Bayh-Dole support for inventors and free competition

Posted on February 28, 2021 by Gerald Barnett

I made this a twitter thread. I’ll post it here as well and work to round it out as I have time. It’s the flip side of being blunt about what happens under Bayh-Dole if an inventor does not assign an invention made in federally funded work to a federal contractor.

Under Bayh-Dole (35 USC 201(b)) federal contractors can add parties to any funding agreement. These parties become, by definition (35 USC 201(c)), contractors, and Bayh-Dole’s patent rights clauses apply to those new parties.

A new party may be added by any federal contractor to a funding agreement by “any assignment, substitution of parties, or subcontract of any type” (35 USC 201(b)). The patent rights clauses flow down to new parties based on what those new parties are. There’s one key exception to the flow down when adding parties. We will come back to that.

If the new party is a nonprofit, then the nonprofit patent rights clause applies–37 CFR 401.14 with paragraph (k).

If the new party is a small business, then the small business patent rights clause applies–37 CFR 401.14 without paragraph (k).

If the new party is a large business, then the small business patent rights clause applies (as conflated with executive branch patent policy by a clueless or mischievous NIST) except that the clause does not preempt federal statutes that require federal ownership of inventions.

And if the new party is an individual, then the individual inventor patent rights clause applies–37 CFR 401.9. Continue reading →

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Being blunt about Bayh-Dole operations, 2

Posted on February 26, 2021 by Gerald Barnett

Under Bayh-Dole, a federal contractor has no special right, and no obligation, to take ownership of inventions arising in federally supported research or development. There is nothing, absolutely nothing, in Bayh-Dole that suggests that Congress had any intention to make contractors own inventions made by research personnel the contractors happened to host to undertake projects supported in part by the federal government. It is simply untrue that Bayh-Dole, to operate “as intended” must get contractors to take ownership of these inventions. The Supreme Court in Stanford v Roche made it clear that Bayh-Dole sorts out priority of claim to ownership only after a federal contractor has obtained ownership, “nothing more.” Not before the contractor obtains ownership.

What happens, then, if a contractor does not take ownership of an invention made in federally funded work?

By statute, bluntly, nothing. Nothing at all.

If a contractor does not acquire ownership of an invention, it is not a subject invention.

Inventions are still owned by their inventors, following federal patent law.

Contractors have no statutory mandate or incentive to take that ownership.

Federal agencies have no statutory or regulatory authority to take ownership.

Inventors have no obligation to disclose inventions or assign inventions.

That’s the established, federal policy. That’s the consequence of the Supreme Court decision in Stanford v Roche. Consider it intended.

I’ll explain, if you are up for it. Continue reading →

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Being blunt about Bayh-Dole operations

Posted on February 25, 2021 by Gerald Barnett

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. Continue reading →

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The IPA and Bayh-Dole on nonprofit assignment of subject inventions, 4

Posted on February 18, 2021 by Gerald Barnett

Well, now we can look at Bayh-Dole’s nonprofit assignment provision. It’s in Bayh-Dole’s specification for what must be included in a patent rights clause that runs with any funding agreement with a nonprofit or small business. Here, 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);

We have the same restriction to nonprofit organizations, and the same structure–a prohibition followed by an exception. But things are different.

a prohibition upon the assignment of rights to a subject invention in the United States

The prohibition is restricted to the US. A nonprofit can assign foreign rights without conditions. Also, any small company can assign any rights in a subject invention without any conditions. One wonders, what changes when a subject invention is owned by a nonprofit so that there must be federal approval, but only for US assignments? Continue reading →

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

Posted on February 17, 2021 by Gerald Barnett

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. Continue reading →

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An odd statement of government interest in a Navy “UFO” patent

Posted on February 16, 2021 by Gerald Barnett

Here’s US patent 10322827. One of the “UFO” patents. It’s interesting physics, if not controversial, for being innovative in an institutional world that has made innovation mostly boring.

But we are concerned with something else here. Continue reading →

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The IPA and Bayh-Dole on nonprofit assignment of subject inventions, 2

Posted on February 16, 2021 by Gerald Barnett

We have looked at the IPA assignment clause. Since the IPA is specific to nonprofits, there’s no reason to call out nonprofitedness. But there is a reason then to restrict any later invention assignment to nonprofit assignees. Why? The point of the implicit IPA policy is that a nonprofit–set up as it is already to serve public interests–may serve as an appropriate alternative to a federal agency in the management of a “public” asset such as an invention made in work supported by the federal government. The policy then is that when nonprofits are engaged to do work in the public interest, the patentable results of that work should go to for-profits by means of a license. If one nonprofit can do the job of managing patents for another, fine. But things stay within the nonprofit circle. Clearly, for-profit operators, even if they might be more capable or more effective or more cost effective (there’s a long discussion there about how even in seeking to tack on a profit margin a for-profit magically finds ways to cost less overall than anyone else happy to do things at cost, or for reasonable hire), are as a matter of policy, excluded from taking assignment of an IPA invention from a nonprofit, just as they would be prior to Bayh-Dole if the federal agency owned the invention.

This nonprofit stickiness of the IPA is itself rather strange. The federal policy insists that whenever there’s an exclusive license to an invention made with NIH support, a nonprofit has to be on one side of that license, that the nonprofit has a role, then, in policing that exclusive license agreement, and the NIH has a role in policing the nonprofit. All this policing, so the idea goes, will protect the public from abuses of the patenting system such as blocking other research or concentrating economic power or withholding inventions from public access or charging exorbitant prices or failing to meet public needs. That’s a lot of stuff to ask of any federal agency or nonprofit licensor. But conjectures about how innovation surely works better with bureaucrats armed with aspirational mission statements and patent attorneys tend to ignore such details.

The whole point of the IPA was to allow NIH nonprofit contractors to take patent positions on NIH research inventions and pass these patent positions (in theory) to pharmaceutical companies for “development” into public-benefiting commercial products, avoiding executive branch patent policies that made a claim for government rights in inventions made in working with inventions made under NIH research awards. Continue reading →

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The IPA and Bayh-Dole on nonprofit assignment of subject inventions, 1

Posted on February 15, 2021 by Gerald Barnett

Norman Latker, patent counsel at the NIH, drafted Bayh-Dole on the sly, working against HEW policy on inventions to create an easier pathway by which nonprofits could pass exclusive control of inventions made in work receiving NIH funding to the pharma companies of their choice. Latker based Bayh-Dole on the Thornton bill (according to Betsy Ancker-Johnson) and on the Institutional Patent Agreement master (according to Latker himself). Really, Bayh-Dole is a Frankenstein’s monster of body parts snatched from the IPA, Thornton, and the Federal Procurement Regulation.

Let’s look at how the IPA and Bayh-Dole handle one provision–the assignment of subject inventions. We will go a long way around to provide context about how both the IPA and Bayh-Dole operate. Short form–both the IPA and Bayh-Dole require assignees of nonprofit-acquired subject inventions to follow the nonprofit requirements of the funding agreement.

Here’s the IPA:

VII. Patent Management Organizations

The Grantee shall not assign any subject invention to parties other than the Grantor in circumstances as set forth in this Agreement except it may assign rights in the invention to a nonprofit patent management organization, provided that the patent administration agreement between such organization and Grantee is approved by the Grantor. Any reference to a Grantee in this Agreement shall also include a patent management organization when applicable and an assignment to such an organization shall be subject to all the terms and conditions of this Agreement.

Grantor is the United States of America, represented by the Secretary of the HEW. Grantee is the nonprofit. Let’s work through this provision.

Continue reading →

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Misconceptions about the law that catalyzed 40 years of university patent bungling

Posted on February 10, 2021 by Gerald Barnett

In a recent op/ed (“The Law That Catalyzed Nobel Prize-Winning Research at UC Berkeley”), Carol Mimura argues, in effect, that provisions of Bayh-Dole should not be used to deter price gouging or to increase the availability of needed medical treatments. Apparently university non-compliance and government inaction and secrecy are what make Bayh-Dole work.

Mimura is entitled to her opinion, of course. But let’s look at her Bayh-Dole claims. Keep in mind that mere opinions don’t depend on reasoning or evidence, though we might expect more from professional opinions (unless they are political–in which case anything goes because no one expects the truth so any reliance is one’s own laziness). Mere opinions that become personal beliefs may persist despite evidence and reasoning, like beliefs in prophecy, like UFOs from the Planet Clarion arriving to save true believers from global devastation. Faced with contrary evidence, believers double down rather than change their opinion–and that’s especially true once they have taken a public action based on their belief. My regrets, Carol, but you know I have to respond.

Mimura writes:

Unfortunately, some misconceptions about Bayh-Dole could chill future private-sector interest in developing university discoveries.

Well, let’s look at Mimura’s misconceptions about Bayh-Dole.  Her op/ed starts with three “key points”–all wrong or fallacious.

The Bayh-Dole Act induces private sector investment into R&D projects that commercialize university research

The badly chosen word here is “induces.” Nothing in Bayh-Dole induces any private sector investment. Nothing in Bayh-Dole’s contracting provisions requires or mandates or privileges commercialization. No one is forced to invest in projects to commercialize anything. University patent administrators might demand certain deals–this or nothing–but that’s on them, not Bayh-Dole. They induce themselves, as it were. Why not own it rather than blame it on Bayh-Dole, or, as bureaucrats do, credit Bayh-Dole? The administrators have got so accustomed to rationalizing their patent practices without challenge that to suggest using Bayh-Dole–properly, with compliance–all but demands they change their practices, which, stubborn typical bureaucrats that they are, they cannot do. Having spent years claiming they are doing things the best way, the necessary way, the way that works so well it is wildly successful, it is very difficult for them to admit they are wrong, misguided, and are screwing up royally. Continue reading →

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A question on RE: practice the invention

Posted on February 8, 2021 by Gerald Barnett

Search on RE: “what does “practice the invention” mean under bayh dole.”

Practice means “to make, use, or sell” an invention. Practice means to use any of the substantial rights to a patentable invention. Practice means to “work” an invention so that the benefits of that invention are available to the public. Practice is not limited to merely the “use” of an invention.

Bayh-Dole uses “practice” with regard to inventions at 35 USC 202(c)(4):

With respect to any invention in which the contractor elects rights, the Federal agency shall have a nonexclusive, nontransferrable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States any subject invention throughout the world:

This language comes from the Kennedy executive branch patent policy by way of the NIH IPA master agreement. Norman Latker, patent counsel at the NIH, drafted both the IPA master and Bayh-Dole. Latker claimed that Bayh-Dole was based on the IPA master. Here’s Kennedy, in its definition of “Governmental purpose”:

the right of the Government of the United States (including any agency thereof, state, or domestic municipal government) to practice and have practiced (made or have made, used or have used, sold or have sold) throughout the world by or on behalf of the Government of the United States.

The Nixon revisions to Kennedy remove “practice and have practiced” and replace these terms directly with “make, use, and sell.” Continue reading →

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