[This article was written before the Supreme Court decided Stanford v Roche (June, 2011). It was also written before NIST did its crazy stupid overhaul of the codification of Bayh-Dole at 37 CFR 401, changing references and adding its dumber than dumb requirement that contractors require inventors to assign to the contractors all those inventions that the contractors must already own for the assignment requirement to apply. Fathom that. These people are in control of the Bayh-Dole submarine and don’t know surface from dive. They have one ping only.]
Bayh-Dole lays out things a federal agency has to do in contracting for research with universities (and nonprofits, and small companies). These things get packed into the Standard Patent Rights Clause (SPRC, 37 CFR 401.14(a)) and a university agrees to these things as a condition of its federal funding. One of those things a university agrees to do is to get an agreement with its employees (other than clerical and non-technical ones, and not with non-employees, and not with independent contractors) that they will report inventions, sign papers so patent applications can be filed, and sign papers to establish the government’s rights in inventions. That is, our friend the widely ignored (f)(2) agreement.
That is, there is a wonderful chain of apparatus from the Bayh-Dole law in 35 USC 200-212 to the Department of Commerce regs at 37 CFR 401.1-16, to the SPRC at 37 CFR 401.14 and its agency by agency implementation in contracting policy, to the introduction of a conforming patent rights clause in each funding agreement, and university actions to protect the government’s interest by obtaining agreements from its employees to that effect. It is all very clear, very doable. A chain of agreements required by the law.
Just, universities are not doing it. Further, patent administrators are arguing they don’t have to. And yet they insist that a compulsory system of taking title to inventions is necessary for the public to benefit from research at universities. It is as if there are two laws. The one on the books and the secret fingers-crossed convenience law for bureaucrats. University patent administrators insist this second law exists, and it is the one they worship because if it does exist, then it provides them with federal powers to run programs for the advantage of their patent licensing practices.
When a university screws up, say, and doesn’t bother to get the (f)(2) agreement with its employees, it’s okay. The secret fingers-crossed law does it for them. When a university approves personal consulting, allows assignments to be made, and then comes to regret that when they see the money to be made, then it’s the secret fingers-crossed law to which they appeal to void the agreement they now regret.
That is how it is shaping up in the arguments in Stanford v. Roche to the Supreme Court. If it’s about Bayh-Dole, then it is about whether university patent administrators are going to follow the contractual obligations their universities have agreed to, or whether the Supreme Court is going to decide that there really is a secret fingers-crossed version of the law that applies directly to inventors, to their private transactions, and makes everything good even when university administrators don’t bother to get things right.
The patent administrators argue they really, really, really want federal powers. They argue in their briefs that faculty inventors are inept, gullible, and selfish. They argue that the secret law makes their control of research inventions absolute. They argue that without such compulsory, bureaucratic intervention, nothing good could possibly come of university research inventions. They argue it’s really, really, really hard to do things the way the law literally reads. They ask the Supreme Court: please just skip the words on the pages, the logic that holds them together, and the rationale that underlies the approach, and furthermore, ignore our own past practices, our own manuals and policies that might say otherwise, and just change the law into exactly what we desire.
That’s an interesting choice. Are the laws as they are reasonably written? Or is there a secret other law, that when people asserting power want it, the state is there for them?
No one is asking research faculty what would work best for them. What do you want, the respect of being asked to agree to protect the government’s interest in what the government is funding you to do? Or, having your invention rights stripped away by university administrators determined to make money on your work and equally determined to enlist your desire to help them make that money, as a matter of “ethics” if not federal law?
Why have all this apparatus involving contracting if Bayh-Dole is merely a vesting statute? Why beat around the idea of contract clauses and the agreements required by them if really, secretly, fingers-crossed, the university patent administrators already own title, and any private deals get canceled retroactively that haven’t anticipated this kind of outcome, even when those private deals were approved by the university or were prior to a federal funding agreement and its obligations?
There are two versions, then, of Bayh-Dole. A bothersome version that requires universities to take action to obtain title to inventions arising in federally funded research; that requires agreements with employees to protect the government’s interest, to notify the government of inventions, elect to retain title in some of those inventions, and for those, receiving assignment of title pursuant to standing under the (f)(2) agreement, and then going off and filing patent applications and using the patent system to promote the practical application of the inventions.
And there is a simple, convenient version of Bayh-Dole that when it says it applies to federal agencies really means that it applies directly to inventors, divests them of title to their inventions, hands that title to their employers without notice or compensation, and voids any agreements those inventors may have had with others, even if the employers had approved the agreements.
So which is it? That’s what the Supreme Court is asked to decide. Is Bayh-Dole a law directed at agencies, with an apparatus of contracting, depending on university action to get agreements and then act within the scope and authority of those agreements? Or is it really about stripping inventors of their rights for administrative convenience, despite what the words on the page say.
Are the protocols of the law, in essence, a big, stupid waste of time, since the outcome of employer ownership is supposed to be inevitable, efficient, and invariant regardless of whether university patent administrators are inept, indifferent, accidental, distracted, regretful, or lazy about actually doing what the patent rights clause asks them to do?
In research contracting, you set out the bargain in the form of a contract, and you go with it. The folks doing the research are expected to comply with the deal. If they don’t, then an invention might hit the public domain, or be assigned outside the expectations of the contract. Sometimes that happens because the contract has limits, and sometimes because it has loopholes, or was badly drafted and incomprehensible, and sometimes because there is a breach of agreement. If the contractor was supposed to do something, and didn’t, the sponsor won’t get the benefit of the bargain. The sponsor may have a cause of action against the contractor, but the sponsor will have a much more difficult time getting back rights to the invention that have been lost.
What university patent administrators are demanding is that federal law should cover them when they mess up. Whatever the apparatus, whatever the agreements, whatever they were supposed to do and didn’t, they are appealing that Bayh-Dole should simply step in and do their jobs for them. It should take title to inventions, hand that title to them, and skip the few, easy things they agreed to to do as a condition of federal funding in the form of a federal contract.
One can see the attraction. A job in which one can make no mistakes, because any mistake is corrected by the force of federal law. The secret, fingers-crossed law that says, Bayh-Dole was established to ensure livelihoods for patent administrators and university technology transfer offices, and more than that, and here’s the attraction, it was established to ensure that university administrators would not have to bargain with research inventors ever again. This bargaining is the worst–not just about money, but about operating models, timing, personnel, register of engagement, BATNAs, deal structure, priorities. Who wants to bargain over innovation when the secret fingers-crossed federal law just takes stuff away, outright and makes an efficient process out of it?
No doubt, if one likes autocracy in one’s government, having a patent law that vests title without due process or just compensation is a really important thing. I can see why patent administrators and the organizations that front for them would be very into this. But only if they are also into power without accountability, disregard for laws and responsibilities, and a desire to prevent anyone from exploring other ways of supporting research results for public benefit.
So let’s see what wins out: will it be the law that sets out reasonable protocols, expects people to work by agreements, and allows for diversity of action? or will it be the secret fingers-crossed law that provides federal powers to ensure patent administrators can never make a consequential mistake, works by compulsion, and establishes bureaucracy as the centerpiece of federal research policy?
[update: Supreme Court rules that the secret fingers-crossed law loses!]