I have been working through Bayh-Dole. You may have noticed. The question that comes up is how does title to subject inventions get from the inventors to universities? There are three possibilities.
1) universities rely on their own patent agreements with employees
2) universities rely on the same (f)(2) written agreement that protects the government’s interest
3) Bayh-Dole automagically moves title around as needed
I’ve argued that 3) is unconstitutional because there is no just compensation for the taking of the property, just an obligation to share royalties–but no obligation to create royalties and no assurance that those royalties will reflect just compensation.
The AUTM practice manual makes a case for 1). That a university has to have a deal with employees by which it can claim title by assignment when it has standing under the standard patent rights clause to request title. In the case for 1), then there have to be two agreements with inventors–a deal between the inventors and the university, and a deal between the inventors and the federal government under (f)(2), the written agreement requirement. In this approach, if a university wants the benefit of the standard patent rights clause, then to retain title, it has to have the legal mechanism to do that–a contract with employees. If that contract does not exist, then the university cannot retain title, and so the (f)(2) agreement kicks in, and it’s up to the government to obtain title or permit the inventors to retain title under 401.9. It is clear in this reading that a university does not have to have a deal with inventors to comply with Bayh-Dole, or more accurately with the standard patent rights clause as required by the agency under Bayh-Dole. The university need not have an IP policy, an employment agreement requiring assignment of patent rights–none of that is required under the standard patent rights clause. What is required is a deal under (f)(2) to protect the government’s interest. What’s not specified is who that deal is with.
I have developed a case for 2). That is, that the deal in (f)(2) is a federal deal, with the employee / inventors agreeing in writing to the big three–disclose as directed by the university, sign papers to permit patent applications to be filed, and sign papers to establish the government’s rights in subject inventions. I argue that (f)(2) is broad enough to cover the university’s interest in subject inventions, that the university need not have any other arrangement with its employees regarding title, and that indeed any other private arrangements trying to do the same thing are pre-empted by the federal nature of the written agreement required by the standard patent rights clause.
The standard patent rights clause forms a federal agreement. That agreement can take various forms–grant, collaborative agreement, contract. The (f)(2) written agreement is of the same form, a federal agreement. It is required that the university require it, but the agreement is not with the university and not with the federal agency, but rather is an agreement to comply with the terms and conditions of the standard patent rights clause.
Consider it this way. We have research employees, some of whom will invent. They will hold title. If anyone else is to have title, these employees will have to be bound by an agreement to transfer their title. But the standard patent rights clause has no idea at the outset where that title might go, if anywhere, so does not specify who gets to direct that transfer of rights. Instead, it provides a protocol for establishing standing to do this. The anchor of that protocol is (f)(2), which binds the employee / inventors to doing the three necessary things to make the protocol operate.
While the standard patents rights clause is indeed standard, the only two things about it that are standard are that it applies in a standard way to most agencies, and those agencies can’t change it without cause. So universities receive it without change, and there you have it, a uniform approach to federal contracting for procurement of invention deliverables for universities. But the genius of the approach is that the standard protocol allows for a wide diversity of university practice–anything from public domain to inventor-owned to university-controlled to university-affiliated research foundation to national research foundation to any organization that has a primary function of managing inventions to any organization at all even if it does not have a primary function of managing inventions so long as the agency approves. And, oh, if none of this works for you, let the agency hold the rights. The national research innovation policy for universities is *try everything, do anything that works for you, ask only if you are staying out past 2, tell us what you are doing maybe once a year.*
Bayh-Dole provides universities with a general protocol for research innovation that is a broad as they can imagine. That protocol is tied to title of invention. Whoever holds that title under the standard patent rights clause is to use the patent system to promote the practical application of the invention.
The protocol of the standard patent rights clause says: inventors under the written agreement they accept to protect the government’s interest will do those things requested of whomever has standing under the protocol to direct them. This could be the university, who may be required to convey title to the government, or the federal agency, or any organization that the university assigns its standard patent rights obligations to, as provided by the protocol. In this way, the (f)(2) written agreement is, one one end, with the employee / inventors, and on the other end is with whomever ends up with standing to be on the other end. This is in the nature of federal agreements, why it is binding when agreed to (rather than imposed unilaterally on citizens by the federal government) but not rightly a contract signed off by two parties.
If the university under (k)(1) assigns its rights to another organization, that organization relies on the (f)(2) written agreement to obtain title, if it chooses to elect to retain title. It has no other agreement with the university. Yes, a university can create a policy and put this into the employment contract that inventors will assign to a foundation. But the protocol is broader than this one instance. A university under the protocol could assign to *anyone* meeting the conditions of the protocol, and there’s no way that it could set up its employment agreement and IP policy to name each and every one–some may not even exist when the IP policy is drafted!
The written agreement at (f)(2) is what has to be in play, regardless of any other paper trying to do the same thing. It makes sense. (f)(2) sets out what the government must have by way of commitments–disclosure, patent applications, rights in patents. Under the standard patent rights clause, that’s all anyone else can claim.
My argument is that if the standard patent rights clause anticipates any number of entities may have standing to require assignment of title, and if the (f)(2) written agreement when properly required binds inventors to follow the requests within scope of whoever has that standing, then universities themselves, when they obtain standing under the standard patent rights clause by electing to retain title, also have standing to direct their inventors to do those things to protect the government’s interest, such as executing assignments of title to the university, as that clearly protects the government’s interest and is within scope of (f)(2) obligations.
In this way, (f)(2) provides all the resources necessary to obtain assignment of title, and to then covey to the government whatever interest in that title the government has bargained for. If the university does not want title, then it can assign that interest, and the assignee of that interest stands in under (f)(2) to make whatever requests of inventors it may, and if there is no assignee, then the funding agency has standing to make these requests, or deal with inventors under 401.9 rather than (f)(2).
Most practices I have been involved with assume that (f)(2) is met with a policy statement regarding IP and another regarding compliance with the terms of extramural research contracts. But the standard patent rights clause does not require inventors to comply with the standard patent rights clause, but rather it is required of the university. It serves no purpose for the university to then say, we have a research compliance policy that requires all of our inventors to comply with everything in the standard patents rights clause, when that clause requires the university to require of its employee / inventors only three things–disclose, sign patent application papers, sign government interest papers.
Same goes for IP policies and the like. If the university fails in its obligations under the standard patent rights clause, then it has no standing to acquire title and its own IP policy simply cannot operate, as the inventor’s personal rights in title will be outside the scope of what the university may claim under its IP policy. If the university obtains standing by timely reporting disclosed inventions and timely electing to retain title, then it needs only (f)(2) to request assignment of title from its employee / inventors.
There, that’s the argument. It will be up to the courts to decide which of these three approaches come into play. Given the quasi-contractual nature of federal agreements, I could see university IP policy meeting some of the conditions of (f)(2) in the absence of anything actually attempting to implement (f)(2). But I also want to make clear that it works to construe all dealings regarding title to subject inventions as a federal matter, coming under the government’s standing interest in invention deliverables in funding agreements, and that the government never makes title disposition a private matter, even in 401.9 proceedings. And that’s how Bayh-Dole stays Constitutional. The moment folks think that title has fallen out of federal interest, and it’s a matter of using the authority of government to take title privately, then there has to be due process and just compensation, and folks, that just ain’t happening.
Thus, the importance of (f)(2) and the inspired nature of the Act.