Bayh-Dole precludes federal enforcement of federally owned patents.
The president should issue an executive order confirming this situation by forbidding federal agencies to enforce patent rights covering federally owned patents. Doing so would remove a huge barrier to public utilization of inventions made in federally supported work. At a time when regulations should come down to spur economic recovery, this one is easy. No legislation required. No studies. No need for input from patent monopolists. Just prohibit federal agencies from suing for infringement. They don’t have Congressional authorization to sue anyway, so require them to do the right thing and drop the pretense that they can enforce patent rights.
The argument is as simple as it is seemingly outrageous. Congress has those rights enumerated in the Constitution, one of which is the power to reserve to inventors for limited times exclusive rights to their discoveries. That’s the foundation for the federal patent system. Congress has the power to, and has, created patent law by which inventors may obtain the legal right to bring a civil action against infringers of their patents on claimed inventions.
Patents have the attributes of personal property (35 USC 261), but subject to the provisions of federal patent law. For ordinary patents, those provisions are the usual things, including the right to bring a civil action (35 USC 281) to obtain an injunction to stop infringement (35 USC 283) and to receive compensation for damages (35 USC 284).
But for federally owned patents, Bayh-Dole–a part of federal patent law–intervenes. Federally owned patents are not ordinary patents. Bayh-Dole places all sorts of conditions on federally owned patents, including a working requirement (35 USC 200). The patent system must be used to promote the utilization of federally owned inventions. Federal agencies are not expressly authorized to enforce patent rights against citizens, even if patentees and successors in title to patentees are so authorized in ordinary patent law.
Here’s the Attorney General:
It has long been recognized that the United States may own and exercise patent rights, and that the incidents of a patent are not destroyed or “merged” by virtue of such ownership. However, as with all Government property, authority must be found, in an act of Congress or elsewhere, for the disposition of the invention.
The only authority presently operating is Bayh-Dole, a part of federal patent law. Bayh-Dole aims to be a uniform, comprehensive statement on federal disposition of inventions. Bayh-Dole does not authorize federal agency enforcement of patents. As the statutory authority for the disposition of inventions, Bayh-Dole authorizes federal agencies to obtain patents and to exercise patent rights such as licensing an invention with a number of prerequisites and with required terms and conditions. But Bayh-Dole does not authorize enforcement of patents on federally owned inventions.
Federal agencies as owners of patents on inventions arising from federally supported research or development are restricted by federal patent law in what they can do with patents. They don’t have standing to seek remedies for infringement by the public. And even if they did, they do not have standing to bring any infringement action that would not promote the utilization of federally owned inventions, nor do they have any standing to claim compensatory damages for public utilization of federally owned inventions.
Long pause while you search for some way use by the public of a federally acquired invention might run against the public interest in promoting the use of the invention and therefore require a federal action for infringement to stop that use or demand payment for that use.
Bayh-Dole is the uniform statute governing federal disposition of any federally owned invention–that is, the disposition of patent rights in such inventions. Bayh-Dole enumerates the rights and requirements that federal agencies have with regard to such inventions. Enforcement of patents is not one of those enumerated rights. If federal agencies already had all those enumerated rights–arguably, they did–then Bayh-Dole has displaced those rights; otherwise, Bayh-Dole is superfluous and its wording has no effect. We cannot assume Congress passed a law intending that its wording has no effect. When Bayh-Dole carefully enumerates the rights of federal agencies with regard to inventions, and does not authorize enforcement of patents, when it is clear that Congress is aware of the right of enforcement in the very same statutory clause, then it is clear that federal agencies are not authorized to enforce patents–even if they were, prior to Bayh-Dole. When Congress passes a law that takes precedence, then it takes precedence also by what Congress chooses to omit from the scope of federal agency authority.
Congress intended, then, that in authorizing federal patenting and licensing, that such disposition of federally owned inventions does not include suing citizens, companies, organizations, or states for infringement. If federal agencies desire a suit for infringement in the public interest, they must assign the invention to a non-federal party, and that assignment must have the form of an exclusive license, and exclusive licenses may be granted only in special circumstances when such licenses are necessary to bring forth private capital to develop for public use something that otherwise would never see public use–that’s the burden of 35 USC 209(a). In practice, those circumstances don’t arise.
Whatever the merits of a patent system that provides inventors with exclusive rights for limited times, the federal government has no standing to exercise those exclusive rights when it becomes the successor in interest to an invention that it acquires in the public interest. Federal agencies cannot use the threat of litigation for infringement to prevent public use in order to set up licensing to a favored company. Federal agencies cannot use the threat of litigation for infringement to obtain better terms–financial or otherwise–from any candidate licensee. Federal agencies cannot sue for infringement should a licensee terminate the license and continue to practice the invention. Federal agencies might sue for breach of contract, but not for infringement.
Federal agencies, as patentees, do not have the rights of ordinary patentees. Federal patent law authorizes ordinary patentees to have the right to civil action to remedy patent infringement. Federal agencies, as patentees, derive their authority to dispose of federally owned inventions from the Bayh-Dole part of federal patent law. The property rights in the patents they hold, including the right of enforcement, are subject to the provisions of Bayh-Dole. And those provisions do not authorize enforcement. And those provisions, even if they did authorize enforcement through some clever implied use of “protect,” preclude enforcement to suppress use, enforcement to obtain more favorable terms, enforcement to play favorites with one company over the rest of an industry or among bidders for federal contracts, enforcement that fails to promote free competition, enforcement that defends the nonuse or unreasonable use of an exclusively licensed invention.
Furthermore, if a federal agency assigns a federally owned invention, such as by means of an exclusive license that grants all substantial rights in the invention, then the federal agency not only grants the licensee the right of enforcement but also gives up that right on behalf of the federal government. If a license is exclusive, then it is on the licensee to enforce, not the federal government. That exclusive license cannot even take place unless the federal agency establishes that all the requirements for such a license have been met and even then the licensee is subject to all the required terms and conditions imposed by Bayh-Dole.
If the executive branch wanted to make this all crystal clear, it would issue an executive order forbidding federal agencies from enforcing patent rights on federally owned inventions. Unleash federally owned inventions from the corrupted, ineffectual, unauthorized, bureaucratic hands of federal agencies. Do it now.