Yippee! It’s Bayh-Dole review time! That’s right, let’s reset what Bayh-Dole is, reminding ourselves of what’s written in the law, how it operates, and what that teaches us about federal policy on research innovation.
First and foremost, the Bayh-Dole Act is a law directed at federal agencies making research awards to universities, other non-profits, and small companies (which for ease we will call universities except if context requires otherwise). It is a law that applies to agencies. It tells agencies how to manage procurement of inventions from research funded at universities. Bayh-Dole does *not* apply to universities. It does not apply to the employees of universities. It is a law that places requirements on federal agreements for research with regard to inventions as deliverables to the government. It makes agencies do things. It relieves agencies of doing other things. Its effects are in what it makes agencies do, and what the agencies make universities do, and what the universities must make their employees do to comply with the agencies requirements, and what they must make assignees, subcontractors, and licensees do. One has to grasp this sequence to see how the Act operates.
Bayh-Dole operates through federal funding agreements for basic and applied research with universities. The government’s challenge is how to fund faculty at universities so they conduct research of interest to government agencies. Federal awards to universities are directed to the proposals of specific individuals–the Principal Investigators and their teams, who propose research and are awarded grants to do the work they propose, based on the merits of their proposals, credentials, and capabilities. The broader resources of the universities that host them are considered as part of the capabilities available to the PIs.
The university in this approach is valuable as the means to handle the logistics of gaining access to PIs. If the universities stopped performing this function, the government would be able to fund PIs directly, or through foundations or scientific organizations, perhaps at some great savings. If however PIs stopped proposing, the government would simply not offer funds to universities. What would be the point? The government contracts with universities as a proxy or intermediary for its interest in PIs. Universities do not win federal awards, PIs do. Universities of course may help PIs be eligible for awards (by having required policies and services in place) and compete for awards (by having a reputation and investing in facilities, equipment, and personnel). But the actual awards are directed at the PIs, using universities as contracting proxies.
Even more importantly, the research culture at universities is such that the universities do not assign PIs to research, nor do PIs assign workers or students to research. People request to participate. The university can block a proposal from being submitted or funded, and can block someone joining a research program that should not be allowed to participate, but the university does not command and control the research. The university does not choose the projects, assign the personnel, decide the methods or directions, evaluate the findings, or direct the publication. This is entirely distinctive of universities. Bayh-Dole recognizes this distinction and sets up its conditions on funding requirements accordingly.
The Bayh-Dole Act is at 35 USC 200-204. Its implementing regulations are at 37 CFR Part 401.
Bayh-Dole is implemented as a law governing how federal agencies construct the conditions under which federal money supports work proposed by university PIs. These conditions take various forms, such as grants, cooperative agreements, and contracts. The common feature of these various mechanisms is that the recipient or contractor promises to conform to the conditions that come with the funding. There are two great policy mechanisms governing these conditions. For grants, we have Circular A-110, now at 2 CFR 215.36(b), which implements Bayh-Dole for grants. For contracts, we have the Federal Acquisition Regulations, or FARs 52.227-11. Bayh-Dole directs agencies in how to construct the conditions under which universities receive money supporting the research proposed by PIs.
Without allocation of money with Bayh-Dole conditions, there is no Bayh-Dole effect on anyone at universities. The effects created by Bayh-Dole come about when recipients accept federal research money and they undertake to comply with the conditions that come with that money.
Bayh-Dole is implemented through award conditions, award by award. Bayh-Dole requires that the standard patent clause at 37 CFR 401.14 (a) be included in all funding agreements for research with universities. It is through this clause (or its variants) that Bayh-Dole imposes obligations on universities. It is really important to understand that 37 CFR 401.14 (a) imposes obligations on universities as contractors and not on any individuals. When a university accepts federal research money, it—the university—promises to undertake the Bayh-Dole obligations. If it takes no other action, no individual PI or research participant has any obligation to the government or to the university, for that matter—and of course, the university would be in breach of its promises to the government under Bayh-Dole. Bayh-Dole is not a general law directed at citizens, such as is, say, income tax law. The Act makes agencies make universities do certain things, and conform to certain agency protocols. It is up to the universities to place obligations on research personnel to comply with obligations the university accepts.
Bayh-Dole requires universities to obtain promises on behalf of the government with research employees, subcontractors, and others who may be involved in invention management. These obligations are set out in 37 CFR 401.14(a). The most important of these is the requirement for written agreements in section (f). Section (f) is labeled “Contractor Action to Protect the Government’s Interest”. In (f)(2), agencies are directed to require in their contracts with universities that universities require their research employees to agree in writing to a set of conditions.
I know that’s a long winded way of saying it, but that’s the flow of control. It’s a law on agencies that requires promises from universities that promises from certain employees.
The Act requires the agency to assert conditions on universities with PIs they fund. One of those conditions is that the university require research personnel to agree to conditions. If the Act made those conditions the law of the land, applicable to everyone outright, there would be no need for the written agreement in (f)(2). The written agreements the university is required to obtain from its research personnel are the means by which the government obtains an interest in their inventions. And it is by the university choosing to undertake actions in the government’s interest that the university has standing instead of the government to obtain an interest in its own research personnel’s inventions. That is, the university depends on those same written agreements to obtain title that the government depends on for its benefit.
The Act does not specify much about these written agreements.
(2) The contractor agrees to require, by written agreement, its employees, other than clerical and nontechnical employees, to disclose promptly in writing to personnel identified as responsible for the administration of patent matters and in a format suggested by the contractor each subject invention made under contract in order that the contractor can comply with the disclosure provisions of paragraph (c), above, and to execute all papers necessary to file patent applications on subject inventions and to establish the government’s rights in the subject inventions.
Restated without the qualifications, we have: The university agrees to require by written agreement its research employees (1) to disclose each subject invention and (2) to execute all papers necessary to file patent applications on subject inventions and (3) to establish the government’s rights in the subject inventions.
There are things worth noting about (f)(2). It is directed at employees of the contractor, but not non-technical or clerical employees. But it does not reach to non-employees–students, for instance. What about independent contractors? visiting scholars? volunteers? industry personnel informally collaborating? It is clear that Bayh-Dole does not intend for the government to claim invention rights from everyone, but only from a select set of research personnel. It is also clear that if any of these non-employees happen to invent within the scope of the federal award, the government has no mechanism to obtain an interest in the inventions from those individuals. We can conclude the government agencies under Bayh-Dole *have no interest* in the invention rights of anyone other than employees other than clerical and non-technical workers. Let’s call these employees the “research employees”.
We may ask a further question. Which research employees are to be required to agree in writing? Imagine a university with one federal grant. Do all research employees of the university have to agree in writing? Or just the research employees working on the grant? If a research employee working on a company grant co-invents with a research employee working on the federal grant, do both have an obligation to the federal government? We will deal with these sorts of questions later. For now, recognize that the (f)(2) requirement is how the government obtains title from university inventors and is how agencies are required (by Bayh-Dole) to require universities (in the standard patent clause at 37 CFR 401.14(a)) to require their research employees (under the written agreement requirement at 401.14(a)(f)(2)) to transfer title to the university when it elects to retain title.
Bayh-Dole does not require a university to have an IP policy. It does not require a research compliance policy. It does not require promises to assign to the university or present assignments to the university. It does not even reach to all inventors or even all university employees, but only those that are, as we call them, research employees. For these, Bayh-Dole provides the mechanism by which these employees promise to convey their personal invention rights. In fact, one may observe that promises made under Bayh-Dole are all that Bayh-Dole requires in agency contracting on subject invention rights, and all it relies upon to establish government rights in subject inventions, and the rights universities need to comply with the provisions Bayh-Dole requires agencies to require.
This is how Bayh-Dole is implemented. It requires agencies to include requirements in their research awards to universities. If grants, then by Circular A-110. If contracts, then by FAR 52.227-11. Under those requirements, universities are required to have written agreements with research employees to protect the government’s interest, entailing three obligations: to report inventions to the university, and to execute papers to permit patent applications to be filed and the government to get the invention rights(title, or license and university diligence) it has bargained for.
Then, in all this, what is the role for universities’ on policies on assignment of inventions? Ah, fun stuff for another post.