Bayh-Dole Secrecy, Part 10

The 1984 change to Bayh-Dole conflates information that must be disclosed by federal agencies under FOIA with information that federal agencies must exclude from FOIA disclosure. This conflation itself violates FOIA. Bayh-Dole does not declare as a matter of law that invention use reports must be kept confidential by the federal government. Bayh-Dole does just that for invention reports and patent applications–for limited times, so Bayh-Dole (taken as a golem-like thing) does know how to do things if it wants to. Instead, Bayh-Dole requires federal agencies to contract to treat all information received in invention use reports as “privileged and confidential”–bungling the wording of FOIA’s (b)(4) exemption in the process. But worse than bungling, Bayh-Dole requires federal agencies to treat non-privileged, non-confidential information as if it were both “privileged and confidential.” Thus, Bayh-Dole requires federal agencies to violate FOIA rather than to act within FOIA.

The implementing regulations to Bayh-Dole hop along with this project by adding the requirement that federal agencies agree not to disclose invention use reports–again bungling this requirement with inconsistencies about whether an agency can disclose within the federal government or is limited to disclosure within the federal agency itself. Continue reading

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Posi are not ordinary patents

Here’s a passage from Thomas Kasëberg’s Intellectual Property, Antitrust and Cumulative Innovation in the EU and the US:

In this passage Kasëberg lays out the standard argument that there is no working requirement in US patent law. As the Supreme Court has put it, “A patent owner “is not in the position of a quasi-trustee for the public…. He has no obligation either to use it or to grant its use to others.”

Now consider the effect of Bayh-Dole, its standard patent rights clause, and the grant requirements for intangible assets in federal subvention funding provided to universities to support faculty research. Here’s Bayh-Dole (35 USC 200): Continue reading

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Bayh-Dole Secrecy, Part 9

The Bayh-Dole secrecy provisions ensure that there will not be public accountability that might challenge the illusion and the practices that take place behind its appearances. Thus, there is no use data for federally supported inventions. There is no licensing data specific to POSIs–patents on subject inventions. There is no way to assess the status of FOIL technologies–fragmented ownership, institutionally licensed inventions. There is no way to match royalties to inventions, nor to show how invention use and royalty payments might be skew. And there is no way to show that royalty payments are being used as required by the Bayh-Dole standard patent rights clause–university administrators may pocket the income and do what they want.

A recent case in California involved public records requests under the California Public Records Act (CPRA). A request was made for records that were created by local government officials using private email accounts. They argued that what they did on private email accounts was not a public record. The California Supreme Court disagreed:

It is no answer to say, as did  the Court of Appeal, that we must presume public officials conduct official business in the public’s best interest. The Constitution neither creates nor requires such an optimistic  presumption. Indeed, the rationale behind the Act is that it is for the public to make that determination, based on information to which it is entitled under the law.

Open access to government records is essential to verify that government official s are acting responsibly and held accountable to the public they serve. ( CBS, Inc. v. Block (1986) 42 Cal.3d 646, 651.) “Such access permits checks against the arbitrary exercise of official power and secrecy in the political process.” (Ibid.) The whole purpose of CPRA is to ensure transparency in government activities.

If public officials could evade the law simply by clicking into a different email account, or communicating through a personal device, sensitive information could routinely evade public scrutiny.

I’ve added some paragraphing and boldface. This argument from the California Supreme Court is relevant to our discussion of secrecy in Bayh-Dole as well. The purpose of public reporting is precisely to hold in check government abuse of power, by allowing the public to make determinations of what is in its interest, based on information that the public is entitled to under the law. Continue reading

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Bayh-Dole Secrecy, Part 8

I guess this ends up being a little book on Bayh-Dole and secrecy. Perhaps I should have titled it “Reasons Why Bayh-Dole Should Not Be Repealed” and made it blank, but for section headings. Then it might be a best seller on Amazon and I wouldn’t have to do so much work. But alas, work it is. We are not quite done. There is one more article after this one, and then a concluding statement that wraps things up. You can wait for the wrap or read through to see how that conclusion arises.

We have looked at the primary reasons why reporting was required under the original Bayh-Dole–to deal with exclusive licenses and to worry march-in reviews. But there were other reasons as well. Until 2009, Bayh-Dole had the following paragraph at 202(a)(3):

(3) At least once each year, the Comptroller General shall transmit a report to the Committees on the Judiciary of the Senate and House of Representatives on the manner in which this chapter is being implemented by the agencies and on such other aspects of Government patent policies and practices with respect to federally funded inventions as the Comptroller General believes appropriate.

This provision required reporting on the implementation of Bayh-Dole. Invention utilization might figure in such reporting, though it is not clear that the Comptroller General produced many of the required reports. As it is, it does not appear that there is any Bayh-Dole reporting to Congress or to the President. And even if this paragraph was still in Bayh-Dole, it does not get so far as how contractors are behaving under the standard patent rights clauses, but only to how federal agencies are using standard patent rights clauses and enforcing or using or waiving the federal government’s rights under those clauses. Even where Bayh-Dole required reporting, the law was drafted to avoid reporting on the central purpose of the law–to promote the use of inventions made with federal support for public benefit on reasonable terms. Everything else is merely “tone” not “substance.” Continue reading

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Circumventing Bayh-Dole, Bonus Fitt

There is one more circumvention in Bayh-Dole that can be used to by-pass much of the onerous apparatus of the law. This circumvention involves an exploit of the almost totally ignored contractor license and march-in provisions in the standard patent rights clause at 37 CFR 401.14(a)(e). The march-in in (e) is not the one authorized in 35 USC 203, in which the government can march-in on assignments and exclusive licenses to require contractor licensing to meet what an agency has determined to be a need for public availability or failure to comply with the U.S. manufacturing requirement. Instead, the (e) march-in has to do with a provision under which a contractor “retains” a domestic license with the right to sublicense even when the federal government obtains title to a subject invention (and goes on to patent the invention).

This (e) provision has no basis in Bayh-Dole. Like the (f)(2) written agreement requirement, it is something made up in the moment perhaps because Bayh-Dole didn’t manage to set out all the things that ought to go into a patent rights clause (even if never enforced). Or perhaps (e) is there in the standard patent rights clause because it wouldn’t have made it through a Congressional review if it had been placed in the text of the statute, as one more required provision in 35 USC 202(c). One wonders why Bayh-Dole isn’t reduced to just *one* requirement for the patent rights clause and then leave *all* other provisions to be drafted outside Congressional oversight. Apparently they had to make a show of enough apparatus gesturing at public oversight to get the law through, and put the walk-backs and add-ons into the implementing regulations, where there would be more special interests to support them and less bothersome meddling by elected representatives. But that’s another issue.

Anyway, let’s have a look at 37 CFR 401.14(a)(e). Here’s the basic gesture:

(1) The contractor will retain a nonexclusive royalty-free license throughout the world in each subject invention to which the Government obtains title, except if the contractor fails to disclose the invention within the times specified in (c), above.

As long as a contractor reports a subject invention, the contractor has a royalty-free license to it. Essentially, the standard patent rights clause requires the contractor, in conveying title to the federal government, to hold back the right to practice the invention (though the clause does not actually specify the scope of rights “licensed”). Continue reading

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Circumventing Bayh-Dole, Fitt the Fourth

We have been discussing contractor-side practices to circumvent Bayh-Dole. We can finish with yet another:

4) circumvention by regulatory procedure, by which federal agencies may reduce the attraction of contractor-side exploits that don’t end up serving the public interest.

Circumvention by Regulatory Procedure

Bayh-Dole doesn’t actually dictate the patent terms of federal funding agreements. Actually, it is more of an administrative bottleneck, requiring default terms but leaving it to federal regulations to set out the actual terms for standard patent rights clauses. In fact, there are four such standard patent rights clauses (one for nonprofits, one for small businesses, one for inventors, and one for use in funding agreements involving certain weapons systems). There could be even more. Bayh-Dole permits agencies to vary from these defaults, but stipulates procedures for such changes. Thus, in a way, Bayh-Dole does absolutely nothing to assure “uniformity” or “certainty of title.” All Bayh-Dole does is to state defaults to be used in standard patent rights clauses and then make it a bother to try to change them. The regulations go further this way than does the statute, adding bother upon bother to the prospect of change, whether to the basic rights proposition or to march-in.

Oddly, Bayh-Dole has no enforcement requirements for the government side of the patent rights clauses. While Bayh-Dole makes it difficult for federal agencies to change the terms they put in a patent rights clause, Bayh-Dole makes it easy for federal agencies to then ignore any of the default terms having to do with federal–public–interest in the patent rights clause. The government does not have to require title in cases of contractor default or mis-doing, does not have to exercise its rights under its non-exclusive license to practice and have practiced, does not have to march-in, does not have to be bothered by exclusive licenses that are assignments, does not have to be bothered by exclusive licenses in the US that don’t require US manufacturing, does not have to worry about preferences for small business, does not have to watch how nonprofits spend licensing income, does not have to require reports on the use of subject inventions. Really, doesn’t have to do a darn thing. Continue reading

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Circumventing Bayh-Dole, Fitt the Third

We have been discussing circumventions of Bayh-Dole. The first set of circumventions are decidedly un-legal but universities do them anyway. Those of the second set, done with attention to detail, are allowed by Bayh-Dole and free university patent licensing practice from the public covenant of subject inventions and most of the fussy administrative overhead of Bayh-Dole’s standard patent rights clause. Now let’s look at circumventions to the faux Bayh-Dole Act–to the practices that university patent brokers say Bayh-Dole is supposed to be used for, but which Bayh-Dole doesn’t bother to come out and authorize, so the patent brokers have to act as Speakers for the Dead, as it were, and bring into the open these unstated purposes of Bayh-Dole. You know, like Bayh-Dole is a vesting statute, that it mandates commercialization, that it exists for exclusive licenses, and that universities can use royalties for most anything they want because anything they do is “education” in some sense.

Let’s use Bayh-Dole–entirely compliantly–to do things that the faux Bayh-Dole advocates want to suppress. Let’s circumvent the circumventions!

3) circumvention by practice to upset the premises of Bayh-Dole while complying with the terms of the standard patent rights clause.

Continue reading

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Circumventing Bayh-Dole, Fitt the Second

Circumventing Bayh-Dole is easy. University administrators have been circumventing Bayh-Dole since the law became effective in 1981. Consider next

2) circumvention by exploit–to use Bayh-Dole’s limitations to end up with the best deal under Bayh-Dole and avoid public covenant requirements.

Circumventing Bayh-Dole without Noncompliance 

Our next circumvention is distinctive because it does not involve a failure to comply with Bayh-Dole. Instead it exploits the architecture of the Bayh-Dole apparatus. Under Bayh-Dole, universities have no obligation to take assignment of inventions made with federal support. Even if a University implements the (f)(2) written agreement requirement in the standard patent rights clause–which makes most any invention otherwise within scope of a federal funding agreement also a subject invention–the university does not have to own the invention.

If the university does not own a subject invention, then a different invention rights clause comes into play, that of 37 CFR 401.9. That invention rights clause instructs federal agencies to treat inventors as small business contractors but with even fewer restrictions than normal small business contractors. Under 401.9, inventors have no restrictions on assignment or use of income from licensing, don’t have to prefer small businesses, and even might not have to grant the government a royalty-free license. The inventor patent rights clause is the most advantageous of all the patent rights clauses that have been created under Bayh-Dole’s authority. Continue reading

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Circumventing Bayh-Dole, Fitt the First

Circumventing Bayh-Dole is easy. University administrators have been circumventing Bayh-Dole since the law became effective in 1981. Let’s look at three sorts of circumvention:

1) circumvention for non-compliant convenience–to make Bayh-Dole do even better what people claim Bayh-Dole was intended to do;

2) circumvention by exploit–to use Bayh-Dole’s limitations to end up with the best deal under Bayh-Dole and avoid public covenant requirements; and

3) circumvention by practice to upset the premises of Bayh-Dole while complying with the terms of the standard patent rights clause.

These are all contractor-side practices. We can finish with yet another:

4) circumvention by regulatory procedure, by which federal agencies may reduce the attraction of contractor-side exploits that don’t end up serving the public interest.

Circumvention by Non-compliant Convenience

Rather than implementing the written agreement requirement in (f)(2) of the standard patent rights clause, university administrators instead created the idea that Bayh-Dole vested ownership of inventions with the universities that hosted federally supported research. And when the Supreme Court in Stanford v Roche ruled that the law did not support such vesting by research hosts (who are not necessarily even legitimate employers), university administrators switched to requiring “present assignments” for any and all future inventions, patentable or not. They’d rather do what they want to do than to do what the standard patent rights clause requires them to do, which is to implement the (f)(2) written agreement clause.

If one wanted to put this practice as a quip, Bayh-Dole’s standard patent rights clause stipulates that universities give inventors the choice of assigning to the federal government or to a non-federal patent broker, but university administrators fear such a choice and instead prevent it from ever operating, in defiance of the standard patent rights clause. Continue reading

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Bayh-Dole Secrecy, Part 7

The story so far: Bayh-Dole’s secrecy provision regarding reports of invention use was changed in 1984 to make it appear that federal agencies had no discretion in the matter, and that they “shall” treat all information in invention use reports as “commercial and financial” information and as “privileged and confidential” and as exempt from FOIA disclosure. In turn, the implementing regulations impose an additional requirement, that agencies agree not to disclose this information “outside of the agency” or “outside of government” unless with the contractor’s permission (meaning, the contractor must be consulted before any such disclosure).

Having beaten this matter beyond death, we looked at FOIA in more detail and in particular the exemption at (b)(4), which Bayh-Dole’s amended secrecy provision depends upon, and at the court’s reasoning in the Public Citizens case from 2002, involving a request under FOIA to release NIH royalty rate and income information. The court there found that the requested information was exempt under (b)(4), both because release would cause substantial competitive harm and because release would impair the government’s licensing program. The court found, and I argue expressed a general truth regarding Bayh-Dole, not just with invention use reports but with all matters of public oversight, that “in balancing the public interest in disclosure against the private interest in withholding information, the private interest prevails.”

The Department of Justice, in discussing FOIA’s exemption (b)(4), considers the issue of whether information that is exempt from FOIA is still available to be disclosed by the government. Just because FOIA does not require disclosure, can the government then disclose the information anyway, on its own time, so to speak? Here, things gather some interest. We turn to the federal Trade Secrets Act, 18 USC 1905. Continue reading

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