Okay, so this is longer than I’d like. It isn’t a simple situation. The neat thing is, if it’s longer than you’d like, you can always pull out. I offer here some alternatives to the approaches of reading Bayh-Dole as a great Act to unilaterally terminate previously valid personal commitments of invention rights.
The Solicitor General takes a bit different approach than that of AUTM/WARF in its brief on Stanford v. Roche. This in itself is something of a relief. The SG instead follows the scoping of the competing claims. This is much better than the AUTM/WARF approach, but also has its problems.
According to the SG argument, Bayh-Dole does not automatically vest all title in the university-contractor (though the SG points at that) but rather rescopes retroactively what an individual could have committed personally. The SG argues, the co-inventor did not have standing to commit future personal invention rights where those rights might someday become encumbered by Bayh-Dole. That is, the company in seeking future personal invention rights arising from the permitted access to company research could only bargain for those rights the future co-inventor had to commit, and these could not include any rights that might in the future–even the near future–come under a federal funding agreement, even if no such agreement exists at the time of the commitment. Whenever there’s a federal funding agreement, then Bayh-Dole goes back in time and resets the scope of all contracts that would conflict with a university assertion of rights under Bayh-Dole.
Working with scope makes sense. The company cannot require the future inventor to break the law, so the future inventor’s personal rights available to be obligated reasonably ought to stop at the point federal funding is involved. But such an argument makes the most sense if the inventor-to-be is already committed to the federal funding or that such funding is clearly anticipated by both parties. If the parties don’t anticipate the federal funding, and the future inventor obtains consideration for the present commitment of personal rights, then it’s a pretty big chop to say, surprise, the scope of those rights has just changed by operation of federal law. There has got to be a better way than to rewrite the present by jiggling the past, which is good for movies like Inception, or Galaxy Quest, but isn’t so great for the operation of law.
One could argue that a present assignment of future inventions acts as a perpetual non-compete clause and that may also may be against public policy, as it may deny an individual the future possibility of practicing one’s trade or of future employment in a potentially broad area of activity. One might say that a present assignment may be unacceptably vague or overly broad in requiring assignment of anything arising from access to research information and expertise. To start with, only those inventions that are related to the company’s present and foreseeable future business should be in that scope, and only those inventions that arise directly from access to company research and personnel, such as would have to recite company confidential information or rely on other proprietary work of the company in order to draft a patent application. If the present assignment scope is collapsed as a result of a perpetual non-compete requirement, one might greatly limit the personal rights in inventions that the co-inventor has committed without ever getting to Bayh-Dole. One would then argue that the appeals court erred, not in its interpretation of Bayh-Dole, but in having to rely at all on Bayh-Dole. The primary issue is the scope of perpetual commitments of future inventions.
In the case at hand (Stanford v. Roche), however, it appears that the co-inventor-to-be went back to the university, accepted federal funding, and went to work using what he had learned in just the same area that the company was working in. I don’t know the details. Maybe it was different than this. Maybe the company moved in the same direction as a result of the future co-inventor being around and talking about possible research directions. In any event, it appears that what was invented at the university can be argued directly arose from the prior months of research interaction covered by the present assignment. So maybe whatever the general arguments about the scoping perpetual future assignments, they don’t pertain until the facts are straight.
There is a problem with rescoping that is similar to the automagicality argument. It’s one thing to say Bayh-Dole rescopes. It is another thing to say it does so even when an individual, having made a commitment of future invention rights, then turns around and with his university seeks federal funding so as to force a limitation on what had been contractually agreed. One might argue, the university and perhaps the inventor intentionally use Bayh-Dole to defeat prior binding commitments. If this is the case, then one is asking whether it is federal policy to allow contractors to void or rescope prior valid contracts in order to secure federal funding.
Here we dive into the FARs for a bit, to illustrate. FAR Subpart 9.5 provides guidance. 9.502(a) says it applies to non-profit contractors. 9.505(b) says that an underlying principle in organizational conflict of interest is preventing unfair competitive advantage. 9.505-4(a) and (b) address a contractor who obtains proprietary information from others to perform a government contract. “A contractor…must agree with the other companies to protect their information for as long as it remains proprietary and refrain from using the information for any purpose other than that for which it was furnished.”
This stuff is implemented with rather more general language in Circular A-110 at __.42 and __.43. One might argue that the university in seeking the federal funding has an organizational conflict of interest with regard to the commitment it has made through one of its employees to the company, as reflected in the present assignment. Essentially, the present assignment exists as the consideration for access to company proprietary information, without which, the university would be at a disadvantage in competing for a federal award. The use of that information without accepting the commitment–and indeed using the federal award to void or rescope unilaterally the commitment–represents an unfair competitive advantage and restraint of trade.
Let’s look now at the effects of unilateral federal rescoping of private agreements to protect a university’s administration’s interest in exclusive rights to invention title. If Bayh-Dole forces a rescoping of prior commitments, it has all but canceled many a consulting contract’s invention commitments—and employment agreements—and expectation of personal rights (in the case of volunteers and non-employee students). This should be be taken into account.
In copyright law, employment differs from its general meaning and pertains to those specific things an employer controls that give rise to a work being made for hire within the scope of employment. If the employer fails to substantially control the conditions under which a work is made (and there is a multi-point test for agency), the fact that for taxes and benefits purposes an individual is an employee is not the deciding thing. One might wonder if this kind of thing also goes on in the case of patent title under Bayh-Dole, that employee in 38 CFR 401.14(a)(f) means in addition to the taxes and benefits, an employee is someone assigned to work within the planned and committed activities of the grant. The guidance in 37 CFR 401.1 is clear: if a federal funding agreement aims to discover new knowledge, and a closely related but industry funded effort aims to apply that knowledge, then the latter work does not result in a finding of subject inventions. The scope of the federally funded research therefore is as important as the scope of individual’s commitments under Bayh-Dole. In this, can a university overclaim inventions? That is, can a university without regard for scope of work claim an invention as if it were a subject invention under Bayh-Dole? Is “just in case” sufficient? One would think not, and that one cannot make an invention a subject invention simply by pretending it is, or being confused that it is, or being negligent about it, or assuming it is for convenience.
This leads to asking whether employees of a university who are not working on a given federal funding agreement, but who discuss the work with those that are, and there is an invention, are subject to Bayh-Dole. We might observe that volunteers who are not employees are not, though the university may permit them (or even recruit them) to participate. The same can be said for students who are not paid. What about students paid as teaching assistants, who happen into a discussion of research? Is their status as employees for teaching purposes enough to make them employees for research purposes, even though their scope of work and duties has nothing to do with research and in fact the university is not at liberty to assign them to do research work as employees? And if not students, then what about faculty? They also are not assignable to research. They choose research and the university permits their research when it involves extramural funding or when it involves a conflict of interest or commitment. But talking among themselves about scientific issues is not something the university as an employer regulates. That’s part of academic freedom. The university may impose requirements when someone accepts the conditions of a particular extramural award, and therefore works as an employee within the planned and committed activities of that award. That’s not the same thing as conferring with colleagues.
Imagine if you will faculty member A who consults for a company in a given area, let’s say, the function of bluebird hearts under migratory stress, which let us offers a model for human relocation stress. A faculty colleague B at the university obtains a federal grant to study heart function under stress of travel for the Army. Bayh-Dole applies. The two meet at a university football game and have a chat and invent something of mutual importance. The SG argument is that A’s consulting obligation to assign is rescoped the moment A talks to B and they invent. That is, the company loses the benefit of that work A is doing for the company, even though A has not accepted any conditions of the federal award B has, and may not even be aware that B is working with federal funding. Is A an employee with regard to the usage in Bayh-Dole? Is A obligated to protect the government’s interest in any invention rights simply as a result of B obtaining a federal award?
In a company, this analysis is somewhat different, because a company does generally direct the work of its employees. In a university, this is not usually the case, except for staff scientists, post-docs employed in research jobs, and students under research assistantships. Does Bayh-Dole require each university lab to run as a closed shop for fear of volunteers, students, or faculty at other institutions contributing inventive subject matter that would then be lost to the host institution as exclusive rights to title? It does not appear that way in the Act. Thus, it is something of a surprise to find the argument that the law has to take all such rights as a matter of federal pre-emption of private commitments. Whether that is by automagical title or by rescoping retroactively past commitments, one has to view Bayh-Dole in this light as a rather grim reaper, antagonistic to personal rights in inventions, consuming everything so that these rights may vest exclusively in universities at their sole discretion.
It is one thing to say, if you contract with the government, then you accept government conditions. That is a matter of personal invention rights, freely obligated.
It is another to say, when I contract with the government, I can force your contributions into that contract simply by engaging you in conversation, even if you have no such contract with the government, and even if you have other contracts obligating your work. Those contracts are simply voided or rescoped so that rights go to the university. Who would ever consider working with university faculty again?
The company requirements for consulting faculty then would be: “you will not accept federal funds during the term of your commitments to the company, and you will not communicate with anyone accepting federal funds, and you will not advise students who may conduct research or communicate with anyone accepting federal funds.” That’s because in the SG reading, Bayh-Dole is not a law of contracts, but a law of rescoping private contracts to clear the way for universities to claim ownership of whatever they want.
One has a personal right in future inventions to commit. But the mere existence of Bayh-Dole says (in the SG’s reading): that personal right, whatever you intend in the act of committing the right, is subject to revision anytime you choose to participate in federally funded research. Further, it is subject to revision anytime anyone else participating in federally funded research happens to engage you in a discussion substantive enough for an invention to be conceived, whether you know about their funding or not. Bayh-Dole, the great harvester. The SG position might be called the Don’t Fear the Reaper argument. We might say, then, in response: don’t Don’t Fear the Reaper.
The present legal debate is headed in the wrong direction. I’ve made this clear with regard to AUTM/WARF, which argues an automagicality of vesting title against 30 years of assignment practice, against good public policy relating to university faculty and research, and against much better ways of reading the law including the usage of “retained”, the purpose of written agreements, and the placement of the Bayh-Dole provisions in contract and award conditions. The AUTM/WARF position is inventor-loathing, process-loving, and monoculture-advocating. The SG argument goes toward the right direction, but still under the sway that the problem is the court’s handling of Bayh-Dole. Scoping is a good topic, but first look at the scoping of the various statements of work to determine whether the claimed inventions are indeed subject inventions with regard to the research. Just because a university reports an invention as a subject invention doesn’t mean it is one. If the invention isn’t a subject invention, then Bayh-Dole cannot have rescoped any prior personal invention rights.
Following that, the issue that stands out is whether a present assignment of future inventions, if it lacks any specificity with regard to subject matter and time, can stand as a perpetual claim, essentially a perpetual non-compete clause or a non-disclosure/non-use obligation that functions as a non-compete. One might say, absent a clear intent with regard to the subject matter on which to be bound, such an assignment is against public policy. A number of states have laws to this effect, directed at invention obligations in employment agreements—that such obligations are void if they exceed the scope permitted by the law, and some go so far as to say the obligations are void if the employer fails to recite the law to the employee at the time that the obligation is imposed. One might expect a similar argument when the individual is not an employee but is being treated as one for the purposes of inventions.
One might also expect that a present assignment contract (or even a promise to assign) to be interpreted against the drafting party. Absent any documentary evidence of the scope of intention, it would be up to the prospective inventor to identify what he or she has committed to, and not for the company to see any invention and argue that whatever it is, it is within the intended scope of claims. A commitment to assign still has scope, and that scope is subject to interpretation, and where there are differences of interpretation, the party at a disadvantage and not doing the drafting may be given the broader room to make a case. If an individual later undertakes research funded by sponsor, carrying obligations to that sponsor, then one might argue that the individual did not breach obligations to either the company or the sponsor, but rather evidences that the scope of the obligation to the company was not so broad as the scope claimed by the company. This argument does not depend at all on Bayh-Dole doing any pre-empting of anything. Instead, it argues that until evidence for the specific intent arises in a promise to assign (or present assignment) of invention rights, it is not possible to pre-state what the scope of such a commitment entails.
There is still the question whether sufficient evidence exists to establish the intent of the parties with regard to the scope of commitment of inventions under dispute. That would be a good question to worry, rather than trying to transform Bayh-Dole into the Reaper.