If under Bayh-Dole a university defaults on electing to retain title, and the agency fails to act on title within sixty days of notice of this default, what then? Is there a second right of refusal that arises because the university defaults and then the agency fails to act? Does the combination of default and inaction create a new shining second opportunity to set things right?
I have argued that the chain of title does not pass through a second right of refusal, but to the inventors and from there to the public domain. The reason is that all the decisions in Bayh-Dole are about whether the patent system will be a viable way to promote use, build university-industry collaborations, protect the public from non-use, and the rest of the Bayh-Dole objectives. Not about making money, as far as Bayh-Dole is concerned. Not about putting university administrators and their process approach at the heart of every creative class transaction involving the results of university research. Of course, agencies, universities, and inventors might think about making money as part of their decisions. It’s not part of the law that they do so. And it is not the secret purpose of the law that they might.
Let’s prod this thing a bit. If a university elects not to retain title, and then the agency doesn’t request title, can the university return and request to retain title ahead of the inventors? Law doesn’t say. I suppose anything is possible. But one might then say notifying the agency in writing electing not to retain title is merely a deferral. What’s the point of a deadline for this to happen, if it’s not really a deadline? Seems to me, whatever standing one has to elect to retain title, it’s gone under the federal contract when you elect no. It doesn’t come back under the contract. It is not a phoenix provision that springs back to life unused the moment you use it.
Then what about default? A university screws up and doesn’t give written notice within the two year window. Seems like under the federal contract, the window is the window. That’s the time frame in which the university possibly could have standing. Outside the window, no standing to elect to retain title. No right of second refusal there. Remember, the right arises under the federal contract for patent rights for the given award in which the invention has arisen. That’s what gives the standing, not a general law–the law sets up a federal contract, and it is the federal contract that disposes of the right.
Okay, so far we’re uneasy. Next, let’s look at the 37 CFR 401.9 conditions. Here, if the agency waives an interest, then the inventors can request to retain title (which they have had all along, but now they want to retain it, and since the two entities that could direct them to assign it have both punted, it’s between them and the public domain). The law expects the agency to consult with the university. Could the consultation provide the university with a right of second refusal? Could the university say: we will oppose the inventors getting anything, so it will go to the public domain to the ruination of everyone, unless the inventors agree that what they really mean is that they want the university to retain title? I suppose so, since the law doesn’t forbid that. But the law also has no mechanism to require the agency to accept this kind of thing, since the university does not have a right of approval, just of conference. All this line of reasoning gets to is how to squander an opportunity rather than support it.
At least one place where there might be a second right of refusal. If the university waives, and the agency waives, and the inventors waive, then the university might come back into it and regret its waiving. It would then be equivalent for asking the agency for approval so that it could deal directly with its inventors rather than through the 37 CFR 401.9 mechanism. In essence, once everyone has exhausted their options under the federal contract, the invention is headed to the public domain. If that is through indifference rather than strategic decision, then perhaps one could argue that no one has any federal chits left, and things fall back to the university’s IP policy, employment agreement and the like. So this not like a second right of refusal, but more like an arrangement as if there had been no federal funding. Other than the government might still insist on its government purpose license, I wonder if this holds up. That is, can this process exhaust Bayh-Dole requirements, but still end up with a patent in play?