A non-compliant Bayh-Dole written agreement at Yale-3

We are working through Yale’s “Patent Policy Acknowledgement & Agreement.” The agreement requires personnel signing it to “abide” by Yale’s patent policy, as if that patent policy does not apply but for this agreement. That’s a bit odd. Even odder, then, is that the agreement appears to be focused rather on research rather than the other things identified by Yale patent policy as within the scope of auspices–teaching and “other intellectual activities.” Here’s the second requirement:

2. If in the course of research conducted under University auspices, as defined by the Patent Policy, I make any invention (whether or not patentable), I will provide to the Yale Office of Cooperative Research a written disclosure of the invention, . . .

Here we are well outside of the written agreement requirements and Bayh-Dole’s scope. The premise for requiring this “Acknowledgement and Agreement” is compliance with terms of research contracts. But here, the agreement eliminates that restriction and simply claims “course of research conducted under University auspices”–much broader than “conducted under the terms of an extramural contract for research.”

For Bayh-Dole, Yale’s scope is not right. Bayh-Dole’s definitions of funding agreement and subject invention do not have to do with what the “course” of “research” might be, but rather whether an invention has been made in “work” that has received, somewhere, federal support. It then does not matter for Bayh-Dole if an invention is made under Yale’s “auspices.” What matters is that the invention was made (i) in the work and (ii) is owned by a contractor engaged for some part of that work. An invention, then, could be made by an employee of a contractor outside the “course of research” and still be within the “performance of work” for which the federal government has provided support–but perhaps not to Yale for the bit that is outside the “course of research” that Yale is concerned with here.

Bayh-Dole’s scope is broader in another way, too. Bayh-Dole defines “made” to mean “the conception or first actual reduction to practice” (see 35 USC 201(g)). A patentable invention, then, comes within scope of Bayh-Dole if the conception part comes within the “work” that the federal government has funded some part of. That conception–a full mental image of the invention in all of its parts–might pertain to some part of the “work” other than the part contracted to Yale. Same with “actual reduction to practice.” That means, in practice, building a prototype, and if prototypes in that area of work routinely do not work as intended, then first actual reduction to practice means testing to demonstrate that the prototype indeed performs in all its elements as intended. Yale’s use of “make” carries none of this nuance. For a general situation–some abstract situation that covers all possible situations–Yale administrators might draft so broad that the words become nebulous. But to comply with Bayh-Dole’s patent rights clause written agreement requirement, Yale administrators have no standing to demand more than what the written agreement requirement requires. To try to take more is to be out of compliance, is to violate federal regulation, and if done negligently or deliberately is to be incompetent or corrupt. Pick your ugly predicate adjective.

Yale insists on dealing with inventions whether or not patentable. What is an invention that’s not patentable? It could be most anything, so long as someone decides to call it an invention. But if it’s not patentable, what is a patent policy doing making a claim of ownership on it? And what theory of ownership is in play? Certainly not patent law, since by definition the “invention” cannot come within patent law. Of course, Bayh-Dole has its own quirk this way, defining “invention” to include plant varieties–which are not patentable but come within a certificate program that has similar properties .(It appears someone pulled a fast one in drafting–Latker?–and substituted plant varieties for the plants that are proper subject matter for patenting.) So in a weird way, Bayh-Dole does concern non-patentable subject matter using the term “invention.” But at least Bayh-Dole is bounded in its scope of the term “invention.” Yale is not. Yale claims everything that is patentable and everything that is not patentable, so long as someone decides that the non-patentable things can be labelled “inventions.”

Now, in contracts with ambiguous wording, there are some rules of interpretation. One is that one should consider reasonable interpretations. A second is that among these reasonable interpretations, the priority of interpretation goes to the non-drafting party. Because Yale has wandered off into entirely vague language here–claiming everything–it is up to the Yale employee here to decide, reasonably, what constitutes an invention and decide to disclose it to Yale. Clearly, Yale does not consider patentability to be a determining criterion. Otherwise, Yale would have written–“if you or anyone else you know thinks what you have made is or may be patentable, then disclose it.” But Yale didn’t write that. Instead  Yale wrote something so happily general that it is entirely vague what Yale is truly interested in.

Sure, an employee can reason that Yale is interested in anything that Yale is interested in–and if so, then there’s the “meeting of the minds” that, along with consideration forms a binding contract. But an employee can just as easily–and reasonably–conclude that Yale is only interested in inventions that are patentable or otherwise “practical.” In such a case, the employee would be perfectly justified (other than Yale’s history of persecuting folks) in interpreting the policy words here to limit what gets disclosed. In short, Yale drafts generally and therefore ends up in ambiguity, but Yale does not then get to tell employees later, in the moment, what Yale truly meant by the words it chose. If it did, the agreement would be an unenforceable agreement to agree. It would amount to servility–“You agree to do with your personal property (here, inventions) whatever I tell you to do.” Yale can do that, sure, but it’s not the subject matter for contracts. And it has nothing to do with complying with Bayh-Dole’s written agreement requirement.

I will and hereby do assign to Yale my rights in that invention as provided by the Patent Policy and I will cooperate with that Office in the preparation of any patent applications.

This is all very fine except that runs against the Yale patent policy. The Yale patent policy provides that inventions will be reported promptly to the Director of Cooperative Research, which will make an “initial screening” of the invention followed by a “detailed evaluation” (presumably because Yale determines that it might be interested), after which Yale or a partner may file a patent application. Any assignment of the invention comes at the request of the Office of Cooperative Research and comes after the detailed evaluation, and after Yale has decided to file a patent application. If Yale does not have an interest in patenting, then Yale “may release to the Inventor the University’s interest in the invention.” Releasing the university’s interest means waiving its claim, waiving the requirement that the inventor must assign. If the policy anticipated that Yale would take ownership of every invention upfront, then Yale would have to assign back that ownership, not merely release its interest.

The Yale patent policy procedure makes sense–evaluate disclosed inventions, and if Yale does not want to file a patent application, then Yale releases its interest, otherwise requests assignment. But the Patent Policy Acknowledgement & Agreement forces assignment upfront: “I will and do hereby assign to Yale my rights in that invention as provided by the Patent Policy.” The Patent Policy provides only that assignments take place upon request, after a detailed evaluation and a decision to file a patent application. The “hereby do assign” does not operate as a present assignment. It operates as a conditional promise to assign, to take effect upon the request of the Office for Cooperative Research, and then only after the Office for Cooperative Research has (i) made a detailed evaluation and (ii) decided that Yale or a partner will file a patent application.

Really, this attempt at a present assignment is an administratively wasteful step. University administrators have tried to use present assignments especially since Justice Breyer in Stanford v Roche argued that a promise to assign a future invention and a present assignment of that future invention should mean pretty much the same thing. In a sign of their clear incapacity to follow Breyer’s argument, university administrators then swapping out their promises to assign for “hereby assigns.” The basis for Breyer’s dissent was that the Court of Appeals for the Federal Circuit had let stand a lower court reasoning that there was somehow a conflict between Stanford’s patent agreement’s promise to assign and Cetus’s (which became Roche’s) later patent agreement’s promise to assign combined with a present assignment of those future inventions, so that when Stanford came to enforce its promise, the inventor had no rights to assign, having assigned them up front to Cetus. It’s a confused mess, though, until the Supreme Court sorted out Bayh-Dole. Stanford’s only basis to enforce its promise to assign, under its policy at the time, was that Bayh-Dole required Stanford to take ownership. The Supreme Court ruled that Bayh-Dole did no such thing. Therefore, Stanford had no basis to enforce its patent agreement’s assignment requirement, even though the lower courts had thought they did. Breyer’s argument makes sense. The university administrator response doesn’t. Yale’s doesn’t.

Worse, Yale’s use of a present assignment here violates policy and isn’t saved by the “as provided by the Patent Policy.” The wording is deceptive, given the Patent Policy doesn’t provide for a present assignment prior to Yale’s own review and decision to file a patent application. And by the time Yale does decide to file a patent application, it cannot rely on this Patent Policy Acknowledgement & Agreement–it will have to go get a written assignment from the inventor that specifies the claimed invention–the invention that is the subject of the patent application. All the “hereby assign” language does is create a false impression in the minds of employees that they have transferred ownership of inventions to Yale in advance as policy requires when they haven’t and policy does not require them to do so.

One last point here. Yale’s patent policy has this bit:

If the University decides that it does not wish, and has no legal obligation, to participate in the patenting or licensing of an invention, the University may release to the Inventor the University’s interest in the invention

Under Bayh-Dole, Yale has no legal obligation to file a patent application on any invention that it has not taken title to. Since Yale’s patent policy requires first a detailed examination followed by a decision to file a patent application before Yale requests assignment of any given invention, then Yale has no legal obligation under Bayh-Dole’s patent rights clause to do either–take title or file a patent application. If Yale has made the inventor a party to the funding agreement, then under the inventor’s patent rights clause, the inventor has no obligation to file a patent application–the inventor can publish and the federal government gains access via the public domain. If the inventor chooses to file a patent application, then the federal agency gets its license and if the inventor fails to prosecute or defend the patent, the federal agency can request title. If Yale hasn’t made the inventor a party to the funding agreement, then it is in breach of its patent rights clause, but the invention cannot be a subject invention, and if Yale otherwise chooses not to file a patent application, nothing in Bayh-Dole creates for Yale a legal obligation to “participate in patenting or licensing.” For any other–non-federal–“legal obligation” to patent or license, Yale has itself negotiated that obligation into the funding agreement.

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