One cannot read “contractor” in Bayh-Dole and assume that “contractor” only refers to the initial or prime contractor. One must always look to the circumstances of a given contract to determine whether others have been made parties to the funding agreement. A contractor may add parties to a funding agreement by any assignment, substitution of parties, or subcontract of any type. Let’s work through some examples. We will start with more overt examples and then look at stuff that is not what you find in the usual glossy accounts of Bayh-Dole.
Consider some examples.
(1) Nonprofit subject invention assignment. Bayh-Dole requires federal agencies to require nonprofit organizations, if they assign a subject invention, to require the assignee to comply with the nonprofit’s patent rights clause. See 35 USC 202(c)(7)(A):
In the case of a nonprofit organization, (A) a prohibition upon the assignment of rights to a subject invention in the United States without the approval of the Federal agency, except where such assignment is made to an organization which has as one of its primary functions the management of inventions (provided that such assignee shall be subject to the same provisions as the contractor)
This provision then shows without the second set of parentheses in the standard patent rights clause at 37 CFR 401.14(k)(1).
Rights to a subject invention in the United States may not be assigned without the approval of the Federal agency, except where such assignment is made to an organization which has as one of its primary functions the management of inventions, provided that such assignee will be subject to the same provisions as the contractor;
If a nonprofit assigns a subject invention to a company, even under the cover of an exclusive patent license, the company becomes a party to the funding agreement–becomes a contractor–and any inventions made by the company made by the company arising from federally supported research or development are also subject inventions. Furthermore, the company is obligated to handle those inventions under the nonprofit patent rights clause. Specifically, the company-assignee agrees–as a party to the funding agreement–to dedicate income earned with respect to subject inventions to the specified public purposes. Continue reading