Bayh-Dole, Tyrannosaurus

Bayh-Dole is a mess of a law. There’s the mess of the conception itself, the disgusting and ineffectual idea that the federal government should sue its citizens for using inventions made with public funding to advance public purposes–and should do so to protect the profit-seeking interests of favored companies chosen by unelected, not even appointed merely hired government officials to seek those profits and share some bit with the government, as if money for the government’s share of price gouging and suppression of access was the prize, rather than the public use of the results of that research work. Now repeat that again for university officials. Make it all secret, eliminate public oversight. Crass stuff.

And there’s the boring bureaucratic idea that “uniform” treatment of patent rights is somehow better for innovation based on federally supported research than treatment specific to the situations that present, or that “uniform” is a virtue for all research purposes, for all industries, and for all inventions and what most matters is the convenience of patent administrators in exploiting patent monopolies. Strangely messy too is that this idea of “uniform” treatment of patent rights  has only to do only with a default ownership position offered in a patent rights clause that itself can be varied–and immediately was for nuclear propulsion and weapons research, and there are no controls on the disposition of patent rights once they are in the hands of contractors or federal agencies–then enforcement of the patent rights clause and licensing under the patent rights clause is anything goes. So much for “uniform.”

There’s the mess of the architecture, as part of patent law rather than federal procurement, taking precedence over other law rather than repealing those laws or amending them. Ignoring the Federal Procurement Regulation and the Nixon patent policy altogether. Defining subject invention to be “of the contractor” rather than just following the IPA definition of any invention made within scope of a federal contract, regardless of who might own it. There are problems with the interface with FOIA and with antitrust law. There’s the problem of a law requiring a default federal contract wording but having no requirement of enforcement, secret reporting and secret licensing terms, and no right of public appeal.

And there’s a total lack of addressing federal claims of invention ownership other than as a contractor messes up disclosure or patent filings without considering that if a contractor does mess up these things, there’s no practical way to recover the patent rights and on top of this, obtaining those patent rights simply to displace the contractor by swinging around threats of an exclusive license make no sense at all, other than to a patent administrator who might dream of swinging around patent rights as a nice additional weapon to tank out one’s appearance of authority.

There’s the mess of the implementation, with all those fussy rules about reporting and notices in patents that don’t do a speck to advance innovation or even use of research and the public protection apparatus that is there only to look good but never to operate. “Oh, no!” cry the “advocates” of Bayh-Dole–“the law is a wild success [nota: not] only if the public is never protected. Anything else, such as using march-in for nonuse or to address unreasonable pricing, would have a chilling effect on contractors’ and federal agencies’ ability to deal in patent monopolies for a financial share of the price gouging and suppression of use value created through private investment in developing commercial products.”

But there is also a mess that has to do with the drafting itself. Here Bayh-Dole also sucks. At least Bayh-Dole is consistent in sucking across all its levels of mess. It’s clear that the same crappy drafting that infects much of university policy and licensing also infects Bayh-Dole. Perhaps that’s because the same people who drafted Bayh-Dole also fanned out to spread their bad drafting spores in university policy and licensing in the form of workshops and conference events and manuals for university patent professionals.

There are three points to make here about writing:

(1) it is all to easy to write to capture what is in one’s head, as something of a reminder of intent, without clearly communicating that intention to others using words. It’s not helpful to insist that a reader must subordinate their interpretation to whatever you recall about what you meant.

The Shaw court decision illustrates the point. Doug Shaw sues the University of California for unilaterally changing their royalty sharing policy after insisting that they have made the patent policy a part of their employment contract with Shaw. They lose and appeal, and argue they didn’t intend for the royalty sharing schedule to be part of the patent policy. The court was not impressed (citations removed):

We are unconvinced by the University’s assertion that it “did not intend to incorporate the Patent Policy as part of the Patent Agreement.” Although the intent of the parties determines the meaning of the contract, the relevant intent is “objective”–that  is, the objective intent as evidenced by the words of the instrument, not a party’s subjective intent. Nothing in the patent agreement hints at what the University now claims was its long-held desire that the Patent Policy’s inventor royalty provision not be incorporated into the patent agreement. The true intent of a contracting party is irrelevant if it remains unexpressed. 

(2) When drafting for what will become statutory law, private intent is entirely distinct from the intent established when a legislative body approves a bill and it is signed into law. The intent that controls is what is clear from the wording used in the text of the law. Where there is ambiguity, one starts with the common meanings of words and seeks a reading consistent with other parts of the law and with other law. For that, one may also be guided by the legislative history of the bill, including debate, revisions, and the like. But in all of this, what any given party thought they were doing in drafting, revising, and advocating for the bill is entirely distinct from what the interpretation of the law as read from the point of view of someone who is required to obey the law. If it were otherwise, we would have a form of petty personal tyranny symbolized by words in a law, where those who must obey are told what they must do by the drafting tyrant, who inspects his or her private intentions and informs us all as to our duties.

Avoiding such drafting tyranny is one reason why contracts are interpreted against the drafting party. If the drafting party gets to make up what they intended in the moment by controlling the interpretation of the words they have written, then there can be no “meeting of minds” to form a binding contract. To be sure, someone gets bound, but it is only the party who did no drafting. That’s not a contract. It’s an assertion of unilateral power over another. For our purposes, it is worth pointing out that Bayh-Dole is a law that specifies contracting language to be used. The law sets the default language. The funding agreement–the contract–then uses that language. What that language then means–in the form of a patent rights clause in a federal contract–is a matter of interpretation that does not depend at all on the private intentions of anyone involved in drafting the language. At best, we ask what Congress intended, and where there are drafting flaws (and there are many in Bayh-Dole), we follow the path of interpretation described above.

(3) When revising, one must revise the entire document for each local revision. A local change may have a global effect on the document. A reviser may not intend the global effect, and may not even have realized what was going on, but that has nothing to do at all with the status of the text once it has become law. A reviser may introduce a defect, and once the bill climbs the waterfall and becomes law, the defect forms part of the collective interpretative fabric of the law.

I will give an example from Bayh-Dole. In the original act, signed by President Carter, federal agencies are required to use a patent rights clause containing a provision that requires contractors to disclose subject inventions:

(1) A requirement that the contractor disclose each subject invention to the Federal agency within a reasonable time after it is made and that the Federal Government may receive title to any subject invention not reported to it within such time.

The disclosure is tied to when a subject invention is made. The Bayh-Dole definition of “made” here is very strange. For ordinary patent purposes, a patentable invention is made when it meets the requirements for patenting in federal patent law–that is, it is not the inventing that counts but that the inventing results in a patentable invention. Thus, the criteria for patentability are ordinarily the ones that matter: an invention must be new, useful, and non-obvious (35 USC 101, 102). Conception and first actual reduction to practice are not part of the requirements for patentability. They are, rather, concepts tied to disputes over first-to-invent (in the case of  conception, now obsolete after first-to-file) and over federal rights in inventions made by federal employees outside of work but tested by the government before a patent application has been filed (In re Eddie L. King). Thus, Bayh-Dole introduces for subject inventions a use of “made” that does not otherwise operate in patent law. Where ordinary patent law treats inventions, it uses “invent” or “discover,” for the inventive activity. What one invents, not what one gets when an invention is made. Conceptually, one of these is disciplined and the other is an administrative restatement.

Perhaps you see the problem with using “made.” Well, there are lots of problems. But this “made” is a usage by a patent administrator, an innovation bureaucrat, if you will, trying to figure out how to force contractors to disclose inventions timely–in a reasonable time. For that to happen, however, a contractor has to (i) come into possession of knowledge of a given invention, (ii) see that it is or may be patentable, and (iii) decide whether to acquire, and in acquiring it make it a subject invention–not necessarily in that order.

The key point here is that Bayh-Dole requires a contractor to be sufficiently aware of research activities that whenever there’s conception or testing of an invention, the contractor documents the invention and discloses it to the federal agency. Apparently this awareness caused angst among university patent administrators–they could not sit on their behinds and wait for invention reports. They had to go out and monitor federal research work and promptly report inventions as they were “made.”

So in 1984, Latker revised Bayh-Dole’s requirement to this:

(1) That the contractor disclose each subject invention to the Federal agency within a reasonable time after it becomes known to contractor personnel responsible for the administration of patent matters, and that the Federal Government may receive title to any subject invention not disclosed to it within such time.

This is hugely different. Now a contractor does not have to disclose an invention unless the contractor has personnel responsible for administration of patent matters, and these personnel “know” about an invention. If those personnel don’t know, then the contractor has no disclosure obligation. There’s no longer any obligation for the contractor to monitor research for inventions. As long as the sit-on-their-behind patent personnel don’t know, there’s nothing to disclose to the federal agency. This change then has a material effect on the standard patent rights clause.

When in 1982–two years before the statutory amendment–Latker went to draft the standard patent rights clause, he threw in stuff that wasn’t expressly authorized by Bayh-Dole. Perhaps it was stuff he intended should be there but didn’t get around to it. He grabs text from the Federal Procurement Regulation on retained contractor rights, rights to grant licenses obligated before the research even after the contractor loses title, and the like. Latker also has to deal with the fact that Bayh-Dole ignores how an invention gets from its inventor to the contractor. Must have forgot this point. So he creates a requirement–not in Bayh-Dole–that contractors must require certain employees to make a written agreement to, among other things,

to disclose promptly in writing to personnel identified as responsible for the administration of patent matters . . . in order that the contractor can comply with the disclosure provisions of paragraph c. above

Here’s the bit of paragraph c. that matters:

The contractor will disclose each subject invention to the Federal agency within two months after the inventor discloses it in writing to contractor personnel responsible for patent matters.

Latker is making this up from thin air. It isn’t authorized by Bayh-Dole. The way Bayh-Dole was written, as originally passed, inventors working under federal contract had a choice. They could hold their inventions, and deal with the federal government’s claims directly (as provided by the Federal Procurement Regulation) or they could assign their inventions to their employer the contractor, and the invention then came within Bayh-Dole, which pre-empted most federal claims. That’s right–there were two patent regimes. Bayh-Dole did not repeal or even amend the existing regime. Rather it overlayed that regime with a new bureaucracy that came into effect and took precedence when a contractor acquired ownership of an invention made in work under federal contract.

In the original Bayh-Dole 1980, a contractor has an obligation to disclose inventions in a reasonable time after they are “made.” The written agreement requirement in the 1982 standard patent rights clause then requires an inventor to disclose promptly so that the contractor can comply with its obligation to report “in a reasonable time”–which paragraph c. makes out to be two months from the receipt of the prompt disclosure from the inventors by the contractor’s designated patent personnel. In its way, despite the mess created by “made,” this sort of works–invention, prompt disclosure to patent personnel, two months to disclose to the federal agency.

But now Latker goes and elevates the implementing regulation language on disclosure to the law itself. Now the law stipulates that the contractor must report only within a reasonable time after those patent personnel get wind of the invention. No wind, no disclosure obligation. Well, what does that do to the written agreement requirement, where a contractor must require certain employees to disclose inventions? It changes the meaning of “promptly” entirely–since the contractor now, after 1984, has no obligation whatsoever to disclose any subject invention under Bayh-Dole until that invention is known to patent personnel, then also there is no compliance obligation that the contractor must meet until an inventor actually does disclose something patentable (or at least a whiff of something) and the contractor acquires title to it. “Promptly” has effect only when the patent folks have got that whiff–then the inventor must make a full disclosure. All very reasonable, but entirely unlike the 1980 requirements.

By the time that the patent rights clause is codified at 37 CFR 401.14(a) (now just 37 CFR 401.14 because NIST doesn’t know what it is doing, or does and is trying to change the law without bothering with the legislative branch), Latker has redrafted the disclosure requirement:

(1) The contractor will disclose each subject invention to the Federal Agency within two months after the inventor discloses it in writing to contractor personnel responsible for patent matters.

So now it’s not merely a whiff–“becomes known”–but that the patent personnel must receive a conforming disclosure, and not just from anyone, but from the inventor. If they don’t get a conforming disclosure–one that meets the required elements–in writing, using the suggested form, and sufficiently complete in technical detail to convey a clear understanding of the characteristics of the invention, then the contractor has no obligation to disclose. In the Bayh-Dole 1984 text, even a whiff of an invention might meet the condition of becoming “known” to the patent personnel. But now they can sniff all they want but they have no obligation to require disclosure by inventors–they may decide to require disclosure all on their own, of course–and inventors can talk with them all they want, but until the patent personnel receive a conforming written disclosure that allows them to meet their obligations–which they don’t have until they receive that conforming written disclosure from the inventor–the inventor has no obligation under Bayh-Dole to disclose.

It then is simply untrue–a misrepresentation of the law, perhaps even involving an effort to deny the inventor his or her Constitutional rights under the color of law–for a university to claim that Bayh-Dole requires inventors to disclose their inventions made under federal contract. Clearly, Bayh-Dole does no such thing. And it’s not somehow implied that inventors must do so. This result is consistent with the Supreme Court decision in Stanford v Roche. Bayh-Dole operates after an invention is a subject invention–owned by the contractor. If a contractor does not own a given invention, then it cannot be a subject invention, and since the Bayh-Dole disclosure obligation is specific to subject inventions, as is the patent rights clause’s written agreement disclosure requirement for certain employees, then there is no obligation for anyone to disclose anything to the federal agency until an invention has been turned into a subject invention. And nothing in Bayh-Dole requires anyone to turn inventions into subject inventions.

Now, I imagine Latker didn’t intend to relieve inventors of the obligation to disclose promptly every invention they make. A good conjecture is that Latker made these changes intending to relieve university patent administrators of the hassle of monitoring federal research for inventions and timely reporting those inventions. It was an edit for the convenience of patent administrators who worried about their own compliance responsibilities–and like much of Bayh-Dole, written for bureaucrats by bureaucrats with the help of bureaucrats, the primary thing is to look good while avoiding accountability.

But doesn’t matter what Latker intended. Congress did not recite Latker’s intentions in its statement of policy and objective at 35 USC 200. Perhaps Latker intended only to make his new, unauthorized drafting of implementing regulations appear as authorized by amending the law after the fact. If so, it points out how much Bayh-Dole is slap-dash patent bureaucrat drafting and personal preferences, and as a result, a mess of a law.

Now folks can make up whatever they want. They can say that “the law” (meaning, Latker, or Bremer or whoever else) “intended” to require inventors to give up their patent rights to their contractor-employers and “intended” to require inventors to disclose promptly all these inventions that they had given up. And one might–wrongly–think that doing so is entirely reasonable. Make those inventors give up their patent rights. Don’t bother to contract with them for those rights. Make those inventors use the patent system. Make the patent system force inventors to use the patent system. It’s not that the Constitution allows Congress to reserve rights for inventors, but rather Congress demands that inventors take these rights but only so that those rights can be handed to organizations that host federally supported research, so those organizations can exclude everyone from access to those inventions–including the inventors–and deal in patent monopolies with their favorite companies, if there ever are any favorite companies, which often there are not.

But that’s not Bayh-Dole. If folks follow the law, then Bayh-Dole at many points requires outcomes that are not convenient to university patent administrators or to their exclusive licensees (when they ever have them). Instead of that law, university patent administrators and their legal advisors substitute a private bureaucratic tyranny–an autocratic interpretation of what they think it would have been reasonable for Latker, or Bayh, to “intend” and since that all sounds reasonable (I suppose, to them), then that’s how the law must be interpreted. The law, in their treatment, is nothing more than a symbol for their private convenience in exercising authority. Tyrannosaurus Lex.

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