We had a look at antecedents to Bayh-Dole’s strange definition of “subject invention.” We saw that the definition has two purposes–
(1) to identify the use of the term “invention” with patent law, so Bayh-Dole works with a defined term not just the common usage of “invention”: “invention” now means inventions that are “protectable” as a matter of patent law (and, um, plant variety protection that’s not patent law). The problem introduced by this new definition becomes what is meant by “protectable,” which is not defined; and
(2) to place such inventions within the scope of federal interest (which is no longer a default claim to own but rather a conditional option to request ownership in limited circumstances).
Patent law (Bayh-Dole is part of patent law), it is worth pointing out, also does not otherwise define invention. The point of patent law is that the individual who invents or discovers is entitled to a patent (35 USC 101):
Whoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.
It’s all verbs and adjectives that matter. No definition of “invention”–except here in the part of federal patent law that is Bayh-Dole. The Bayh-Dole variation really should have been more like this:
Whoever in the course of or under a federal funding agreement invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title, including the additional conditions and requirements of Chapter 18.
That, of course, would have been too easy.
We also have worked through the bureaucratic rationales for the definition of subject invention and got to the very clockwork logic (such as it is) that motivates all this institutional interest in the use of patents on inventions made in publicly funded work to exclude all others in favor of exclusive deals with investors focused on making somewhat profitable commercial products ultra-profitable. This ultra-profitability–created by using patent rights to exclude all other uses, competition, and alternative development of inventions–it is said, is the purpose of the patent system, otherwise wasted if not obtained and not used to exclude practice, even practice that would take place without any patents at all. If the purpose of the patent system, by contrast, is to promote the progress (i.e., dissemination) of useful art, then this idea of ultra-profitability through suppression of all other use is not the purpose of the patent system. To get at this very clockwork of Bayh-Dole, then, one has to have some position regarding the purpose of the patent system. In this, antitrust law comes into play, or would, if anyone cared about antitrust law anymore.
In short, even if patent law generally permits ultra-profitability short of antitrust situations, all the public protection apparatus added to Bayh-Dole makes clear that when the work is in an area of public need and the people involved request, and receive, federal support, then ultra-profitability is no longer part of the “incentive” for the use of the patent system. Those public protections–among others, to use the patent system to promote utilization of inventions arising in federally supported research or development, to promote free competition, to promote commercialization and public availability of inventions made in the United States, to make the benefits of the use of subject inventions available to the public on reasonable terms, to require nonprofits and any of their assignees or exclusive licensees (including for-profit companies) to use all income earned with respect to subject inventions (less limited administrative expenses) for scientific research or education, to allow the federal government to practice (make, use, and sell) and have practiced each subject invention–argue against ultra-profitability. Only if these protections never operate–there’s never march-in, there’s never restrictions on suits for infringement (which suppress use rather than promote it–figure that), the government never uses its license to practice, and the use of income and preference for United States industry are never enforced–do we get to ultra-profitability.
It may be that tacit federal policy is that contractor patents on work that was dedicated to the public and subsidized with federal money should support ultra-profitability through suppression of use, competition, and availability–but that is not the policy set forth in federal patent law or the bit part of patent law represented by Bayh-Dole.
Now let’s look at federal contracting from a different angle, to get at the problem of drafting a scope to cover what “may be” patentable. Let’s go back to the pre-Bayh-Dole federal patent policy default and say that the federal government insists on title to all “may be” patentable things as contract deliverables. We end up at NASA’s (I paraphrase) “report everything you do, make, gather, or think and it doesn’t much matter what you also think “may be” patentable.” Then it is up to the federal government to paw through everything and decide if there is anything they want to issue patents to themselves on and make you disclose those things as subject inventions. If you are smart, you see the threat and disclose everything you can as subject inventions, even if not, because, well it’s NASA’s problem. Academics, seeing the prodigious disclosure rate, then write articles analyzing innovation dynamics and advocates for Bayh-Dole claim a roaring success. Data integrity as the common weakness of quantitative rhetoric.
Oh, okay. Here’s NASA’s definition of “reportable item” (1827.301):
“Reportable item” means any invention, discovery, improvement, or innovation of the contractor, whether or not patentable or otherwise protectable under Title 35 of the United States Code, made in the performance of any work under any NASA contract or in the performance of any work that is reimbursable under any clause in any NASA contract providing for reimbursement of costs incurred before the effective date of the contract. Reportable items include, but are not limited to, new processes, machines, manufactures, and compositions of matter, and improvements to, or new applications of, existing processes, machines, manufactures, and compositions of matter. Reportable items also include new computer programs, and improvements to, or new applications of, existing computer programs, whether or not copyrightable or otherwise protectable under Title 17 of the United States Code.
NASA then defines “subject invention” in the context of “reportable items”:
“Subject invention,” in lieu of the definition in FAR 27.301, means any reportable item that is or may be patentable or otherwise protectable under Title 35 of the United States Code, or any novel variety of plant that is or may be protectable under the Plant Variety Protection Act (7 U.S.C. 2321, et seq.).
The definition of “subject invention” at FAR 27.301 is this:
any invention of the contractor made in the performance of work under a Government contract
Because the FAR is specific to government contracts, it makes sense that the FAR doesn’t bother with “funding agreement” or grants or collaborative agreements. But in doing so, the FAR also omits the second sentence of the definition of “funding agreement” in 35 USC 201(b)–and that definition applies to contracts as well as grants and cooperative agreements. The second sentence makes clear that a contractor may add additional parties to any funding agreement (and therefore any contract) and those parties become, then, contractors, too.
The NASA idea, then, is to define what is “reportable” and then carve out the bit of “reportable” that comes within Bayh-Dole. One reports every reportable item, and the requirement to report Bayh-Dole lies with Bayh-Dole authority and all the other reporting doesn’t involve Bayh-Dole, so it all works.
If the federal government doesn’t need title to inventions, but doesn’t want to be sued in the Court of Federal Claims for making or using stuff that the government is out contracting bits and pieces for, then the federal government does not need to see everything that “may be” patentable. All it needs is to see that some thing that does indeed get patented is within the scope of the government’s interest as established by the funding contract. So all of NASA’s “reportable items” stuff is a big bureaucratic waste, though it works in some form of administrative logic. NASA gets everything, even if it doesn’t need everything, doesn’t want everything, and doesn’t do much of anything with most of what it apparently wants and thus gets. Showing compliance with the requirement is the prize, not the use of new things without the prospect of getting sued over patent rights for doing so.
You gotta see that these two situations are night and day different. If the government wants title to inventions, it wants to make the decision whether to use the patent system. If the government doesn’t want title, but wants to be free of claims on the deliverables it is contracting for, then the government doesn’t need to see everything and doesn’t care about decisions to seek patents. All it cares about is that for patents that issue and are within its scope of interest, it won’t face a financial claim for compensation for its making or using the patented invention.
Think about the disclosure traffic difference in these two situations. In one, every nonsense burp or fart is disclosable as a matter of compliance. It is a breach of contract or worse to burp or fart and not provide the government with a full written report on the characteristics of the burp or fart in sufficient technical detail that the government decide whether it is worth attempting to patent (with the government’s idea of worth). In the other, all the government needs is agreement on whether a given patented thing comes with compensation claims or does not. For that, looking at the claimed invention (now patented) and the statement of work should give a good idea whether there could be a claim for compensation if the government makes or uses the claimed invention. Isn’t it weird how a whole pile of bureaucratic compliance garble can be built out of whether the federal government should have to pay once or pay twice?
Wouldn’t it be easier to amend 28 USC 1498 to add “The court shall not award compensation under this section if the claim is based on the use or manufacture by or for the United States of any invention made in performance of work receiving federal support”? No fuss over definitions. No prior invention disclosure necessary. No endless, useless storm of paperwork. Talk about “unleashing” innovation. All of Bayh-Dole could be replaced by a single sentence in 28 USC 1498, if the government needed only the assurance it wouldn’t be sued for supporting work, the results of which it wanted to use. Given the public protections in Bayh-Dole (march-in, preference for U.S. industry, benefits available to the public on reasonable terms) have never operated, they serve no purpose (other than to get the law passed and bait the gullible into thinking they should operate). What else is there on the contracting side of Bayh-Dole? A government license broader than 28 USC 1498–to practice (make, use, and sell) and have practiced, not just use and manufacture. Exceptional circumstances in which the government might require invention title as a deliverable.