I’m trying to pin this down. It is has been a long haul. First we looked at Stanford v Roche and the AUTM arguments for vesting and found them all scary and wrong, but it took a lot of work with Bayh-Dole–and to get past its “defenders”–to see what is actually going on. Then we had to look at how Bayh-Dole does shake out in general, in terms of how Bayh-Dole operates, how obligations are distributed, what options and obligations a contractor in a federal funding agreement may have, and how these in turn might apply in the case of Stanford v Roche.
What it all got to is that the problem is not a promise to assign trumped by a later present assignment. Yes, that happened, but that wasn’t the fault, and it would not be fixed by making the first promise to assign a present assignment. That’s because the obligation is still dependent in university policy on another set of conditions by which the university asserts an interest. But more so, the standing to make the claim is conditioned on the SPRC in any given federal funding agreement, which takes precedence in the university’s obligations over any of its own standing requirements that might conflict as to the disposition of common subject matter, like title to invention.
We see that Bayh-Dole, through the SPRC, makes a distinction between the rights due the government and those that may be held privately. The rights due the government follow both an agreement made by research employees (that’s the (f))(2) agreement) and obligations required of the university as contractor. We see further that Bayh-Dole is interested in invention title as a contract deliverable, not as a statutory right. Thus, retaining title means acting to preclude the agency’s standing to request delivery of title. One may or may not already have title. That is quite beside the point. What matters is that the Act doesn’t change anything about that other than whether or not the contractor is on the hook for conveying that title to the government, or doing something else with it, or leaving well enough alone.
From there, we could see clearly that Bayh-Dole was no vesting statute when it comes to title. Title vests the old fashioned way, with inventors personally, and conveyed as the Patent Act requires, by a written instrument. We toyed with the idea that a vesting statute would be unconstitutional for lack of due process and just compensation. We pointed out how damaging such a vesting statute would be to all agreements pertaining to any present or future inventions, especially those that had not been actually reduced to practice, since in the vesting reading, a university gets title upon first actual reduction to practice, regardless of anything else (such as obtaining an issued patent based on constructive reduction to practice). We also pointed out how antagonistic to inventors generally a claim of perfunctory vesting is, and how shameful it is to see university patent administrators of all people rushing to join the ranks making such an argument.
After working through Bayh-Dole these ways, we then turned back to how Bayh-Dole operates to distribute obligations. We saw that it doesn’t directly address with an (f)(2) requirement clerical and non-technical employees, and doesn’t appear to address at all non-employees, in (f)(2) obligations. We observed that there would be no reason for an (f)(2) obligation if it applied to all these other people anyway, and further, we observed that the (f)(2) agreement was required by statute but it was not implemented directly but rather, like the SPRC, was implemented as a federal contract reaching directly to certain employees of the contractor. One might think, it is like a mini-SPRC with these people in the context of the major SPRC with the contractor. Above all, we saw that (f)(2) does not directly require assignment of title to the university, nor does it transact such title. In fact, it serves as the means by which the inventors would be required to convey title to the government in the event that the university elects not to retain title and the agency requests it. We snorted at the idea that title magically bounces around, first automagically with the university, then back to personally, simply based on notices passed around by administrators, all without support in every aspect of the patent law, unnoted in the MPEP, and not acknowledged in any university patent documents or training. The irony that AUTM’s own Practice Manual teaches against the idea of vesting caps it all.
From this we saw that the SPRC is interested in the title to inventions that the contractor has standing to deliver to the agency, not necessarily the entire title in any invention. This leaves off title that co-inventors may have obligated to others, such as co-inventors who have not agreed to (f)(2) obligations to the government for various good reasons (such as not being research employees, or the university goofed up and didn’t get an (f)(2) agreement out of them).
We then spent time looking at things like work made for hire, which is a federal definition for a class of creative works in copyright law. This definition changes properties of a work of authorship such as the term of copyright and whether there is a personal termination right in the law that trumps any private agreement otherwise. The treatment of work for hire shows how a federal law on intellectual property can use the status of an asset as a means for establishing the conditions of contracting around it. The same goes for subject invention. Subject invention is a definition free and clear in the Patent Act at 35 USC 201(e). When an invention meets the conditions of the definition it is a subject invention for everyone involved–the inventors, the university, any assignees, any subcontractors, anyone who is or becomes a party to the funding agreement. Once a subject invention, always a subject invention. But also, there is no way but by meeting the conditions of the definition for an invention to become subject. It cannot be made so by private agreement. No university can declare something a subject invention “just in case” or as a convenience to pursue its own agenda using the power of the Bayh-Dole Act rather than relying on its own alternative policies, which might provide a different outcome.
From subject invention we then turned to the obligations that attach to subject inventions are deployed. We found a number of pathways that depend on the relationship a party has to the SPRC under which an invention becomes public. We noted the use of “of the contractor” and “subject inventions subject to the provisions of this clause” (meaning the SPRC) not as drafting foolishness but carrying actual meaning. There can be inventions not of the contractor, and there can be subject inventions that are not subject to the particular SPRC. We pointed out how these could come about, such as an invention made solely by a non-employee but within the planned and committed activities of a federal award so that there was a diminishment or distraction in the performance of the work under that award. Subject invention “of the contractor” (because within scope of the work) but not subject to the SPRC (because no (f)(2) agreement required, no obligation to assign or license to the government, therefore not a deliverable under the SPRC).
Doing this work allowed us to see clearly the various means provided by Bayh-Dole for title to subject inventions to move around, and with title various obligations depending on who has title, and what obligations they have for it, whether under Bayh-Dole directly (such as something being a subject invention) or by means of the SPRC, the (f)(2) written agreement required by the SPRC, or imposition of portions of the SPRC such as at 401.9 when inventors retain rights acting for themselves rather than as agents of the university.
Chasing down the various pathways has its own difficulties. One of these is that some of the pathways no one talks about. No one asks about how a (e)(1) standing license operates in the event a university does not elect to retain title. Nor do universities go out of their way to establish such agreements with companies in advance of federal funding, though the situation of an industry consortium would be an ideal place for it–providing that regardless of the university’s decisions on title, the companies in the consortium are assured a non-exclusive license to practice. Further, it appears that university patent administrators go out of their way to suppress some options (such as assignment to companies under (k)(1)), are horribly sloppy in their language (such as conflating electing to retain title with actually having title, or that the law requires assignment to the university).
We didn’t note, but could have, that sloppy language is rampant throughout university technology transfer and points not so much to idiom as to a kind of presumption of authority that allows an indifference to practice, not unlike the problems banks had with foreclosure documents that they hadn’t bothered to get right or follow. It’s quite the realization that folks in tech transfer don’t care to distinguish a license from a contract, an invention from an innovation or from a technology. What does one expect when it comes to something truly elegant, like Bayh-Dole? But apart from the observation about banks, we really did not need to point out the apparent lack of practice depth in the biz.
All this gets us down to the realization that patent law is the same as it ever was. Title vests as it always has done. Contracts that dispose of invention rights are the same as they ever were. The only thing that has been introduced is the status of a subject invention, and how the special obligations attending that status are conveyed through the various means available to convey title or rights to subject inventions. These pathways are the stuff to understand in practice. Perhaps what is so surprising in Stanford v Roche, or more so in the discussions around the case is how little of the diverse, even cool, stuff of Bayh-Dole gets into practice. It’s like everyone lives in the kitchen, and there’s a beautiful house to explore, a beautiful car. Even, at some point, especially for some folks, a My God, What Have I Done?
To summarize:
A subject invention is a subject invention regardless of who owns it. Buyer beware. Just because Roche does not inquire with diligence into what it is obtaining does not mean it can strip out later what it finds it does not like. Subject invention is a definition in the federal patent law. It is not a status that arises by private agreement. It’s a subject invention and the properties of subject inventions follow the entire right, title, and interest to subject inventions. Roche has obligations as a matter of federal patent law arising from the standing of the invention.
The present assignment of future inventions is either an action authorized under Bayh-Dole or is not. If not, then folks are arguing vesting statute. You have to go the other way or give up. If you go the other way, then the assignment is valid. That’s what the CAFC says. If it is valid, and the invention is a subject invention, then Bayh-Dole follows it. First, as above, subject invention sticks as a matter of law. That is not just a name change. It carries obligations *that vest with assignment*. Second, there is a mechanism laid out in the Act and within the SPRC for how Bayh-Dole obligations are assigned along with title, as they must, for a subject invention. Thus Roche not only inherits a subject invention, but is one or more of a) a party to the Stanford funding agreement by assignment or substitution of parties b) an assignee of title under Stanford’s standing under the SPRC at (k)(1) coming about through its employee’s authorized assignment and/or c) the holder of title per assignment from the employee’s authorized assignment along with that employee’s (f)(2) federal agreement regarding the government’s interests.
It may be as simple as Stanford asking Roche for title rather than appealing to the government for title. No question it is a subject invention. No question it is a subject invention for Roche, then. The only question is what Bayh-Dole obligations pass to Roche, and those are pathway dependent. We are assured that there is at least one pathway that operates. Perhaps Stanford should just *ask*. Wouldn’t that just take the biscuit?
The particular pathway Bayh-Dole obligations follow, and what they are for each party, is a choice of the parties in their contacting. If Roche has a license from Stanford, then it has only the flow down obligations for reporting and march-in. If it has title via assignment under (k)(1), then it has all of Stanford’s obligations, including royalty sharing. If it has title via a personal assignment, then under (f)(2) Stanford has standing to go get the title back, leaving Roche with standing for a share of royalties.