Now let’s look at how Bayh-Dole deals with federal agency patent dealings with regard to licensing. 35 USC 207 authorizes patent dealing and 35 USC 209 stipulates the conditions under which exclusive licenses may be granted and the terms and conditions that must be (or should be) included in any licenses, exclusive or otherwise, and the requirements on potential licensees if they hope to obtain a license.
35 USC 207(a) authorizes federal agencies:
(1) to apply for, obtain, and maintain patents
(2) to grant nonexclusive, exclusive, or partially exclusive licenses
(3) to undertake all other suitable and necessary steps to protect and administer rights
(4) to transfer custody and administration to another federal agency
What’s left out is anything having to do with enforcing patent rights. Or, almost. Let’s work through this 207(a) authorization more closely.
(1) apply for, obtain, and maintain patents or other forms of protection in the United States and in foreign countries on inventions in which the Federal Government owns a right, title, or interest;
Note that “other forms of protection” on inventions is left wide open. That might mean plant variety protection certificates–since that is something expressly added to the definition of invention. A plant variety is not a patentable invention, but a plant variety is defined expressly by Bayh-Dole (35 USC 201(d)) as an invention. But this 207(a)(1) authorization also apparently could include copyrights, mask works, domain names, trade marks, trade secrets, and whatever else might come within the meaning of “other forms of protection . . . on inventions.” Software may be an invention, “protected” by copyright just as a plant variety may be an invention, “protected” by a plant variety certificate. In this way, Bayh-Dole offers an expansive sense of “invention” to patent law, which otherwise does not define invention.
In its way, 207(a)(1) is very broad–it authorizes federal agencies to use any means of “protection” of its choosing for inventions. It’s just not clear what “protection” means–to “protect” one would think would mean to enforce rights in inventions. That is, sue for infringement.
Let’s look briefly at the connection between protection, infringement, and enforcement of patent rights.
35 USC 271 establishes infringement. 35 USC 281-299 (Chapter 29) deals with remedies for infringement. 35 USC 287 states limitations on those remedies. What’s at stake is how Bayh-Dole alters these elements of patent law–and in particular, 35 USC 200 (policy and objectives) and 35 USC 207 (protection of federally owned inventions) and 35 USC 209 (licensing federally owned inventions).
35 USC 271 establishes infringement (my bold, of course):
(a) Except as otherwise provided in this title, whoever without authority makes, uses, offers to sell, or sells any patented invention, within the United States or imports into the United States any patented invention during the term of the patent therefor, infringes the patent.
In the case of CDC’s PrEP patents, the HHS claim is that Gilead induces the infringement of the CDC patents by recommending that doctors use its products to follow the CDC’s own clinical guidelines. That would be a 35 USC 271(b) infringement:
(b)Whoever actively induces infringement of a patent shall be liable as an infringer.
It would appear that CDC has the special advantage of setting federal clinical guidelines and then suing any company that encourages doctors to follow those guidelines, arguing that the federal government is damaged if it does not receive royalties from the companies encouraging practice under the CDC’s own policies. It does not add up.
Infringement sets up the prospect that the holder of a patent may sue for infringement 35 USC 281:
A patentee shall have remedy by civil action for infringement of his patent.
Let’s start with the problem of ownership and exclusive licensing.
Courts have held that to have standing to sue for infringement, the plaintiff must own the invention. If a patentee grants an exclusive license to all substantial rights in an invention, then the patentee has conveyed ownership of the invention to the exclusive licensee and the exclusive licensee has standing to sue for infringement–and the “patentee” does not. See Ciba-Geigy v Alza, for instance, or Prima Tek II. Here’s Prima Tek II:
The exception [to requiring a patentee to be joined to a suit for infringement brought by an exclusive licensee] is that, where the patentee makes an assignment of all substantial rights under the patent, the assignee may be deemed the effective “patentee” under 35 U.S.C. § 281 and thus may have standing to maintain an infringement suit in its own name.
Thus, where Bayh-Dole uses “protection” of inventions, the necessary implication is that patents (and other protections) may be used to enforce rights provided by those protections, whatever those rights turn out to be. A patent need not “protect” an invention–it could be used just to “publish” an invention–that is, teach the invention, define the invention, and make that teaching and definition available to all by means of publication through the patent system. This idea of publish is caught up in the term “dedicate” used in discussion of federally held patents from at least 1945 through the Kennedy patent policy of 1963. But Bayh-Dole uses “protect.”
Now we get to the grit of 35 USC 207(a):
(2) grant nonexclusive, exclusive, or partially exclusive licenses under federally owned inventions, royalty-free or for royalties or other consideration, and on such terms and conditions, including the grant to the licensee of the right of enforcement pursuant to the provisions of chapter 29 as determined appropriate in the public interest;
Strange. Here we have an authorization for federal agencies to extend exclusive licenses to the point of assignment of the invention to a non-federal entity. There’s much going on here. “As deemed appropriate in the public interest” encompasses such “terms and conditions” as keeping the terms and conditions secret–withheld from the public. Because, as the court in Public Citizen ruled, if the terms of exclusive license deals entered into by federal agencies were to become public, then federal agencies would be unable to attract exclusive licensees on the terms and conditions that they presently use, and since it is in the public interest that federal agencies be able to offer such exclusive licenses, then it follows that it is in the public interest to keep those terms and conditions secret from the public.
The term and condition, however, that’s expressly called out–to ensure there’s no room for doubt–is the “grant to the licensee of the right of enforcement” of the patent rights for infringement. Wow! The necessary meaning of this grant of rights is that the exclusive license convey all substantial rights in the invention–that is, the exclusive license must act as an assignment of the invention. The licensee becomes, for enforcement, the “patentee”–even if the title to the patent stays with the federal government and even (apparently) if nothing is recorded in the USPTO regarding the assignment of the invention to the exclusive licensee.
For now, it’s enough to see that 35 USC 207(a)(2) authorizes federal agencies to enter into contracts under which non-federal parties may enforce patent rights in federally owned inventions–but there’s nothing there about federal agencies doing so. Nothing, even, expressly authorizing federal agencies to enforce patent rights by being joined–even involuntarily–to suits for infringement brought by their exclusive licensees. If federal agencies may join such suits for infringement, then the power of the executive branch of the federal government backs such suits–that is not ordinary. And if federal agencies may not be joined to such suits for infringement, then clearly the exclusive license contemplated in 207(a)(2) involves the assignment of the invention. That, too, isn’t ordinary–the federal government obtains patents–issued, as it were, to itself–and then Congress authorizes the federal government to either (i) bring its power to bear to back non-federal enforcement of patent rights or (ii) assign inventions to non-federal entities and let them enforce those patents however they might.
One might even wonder if the executive branch has a conflict of interest in issuing patents (via the USPTO, a division of the Department of Commerce) and applying for patents (for itself) and all the while the Department of Commerce has responsibility for administrating Bayh-Dole, which it has delegated to NIST, including the regulations pertaining to federal agency licensing of those same inventions. Funny all that. Or, it’s not funny at all. It has the appearance of corruption. Imagine if companies were allowed to issue patents–privatize the system, as it were. And then could apply to themselves for patents. And then were authorized to write and review the regulations under which they could deal in those patents. We’d cry foul. What is the difference? No–really–there isn’t any difference, with regard to the conflicts of interest.
Now add in the Gilead situation. The CDC not only has invented a method to use drug regimens before exposure to HIV–and created all the patent conflicts of interest that come with that patenting–but also CDC controls public policy for the use of just such methods as a matter of public health. The CDC is permitted not only to patent its inventive research and enforce the patents on inventions made in that research but also announce what treatment regimens it recommends for the prevention of the transmission of HIV. Here’s the HHS complaint:
In 2014, based on favorable clinical data that mirrored the initial CDC animal results, CDC issued comprehensive clinical guidelines recommending that daily PrEP be considered for HIV prevention in all people who are at substantial risk.
The CDC takes advantage of research to invent a method of moving from post-exposure drugs to pre-exposure drugs, patents that method, and then recommends that method. Then the CDC sues Gilead for using that method. That’s something, but does it hold up as public policy under Bayh-Dole?
The logic here is funny-strange. First, we have EO 10096 that asserts the right of the federal government to demand federal employees assign inventions to the government. One would think that the federal government obtains inventions from employees because it is appropriate for the government to manage those inventions in the public interest because an inventor would, on the face of it, not be expected to do so.
Here’s a bit from EO 10096 (where paragraph 1(a) stipulates government ownership of inventions made by employees during working hours and the like):
When an invention is made under circumstances defined in paragraph 1(a) of this order giving the United States the right to title thereto, the Government agency concerned shall either prepare and file an application for patent therefore in the United States Patent Office or make a full disclosure of the invention promptly to the Chairman, who may, if he determines the Government interest so requires, cause application for patent to be filed or cause the invention to be fully disclosed by publication thereof
So the government will either file a patent application or publish the invention. But Bayh-Dole–our 207(a)(2) bit–then goes on to say that federal agencies are authorized to turn around and assign that same invention, with patent rights, to any non-federal entity of its choosing, and on secret terms, if it so determines that secrecy is the only way to get the deal done. Inventive federal employees must give up their personal rights to inventions (confirmed by Dubilier) so that federal agencies can deal in those same rights to whomever they choose. Federal patent law implies that it is in the public interest that inventors own their inventions and have a right to seek patents on those inventions.
EO 10096 implies that it is more in the public interest that the federal government own inventions made by federal employees–rather than just assert that the federal government should have a shop right in such inventions, to use them for government purposes, as Dubilier held. Thus, federal ownership of federal employee inventions must somehow be more in the public interest than inventor ownership of those same inventions. And after all this public interest reasoning, Bayh-Dole shows up and implies that it may be even more in the public interest that some non-federal entity–a company, apparently–own the invention after all. Not the government, not the inventor–but some company chosen by the federal government (and not by the inventor–if only one company is to be chosen).