Let’s be blunt.
If you are a federal contractor and you don’t take/accept ownership of an invention arising in federally supported research or development, you have no Bayh-Dole obligations with regard to that invention.
You do not have to get ownership of the invention.
You do not have to disclose the invention to the federal funding agency.
You do not have to force the inventors to disclose the invention to your patent personnel.
You do not have review the invention for patentability.
You do not have to elect to retain title (you have no title to elect to retain).
You do not have to force inventors to use the patent system.
You do not have to pay to prepare patent applications or file patent applications.
You have nothing to report regarding utilization.
There is nothing for the federal agency to march-in on.
Bayh-Dole’s scope, for contractors, is restricted to subject inventions. A subject invention is one owned by a party to a federal funding agreement–defined as a contractor. If you don’t own an invention, it cannot be, for your organization, a subject invention and is not subject to Bayh-Dole or the patent rights clauses authorized by Bayh-Dole.
Furthermore, Bayh-Dole gives your organization no mandate, no special privilege, no first right, no first option, no outright vesting, no interest whatsoever in inventions that your organization does not own. The Supreme Court in Stanford v Roche was adamant on this point. Bayh-Dole, on the contracting side, deals only with the priority of claims between a contractor and a federal agency once the contractor has gone out and obtained ownership of an invention made under contract. The Court ruled that if Congress had intended to alter federal patent law in so fundamental a way, it would have done so expressly and not by a sketchy implication hung on the meaning of a single word (“retain”). The Court also suggested that the lack of third party (including inventor) rights of appeal in the law would be unconstitutional if the law were to do anything other than what the Court said it did. Priority of claims after acquisition of ownership. “Nothing more.”
Got it? Now, let’s push it. Bayh-Dole is part of federal patent law. Bayh-Dole amends federal patent law to create a new category of patentable inventions and supplies this new category with a new set of patent property rights–in essence, inventions subject to Bayh-Dole’s standard patent rights clause carry with them a standing federal interest–essentially a conditional co-ownership position in inventions within scope of Bayh-
Dole. “If you take ownership, you do so as well on behalf of the federal government.” That’s what the 35 USC 203 march-in provisions and the 35 USC 202(c)(7)(A) restrictions on assignment without federal approval necessarily imply.
Bayh-Dole does more. As federal law, it preempts state law and contracts enforceable under state law. That means: if Bayh-Dole does not require inventors to assign inventions made in federally supported work to the organization that happens to host that work, then there’s no way that those organizations can somehow require inventors to assign those inventions as a matter of compliance. Just the opposite. Those assignments don’t operate, are preempted by Bayh-Dole.
Bayh-Dole’s standard patent rights clause goes further. At 37 CFR 401.14(f)(2), the patent rights clause requires contractors to flow down duties under the clause to potential inventors–the contractor is to require those inventors to make a written agreement to protect the rights of the federal government. The contractor’s act of requiring this written agreement makes those potential inventors parties to the funding agreement of which the patent rights clause is an integral part. The inventors become contractors. They have their own patent rights clause, 37 CFR 401.9. They own their inventions. Those inventions then are subject inventions. The inventors have the same right to elect to retain title to their inventions under 35 USC 202(a) that organizational contractors have when they obtain title. It’s just that under Bayh-Dole, those organizational contractors have no standing to demand ownership of those inventions, having been required to cede any such demand for ownership to the inventors so that the inventors may make the required written agreement.
Even NIST’s 2018 insertion of an assignment clause in the (f)(2) written agreement is directed at the subject inventions that the organizational contractor already has acquired. It cannot be otherwise. If it were, NIST would have turned Bayh-Dole back into a vesting statute, which the Supreme Court made clear Bayh-Dole was not. Without third party right of appeal, Bayh-Dole would then be unconstitutional. Congress does not have the power to secure exclusive rights in discoveries to organizations that happen to host federal research. They have that power only for individuals–for inventors. Bill of Rights, amendment Zero, if you will.
More. Why do university administrators then insist that somehow for Bayh-Dole to “work as intended” they have to take ownership of all inventions made in federally supported work and attempt to license those inventions exclusively, essentially serving as factors to make patent law result in corporate ownership of inventions made in publicly supported work, with patent attorneys working out of nonprofits, and especially universities, taking a 1% share of any upside from their licensing as the institutional pay for playing the middlemen. Nothing in Bayh-Dole requires institutional ownership. Nothing in Bayh-Dole requires exclusive licensing. Nothing in patent practice indicates that exclusivity makes more money than open access or FRAND licensing, if license money from public research inventions is your thing.
Bayh-Dole’s policy and objective is invention use, not commercialization. And a particular kind of use, with benefits available to the public on reasonable terms–with pricing as if there were competition, for instance, or as if the public held an equity interest in the products produced. A price substantially less than “what the market for health care medicines sold to seriously ill patients will bear,” if also allowing for a reasonable profit. So the prostate cancer drug Xtandi at $3 a pill is reasonable. And at $80, unreasonable. This is all easy if you try.
When university patent administrators say that for Bayh-Dole to work “as intended,” they have to get ownership, must preserve patent monopolies by licensing exclusively (to the point of assignment of inventions), and must get a free pass for all the inventions they take in but withhold from licensing or license without producing a commercial product or other beneficial use, or even where there is a product, a free pass on whether that product is made available to the public on reasonable terms, including reasonable price–when they say this, there is no-one doing the “intending” but them. They make up a fake law that serves their own patent practice interests and dare anyone to oppose them. They denigrate proposals to enforce Bayh-Dole. They laugh at anyone who argues for open access. They claim that faculty retaining rights to their inventions are ethically compromised. They make it appear that a handful of “success” stories stand for a “portfolio” that is a performance disaster.
In the Bayh-Dole era, universities and their pals have got over 50,000 U.S. utility patents. Even if they were right that 200 drugs had resulted (they aren’t, it’s significantly fewer), that would be a horrible public return for the trillion dollars of federal investment in university research during that time. Nothing, for instance, for diabetes.
Nothing in Bayh-Dole gives universities a free pass. Nothing says, the public protections in Bayh-Dole were intended to work only if they weren’t ever used. Nothing in Bayh-Dole demands institutional ownership, or institutions dealing in patent monopolies, or attracting speculation on the value of medicines based on monopoly pricing, or no-one acting on the patent property rights reserved by Bayh-Dole to protect the public from nonuse and unreasonable use. There is no “work as intended” wording secretly running alongside Bayh-Dole. That “work as intended” talk is part of the scam. Let us stop talking falsely. End the Bayh-Dole scam.