Since the topic keeps coming up, let’s look again at Stanford v Roche. The standard analysis is that the case teaches universities that they have to make their invention assignment agreements “tighter”. The argument goes, in Stanford v Roche a promise to assign was trumped by a later present assignment, hence the interest in the dissenting discussion of FilmTec in the Supreme Court decision and the importance of distinctions between equitable title and legal title. This analysis is simply incorrect.
The present assignment is a non-issue. Yes, it was the means by which Cetus (and then Roche) expected to have an ownership interest in inventions made by the post-doc. Yes, it was found to be a valid assignment. But it did not trump an earlier promise to assign. It trumped a later attempt to obtain assignment. Any valid assignment, however made, would have trumped the later attempt to obtain assignment, given that Stanford was on notice of the assignment. The important part in “present assignment” is assignment, not present.
In reviewing Stanford’s patent policy, the CAFC quotes this section (p 17):
Unlike industry and many other universities, Stanford’s invention rights policy allows all rights to remain with the inventor if possible.
This language is consistent with the idea that obligations to sponsors may require a university to take title to inventions, or to require inventors to assign title to sponsors of research. The CAFC then took up Bayh-Dole arguments and found that Bayh-Dole does not void “any prior, otherwise valid assignments of patent rights”:
As previously noted, Stanford’s invention rights policy “allow[ed] all rights to remain with the inventor if possible,” J.A. 743, which supports the conclusion that Holodniy still possessed rights at the time he signed the VCA with Cetus. Just as we explained that Bayh-Dole does not automatically void ab initio the inventors’ rights in government-funded inventions, Cent. Admixture, 482 F.3d at 1352-53, we see no reason why the Act voids prior contractual transfers of rights.
Of course, Bayh-Dole would not void anything anyway, because it applies to agencies. What applies to universities is the patent rights clause in a particular grant or contract, generally the standard patent rights clause as introduced by Circular A-110 (now 2 CFR 215). It’s a shorthand to say Bayh-Dole requires this or that of universities, but the university obligations arise from agreeing to federal funding agreements. The obligations are not imposed by statute. If a university breaches a federal funding agreement, it has broken a federal agreement, not the law that established standard terms for such agreements.
The policy situation at Stanford was that university claims of ownership in inventions were not discretionary with administrators, but were imposed by law or contract. One can see in this how an interpretation of Bayh-Dole as a law vesting university ownership, or as a research contract requiring ownership, might be prized if it leads to the university administration being able to expand the scope of its claim to inventions to the vast majority of all inventions, as the federal government becomes the primary sponsor of university research. A university tech transfer office using this “federal law requires” trick could expand university claims without ever changing the text of their patent policy. From there it is a simple step to add institutional ownership language to sponsored research agreements as well–not as a condition imposed by a sponsor, but as one imposed by the university administration. And from there, it is only efficient, if not equitable (in that strange administrative usage of “equitable” to mean that all should suffer equally since many were made to suffer specially), that all other inventions be treated in this same fashion–institutionally owned, institutionally licensed, for institutional benefit, which is then conflated with public benefit.
The Stanford invention policy, however, worked in this way: Stanford will own everything it must own, but inventors will own whenever possible. Investigators joining Stanford sign an agreement that says: “I agree to assign or confirm in writing to Stanford and/or Sponsors that right, title and interest in . . . such inventions as required by Contracts or Grants.”
Now let’s run it forward. An investigator joins Stanford and signs this agreement that stipulates future assignment of title to Stanford if required by Contracts or Grants. The investigator then leaves Stanford for nine months at Cetus, where he signs Cetus’s patent agreement, which includes an obligation to assign inventions arising from the work at Cetus to Cetus (and also has a present assignment of those inventions, for good measure). All this is entirely within Stanford policy and outside Stanford expectation of invention ownership. There is no obligation–none whatsoever–under Stanford’s policy to assign to Stanford–not at the time, not in the future. The promise to assign has nothing to do with the Cetus interaction. That interaction is not the subject of an extramural contract or grant that requires such assignment. A present assignment requirement by Stanford would have made absolutely no difference. Obviously. Clearly.
Now the investigator comes back to Stanford, continues work within the scope of what he had obligated to Cetus and Stanford knew he had obligated to Cetus (since, among other things, his direct supervisor at Stanford was on the technical advisory board at Cetus). This continuing work is funded (so Stanford claims) by a federal grant. The question then arises, does this federal grant require Stanford to obtain title to inventions? That’s the crux of it. The answer is no, the federal grant does not. That’s the Supreme Court’s conclusion as well. Good for the Justices. They can read! They understand federal policy! Bad for tech transfer officers and law professors who can’t or won’t. The upshot is that under the Stanford invention policy in effect at the time, Stanford had no policy authority to require assignment. A present assignment would not have changed the outcome. The issue is not how an invention is assigned, or even when, but rather the changing scope of interest in future inventions.
A federal funding agreement’s standard patent rights clause controls agency interest in inventions, not the relationship between the university and its research personnel–except in one crucial detail–and that is that the university must release its personnel from any conflicting university claims so that they can comply with the (f)(2) obligations–to disclose, sign paperwork to permit applications, and sign paperwork to establish the government’s rights. Nothing in there about establishing the university’s rights, or the rights of a research foundation, or nothing. This is not a flaw. This is the federal government not intervening in the private affairs of creative people and the supporting institutions that host them. This is the essence of Bayh-Dole. This is the juicy bit. And this is the part that the technology transfer community, incredibly, stubbornly, has rejected.
The idea is around that somehow Cetus/Roche cheated Stanford out of hundreds of millions in royalties. This is nonsense. The idea is also around that the post-doc in making the assignment to Cetus/Roche cheated his colleagues and Stanford out of hundreds of millions of dollars. Also nonsense. And there is the idea that Stanford’s invention policy, had it been drafted properly with a present assignment, would have prevented this terrible outcome. We can see that this, too, is nonsense.
It is still nonsense if it is a present assignment as a condition of employment rather than a requirement of an external contract. Even if the present assignment is “everything we may legally claim, we claim now, without review and without future formalities.” Such an assignment still applies only to inventions that the university is entitled to have an interest in. It is a question of the scope of claim at the time an invention is made. Make up any premise you want for the obligation to assign–employment, use of facilities, participation in extramural research–it doesn’t matter. Once a university permits consulting, and permits an assignment of inventions that goes with it, the university has waived its claim on inventions within that scope. Those inventions are then outside any promise to assign or present assignment signed upon employment. If an employee-consultant returns to the university to develop an invention obligated contractually to others, then the university has no standing to void that assignment unilaterally. The university’s present assignment doesn’t operate. The university may accuse its employee of breach of policy, but that accusation does not recover title to inventions the university has previously agreed (by approving the assignment made in consulting) are outside the scope of the university’s claims.
We can chase down all the variations at leisure. How about making employees insert a provision in their consulting agreements that obligations to the university take precedence? How about restricting consulting to work that doesn’t involve inventing? How about banning all consulting work? How about making consulting work a violation of conflict of interest rules if there’s an assignment of an invention the university later decides it wants? The bits that “work” to prevent assignment to others also diminish the ability of faculty to teach, collaborate, learn, find opportunity, and engage the broader community. The bits that don’t “work” also have this effect.
The one variation that no-one seems willing to pursue is what happens if the (f)(2) agreement supersedes any university policy or employment claims on inventions. It’s clear that if a university does not implement (f)(2), then the government is exposed to a university research employee assigning to a company and not obtaining a license to the invention. In this case, Stanford lucked out because there were co-inventors. The lesson ought to be: get the (f)(2) agreement in place. What then? If the (f)(2) agreement precedes a later private assignment, then I would argue that the Bayh-Dole flow down rules follow the assignment, like any other assignment made within the standard patent rights clause, and the assignee has accepted the obligations that go with assignment. The university may not get title, but the government’s interests are protected, and the new assignee has the same obligations that the university would have had. Whether the later private assignment violated policy or employment agreements or patent agreements between the employee and university is another matter.
If the requirement for the (f)(2) agreement comes after a private assignment (such as a present assignment), then there’s a question of whether the research employee can make the required agreement under (f)(2). If not, then that research employee must be excluded from the research. If the (f)(2) agreement is made anyway, then any problems are between the research employee and the party on the other end of the private agreement regarding assignment. The government will get its rights–federal agreements trump state-enforced ones. It would appear that (f)(2), not present assignments, is the key to complying with federal research invention policy.
The Stanford v Roche disinformation campaign is not about improving university research impact or more effective technology transfer. Stanford v Roche teaches that Bayh-Dole does not dictate subject invention ownership and this is not a flaw but its great strength. Stanford v Roche also teaches that university administrators, in defiance of the opportunities offered by Bayh-Dole, are intent on claiming everything they can, even if doing so comes at the expense of faculty independence, collaboration, and innovation–the very things that sparked the idea of expanding federally funded research at universities, and later, Bayh-Dole. Present assignments won’t save universities, and will eventually undermine federal research policy that directs $60b+ per year to universities, perhaps sooner than the retrenchment crowd expects.