The IPA and Bayh-Dole on nonprofit assignment of subject inventions, 3

We are working through the approaches of the IPA master and Bayh-Dole’s standard patent rights clause to the assignment of inventions by nonprofit organizations.

Unlike the IPA, which was a federal master contract made with selected organizations, Bayh-Dole is a federal statue, a part of patent law. Bayh-Dole authorizes patent rights clauses that look a lot like IPA master agreements, except under Bayh-Dole, there’s no master agreement. The patent rights clause runs with each federal funding agreement. Thus, the Bayh-Dole sequence is:

1) Nonprofit accepts federal funding for research or development.

2) Nonprofit accepts the patent rights clause for that funding agreement.

3) Nonprofit requires potential inventors to make a written agreement to protect the government’s interest.

4) Inventor makes an invention.

5)  (a) If the nonprofit acquires the invention, then it must disclose the invention to the federal agency and within two years of that disclosure decide whether to keep title to the invention and, prior to a patenting bar date (basically, within one year after public disclosure), file a patent application.

(b) If the nonprofit does not acquire the invention, then the invention is not a subject invention, is not subject to the Bayh-Dole patent rights clause.

Oddly, inventions not acquired by a federal research contractor appear not to be subject to any federal requirements. Inventors are not parties to the funding agreement unless a contractor takes action to make them parties. That is, in part, what the written agreement requirement is–but that requirement itself has no statutory authority in Bayh-Dole. Latker throws it into the patent rights clause, having left it out of Bayh-Dole. Clearly, it would have been a non-starter if Latker had proposed federal patent law legislation that forced inventors to give up their rights not just to employers but to organizations that happened to host federally supported research, did not control that research, and were fully compensated for direct and indirect costs of doing the research–and so not employers for that research and not hiring anyone to invent and not providing any private resources. There is a good argument that the Congress does not have the constitutional power to force inventors to give up their exclusive rights in inventions as a matter of federal law–or not to have those rights in the first place–or force inventors to use the patent system.

Bayh-Dole certainly does none of these things and does not authorize any of these things. But that’s not how the “advocates” for Bayh-Dole (a fake, doesn’t exist Bayh-Dole) present it.

There is a way to save Bayh-Dole’s scope on inventions arising in federally supported research or development using the written agreement requirement. That requirement requires contractors to add parties–potential inventors–to the funding agreement. When those potential inventors make the written agreement, they accept duties under the standard patent rights clause and by Bayh-Dole’s definitions, become contractors. More of that cognitive dissonance that Latker was so good at. As contractors, inventors then have the same rights as other contractors (and subcontractors) under 35 USC 202(a)–they disclose inventions and have the right to elect to retain title in those inventions, subject to the individual inventor patent rights clause at 37 CFR 401.9.

With a written agreement in place–not the patent agreement of the IPA–but an agreement by which inventors become contractors and accept duties to the federal government and receive the benefits of Bayh-Dole’s keep-title-on-notice provision in 202(a). Then any invention the inventors make is immediately a subject invention–but not one owned by the organization that hosted the federally supported research. For the organization to own, there must be an assignment step entirely outside the scope of Bayh-Dole and not conditioned on Bayh-Dole or the use of resources provided to support the federal research. That’s the implication of the Supreme Court’s decision in Stanford v Roche.

And it makes perfect sense, if you think it through. Bayh-Dole, unlike the IPA program, deals only with suspending a federal agency’s obligation to take ownership of inventions made in health-directed federal research (among other things) or as otherwise provided by federal statute and wait for a contractor or inventor to request exclusive rights. The IPA program, remember, asked nonprofits to agree to require their inventors to assign their rights in any invention that the nonprofits chose to patent. In a sense, nonprofits could force their way to compelling faculty to assign inventions made with NIH funding simply by choosing to agree to the NIH’s IPA terms. An easy way to force policy change: “the NIH requires it” (without saying–but doesn’t require us to agree in order to receive NIH funding). Bayh-Dole, by contrast, assumes there’s a Federal Procurement Regulation still operating behind the scenes.

By acquiring ownership of an invention made in work receiving federal support, a university or other contractor preempts the FPR that codifies executive branch patent policy and the various federal statutes that require federal ownership of inventions made in various federal funding programs, such as the Space Act that established NASA. If an invention is not a subject invention under Bayh-Dole, then it is still a subject invention under the FPR, and the federal government may receive title upon request. All well and good, except that Reagan mooted the Nixon patent policy and replaced it with a policy (EO 12591) that is something that mentions Bayh-Dole but does something else almost entirely. And then the FPR was replaced by the Federal Acquisition Regulation and the FAR implemented Bayh-Dole requirements. Ends up that unless a contractor adds inventors as parties to the funding agreement, there’s no way for the federal government to claim an ownership interest in inventions made under federal funding agreements.

And inventor ownership of inventions made in federally supported work could be great federal policy. If inventors have no particular reason to assign their inventions to their research host, such as a university, then the federal government, following this policy, also gains no ownership interest in those inventions. No red tape. Nothing fussy. Just get on with things without bureaucratic thumbs trying to trip the march of progress.

Given that no federal agency has ever bothered to enforce the public protections stipulated by Bayh-Dole, the only difference between inventors having quiet possession of their inventions and their research hosts gaining ownership is the fussy, useless administrative requirements in the standard patent rights clause–which have nothing helpful to do with working an invention, or developing it, or turning it into a commercial product or standard or research tool or whatever it is that we want so much that we think bureaucrats would be better at it than the inventors or those that inventors might choose to work with.

Under Bayh-Dole, organizational contractors have no mandate, special privilege, or requirement to take ownership of inventions arising in federally supported research. Nonprofits did have that right under the IPA program–because they chose (begged, in many cases) to agree with the NIH that they would assert that right, not because the NIH imposed a requirement that they take ownership of all such inventions. Even under the IPA, the only inventions that a nonprofit was required (required itself) to take from inventors were those that it chose to patent. If it had not decided to patent, then it had no requirement to take ownership of a subject invention, even though it had to report every subject invention. Why the difference? The IPA definition of subject invention does not include the qualification “of the contractor.” An invention “of the contractor” (as Bayh-Dole has it, is an invention owned by the contractor (as the Supreme Court made clear in Stanford v Roche). The IPA definition does not include “of the contractor.” A few words, a huge difference.

It’s then nonsense for anyone to assert that for Bayh-Dole to “work,” contractors must own all inventions arising from federally supported research or development. Maybe some other law could be written to work that way, if it could navigate the constitutional waters, but Bayh-Dole isn’t that law. Rather than focusing on what federal policy is on a university patent lawyer’s wish list or what now elderly gentlemen assert is what they truly intended and that their intent should be the law even if it isn’t, why not focus on the federal policy put in place by Bayh-Dole? Inventor freedom from bureaucracy. Talk about unleashing innovation. Why is NIST so clueless?

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