3 More Oddities of 35 USC 210

We are working through oddities of Bayh-Dole’s assertion of precedence over other Acts.

11. Consider some possible variations on 35 USC 210’s treatment of precedence. Here’s the present text of the start of 210(a) again:

This chapter shall take precedence over any other Act which would require a disposition of rights in subject inventions of small business firms or nonprofit organizations contractors in a manner that is inconsistent with this chapter

Why not remove “of small business firms or nonprofit organizations contractors”? It is an ugly construction anyway. Subject invention contains within it an express dependency on the definition of contractor. Contractor in turn includes small businesses and nonprofits–but also includes persons. If a person becomes a party to a funding agreement, then that person is also a contractor. It would appear that Bayh-Dole aims to exclude persons from the benefit of precedence, even if those persons are otherwise contractors and subject to Bayh-Dole’s contracting provisions. If that’s the case, then for persons, Bayh-Dole does not preempt other Acts, those Acts apply and one might think it is reasonable then that those other Acts take precedence because Bayh-Dole carefully chose not to assert precedence when it had the opportunity to do so.

Problems with all of this are many. Bayh-Dole addresses inventor ownership at 35 USC 202(d)–persons–where inventors “retain” rights. But if inventors–persons–are subject to some other Act regarding the disposition of rights, then 202(d) won’t operate, even if it is consistent with that other Act–the other Act will control.

Worse, Bayh-Dole’s standard patent rights clause at 37 CFR 401.14 requires (at (f)) that contractors require their employees (the ones for which it would be equitable to make a claim with regard to their inventing) to make a written agreement to protect the government’s interest in subject inventions. The wording of the requirement is such that the contractors to comply must make these employees parties to the funding agreement. That must make them also contractors, but person-contractors, by operation of the definition of funding agreement at 35 USC 201. Their inventions, when they make them in performance of work under a funding agreement to which they are now parties by the action of their employer, are necessarily subject inventions.

But the employer has no right to elect to retain title to such inventions because the employer does not have title. The person-contractors have title and would appear to have the right to retain that title subject to 35 USC 202(a) or (d)–except that 35 USC 202(a) refers only to small business and nonprofit contractors, not to persons.

To complicate things (ha!–a small joke here), Bayh-Dole’s implementing regulations add a separate patent rights clause for inventors at 37 CFR 401.9. That clause instructs federal agencies to treat a “contractor employee inventor” or “employee/inventor of the contractor” (both usages signs of crap drafting at work) as a small business contractor but with fewer requirements. Does that mean that these person-contractors then have the rights of small business contractors under 35 USC 202(a)? That is, person-contractors are then sole proprietors? Seems that’s just what person contractors would be. But then, what havoc on their taxes if they are paid as employees but with federal funds under an arrangement that construes them as independent contractors for the disposition of rights to inventions.

Dunno. This all seems stupidly done, not carefully nuanced. It’s more a hack job done by bureaucratic attorneys with sketchy mental models of contracting, invention, research, and innovation than anything thought out. But because their hack work makes it into law, we have to assume that it is intended, that there are reasonable interpretations, and those interpretations are binding, enforceable. The explanation for all this is that the apparatus of Bayh-Dole was created to restore a pipeline of patent monopolies created from federally supported work from federal control to the pharmaceutical industry. If there was going to be millions or billions of federal money, then pharma should find a way to suck up as much of it as it could, and there were patent attorneys at the NIH and attached to universities ready to help this happen, if they could rake off a share in the process. Everything else about Bayh-Dole appears to be constructed to make a show of public interest but was never intended to be used. Thus, when self-styled Bayh-Dole advocates screech that some part of Bayh-Dole was never intended to be used to control prices, that’s true only in the larger context that that part of Bayh-Dole along with all the rest of the substantive public interest apparatus was never intended to be used at all. Just the bureaucratic paper requirements–disclosure, notices in patents, secret reports, paper-based government licenses.

Back to 37 CFR 401.14(f). If one goes the other way and asserts that these person-inventors are not parties to the funding agreement, then the inventions they make cannot possibly be subject inventions unless they assign their inventions to a contractor. Bayh-Dole then does not apply until there’s such an assignment. Nothing in Bayh-Dole compels such an assignment, vests ownership with the contractor without the need for assignment or provides a mandate for the contractor to obtain assignment or restriction on inventors with regard to how they may assign their inventions. See Stanford v Roche. If Bayh-Dole does not apply, the it cannot take precedence over other Acts. Those other Acts then apply. Whatever else is the case, no contractor under those other Acts has the right to “elect to retain title” to any invention unless a federal agency has expressly contracted so that is the case.

And, sigh, if person-inventors aren’t contractors and their inventions are not subject inventions, then 37 CFR 401.9 also would not apply–it is specific to subject inventions, which these inventions owned by inventors who aren’t contractors are not. 37 CFR 401.9 would apply only if an inventor assigned to a nonprofit or small business employer and that nonprofit or small business employer did not want the invention and assigned it back to the inventor. Then the inventor could deal with the agency with regard to retaining rights (the invention would have been transmogrified into a subject invention). Talk about administrative hoopla accomplishing nothing except to bring something within the scope of bureaucratic machinations.

12. Why not just amend all those other Acts to provide something simple?–if a contractor (person, small business, nonprofit) acquires an invention made under a funding agreement (restricted to small business, nonprofit)–making the invention a subject invention–then the federal agency must follow Bayh-Dole. Why make Bayh-Dole a matter of conflict of laws rather than working through each law and getting it right and supplying model text for future Acts, should they choose to follow Bayh-Dole’s guidance?

If Bayh-Dole must merely take precedence, then why not:

This chapter shall take precedence over any other Act with regard to the disposition of rights in subject inventions.

But no, that’s not what Bayh-Dole does. It does something so complicated and unsound that no one can figure it out. Surely I am clueless. Even NIST is clueless. That’s because Bayh-Dole itself is empty-headed bureaucratic nonsense. No one will say this, of course, because it is law and therefore must be respected. But law this hopeless should never be law. Doing so hands control to those making interpretations at their whim (because there simply cannot be anything clearly grounded in the reason of the law itself)–that is, Bayh-Dole authorizes a sort of private law, government vigilante law, or government drawn into the service of vigilantes, or in this case, mostly non-federal bureaucrats to give them power over both federal policy on invention and over inventors. Bayh-Dole should never have become law, and should not be law now–and, in a way, Bayh-Dole isn’t law since it is never complied with (but for the paperwork requirements–and even there compliance is sketchy), isn’t enforced (but for paperwork requirements, etc.), and the federal government does not act on its responsibilities and rights reserved for it under the law. Bayh-Dole is something else–a law that isn’t law that shouldn’t be law that takes precedence over bona fide laws.

13. The precedence asserted for all funding agreements in 35 USC 210(c)–where here “funding agreement” cannot have the definition supplied by Bayh-Dole at 35 USC 201(b)–also appears to be out of place:

except that all funding agreements, including those with other than small business firms and nonprofit organizations, shall include the requirements established in section 202(c)(4) and section 203.

Why not:

All federal contracts, grants, and cooperative agreements for experimental, developmental, or research work that are not otherwise funding agreements shall require that the United States shall have a nonexclusive, nontransferrable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States any subject invention throughout the world.

There could be more added from 35 USC 202(c), of course, and I’ve replaced “Federal agency” with “United States”–the defined term in 35 USC 100(c). But if put in this form, why should Bayh-Dole have anything to say about those other agreements? And if it does, why should it be a matter of taking precedence over other Acts, when those other Acts are about the federal government taking title to inventions made under contract, not about licensing when the federal government does not take title. Here, in 210(c), Bayh-Dole appears to be asserting authority over executive branch patent policy outside the scope of Bayh-Dole’s scope of interest. Perhaps there’s a thread of connection with Bayh-Dole’s statement of policy and objective at 35 USC 200, which is not specific to subject inventions but rather recites “inventions arising from federally supported research or development.” So why not address that directly?:

The United States shall have the right to practice or have practiced for or on behalf of the United States throughout the world any invention arising from federally supported research or development, without obligation to compensate the owner of any such invention.

Bayh-Dole is part of federal patent law. The assertion here acts as a limitation on patent property rights and does not require the administrative fuss of granting paper licenses to the government or worrying about redoing such a license if an invention is assigned. There’s no restriction with regard to the status of the contractor–person, nonprofit, small company, non-small company. In effect, the license clause in 35 USC 202(c)(4) preempts 28 USC 1498–the right of an invention owner to seek recovery of reasonable and entire compensation for the use or manufacture by the United States. One could then put the government license in the form that makes clear sense:

Owners of inventions arising from federally supported research or development have no right to recover reasonable and entire compensation in the United States Court of Federal Claims under 28 USC 1498.

That still does not get at the Bayh-Dole march-in provisions at 35 USC 203, but if “United States” is understood to include federal agencies and department, state governments, and domestic municipal governments, and “practice” is understood to mean “make, use, and sell” (as it is used in executive branch patent policy), then there’s really no need for march-in at all. March-in is just more baggage created to make Bayh-Dole appear to have a public interest apparatus. The actual public interest apparatus is baked into the government license clause, which really is a preemption clause directed at 28 USC 1498. In other words, an invention owner has no standing in patent law to sue the United States for patent infringement. Bayh-Dole makes it so that an invention owner also has no standing to sue the United States for compensation for use or manufacture. By implication, an invention owner also has no standing to sue the United States for selling the invention or products that involve the invention. This sort of thing does make some sense as a matter of precedence–it’s just that Bayh-Dole takes precedence over 28 USC 1498 rather than anything in the list of Acts.

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