Bayh-Dole Basics, 7: Disclosure comments, 4

Posted on August 7, 2018 by Gerald Barnett

Though it’s rather useless to do so, let’s consider then the steps required by a Bayh-Dole compliant disclosure. I say it’s useless because no one complies with Bayh-Dole and federal agencies don’t care. The law doesn’t operate but enables something else to operate. It’s like using the rule of law to avoid the rule of law. If you follow this recursion, then you see the cleverness of Bayh-Dole. It’s the flip of “copyleft.” Rather than use copyright to require others to “share alike,” Bayh-Dole posits using patents to “defect on the commons that justifies the use of public resources” to justify the use of public resources. “We must prevent stuff that is publicly funded because it should be public to become public because if it became public then the public would not benefit from it not becoming public.”

Let’s put it in terms you may recognize: the public won’t benefit from publicly funded research unless that research is secured as patent monopolies and conveyed to single companies for their exclusive use, because no company will develop any such invention without a patent monopoly and freedom to exploit that monopoly–and that, my friends, is the only path to public benefit arising from publicly funded research. Any enforcement of Bayh-Dole would sour the whole enterprise and drive away these companies that are essential to the public benefit that may arise from publicly supported research.

Or, in its politically effective form: “what is available to all will be used by none.” Absurd? Yes, of course. Crazy? Yes, beyond simple lunacy. Inspired? Yes, but only if you are a BDCBF Bayh-Dole advocate.

Steps in Disclosure

It is important, then, that folks get the disclosure right. Bayh-Dole’s standard patent rights clause (at (f)(2)) requires contractors to require their technical employees to make a written agreement that includes a promise to disclose inventions to the contractor so the contractor can comply with the disclosure requirement. The disclosure must identify the funding agreement and the inventors, as well as any statutory bar to patenting. But the core of the disclosure is that:

It shall be sufficiently complete in technical detail to convey a clear understanding to the extent known at the time of the disclosure, of the nature, purpose, operation, and the physical, chemical, biological or electrical characteristics of the invention.

In other words, the disclosure is essentially the text needed for the specification part of a patent application–the part that teaches one with ordinary skill in art how to practice the invention. Put another way: before a contractor must disclose a subject invention, the contractor must

  • determine that the invention is or may be patentable,
  • obtain information on possible patent bars,
  • acquire ownership of the invention,
  • determine that the invention was made under a federal contract,
  • obtain a sufficient description of the invention that it could use the description to prepare a patent application, and
  • convey this description to its patent administrators.

This ought to look like a weird list. How can anyone determine that an invention may be patentable without having a full disclosure of the invention and information regarding patent bars? But none of these things are required until a contractor owns an invention made under a federal funding agreement–including, even, determining whether the invention was made under a federal contract. Continue reading →

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Bayh-Dole Basics, 7: Disclosure comments, 3

Posted on August 6, 2018 by Gerald Barnett

We are considering disclosure under Bayh-Dole. You may have thought that every invention made with anything like federal support must be disclosed. That you now know is not true. Under Bayh-Dole, inventors have no obligation to disclose anything, though they might under the statutes and regulations not preempted by Bayh-Dole. Under Bayh-Dole’s standard patent rights clause, universities are required to require inventors to promise to disclose, but only inventions that a university already owns. Fathom that.

But university administrators refuse to comply with the standard patent rights clause requirement. Fathom that, too.

I won’t go into the details, but the upshot is, Bayh-Dole does not require university inventors to use the patent system or to assign their inventions to anyone. Even NIST’s silly addition of an assignment requirement to the written agreement requirement that university administrators blow off applies only to subject inventions, not to all inventions made in work receiving federal support.

What Bayh-Dole requires to be disclosed is only those inventions that are determined to be subject inventions. Anything else might have to be reported to a federal agency–but that obligation falls outside of Bayh-Dole and into the framework of federal statutes and regulations that Bayh-Dole otherwise preempts.

And even if a contractor fails to disclose an invention that turns out by federal agency determination to be a subject invention–what happens? The contractor discloses the invention, elects to retain title, grants the government its license and life goes on. What then is the point of disclosure? A contractor could just agree not to file claims in the Court of Federal Claims for compensation for government use of subject inventions. No disclosure necessary. And since the Court of Federal Claims is where disputes regarding a determination of subject invention show up, the requirement is merely that things will get settled in the Court of Federal Claims, where disclosure will be necessary to determine whether a given invention was made in the performance of work under a federal funding agreement. Continue reading →

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Bayh-Dole Basics, 7: Disclosure comments, 2

Posted on August 3, 2018 by Gerald Barnett

We are working through the details of Bayh-Dole’s requirement that all subject inventions must be disclosed. What are subject inventions? What is the scope of a funding agreement? Who must disclose? What is the nature of the disclosure? Good questions, all. If Bayh-Dole were a clear, smart law, the answers would be clear and smart. But alas, Bayh-Dole is a mess and the people who have exploited the mess haven’t bothered with logic or public purpose and have turned Bayh-Dole into a do WTF you want law. If you believe that bureaucrats doing WTF they want is grand public policy, then what goes on here is not likely to help your peace of mind. I’m not at all opposed to bureaucrats doing WTF they want–if that’s the public policy we decide on, I’m not going to go all resistance on it. What’s wrong is bureaucrats deciding on their own to do WTF when law and regulation don’t authorize the bureaucrats to do so. Rule of law or rule of WTF bureaucrats–probably a lousy dichotomy for federally supported inventions, but there it is.

We see what happens with the WTF bureaucrat part–dismal practice, most everything locked behind patent paywalls, patent speculators attracted, lack of public domain, fragmentation of cumulative technology, exclusion from participation in standards, lack of interoperability, no competitive development of variations and functional equivalents, a twenty-year lock out on the results of federally funded research with incentives not to use, to design around, to undermine, to ignore, to take work offshore where the sun still shines. And for a handful of cases, mostly in pharma, a lucrative deal in which a university shares in the upside of a patent monopoly on a class of compounds that would treat a disease. Now let’s look at the rule of law part.

Disclosure of Subject Inventions

Let’s consider, then, disclosure of subject inventions in Bayh-Dole. Disclosure is the fundamental requirement in Bayh-Dole pertaining to subject inventions–inventions a contractor has acquired. Here’s 35 USC 202(a):

Each nonprofit organization or small business firm may, within a reasonable time after disclosure as required by paragraph (c)(1) of this section, elect to retain title to any subject invention

This is the heart of Bayh-Dole’s carve out. The federal framework of laws gives federal agencies the right to require contractors and their employee inventors to convey title to the government, except for contractors with established commercial positions in non-governmental markets or otherwise when the agency has determined that it is in the public interest that a contractor be allowed to deal in patent monopolies. For the rest–where statute, regulation, and federal agency policy might require federal ownership as a default in the public interest, Bayh-Dole instead permits a contractor who gains title of a patentable invention made in performance of work under a funding agreement to preempt the framework and exploit patent monopolies, subject only to the apparatus of Bayh-Dole, which turns out not to operate, despite hand-waving gestures to the public interest.

If a contractor gains ownership of such an invention, the contractor can keep that ownership and preempt by patent monopoly any disposition of the invention in the public interest expected by law, regulation, agency policy, faculty investigator, or inventor.

In this regime, disclosure is everything. Continue reading →

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Bayh-Dole Basics, 7: Disclosure comments, 1

Posted on August 2, 2018 by Gerald Barnett

This will be longish. For the brief of heart, here’s a synopsis.

  • Invention disclosure is the heart of Bayh-Dole standard patent rights compliance.
  • Disclosure is not reporting that an invention exists.
  • Disclosure means providing, for an invention owned by a contractor, the information necessary for a determination of patentability and for a patent application to be drafted.
  • Bayh-Dole plays games with the timing of disclosure. Originally, it was within a reasonable time after a subject invention was made. Now, it’s two months after a contractor’s designated patent administrators receive disclosure in writing from the inventors–could be a long time.
  • An invention must be owned by a contractor before Bayh-Dole applies. Contractor ownership is Bayh-Dole’s trigger, not inventing, not federal funding.
  • The definition of subject invention means that a contractor can become aware that an invention exists–and acquire ownership of it–long before a conforming disclosure is received by the contractor’s patent administrators.
  • Contractors may be added to a funding agreement by assignment, substitution, and subcontract, and any inventions these contractors make are also subject inventions for which the disclosure requirement applies.

Procedures for disclosure have to be strange because of the definition of subject invention.

Okay, here’s the discussion, O less faint of heart.

First, Bayh-Dole

Bayh-Dole requires federal agencies to use a default patent rights clause in funding agreements for research or development when they cannot justify a purpose-specific clause. The patent rights clause establishes the primary obligations for a contractor who obtains ownership of a patentable invention made under the funding agreement and chooses to retain that ownership. The patent rights clause then becomes part of the federal funding agreement. While Bayh-Dole specifies the provisions that are to be included in the patent rights clause, the implementing regulations establish four variations on the patent rights clause–one for companies, one for nonprofits, one for inventors (a subset of the company clause), and one that originally was a default “exceptional circumstance” for DOE nuclear energy and weapons programs.

If a contractor obtains ownership of a patentable invention, and that invention has been made under a federal funding agreement, the invention becomes a “subject invention.” The requirements of the standard patent rights clause then apply to that invention. How does a contractor determine that an invention is a subject invention? A contractor must acquire the invention. That part requires, for an institutional contractor, a written assignment. So, there’s a piece of paper. But also, an assignment is of a property–so there must be some definition of what is assigned (and what is not). That’s the starting point for a disclosure–the disclosure defines what is to be assigned. Otherwise, the assignment is really a promise to assign later, when everything has been sorted out: “I assign all of this whatever” is really “I assign what later we decide I have assigned.” Continue reading →

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Bayh-Dole Basics, 7: Disclosure

Posted on August 1, 2018 by Gerald Barnett

The Bayh-Dole Act requires contractors who acquire title to an invention made in the performance of work under a federal funding agreement to disclose that invention to the federal government. Here’s 35 USC 202(c)(1), specifying one condition among others that must be in a standard patent rights clause:

That the contractor disclose each subject invention to the Federal agency within a reasonable time after it becomes known to contractor personnel responsible for the administration of patent matters, and that the Federal Government may receive title to any subject invention not disclosed to it within such time.

“Contractor” is a collective noun, used for any and all parties to a funding agreement. A prime contractor may add other parties to a funding agreement by any assignment, substitution of parties, or subcontract of any type. A subject invention is a patentable invention owned by a contractor and which has been made under a federal funding agreement.  Continue reading →

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If state university patent policy is actually state law . . .

Posted on July 31, 2018 by Gerald Barnett

Over the course of a number of years, Professor Galen Suppes was involved in litigation with the University of Missouri over rights to inventions. Among other things, the University claimed ownership of inventions that Suppes made at another institution before joining MU, which the other institution had released to him. When Suppes sought to appeal MU’s actions on this and other matters, the university interpreted its policy to preempt the appeal. The policy stated that a faculty member could appeal only if there was no litigation. The idea was a faculty member could not both appeal and sue. But MU pulled a fast one and sued Suppes. Then claimed that its suit against Suppes meant that Suppes lost his right to appeal. You can see where this goes for any appeal that MU might worry about losing. Just sue. No matter. The university has beaten back Suppes at every point.

Professor Dennis Crouch, at PatentlyO, has an interesting commentary on one aspect of the multiple cases, one in which Suppes sued the MU technology transfer office for claiming ownership of his inventions, preventing him from pursuing patents on these inventions, and then doing nothing with the inventions itself. You can see there’s a point to Suppes’s argument. It’s just that Suppes’s petitions were batted back and forth between federal court and state court. State court controls ownership of inventions. Federal court controls patent law and ownership of patents. The state, via MU, claims ownership of inventions and refuses to seek patents on them and refuses to release its ownership claim. State court sides, easily enough, with the state. Federal court declines to get involved.

But here’s Prof. Crouch’s comment:

One way to think about Suppes argument here is to consider the employment contract as a state law that applies to anyone who works for the state (at least this branch of the state). And, the state law says that the University (rather than the inventor) owns the inventions.

Continue reading →

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Mapping Bayh-Dole Flow of Control

Posted on July 30, 2018 by Gerald Barnett

I have updated this article from June 24, 2011  in light of the Stanford v Roche decision. In its previous version, the article sets out the idea that a federal agency has a right to claim title to inventions made in federal funding agreements–and this is indeed the case under various federal laws and the the Kennedy/Nixon executive branch patent policy. Bayh-Dole does not repeal that federal framework. Bayh-Dole preempts that framework (but for Stevenson-Wydler) when a contractor comes to own a patentable invention made under a federal funding agreement. That’s the definition of subject invention. If a contractor doesn’t own it, then it’s not a subject invention, and Bayh-Dole does not apply–but the framework otherwise preempted by Bayh-Dole does apply.

In my earlier account of Bayh-Dole flow of control, then, I have the idea that a federal agency acting under the prior federal framework, may assign to a university (or other federal contractor) the federal agency’s own right to receive inventions as deliverables. That is, the federal agency assigns its side of the federal contract involving inventions to the contractor. If inventors were obligated to assign to the federal government upon request, now they would be obligated to assign to the university upon request–provided that the university “elected” its option under the federal arrangement to receive title.

In that account, then, Bayh-Dole required federal agencies to permit contractors to choose to stand in for the federal agency with regard to inventions as deliverables. The university in essence may request ownership of any invention deliverable that otherwise would be up to a federal agency to request.

It’s a neat scheme–too bad for the drafters of Bayh-Dole that they didn’t think of it. But it’s also not the scheme that is at work in Bayh-Dole, as the Supreme Court made clear. Under Bayh-Dole, a federal agency must use the standard patent rights clause if it cannot justify an alternative clause. But the standard patent rights clause applies only to subject inventions–inventions owned by a contractor–not to any invention made in a project with federal support. Under the SPRC, inventors are obligated (if a university complies) to disclose subject inventions only. That is, inventors agree to disclose those inventions made under federal contract that their employer already owns. And with NIST delegated by the Department of Commerce to look after the SPRC, NIST has added that if the employer already owns an invention made in a project with federal support, then the inventor must agree to assign that invention to the employer. Well, that makes one’s head spin. Apparently, NIST is concerned that if a university has a claim of equitable title in an invention made in a project with federal support, then the inventor must be required to agree to assign legal title to the university, whether the university wants legal title or not.

I have therefore updated the slides. Continue reading →

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Only Bayh-Dole and University Research Enterprise, 5

Posted on July 30, 2018 by Gerald Barnett

We are working to explain a complicated scheme to circumvent federal policy and suppress a public discussion of the merits of doing so. Suppression of public discussion is a pretty good sign that the merits are lacking. Lack of evidence that things are happening in any way close to the aspirational rhetoric is another good sign. But no matter–we are trying to follow the logic and practice to understand the scheme. This stuff isn’t easy, just as any fraud scheme constructed by capable bureaucrats is not designed to be obvious. If it were obvious, it would not be such a successful fraud scheme.

Bayh-Dole may not quite be fraud, but it works on the same principles–sound too good to be true, flatter those in power, suppress reporting, report irrelevant stuff, deceive people with puffy language, disparage anyone who disagrees. If you demand a Bayh-Dole account be simple, so you can understand it without much effort or knowledge, then you are crying out for self-delusion and there are a number of people happy to service your need. Here, we are trying to characterize the canker and come to understand its policy physiology–the illogic by which it operates and what might be done about its dismal outcomes. If all you wanted was that Bayh-Dole sucks and we should shoo the rascals out, you need not have read this far.

It’s clear that Bayh-Dole does not provide a “uniform” approach to invention rights in federally funded research. Rather, Bayh-Dole offers an arbitrary, preemptive default patent rights clause that allows any contractor who gains ownership of an invention made in a project receiving federal support to preempt the purposes of everyone else involved in a given university research project undertaken (and judged by the federal government to be) in the public interest. That is–according to Bayh-Dole, the public purpose objectives of federal agencies in providing grant funding don’t matter. The objectives of university faculty don’t matter. The objectives of research collaborators don’t matter. The objectives of other sponsoring organizations don’t matter. The objectives of inventors themselves don’t matter. Once a university owns an invention made in a federally supported project, the only objective that matters, for Bayh-Dole, is that of the university administrator who controls the invention.

And look at the logic. If an open, declared public purpose should control the management of a subject invention, then there would be no particular need for a university administration to take control of it–the flexible, purpose-oriented Kennedy/Nixon patent policy easily handles the situation. Almost any public purpose one can imagine begins with making a patentable invention available to all involved in the research and all those who are intended to benefit from the efforts of the project. If a university administration comes to acquire ownership of any such invention, then it ought to do just what anyone else who comes to acquire ownership of that invention–manage it to achieve the public purpose of those engaged in the public supported project. Continue reading →

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Only Bayh-Dole and University Research Enterprise, 4

Posted on July 27, 2018 by Gerald Barnett

Consider, then, this (f)(2) written agreement requirement that’s outside Bayh-Dole but made a condition of federal funding agreements anyway. The (f)(2) requirement is most certainly not a private patent agreement between a university as employer and its faculty inventors. It is not the IPA’s required promise to assign inventions on which a nonprofit has decided to file patent applications. It is not an agreement already in place or asserted to be in place by a university patent policy. Unlike the IPA master agreement, which required one agreement with potential inventors to cover all subsequent NIH-funded research, the Bayh-Dole (f)(2) is required each time a funding agreement is put in place. Why would that be?

Ah, that’s the question. The (f)(2) agreement does two things. First, it extends the reach of the government’s interest through to the inventors themselves. If the university declines to “retain title” to inventions it has previously acquired (and so these inventions are subject inventions), then the federal agency may request title. But if the university has obtained only “equitable title,” then the federal agency must rely on the inventor’s (f)(2) agreement promise to establish the government’s rights in subject inventions–and therefore request assignment from the inventor. Of course, if the university does not have equitable title in such an invention, but the invention is otherwise within scope of the funding agreement (though not necessarily Bayh-Dole’s scope, which is in certain respects formally more narrow), then Bayh-Dole doesn’t apply at all, and the invention falls back under the regulations that Bayh-Dole otherwise preempts.

You can see, then, that Bayh-Dole is anything but uniform. It is a carve-out. There are then two regimes always in play. The flexible and public-purposed regime, and the “uniform” regime under Bayh-Dole that applies only when a contractor acquires an invention and that invention is within scope of Bayh-Dole. Continue reading →

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Only Bayh-Dole and University Research Enterprise, 3

Posted on July 26, 2018 by Gerald Barnett

We are working through Bayh-Dole without the cover of the political bluffery that permitted Bayh-Dole to become national policy. Without the bluffery, Bayh-Dole addresses the same situation addressed previously by the IPA program, which in turn took up the Harbridge House report. The Harbridge House report argued that no “uniform” patent policy would meet the needs of all federal agency research work and at the same time address the widely and even wildly varying attitudes regarding patents in industries and even among companies within a given industry. Harbridge House, then confirmed the Kennedy patent policy’s approach of flexibility and primary attention on those practices in particular dealings that best advanced the public interest.

The Kennedy patent policy (1) identified four circumstances in which the government ought to take ownership of inventions regardless; (2) a broad situation in which companies with established commercial positions should be allowed to keep whatever inventions they did acquire, provided they timely develop those inventions for use; (3) and for the rest, an agency should determine whether to grant a request for private ownership of a patent, whether at the time of an award or after an invention has been made.

The four Kennedy default ownership circumstances became exceptional circumstances in Bayh-Dole–difficult to get rather than fundamental public policy. Only the DOE’s nuclear program has managed to be incorporated as a default conditional in the present standard patent rights clause. Continue reading →

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