The Dole-Bayh Act: Subject Inventor

Posted on July 3, 2020 by Gerald Barnett

Before the Bayh-Dole bill came together, there were precursors. One of these is a draft bill produced by Senator Dole. It differs in a number of ways from the bill that became Bayh-Dole, and the differences provide some insight into both the eventual architecture of the final bill and the problems that were introduced by changes that weren’t thought out and weren’t followed for effects throughout the bill.

Let’s look at the Dole bill’s use of “subject inventor” and “subject invention”:

There is no “subject inventor” in Bayh-Dole, though perhaps there should be. In the Thornton draft bill (HR 8596) and in Bayh-Dole, eventually, the term used is “contractor.” A contractor becomes “any person (as defined in section 1 of title 1, United States Code) that is a party to the contract” (HR 8596) or “Any person, small business firm, or nonprofit organization that is a party to a funding agreement” (Bayh-Dole).

Though the wording in these three versions appears similar, it actually expresses substantially different concepts. Continue reading →

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The Dole-Bayh Act: Patentability

Posted on July 2, 2020 by Gerald Barnett

We are looking at a draft of a bill proposed by Senator Dole, with Bayh along for the ride. It–and other drafts, such as the Thornton bill (HR 8596), and the Institutional Patent Agreement master, and the Federal Procurement Regulation codification of the Nixon version of executive branch patent policy–eventually became Bayh-Dole. So we will call this draft bill the Dole-Bayh Act, though it never was.

The draft of Dole-Bayh starts with a premise that’s not in Bayh-Dole: “a consistent policy and procedure concerning patentability of inventions made with federal assistance.”

Oh wow. This is not just an idle reference. Here’s the title of the proposed new chapter of federal patent law:

The foundation of the bill is how inventions made with federal assistance are patentable. Continue reading →

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Persons under Bayh-Dole

Posted on June 29, 2020 by Gerald Barnett

Bayh-Dole defines “contractor” as “Any person, small business firm, or nonprofit organization that is a party to a funding agreement.” In turn, 1 USC 1 defines “person” thus:

In determining the meaning of any Act of Congress, unless the context indicates otherwise—

. . .

the words “person” and “whoever” include corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals;

Some universities, say, might be left out of this definition because they are chartered under state law and not organized as corporations or the like. Bayh-Dole deals with this by defining both small business firm and nonprofit organization and adding these to the standard 1 USC 1 definition of person.

This is all pretty messed up, though it is foundational to the structure of the law. Bayh-Dole purports to be about how nonprofits and small businesses deal with federal agencies over invention rights the nonprofits and small businesses have got from inventors working in projects receiving federal funds. The definitions of funding agreement and contractor then are fundamental to that scope. Except they aren’t exactly. Continue reading →

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Bayh-Dole, Tyrannosaurus

Posted on June 23, 2020 by Gerald Barnett

Bayh-Dole is a mess of a law. There’s the mess of the conception itself, the disgusting and ineffectual idea that the federal government should sue its citizens for using inventions made with public funding to advance public purposes–and should do so to protect the profit-seeking interests of favored companies chosen by unelected, not even appointed merely hired government officials to seek those profits and share some bit with the government, as if money for the government’s share of price gouging and suppression of access was the prize, rather than the public use of the results of that research work. Now repeat that again for university officials. Make it all secret, eliminate public oversight. Crass stuff.

And there’s the boring bureaucratic idea that “uniform” treatment of patent rights is somehow better for innovation based on federally supported research than treatment specific to the situations that present, or that “uniform” is a virtue for all research purposes, for all industries, and for all inventions and what most matters is the convenience of patent administrators in exploiting patent monopolies. Strangely messy too is that this idea of “uniform” treatment of patent rights  has only to do only with a default ownership position offered in a patent rights clause that itself can be varied–and immediately was for nuclear propulsion and weapons research, and there are no controls on the disposition of patent rights once they are in the hands of contractors or federal agencies–then enforcement of the patent rights clause and licensing under the patent rights clause is anything goes. So much for “uniform.”

There’s the mess of the architecture, as part of patent law rather than federal procurement, taking precedence over other law rather than repealing those laws or amending them. Ignoring the Federal Procurement Regulation and the Nixon patent policy altogether. Defining subject invention to be “of the contractor” rather than just following the IPA definition of any invention made within scope of a federal contract, regardless of who might own it. There are problems with the interface with FOIA and with antitrust law. There’s the problem of a law requiring a default federal contract wording but having no requirement of enforcement, secret reporting and secret licensing terms, and no right of public appeal. Continue reading →

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Mick Stadler writes a letter in 1976 on “effective transfer mechanisms”–2

Posted on June 19, 2020 by Gerald Barnett

We are working through Mick Stadler’s 1976 letter to Research Corporation’s Willard Marcy. Stadler outlines eight functions for a next generation “technology transfer mechanism.” The essentials of Stadler’s view are that the mechanism must distribute technology widely, must be distributed, must be flexible, must focus on the needs of the inventor, must recognize multiple forms of transfer, and where patents are used, must make clear the economic and procedural reasons for doing so.

We continue then with Stadler’s points 5 through 8.

Stadler builds on the problem that university-based patent administrators are doomed to isolation–and the problem only gets worse if their response is to band together to compare notes at AUTM meetings. Stadler points to the importance of seeing many new technologies in a given area–from multiple sources, with multiple targets of possible action. That’s what a specialized firm can do. A firm that works with video game development will have different expertise from a firm that does pharmaceutical drug development will have a different expertise from a firm that handles 3d printer technology. There still will be inventions that aren’t anticipated by anyone–and it may be that for those, simply being hired to “transfer technology” isn’t a workable qualification–nor would “representing university policy enforcement.” Continue reading →

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Mick Stadler writes a letter in 1976 on “effective transfer mechanisms”–1

Posted on June 18, 2020 by Gerald Barnett

On June 29, 1976 Mick Stadler wrote a letter to Willard Marcy, the Vice President of Research Corporation’s Patent Program. Stadler, at the time was assistant director of the Case Western Reserve technology transfer program. He would go on to work for University Patents and then Research Corporation and then quietly went around the country involved in venture-based organizations spinning out technologies and companies from universities. The general context of Stadler’s letter is a “Patent Awareness Program” organized by the NSF and a proposal to extend the NSF and NIH IPA programs government-wide. Thus, one of those cc’d on the letter is Norman Latker at the NIH. The reason to revisit this letter after so many years is Stadler’s discussion of what is needed in a technology transfer program.

The IPA program required a participating university to demonstrate that it had technology transfer capabilities, and not all–indeed, perhaps, not many–had such programs or even the resources to create them, or even the volume of inventions to justify the expense. Instead, Research Corporation, which was the leading patent development firm at the time, might play a role in setting up regional offices for technology transfer, hosted by a cooperating university to provide services to a number of universities in the area whose inventors then could liaison readily with Research Corporation staff, at a cost of perhaps a half-time administrative position per university. It was a brilliant proposal, but as it turned out, Research Corporation could not execute on the plan.

In the course of his letter, Stadler lays out eight services of an “effective transfer mechanism.” His observations then are just as relevant today. Let’s work through these eight services. Continue reading →

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One way Bayh-Dole destroys innovation opportunity in the U.S.

Posted on June 17, 2020 by Gerald Barnett

When Bayh-Dole came into effect in 1981, it had this requirement for subject inventions retained by contractors (35 USC 202(c)(3)) (my bold):

(3) A requirement that a contractor electing rights file patent applications within reasonable times and that the Federal Government may receive title to any subject inventions in the United States or other countries in which the contractor has not
filed patent applications on the subject invention within such times.

Three years later, in 1984, Bayh-Dole was amended by PL 98-620, which made significant changes throughout. At 202(c)(3), the requirement to file patent applications was changed:

(3) That a contractor electing rights in a subject invention
agrees to file a patent application prior to any statutory bar
date that may occur under this title due to publication, on sale,
or public use, and shall thereafter file corresponding patent
applications in other countries in which it wishes to retain title
within reasonable times, and that the Federal Government may
receive title to any subject inventions in the United States or
other countries in which the contractor has not filed patent
applications on the subject invention within such times.

The “reasonable times” requirement then was interpreted by the implementing regulations finalized in 1987 thus (37 CFR 401.14(a)(c)(3)): Continue reading →

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Harbridge House on university exclusive licensing, 2

Posted on June 16, 2020 by Gerald Barnett

There’s one more thing raised by the Harbridge House report–the metrics on those patent development firms.

Patent applications are filed on approximately 10 to 15 percent of the disclosures submitted and, if present circumstances continue, only one-quarter of these patents will ever be licensed.

In this approach, patent development firms were highly selective. Most university inventions were rejected for management. That meant those inventions were published and entered the public domain or were acquired by the federal government and made available through “dedication or licensing”–open access, without a patent or with. Thus, most results were not constrained by patent monopoly withholdings. By contrast, universities now report filing patent applications on about half of the reported inventions, and licensing rates are 20% at the best of university licensing offices.

It should be pointed out that licensing has little to do with eventual use of an invention. If an invention is licensed exclusively–so that it may be “developed” by a single organization–that invention is necessarily unavailable to anyone else for adoption, research, in-house use, or commercial use. The use is suppressed. If of course no one could ever use the invention without “development,” then there’s no particular reason for exclusivity anyway. The IP that will exclude others will be generated in that “development” work. And if “development” does not involve anything else inventive, then one might wonder exactly what all the big bucks are spent on. Other than expensive clinical trials–themselves a result of government regulation–what other areas of commercial activity are there in which “development” of an invention that otherwise cannot be used at all does not result in additional inventive activity? Continue reading →

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Harbridge House on university exclusive licensing, 1

Posted on June 15, 2020 by Gerald Barnett

The Harbridge House report on government patent policy in 1968 laid the foundation for Bayh-Dole. Or, rather, federal officials selectively used portions of the report to change federal policy to conform to the wishes of patent development firms affiliated with universities.

Here’s Harbridge House on university inventions (vi):

Today, however, schools with large government research programs are taking greater interest in their patent portfolios and are seeking through a variety of means to promote them through licenses with industry. Nonprofit research firms also view their patents as a potentially useful source of income and actively seek to license others.

The driver appears to be the money.

In both cases, the inventions must frequently arise from basic research and require substantial private development before reaching the stage where they are commercially useful.

This is a report of survey responses. There is nothing to support the repeated claim that inventions arise from basic research, that these inventions require “substantial” development before use, that that funding must be “private,” or that there is some future stage at which the invention will become “commercially useful.” Certainly, it is reasonable to expect some inventions will meet all these conditions. But very rarely. Continue reading →

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Federal agency patent enforcement: Gilead, 3

Posted on June 14, 2020 by Gerald Barnett

If you turn off all logic, then Bayh-Dole is whatever it is. But with logic on, the compelling public interest reason for the federal government to claim inventions made by federal employees (or even by the employees of federal contractors) is to do something with those inventions other than what the ordinary patent system would permit inventors (or contractors taking assignment from their inventors) to do with patent rights in those inventions.

That “something other” in the public interest was “dedication” of the invention to the public, whether by using the patent system or just fully publishing the invention. The effect of this approach was clear: regardless of the opportunities to exploit the patent system to exclude all others from the use of an invention made in work judged by the federal government to be in the public interest and thus publicly funded, inventions made in such work should be freely available, even if patented. Such an invention must be published–not held as a trade secret, not unpublished through indifference or some inappropriate pressure to conceal. Such an invention may be patented–use of the patent system is not itself the issue. But in the hands of the federal government, any such patent is not to be used as an ordinary patent holder might use it–to exclude all others or to sell or license the claimed invention to another who would exclude all others.

But here’s Bayh-Dole saying just the opposite. Federal agencies are expressly authorized to convey an invention out of the hands of the government to permit someone else to exclude all others. The force of the implied argument is that it is in the public interest for the federal government, with regard to any particular invention made in work worthy of public support, to choose who is authorized to exclude all others. Implied: the company the federal government chooses will better serve the public interest in excluding all others than would the federal government in excluding all others. Further: that such a company will better serve the public interest in excluding all others than would any federal employee inventor or contractor. Also implied: the public is better served by someone excluding all others, chosen by the government and on secret terms, than in everyone having access to the invention.

This is a very strange argument for the public interest. Continue reading →

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