A non-compliant Bayh-Dole written agreement at Yale-2

Now let’s look at a “Patent Policy Acknowledgement & Agreement” from Yale University. Here it is:

Yale’s web site asserts that this agreement is required “for grant and patent compliance.” That’s a strange combination–grant and patent. One might think grant compliance with regard to inventions. But patent compliance? What’s that? Or is this just language to say everyone must sign because [important hand wave]. Turns out, even if everyone must sign, this agreement doesn’t do much for grant compliance, whatever it might signify about faculty subservience.

Given all we have been through to consider Bayh-Dole’s standard patent rights clause written agreement requirement, is this agreement said to be necessary for compliance indeed compliant with the written agreement requirement? Well, at least it *is* written, so we are off to a good start. Some policies just make an assertion that employees will comply. That surely is not good enough. Unfortunately, the rest of the Yale agreement makes clear it does not comply with Bayh-Dole’s standard patent rights clause requirement.

I understand that Yale University has a Patent Policy that applies to inventions made under University auspices.

This is just making the employee mouth words to defeat any claim that an employee didn’t know there was a policy. If Yale expects that faculty members don’t know that Yale has a patent policy and must put words in their mouths that they do, then how could Yale possibly argue that faculty should be in general bound by that patent policy? Certainly there’s no expectation on Yale’s part that there has been a meeting of minds on the matter, given that Yale indicates that faculty minds have not met the Yale patent policy and until now have not shown that they agree to be bound by it.

Yale makes faculty sign this agreement, as well, on the argument that the agreement is necessary for Yale to comply with the terms of extramural awards. But what research sponsor requires any organization providing research services to expressly re-require its employees to follow policy? If one found a situation in which an organization did not already have binding agreements in place with employees, one would be hard pressed to continue to want to contract for research with that organization. In such a case, one would want the special performance of a given employee, and not rely on the organization at all. One would demand to have an agreement directly with that employee who would do the work. One would not demand that the organization make the employee give up rights to the organization.

But wait–isn’t this exactly the situation if the employee is not actually an employee for research, such as almost always is the case with university faculty? And isn’t it a specific faculty member or team that one wants access to, not the organization other than as it provides services that make that access easier and more reliable? And wouldn’t one want from the organization then something more like a release so that one sponsoring research could have a relationship directly with that faculty member or team without being accused of tortious interference, but still have (and pay for) access to the organization’s facilities, equipment, and personnel to support the faculty member’s sponsored work?

Finally, just so you see this thing for what it is, if Yale has a policy under which it claims to require reporting of, and own, all inventions made under its auspices or using its facilities (which it does, as we will see), then what possibly could there be in any research contract acceptable to Yale that would cause Yale to require this Patent Policy Agreement & Acknowledgement? Whatever it is, it would have to otherwise violate Yale’s patent policy, it would have to be an exception to the general policy. Now if that were the case, then this patent agreement would be necessary only for those awards that presented exceptions, not for all awards, generally. But here Yale requires signature from everyone, all the time, as if all the awards Yale contemplates accepting somehow violate Yale’s patent policy and therefore require (in some administrator’s head) everyone signing off to indicate their acknowledgement and agreement with such breach of Yale’s patent policy. What do we get to? A patent policy so limited and misguided that every research agreement requires an exception to the policy. Isn’t that weird?

In practice, only one form of extramural research agreement requires a written agreement to be made by employees as a condition of the award, and that is a federal funding agreement operating under Bayh-Dole. That written agreement requirement does not require Yale to make its employees agree to Yale’s patent policy or agree to Yale’s claim to own inventions that they may make. That written agreement does not even require disclosure to Yale of inventions other than those that Yale has acquired ownership of–subject inventions. For that, the written agreement requirement is restricted to Yale’s employees–those persons for which Yale acts as the master and they the servants. There is no such written agreement requirement for volunteers, for independent contractors, for subcontractors–indeed, for subcontractors, the standard patent rights clause forbids Yale to have any interest in a subcontractor’s subject inventions as a condition of the federal award. For these personnel, Yale’s Patent Policy Acknowledgement & Agreement would openly violate the standard patent rights clause by asserting Yale’s interest in inventions that the standard patent rights clause forbids.

Now consider: if Yale’s faculty are not, generally, Yale’s employees in matters of extramural research but rather are only treated that way as an administrative short hand, but rather are released from their official duties to conduct research for others, using Yale’s facilities and personnel, for which Yale is compensated, then Yale’s faculty really are independent contractors with regard to research. This is certainly all the more true with regard to patentable inventions. Employment does not establish in the employer any equitable claim to own an employee’s inventions, nor does use of the employer’s facilities. That’s even all the more true when the employer approves of the use of the facilities as a condition of an extramural award, agrees to supply those facilities, and is compensated for doing so. Yale does not assign faculty to research tasks, does not direct that research, does not approve the results, does not decide when or if to publish.

Faculty are not employees for purposes of extramural research unless they expressly waive their academic privilege assured them under Yale’s policies and Yale then acts the employer, exercises the rights of an employer. If one works through these realities, then the standard patent rights clause written agreement requirement does not apply to Yale faculty under most circumstances and Yale has no obligation under the standard patent rights clause to require the written agreement, and furthermore, no right in contracting with those faculty in their non-employee research role to take an ownership position in their inventions. Yale’s patent agreement, because it is expressly conditioned on grant compliance, is then expressly non-compliant with Bayh-Dole, with federal law, with the standard patent rights clause.

If Yale wanted to assert an ownership position in such faculty inventions, it would have to do so, at least for federal awards, before and entirely outside of any compliance with those awards, or require faculty to give up their academic freedom and turn into Yale’s research employees prior to being allowed to participate in any federally funded work.

Any private sponsor of research worth its administrative brains would not find any assurance in Yale putting its Patent Policy Acknowledgement & Agreement under faculty noses for signature. Acknowledging there’s a policy does not do anything for whether that policy applies in any given situation or what the policy requires–or even why that policy is a policy at all and not something that’s already in one’s employment agreement or an agreement made at the time of employment or afterwards, with its own consideration. A policy, generally, binds the organization–binds those with authority to act for the organization. A policy may authorize the organization to bind employees and officers, but to get there, someone acting for the organization must do the binding. That’s what this “Acknowledgement & Agreement” apparently is intended to do–as we will see.

I also understand that Yale’s funding agreements with third parties, including the United States Government, impose certain obligations with respect to rights in inventions.

This is, sad to say, mealy mouthed. Let’s deal with the non-federal funding agreements. Such funding agreements are negotiated. Nothing in these agreements is imposed. Yale accepts the terms–indeed, Yale may demand the terms. Nothing, then, in non-federal funding agreements enters Yale’s system without Yale’s approval, if not also Yale’s action to insert requirements that then enter its system. In effect, Yale asserts that it can impose on employees whatever it wants, and employees must comply. Now if that’s what the Yale Patent Policy provides–that Yale can make up whatever requirements it wants and employees must comply, so long as Yale has gone to the bother to get a third party to agree that Yale can impose those requirements on its own employees,–then Yale’s Patent Policy cannot possibly be contractual because it lacks a meeting of the minds on something definite. If Yale can alter the deal at will, the deal cannot be an enforceable contract. It’s just a statement that employees must obey. And even that statement is open to challenge, given that Yale elsewhere in policy makes all sorts of assertions about faculty privileges. This is the stuff, then, of threats, not contracts. The Yale Patent Policy Acknowledgement & Agreement is a threat put in the clever form of an agreement.

Yale’s patent policy makes all this explicit in its Paragraph 7 “When Arrangements with Outside Organizations Override This Policy”:

Arrangements with outside organizations that propose terms which are exceptions to this Policy must be submitted to the President or Provost for review by the University with
the advice of the Committee on Cooperative Research, Patents, and Licensing. If approved by the University the terms shall be binding upon all members of the faculty, staff, and employees of the University conducting such research or utilizing such
facilities, and will supersede the provisions of the patent policy to the extent that the terms are inconsistent therewith.

Well, that’s a legal mouthful. Broken down, it says that Yale can change its patent policy any time it wants, provided a committee passes the change on to the President or Provost and they agree, and then everyone has to comply with the change. Again, that’s just demanding agreement to agree–or, another way, a threat. It’s hard to understand what changes to the Yale patent policy an outside organization might propose. That inventions aren’t disclosed? That they must be disclosed somewhere in Yale other than the Office for Cooperative Research? That royalties must be shared with research staff even though Yale doesn’t normally do that (and how they comply with Bayh-Dole on this point is an open issue for federal audit)?

This provision is a remainder from past policy regimes in which a university doesn’t make claims on faculty inventions and a sponsoring organization might require that the university do so or might require that inventors assign directly to the sponsor. That would be the sort of exceptions to policy that would come into play in extramural research contracting. That was especially true of federal contracts, in which, for nonprofits and especially in areas of public health, the federal government required assignment of inventions and would release inventions for private management via patents only if those requesting the release (contractors, or inventors) could show a better likelihood of public benefit from their control of the inventions. Otherwise, the federal agency would release the invention for all to use, including the inventor and the contractor. In a grasping invention scheme, where neither the contractor nor the federal agency release inventions for general access, both inventors and the general public get screwed over. Inventors have the right to use inventions they make in federal work only by license from the contractor or the federal agency–they have no expectation that they can leave the contractor’s employment and continue to use what they have invented without risking a claim of infringement. Talk about leashing up innovation.

Here, the Yale policy is nothing but fussy leftovers to once was a freedom-loving policy. Here is Yale’s patent policy from 1943 in its entirety:

It is the policy of the University that it or members of its faculties should not make profits from inventions or discoveries made at the University, or in connection with its activities, and especially from inventions or discoveries which may affect the health or welfare of individuals or of the public. In any case where for the public interest or the advancement of learning it may seem desirable to apply for patents covering inventions or discoveries so made, the inventor should bring the matter to the attention of the President for report by the President to the Prudential Committee of the Corporation. The Prudential Committee is hereby authorized to deal with each case according to its merits.

No profits from patents, especially ones involving health, and no patents without the approval of the Prudential Committee. Leave it at that. It’s a pretty simple statement, whatever one might want to complain about with regard to certainties. At its base, the policy assumes that patentable stuff will be rare, and it will be even rarer that an invention ought to be patented to advance the public interest or learning. Thus, it can be treated as a matter for the university president and a general committee to take up from time to time.

By 1958, Yale’s policy has morphed somewhat. There’s still the base statement–“In general it is not the policy of the University to hold title to patents.” But now the policy goes on to describe Yale’s relationship with Research Corporation, which gets a right of first refusal. The earlier policy’s scope of interest–“made at the University or in connection with its activities” becomes “auspices” and a special mention is made of facilities and persons, as if there were somehow inventions that might be made at Yale by persons not associated with Yale. There is also now a new Committee on Patents, suggesting that the volume of reporting has ticked up or that special expertise is needed to decide whether an invention should be patented and the like:

When an invention of any person associated with the University results from research conducted under University auspices or with the use of facilities under the control of the University, the inventor shall report the fact to the Committee on Patents.

It is then up to the Committee to decide whether to submit the invention to Research Corporation. If Research Corporation chooses to handle the invention, then the inventor will assign the invention to Research Corporation. Yale still stays out of it. If Research Corporation declines, and Yale declines to find some alternative, and the Committee on Patents doesn’t think the invention should not be patented, then Yale has no further interest in the invention. In Yale’s 1958 patent policy, inventors decide when something has been invented under Yale auspices or using Yale facilities. Inventors report the fact of the invention to a committee–and if the committee decides to refer the invention to Research Corporation, then the inventor discloses the invention to Research Corporation for review, and if Research Corporation accepts the invention for management, the inventor assigns the invention to Research Corporation for 15% of any future royalty income. The policy does not demand Yale see every invention or own every invention–instead, it expects inventors, if they think their invention has been made in research either (i) conducted under “University auspices” or not conducted under University auspices but (ii) “with the use of facilities under the control of the University,” then the inventors are to report their inventions to the Committee. In the 1958 policy, Yale’s interest in inventions is limited to research-originated inventions, and there only those research-originated inventions involving research under University auspices or using University facilities. Any other inventions are not Yale’s problem. To avoid a Yale interest, don’t do the inventing in sponsored research or in Yale buildings.

Here is the 1958 forerunner of the current Yale workaround to the patent policy:

The terms of proposed grants from, or contracts with, outside organizations or agencies respecting rights to patents developed as a result of research conducted under such grants or contracts, or with facilities provided by any such outside organization or agency, must be approved by the Committee on Patents and if so approved shall be binding upon all members of the faculty, staff and employees of the University conducting such research or utilizing such facilities and shall supersede the provisions of Sections I and II hereof to the extent they are inconsistent therewith.

Keep in mind that Sections I (objectives) and II (administration) are all there are. Yale won’t take title. Yale gives Research Corporation first refusal. Otherwise, except in unusual circumstances, inventors own their stuff and do what they want. The exceptions policy is restricted to research and concerns itself with research at Yale under contract and research in the sponsor’s facilities. There, sponsors have some say in what happens with inventions–and they may not want Research Corporation to have first refusal or they may not want any patenting, or in the case of federal agencies, they may want ownership of inventions for the purpose of releasing the invention to all, regardless of whether they use the patent system to publish the invention. Any changes approved by the Committee are binding on those involved in the research. Finally, notice that Yale’s personnel are described as “members of the faculty,” “staff,” and “employees of the University.” Three categories. Faculty members are not in the category of “employees of the University.” That’s interesting, no?

Now back to today. Here’s the Yale exceptions policy again:

Arrangements with outside organizations that propose terms which are exceptions to this Policy must be submitted to the President or Provost for review by the University with
the advice of the Committee on Cooperative Research, Patents, and Licensing. If approved by the University the terms shall be binding upon all members of the faculty, staff, and employees of the University conducting such research or utilizing such
facilities, and will supersede the provisions of the patent policy to the extent that the terms are inconsistent therewith.

The language is very similar, but the policy that is referred to has changed substantially. That policy is broader, claims Yale ownership, and demands disclosure of most anything, even stuff that Yale by policy does not have a claim to. The fundamental ambiguity here is the first restrictive clause: “that propose terms which are exceptions.” Is it “arrangements that propose terms which are exceptions” or “organizations that propose terms which are exceptions”? A basic rule of interpretation is that a modifier ought to modify the closest element. Here, that would be “organizations.” The provision then would read, “When an organization proposes terms that require an exception to be made to Yale’s patent policy . . . .” Yale would have no standing to propose the exceptional terms itself. But even here, what is going on? Just because an organization proposes terms that violate Yale’s patent policy, why would Yale accept those terms and push them through as an exception? Would not Yale’s first obligation to all involved be to resist those terms? Wouldn’t this be a matter of public purpose (as Yale’s patent policy emphasizes).

One could imagine that if those Yale personnel involved in the sponsored research wanted the exception that Yale might be somewhat inclined to waive its policy for them. We don’t get any guidance about what the driving issues are. However, if the “that propose terms” gets tied to “arrangements,” then Yale allows itself to propose arrangements inconsistent with its own policy so long as it gets approval to do so. Either way, the policy is open to change at the whim of the administration, and researchers and inventors appear to have no standing to be involved or to resist, short of refusing to do the work.

This exception procedure creates an open-ended method for Yale to insert requirements into a sponsored research agreement that it wants to add to its own patent policy, and then impose those requirements on its own personnel. Thus, Yale might expand its claims on inventions or require a non-compete clause or forbid consulting and the like. Not stuff an outside organization would require, but which an outside organization would not contest if Yale inserted the exceptions into any given sponsored research agreement. In those universities that had patent policies acknowledging much broader inventor freedoms (including using university facilities without making any special claims), administrators used this policy exception for contracts to insert a claim to university ownership into research contracts. Indeed, that workaround to liberal university patent policies (such as the one at the University of Wisconsin) is at the heart of the NIH’s and NSF’s IPA programs in the 1970s.

Now let’s look at federal funding agreements. We have had a close look at the written agreement requirement in the standard patent rights clause. The only obligations in the written agreement pertaining to rights in inventions are that (1) inventors will assign inventions that Yale owns to Yale and (2) inventors will assign or license to the federal government inventions they own and made under contract, provided that Yale has made them parties to the funding agreement. Bayh-Dole does not require inventors to assign inventions to prime contractors or to employers. The standard patent rights clause for nonprofits does not require inventors to assign any inventions to prime contractors or employers other than inventions those contractors and employers already own. (Some stuffiness here about the differences between assigning title and conveying ownership in an invention, and whether the assignment results in a transfer of title or memorializes in a written form what has already happened some other way to meet the paperwork expectations of the USPTO.)

We can ask, then, what are these “certain obligations with respect to rights in inventions” for federal funding agreements as far as employees–potential inventors–are concerned. Those obligations would be the ones required by (i) the written agreement requirement and (ii) the inventor patent rights clause at 37 CFR 401.9. Neither of these provisions has anything to do with providing Yale with leverage to take invention rights. If anything, the written agreement requirement, once Yale complies with it, precludes Yale from having an interest in any inventions of the inventor except those inventions that it is equitable under the circumstances for Yale to own–inventions made by employees hired to invent, assigned to research or experimental tasks with an expectation of inventing, directed to invent to meet some Yale-defined need. For anything else, reasonably, Yale is precluded from taking an interest by the fact that it has required of its employees something else–the written agreement–and therefore made those employees, for matters of their inventing, parties to the funding agreement with their own standing as contractors on matters of inventions.

The written agreement requirement does not require prime contractors to put their employees on notice with regard to the employee’s inventor patent rights clause obligation, nor that employees, once they become parties to the funding agreement have an obligation to disclose their subject inventions to the the federal government, to timely elect to retain title if they want to retain title, and, depending on what they then do, either publish without patenting, patenting and granting the government its license, or having started the patenting process and choosing not to finish it, assigning the invention upon request to the federal government.

In order to facilitate compliance with the terms of those agreements and applicable Federal regulations, I agree as follows:

Here, the standard patent rights clause is misconstrued as a “federal regulation” and it is left out who exactly is to comply with such regulations. The regulations that implement Bayh-Dole apply to federal agencies–they instruct federal agencies that they must use a patent rights clause, what provisions must be in that clause, how the clause may vary depending on the status of the contractor, and the procedures to be used to make changes to these clauses, adjudicate disputes, and the like. The standard patent rights clause, in turn, comes into play only when Yale becomes a party to a federal funding agreement.

There, other than the written agreement requirement, nearly everything else (there are some communications clauses) depends on Yale having acquired ownership of an invention made under contract. If Yale doesn’t acquire any invention, the only thing that would bring an invention made under contract within Bayh-Dole’s scope is the operation of the written agreement, which makes inventors become contractors, makes their inventions made under contract become subject inventions when they are made (conceived or first actually reduced to practice (=tested to show all elements of the invention work as intended)), and imposes on inventors the obligation to establish the government’s rights in those inventions.

Yale makes it appear that Yale is operating to comply with federal regulations, and is using this instrument to transmit that obligation to its employees. But that isn’t what the written agreement requires Yale to do. Yale is to put its employees in parallel standing to Yale, as parties to the funding agreement, and leave their inventions alone but for those that become Yale’s subject inventions as a matter of equity. A generalized policy claim on inventions is not necessarily a matter of equity. Certainly a policy claim merely based on some invention having been made under a federal contract is not an equity claim. The Supreme Court in Stanford v Roche made clear that employment was not a basis for an equity claim, and that Bayh-Dole did not vest inventions with employers or otherwise give employers some special right to take title to inventions made under contract. Bayh-Dole applies when a contractor obtains title, and is not some means to getting that title. Bayh-Dole does not create for Yale any equitable claim to inventions made under federal contract. The government’s interest is in its own rights to such inventions and does not care which contractor–prime contractor, subcontractor, assignee, employees of any of these, if contractors–owns such an invention. Yales obligation–to comply with its patent rights clause–is to ensure that its inventors also become contractors–and that’s what the written agreement is to do.

For all that, “facilitate” is the wrong verb. It is not that Yale requests help, as if Yale could do this all itself anyway, but cooperation makes its work easier. The correct verb is “comply” and the construction ought to be “In order that Yale may comply with the terms of these agreements, I agree as follows.”

But then, there has to be a set of provisions that are specific to the funding agreement that Yale has accepted–what is it that the employee as a potential inventor must do so that Yale can comply? Let’s see.

1. I will abide by the Yale University Patent Policy, including any amendments to it adopted from time to time, and I will execute any assignments or other documents necessary to comply with its terms.

Well this is strange! What is this doing here? The implication is that, but for this Patent Policy Acknowledgement & Agreement, inventors don’t have to comply. Otherwise, there’s no reason to put this statement here. Furthermore, as we have seen, this requirement amounts to an agreement to agree–the employee must accept whatever Yale puts in its patent policy. Yale could require that employees wear clown shoes and ride unicycles, or assign all their inventions to Satan or Baal or Comcast and apparently all Yale employees would have to comply. There’s nothing binding in agreements to agree. (The “any amendments” is lawyer patch to cover for the debacle of their persecution in the courts of Professor Fenn,)

While for non-federal contracts, Yale may require that its employees “abide” by the patent policy’s terms, for federal contracts, Yale must require instead the written agreement. Bayh-Dole does not care about a contractor’s patent policy. Bayh-Dole does not care that a contractor has any patent policy. Bayh-Dole is designed to operate without reference to a contractor’s patent policy, technology transfer operation, or anything else. A contractor does not have to have policies or even to have personnel designed for patent matters. A contractor does not have to take an ownership interest in any invention, file patent applications, seek commercialization, nada. Bayh-Dole is self-implementing via the standard patent rights clause and entirely conditional on a contractor acquiring ownership of an invention made under contract. If a contractor does not acquire that ownership, it has no obligation but for requiring the written agreement–it does not have anything to disclose, to elect to retain title for, to file patent applications on, or license or assign to the government, or report on the utilization of. None of that.

Bayh-Dole is entirely conditional, and so is the patent rights clause, but for the written agreement requirement, by which the contractor delegates, conveys, substitutes parties, assigns, subcontracts (pick your verb) the invention stuff to its employees for whom there might be some equitable basis for taking an interest (as there would not be for clerical or non-technical employees). If a prime contractor does not acquire ownership of any such invention, then for the invention to become subject to any Bayh-Dole’s patent rights clause, the inventors must have become contractors. Otherwise, Bayh-Dole does not preempt any other “Acts” and if no other Act applies, then executive branch patent policy applies, but no, that policy was amended by Reagan and the codification abandoned so that there in effect is no executive branch patent policy to govern inventions made under contract that are not owned by a contractor. What a cock up. And these are the brilliant bureaucrats that would unleash an innovation economy based on institutionalized research? Ah, we get what we deserve.

Yale has no obligation to obtain ownership of any invention made under federal contract. It has no special right to that ownership, no mandate to take ownership, no obligations whatsoever other than to comply with the written agreement requirement and pass the obligation to establish the government’s interest to inventors. For that Yale must make them parties to the funding agreement, require them to timely disclose to Yale inventions in which Yale has equitable ownership, assign those inventions to Yale, and otherwise sign paperwork to allow patent applications to be filed (by Yale or its assignees or the federal government) and to assign to the federal government or license to the federal government any other inventions made under contract.

That’s Yale’s obligation under its patent rights clause. When an employee-contractor invents, then the inventor patent rights clause at 37 CFR 401.9 applies to that invention, unless Yale has an equitable ownership interest in the invention and the inventor assigns that invention to Yale. Then the inventor has an obligation under the written agreement to sign paperwork as requested by Yale to permit Yale to file patent applications.

Nothing in this first provision complies with Bayh-Dole’s written agreement requirement.

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