Federal agency patent enforcement under Bayh-Dole, 2

We are working through two assertions about Bayh-Dole. The first is rather easy–Bayh-Dole does not anywhere give federal agencies the right to enforce patents on federally owned inventions. It’s not there. It’s not a matter of much argument.

The second is that Bayh-Dole is the sole authority governing the disposition of patents on federally owned inventions. There is no other authority. Bayh-Dole is part of federal patent law–so one cannot even look to federal patent law and say–“Patentees have a right to enforce patents by means of a civil action. The government is a patentee.” Bayh-Dole changes this right. It’s a big deal. Bayh-Dole is the sole authority for the enforcement rights that federal agencies have in the patents they hold–that the government has issued to itself or had assigned to itself. There is no other authority under which federal agencies have the ordinary rights of a patent holder to sue for infringement–either for injunctive relief (stop the practice of an invention) or for compensation (“damages”).

There are then consequences that directly affect how federal agencies may license or assign patent rights under Bayh-Dole. Those consequences also may seem outrageous. But they aren’t. They are cool. Congress intended cool.

Let’s consider Bayh-Dole precedence. Bayh-Dole makes it express that Congress intends the law to take precedence over any other “Act” on certain matters (35 USC 210):

(a) 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. . .

Those matters involve subject inventions. A subject invention is defined by Bayh-Dole (35 USC 201(e) as an invention “of the contractor” and made under a funding agreement. The Supreme Court in Stanford v Roche made clear that “of the contractor” mean owned by, not merely made under the auspices of or using federal funding provided for the conduct of research and the like. Thus, 210(a) concerns small businesses and nonprofits that acquire ownership of an invention made under a federal funding and acquired by a contractor. The small business or nonprofit does not have to be a contractor that receives federal funding–any small business or nonprofit that acquires title to a subject invention (one acquired by a contractor) is in line to have the benefits and requirements of Bayh-Dole. 35 USC 202(a)–Bayh-Dole’s fundamental statement of small business and nonprofit rights–follows exactly this language:

Each nonprofit organization or small business firm may, within a reasonable time after disclosure as required by paragraph (c)(1) of this section, elect to retain title to any subject invention

The order of the beneficiaries is reversed but in neither 210(a) or 202(a) is there any mention of contractor. Once a subject invention has been disclosed to the federal agency that provided funding (full or partial) for a project in which an invention has been made and acquired by a party to the funding agreement, any nonprofit or small business that acquires title to that invention may retain that title, subject to the stipulations of Bayh-Dole, Chapter 18 of federal patent law:

The rights of the nonprofit organization or small business firm shall be subject to the provisions of paragraph (c) of this section and the other provisions of this chapter.

Thus, on the contracting side of Bayh-Dole, Bayh-Dole is clear that it takes precedence over any other “Act” dealing with subject inventions, small businesses, and nonprofits.

On the federal agency licensing and assignment side, however, there is no such statement of precedence. That may seem an oddity lost in the forest of oddity that is Bayh-Dole. If there were any other authority on the matter, Congress would have certainly asserted Bayh-Dole’s precedence. But Congress did no such thing, even though it demonstrated with 35 USC 210 that it was searching the US Code for all instances of “Acts” that varied from Bayh-Dole’s contracting defaults. Congress would have had to do so on the federal licensing and assignment side or it would have been merely adding another authority to federal agency licensing instead of meeting its objective for “uniform” federal practice.

Here’s 35 USC 208, “Regulations governing Federal licensing”:

The Secretary of Commerce is authorized to promulgate regulations specifying the terms and conditions upon which any federally owned invention, other than inventions owned by the Tennessee Valley Authority, may be licensed on a nonexclusive, partially exclusive, or exclusive basis.

Nothing here but for the exclusion of TVA licensing–imagine the TVA politics at work there. But everything else is under Bayh-Dole. The regulations control “any federally owned invention” (but for TVA’s). If there were other licensing regulations, we would have a fustercluck of contrary regulations and federal agencies could pick over what they wanted to do. But there aren’t other regulations. There can’t be. Bayh-Dole authorizes the Secretary of Commerce to write the regulations. These are they. (Previously, Bayh-Dole designated the Administrator of General Services–different from Bayh-Dole authorization for regulations on its contracting side, the Office of Federal Procurement Policy with recommendations from the Office of Science and Technology Policy–all of these amended away in 1984 before they had the chance to operate.)

Where are we? Before Bayh-Dole, there were no “Acts” that authorized federal agency licensing of inventions or dealing in patents. If there were, Bayh-Dole would have had to find them and preempt them, just as it did for contracting, where there were such “Acts.” Bayh-Dole requires regulations that control federal dealings in patents, as part of federal patent law. Any federal dealings in patents must pass through this regulatory choke point. Bayh-Dole does not authorize federal enforcement of patents. Bayh-Dole does authorize assignment of patents by means of exclusive licenses, so that the exclusive licensee may enforce federally owned patents. That’s the only means authorized by Bayh-Dole for the enforcement of federally owned patents. That’s the only way enforcement can happen, post-Bayh-Dole. And federal exclusive licensing itself is restricted, and hence so also is the use of exclusive licenses to assign federal inventions to set up non-federal enforcement.

Even Bayh-Dole’s 35 USC 210 statement of precedence, which excludes Stevenson-Wydler only does so for subject inventions–that is, on the federal contracting side of Bayh-Dole–and does nothing to indicate that there are other authorities under which federal agencies may operate to license federally owned inventions. There clearly were other authorities–but they were in executive branch patent policy. Bayh-Dole does something different–it positions itself in federal patent law. Any other executive branch authority that aims to control federal licensing of patented inventions has to move through patent law. Bayh-Dole keeps that gate. Congress intended this outcome. Federal agencies have no authority to enforce patents on federally owned inventions.

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