At the end of the majority decision in Stanford v Roche, the Supreme Court pauses to chide the universities that have come whining to it for federal power to strip inventors of their rights, all for, apparently, administrative convenience:
Though unnecessary to our conclusion, it is worth noting that our construction of the Bayh-Dole Act is reflected in the common practice among parties operating under the Act. Contractors generally institute policies to obtain assignments from their employees. Agencies that grant funds to federal contractors typically expect those contractors to obtain assignments.
With an effective assignment, those inventions–if federally funded–become “subject inventions” under the Act, and the statute as a practical matter works pretty much the way Stanford says it should. The only significant difference is that it does so without violence to the basic principle of patent law that inventors own their own inventions.
The Supreme Court here is addressing one prong of the ownership issue, leaving another unmentioned because it was not raised as an issue, and not considering a third, which is more important by far but not really a matter of law and therefore outside the scope of their attention.
The first prong of ownership is that of the arrangement between contractor and employee. There, the court says, get your act together, folks, if you want to own inventions made with federal support. A host of hot, sweaty administrators riding lusty attorney nags rush toward the present assignment corral. But the court here is not providing the only alternative, and as the court has pointed out, their advice is not necessary to their conclusion in the case of Stanford renegging on its own patent policy, and on the waiver of that policy with regard to consulting it permitted, nay, even wanted.
The second prong, unmentioned by the Supreme Court, is how also inventions may become subject inventions without being first assigned to a university contractor. The third prong we will get to at the end.
When an invention is “of the contractor” and is federally funded (that is, owned by the contractor and within the planned and committed activities of a federally funded project, or that diminishes or distracts from that project), then the invention is subject to the standard patent rights clause, and becomes a “subject invention.” But that is not the only pathway by which an invention becomes a subject invention. It is not without good reason that Senator Long called the Bayh-Dole legislation “the worst bill I’ve seen in my life.” It is miserably written, perhaps cursing a generation of university patent managers and attorneys to write equally miserable patent policies to accompany it. But a concept embedded in Bayh-Dole, that faculty should have a say in the disposition of inventions made in research they have proposed and the government has chosen to support, makes a lot of sense. This is not the only concept that was at work in Bayh-Dole, of course. There were others: making all agency contracting with universities uniform; eliminating nagging legal counsel that argued that the government must take rights, or must fuss for months over the details of each request to retain title; shifting the default from ownership to non-exclusive government license; and perhaps even cutting out nationally oriented invention management agents in favor of a provincial, in-house or WARF-house approach. But the idea of faculty inventor ownership is there in Bayh-Dole, too.
It is also clear that advocates of Bayh-Dole did not want faculty inventors to have any say in their inventions. For these advocates, the deal was between the funding agencies and the invention management organizations that were to do something with the inventions made with federal support. In one account, three of the primary advocates take up the arguments by Rebecca Eisenberg and David Mowery, among others, that Bayh-Dole was about trying to commercialize government-funded inventions that really had no prospect of commercialization, that the industry contractors had declined to make the effort and were fine with the government taking ownership. They don’t actually provide any counter to this perspective, but rather insist that it was mere coincidence that there were a “confluence of forces which had an effect upon universities’ technology-transfer efforts” (4). The objectives, the advocates insist, are the ones given in the Act, at 35 USC 200.
Actually, the driving force and theory behind Bayh-Dole was that the public was not reaping the full potential benefit from the taxpayer’s support of basic research, with expenditures for such support amounting to billions of dollars each year. (4)
The result was a uniform patent policy, a shift in presumption of title from government to contractor, a “certainty of title” as between the contractor and the government, and the use of the patent system as a means to encourage the private sector to “undertake the considerable risk and expense necessary to take early stage university discoveries from the laboratory to the marketplace” (5).
Pause a minute. If the driving force was benefit to the public, then it is fair game to ask why a model utterly fixated on pharmaceutical compounds, arising from a nasty dispute between a federal agency (HEW) and pharma over an ill-begotten government patent policy imposed in 1963, leading to a boycott of government collaboration by the pharmas, only to be circumvented by an “Institutional Patent Agreement” approach that rewarded universities with established tech transfer operations (advantage, then, to the likes of WARF, MIT, and Stanford) should be extended to all research, inventions, industries, and innovation?
For twenty years I have tried to figure out why all the bombast out of university technology transfer offices, and in particular, AUTM. Why the domination of biotech? Why, when it was clear by the late 1990s that biotech licensing was toast, did university tech transfer offices remain fixated on biotech, even through the software investment window, the internet investment window, the web 2.0 investment window, the nanotech investment window, the mobile communications investment window, the cloud investment window, and the energy investment window, just to identify a few windows that one could have looked out to find opportunity? It appears that one biotech model–the basic invention protected by a patent handled exclusively by a developer moving through a symbiotic regulatory process to ensure only big companies can play–is given federal sanction through the choice of architecture for management established by Bayh-Dole. The architecture, not the subject matter, is baked into the Act. The hammer for the nails. It is just that the one model to rule them all doesn’t even work all that well for biotech, and certainly fails for much of anything that is engineering based, that requires networks of collaboration, that builds slowly over time to platforms and realizations, or that operates through practices and methods and standards rather than through building widgets and pills.
While Bayh-Dole established uniform agency patent practices, it also imposed a default architecture on the expected process–that there would be commercialization, that it would happen because university-bound “technology transfer” offices would license patent rights, that there would be patent rights galore, that industry would flock to the porch light seeking these rights, and universities would make a ton of money choosing each lucky company to take on the noble task of making products for a profit, all funded by the taxpayer. You might see why the supporters of Bayh-Dole would get a little testy if one pointed out that the numbers just aren’t there, that the new products on the market are paltry compared to the expenditures, the patenting, and the expectations that have been set up by the advocates of the Act. Even more so if one looks at the negative numbers–the number of claimed but unworked inventions acting as barriers to domestic use; the disrupted collaborations due to claiming institutional ownership of faculty inventions early, often, compulsorily, and increasingly indiscriminately; the institutional overhead for contracting apparatus for granting any license at all, with the demand for payment being only one such bit of overhead–the demand that product be made being another.
It is apparent that Bayh-Dole is part of a rhetoric to increase funding for health sciences research. A lot of players wanted it: certainly the NIH did; so did the universities; and if it provided a resolution to the HEW-pharma standoff, allowing pharma to win in its objections to the HEW patent policy while allowing the government to save face with the expansion of its IPA approach, now required by Congress to be accepted by all federal agencies, so there would never be any way to show a competing, and perchance more effective approach, then all would be good. The technology transfer enterprise, as constructed by Bayh-Dole, serves as a public argument for increasing federal support to health research, and in particular to drug research, which is one of the few industry settings in which a positive case could be made for patents in fundamental discoveries because of the high cost of development and the later low cost of imitation.
The metric of success for this funding rhetoric, was commercial products–new drugs–on the market. That made for happy success for the pharma industry, success for the universities reaping royalties, mild happiness for university inventors as they thought they might have a winning ticket (not realizing that the biggest deals had largely already happened, and that subsequent deals would be, like, a handful per decade). These sorts of success would mean success as well for a funding agency that could show a connection between its research funding and (a) public benefit (new products providing aid to the sick); (b) economic vitality (innovation in commercial products); and (c) a barrier to foreign firms seeking to benefit from US government research, making US companies leaders once again. (This last point is important, because the federal government has a much more delicate time of it taking patent positions in foreign countries than does a university or its affiliated research foundation.) In all, the purpose of Bayh-Dole, as distinct from its stated objectives, was to default federal invention procurement rules to ones that favored getting more funding to the NIH. That’s where the “realize the full potential” of benefit from taxpayer investment in research comes to roost. That’s why the the baked-in architecture favors the pharma approach to patents. That’s why biotech licensing dominates university tech transfer policies, rhetoric, hiring, licensing models, and reporting.
In essence, Bayh-Dole transferred the HEW IPA methodology from agency to federal law, and then passed the federal agency patent provincialism to the university contractors. The contractors expect to act just as the federal agencies have done–own everything, grant access on a case-by-case basis, but with the added interest in money, the freedom to do exclusive licenses without accounting to the public for doing so, and the ability to withhold all the accounting measures from the public (since Bayh-Dole provides for FOIA exemptions for reports of utilization). Nothing really went away. Nothing really changed, except that other federal agencies were forced to accept the HEW IPA model, with its baked in architecture endorsing patenting of biomedical inventions to encourage speculative investment in the development of new products. If you make your regulatory burden too great, then perhaps the only private players who can play are the speculators.
It is possible to work against this default architecture, but it takes university leaders who can see past the presumptions of Bayh-Dole. There is nothing that prevents a university from not claiming ownership of inventions, or doing so on an indiscriminate, compulsory basis; nothing that requires a university to demand “commercialization” of faculty research findings; nothing even that requires a university to require payment of the grant of licenses, or that those licenses must be exclusive; nothing, for that matter, that requires a university to manage its inventions directly, or dictate who does manage its inventions; or, finally, for the university to expect to control how licensing income gets spent, beyond ensuring that it is spent, after expenses, on “scientific research or education”. (If there is anything really bothersome in Bayh-Dole, it’s this “scientific” restriction: it would seem that funding research in the arts–in design, in interpretation, in history, in music–can be every bit as important to the advance of technology as anything in the sciences. In fact, one might argue that science has gotten its ideas, preponderantly, not from “science” but from engagement in just these other sorts of things. The premise that only credentialed scientists can think up work for science is silly, and even dangerously, dully, foolishly silly.
The problem for implementing this “worst bill of all” fell to those charged with drafting the patent rights clauses to be used by the federal agencies in their funding agreements. There, it must have become evident, even to Norman Latker, that there was a fundamental problem with the Act. While Bayh-Dole defined funding agreement and contractor and subject invention, it did not address how title to any invention moved from the inventor to the government in the event that a contractor did not obtain title. The gap was bigger than that, however. If a subject invention is one “of the contractor”–that is, one that the contractor owns, and the contractor is the university, then when an inventor makes an invention with federal support, it is not a subject invention until it is assigned to the university. (Wait, no need to spur that frothing bay towards the corral!) Consider the bits of law:
35 USC 202(c)(1): a funding agreement must “effectuate” that
the contractor must disclose each subject invention within a reasonable time after it becomes known to contractor personnel responsible for the administration of patent matters, and that the Federal Government may receive title to any subject invention not disclosed to it within such time.
A subject invention, though, is one owned by a contractor. Notice, too, that the law carefully distinguishes the “contractor” and the “contractor personnel responsible for the administration of patent matters.” Odd, isn’t it? When one looks for the baked-in architecture, it starts to become apparent. The language here is not just “when the invention is assigned to the contractor”–which would be the obvious condition under which an invention would become “subject”; and it is not “contractor employees” but rather “contractor personnel,” working at a general level, to include both the internal tech transfer office (like MIT’s and UC’s) and the affiliated research foundation (like WARF), but not the national invention management agent (such as Research Corporation). RC gets written right out of the architecture of the law, to be plunked into a restriction clause at 35 USC 202(c)(7)(A). The architecture of the Act defaults to a tech transfer operation attached to each university, IPA-style.
This is just the beginning of the problems, though, for a standard patent rights clause. How does a report of invention get to the contractor? If an invention is a subject invention only when the contractor takes assignment of it, then what is it before that? Apparently not a subject invention under Bayh-Dole. As written Bayh-Dole does not worry how inventions are reported to and acquired by a contractor. There is nothing to indicate that anything is assumed, required, or expected in the process. There is no stipulation that a contractor have an invention policy, or a technology transfer office. Nothing that makes reporting required, or that title vests in the contractor or that there is a right of first refusal for the contractor. It’s like, if you get invention ownership, then report that, and then get on with making a choice about it, now that you have gone and done that. If you don’t get invention ownership, then move along, nothing to do.
This seems like a really big gap, and various authors have gone after it. One way is to tell everyone that Bayh-Dole implemented a secret vesting requirement, and that by cleverly fiddling with interpretations of words here and there, one gets it that universities just got ownership outright. That is, the “title certainty” wasn’t the bit of cross words tech transfer offices were having with HEW lawyers over which organization had the right to take ownership of an invention from federally supported inventors–rather, the “title certainty” became one of being certain that the university had title always. Under US patent law, an inventor owns the inventions he or she makes. That’s certain. There never was any title uncertainty as to that. In any event, the Supreme Court in Stanford v Roche rejected the vesting claim, but not until that claim had festered for some three decades and grown confident, if not arrogant, in its assertion of rights.
The implementers of Bayh-Dole must have recognized there was no vesting argument to be had, much as advocates wanted “presumption of title” to be with the university tech transfer operations. That’s as close as they could get: presuming title, rather than seeing to it that title transferred. It is the limits of the architecture, as far as they could go without straying into constitutional issues (rights to inventions are reserved for limited times to the inventors) or getting into problems with what organization, exactly, is forced to own title, if not the inventor (and there, WARF and the University of California would be on different sides of the issue, given that WARF was not a contractor for research, unlike, say UC or SUNY Research Foundation, which was). Presumption of title is nothing in a federal funding agreement, just as “the true intent of a contracting party is irrelevant if it remains unexpressed.” Nowhere in Bayh-Dole is a presumption of contractor ownership expressed, unless by “presumption” one means, “a lot of what Bayh-Dole discusses only matters when a contractor gets ownership.” And that’s a different kind of presumption.
What, then, did the implementers of Bayh-Dole do? That’s where we come, again, to the one major provision in the standard patent rights clause that is not in the Bayh-Dole Act, namely the provision at 37 CFR 401.14(a)(f)(2). This is the gap-filler, the presumption-dealer, the fix-it clause that gets everything to work. This (f)(2) requirement covers patent policy, technology transfer office, reporting of inventions, and a way to make that reporting of inventions work under the definition of subject invention. It is brilliant in its way, even if it is something of a hack to an otherwise miserably drafted law with a politically inspired, baked-in architecture to favor pharma inventions over all others. Here is the (f)(2) clause, with emphasis added.
(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. This disclosure format should require, as a minimum, the information required by (c)(1), above. The contractor shall instruct such employees through employee agreements or other suitable educational programs on the importance of reporting inventions in sufficient time to permit the filing of patent applications prior to U.S. or foreign statutory bars.
This requirement, a part of the standard patent rights clause, so contractual not statutory, is essential to understanding how Bayh-Dole operates in practice. It is also comes with its own costs, ones that the advocates of Bayh-Dole for some reason refuse to acknowledge, but they should.
The (f)(2) provision is in a section labeled “Contractor Action to Protect the Government’s Interest”. If there is a presumption, here, then it is about how the government may contract for invention rights to look out after the government. (f)(2) requires a written agreement, stipulates a disclosure format, and requires an educational program focused on the timeliness of reporting. The written agreement is an agreement required in each funding agreement. The requirement to require it comes into effect when a funding agreement is accepted by a university contractor. The contractor then must take action to protect the government’s interest in the possible inventions that might arise under that particular funding agreement. Because there are opportunities for funding agencies to tailor the patent rights clause, it is the clause as tailored that controls the funding agreement, not some general statutory expression. As with other agreements, one must follow the particulars of the contract under which work is performed.
The written agreement is also a federal agreement. It is not an agreement between the university and certain of its employees. It is an agreement made by those employees on behalf of the government, to protect the government’s interest. Federal contracts supersede state-enforced contracts. The written agreement required here is of the form of a compulsory delegation of certain responsibilities from the university (or nonprofit, or small business) contractor to the employees that will do the research and for which inventions might be expected (and claimable). Such delegations are anticipated elsewhere in the implementing regulations, such as at 37 CFR 401.14(a)(g) for subcontracts, and at 37 CFR 401.14(a)(k)(1) for assignment of rights. In both cases, when an interest in inventions is assigned, so are the provisions of the standard patent rights clause. The written agreement at (f)(2) also makes such a delegation. It is a conditional delegation of the duty to report, to assist, and to license or assign. The prospective inventor makes this agreement as part of the funding agreement, as part of the patent rights clause in the funding agreement, and with respect to a narrow set of actions anticipated by that patent rights clause.
To show how this happens, consider the definitions of funding agreement and contractor at 37 CFR 401.2, again bold added:
(b) The term funding agreement means any contract, grant, or cooperative agreement entered into between any Federal agency, other than the Tennessee Valley Authority, and any contractor for the performance of experimental, developmental, or research work funded in whole or in part by the Federal government. This term also includes any assignment, substitution of parties, or subcontract of any type entered into for the performance of experimental, developmental, or research work under a funding agreement as defined in the first sentence of this paragraph.
(c) The term contractor means any person, small business firm or nonprofit organization which is a party to a funding agreement.
Bayh-Dole is directed at nonprofits (including universities) and small businesses. There is no other arrangement for contracting with individuals. While “person” can mean those golem corporate persons, it also plainly also means individual people. It is clear that the definitions here contemplate that individuals can become contractors. In particular, they may do so through assignment (of the contract or a portion of the contract), substitution of parties (standing in for another) or subcontract (delegation of work through an independent contract). This is just what the (f)(2) written agreement requirement does. It requires the university to make conditional contractors, for a tiny but critical part of the deal, out of the university’s potential inventors (at least those to which the government expects it has a legitimate right to make a claim of ownership or license). It is clear as well, for 37 CFR 401.9, that if these potential inventors invent, and are permitted by the funding agency to retain the title to their inventions (which they have by virtue of federal law), then they are to be treated as small business contractors, but with fewer restrictions:
Agencies which allow an employee/inventor of the contractor to retain rights to a subject invention made under a funding agreement with a small business firm or nonprofit organization contractor, as authorized by 35 U.S.C. 202(d), will impose upon the inventor at least those conditions that would apply to a small business firm contractor under paragraphs (d)(1) and (3); (f)(4); (h); (i); and (j) of the clause at Sec. 401.14(a).
Compare this with the statement in 35 USC 202(d):
(d) If a contractor does not elect to retain title to a subject invention in cases subject to this section, the Federal agency may consider and after consultation with the contractor grant requests for retention of rights by the inventor subject to the provisions of this Act and regulations promulgated hereunder.
There are puzzles here. In the Act, we have a conditional (“if a contractor”), a consultation requirement, and a request (without indication of who makes the request), that allows agencies to allow “retention of rights by the inventor” subject to Bayh-Dole and the implementing regulations. In one reading, an invention only becomes a subject invention when the contractor has got title to it. In this reading, if the contractor doesn’t want what the contractor has gotten, like pulling a mean kitten from a burlap bag and getting a thumb bit through, the contractor can shake the invention off and leave things up to the funding agency and the inventor. But that’s not the only reading, and it doesn’t deal with how an invention becomes reported before it’s owned by the university contractor.
37 CFR 401.9 is structured differently. It drops the conditional and the consultation, and directs agencies in the conditions that attend to inventors retaining title. In short, it creates a patent rights clause for inventors as contractors. 401.9 is even unclear on just how to deal with these inventors, using “employee/inventor of the contractor” rather than simply “inventor” as in 35 USC 202(d). It is as if someone pointed out that faculty, in holding appointments at universities, might not be “employees” of the contractor if the university contractor had assigned Bayh-Dole obligations to a research foundation, like WARF. WARF would be a contractor by operation of the definitions of funding agreement and contractor, but the inventor would not be a WARF employee. Furthermore, under 401.9, with the absence of the university contractor, the language involving subject invention and inventor operates without any expectation that there first is required an assignment step to the university contractor, a decision not to retain that title, a re-assignment of the invention, now transmogrified into a subject invention, so that the agency can approve retention of the subject invention. That’s a whole lot of apparatus to go unnoticed. There is a presumption conspiracy reading, of course, that everything that one wants in a law but doesn’t find was of course presumed, but that’s not needed here and hasn’t served Bayh-Dole well when it’s been resorted to.
No, instead, it makes sense that the written agreement at (f)(2) turns inventors into contractors for three specific actions–reporting inventions, assisting in patent applications, and establishing the government’s rights. The moment an employee of the contractor invents, the (f)(2) agreement comes into effect as a delegation under the funding agreement, that employee becomes a contractor, and the invention becomes a subject invention, and invention “of a contractor”–just like the definition reads:
(d) The term subject invention means any invention of a contractor conceived or first actually reduced to practice in the performance of work under a funding agreement;
That is, it’s not “the” contractor as scattered throughout the standard patent rights clause: “The Contractor may retain…”; “The contractor will disclose”; “The contractor will file”. These are all activities of a university contractor, but not the contractor for delegated actions such as reporting subject inventions to the university contractor’s patent personnel, which is properly an obligation for inventors, not for university contractors in their incorporated personhood, which has standing but no mind for reporting what people do. Thus, the written agreement at (f)(2) makes the definitions of Bayh-Dole, and the standard patent rights clause, operate in perfectly natural way. Inventors are also contractors. Their inventions are subject inventions. Now all subject inventions can be reported without the silliness of inventions have to be owned by the university first, so they can then be reported to the university, so it can then know that it has what it has already got assigned to it!
No wonder the present assignment folks are all tight as a knot over this stuff. In their view, if Bayh-Dole didn’t outright strip ownership of inventions from faculty and other university inventors, to vest title in the university-as-contractor, then it must have been still the federal policy that such a vesting is a really good thing, and there remains a policy mandate (call it a presumption) that all good folks had better go out and do the stripping of faculty invention rights privately, to make everything work out. This, too, is nonsense. There is no “presumption” in federal policy that faculty shouldn’t own. The Supreme Court’s chiding of the universities does not have to do with that they must, or should, get ownership of inventions made with funding that passes through their hands, but that there is a way to do it if they feel the compulsion to get ownership. That is, get assignments in place.
Notice, too, that in the (f)(2) clause, there is another indication that the written agreement in (f)(2) is not the same as a patent agreement between the university and its employees:
The contractor shall instruct such employees through employee agreements or other suitable educational programs on the importance of reporting inventions in sufficient time to permit the filing of patent applications prior to U.S. or foreign statutory bars.
The “employee agreements” here are clearly not the “written agreements” required at the start of (f)(2). Further, these “employee agreements” are not required, as a contractor may substitute “other suitable educational programs.” The purpose of either is to emphasize the importance of timely reporting of inventions, not to secure ownership of inventions for the university contractor. Of course, a university and employee could, in an employee agreement, do just what the Supreme Court suggests–work out the arrangements under which the employee, should she or he invent, will assign the invention to the university, or to some other invention management agent. Nothing compels the university to be that agent, and in fact there are a ton of very good reasons, including ones of university financial self-interest, that argue for not compelling all inventions to be assigned to the university, or even to a monopoly invention management organization chosen by the university.
We come, then, to the third prong of this discussion of ownership. How ought inventions be dealt with, when they arise in faculty-led research funded by the federal government? Should the federal limitation of interest merely serve to allow state governments to rush into the void and eat inventions until they barf? Should institutions stalk inventions in the hope of selling them off to speculators–to anyone willing to pay–while withholding inventions from those not willing, or able, to pay? And should that for a moment be presented as virtuous, or forward-thinking, or generally a grand idea? The Supreme Court is little help on this prong. Indeed, it is not the Supreme Court’s role, and it would be a sad day that we become so helpless that we have to wait for courts to tell us how to get on with doing creative things, either because bureaucrats are too powerful, or inventors are too frail, or others who ought to be involved, as the voice of reason, or the chorus, are indifferent or timid or uninformed.
Once the furious, unabated, blind, unthinking determination by certain university administrators to gain power over faculty inventors and secure title to their inventions with the most efficient, most compulsive, least considered, non-negotiable, risk-averse process possible, there’s a very lively, important, and practical discussion about how research informs innovation, how inventors and those around them might play a role, or choose not to, and how collaboration, and competition, across research organizations and their personnel can be enhanced when institutions, and especially patent managers, do not step in and control inventions early, often, and without thinking (or only thinking about the most immediate, and coarsest version of financial interest). Innovation is not a function of petty desires to make money, to strike it big, however these are framed in the minds of administrators for whom order, process, and respect for delegated authority are values second to none. Innovation will out a lot of different ways, and it makes no sense that universities, of all places, would try to dictate a bureaucratically convenient approach to it in the name of “realizing the full potential” of federal funding for faculty-led research. If faculty lead the research, then they also can lead the next steps toward doing something with that research, whether those next steps are to ask for help, teach others, start a company, work with one or more companies, or release to the public domain and move on.
Perhaps those writing the standard patent rights clause felt some of this pressure as well, not to constrain university faculty, who were the ones proposing the work, and doing it, and inventing, and creating the invention management resources that they needed when they needed something new. Perhaps too they felt it was inappropriate to use the power of federal law to force invention ownership–and with it innovation leadership–simply into the hands of university officials. Perhaps they were stuck. If they required each university to have its own invention management office, then WARF would be out of business. If they didn’t require that, then to save WARF they’d have to require that the university enter into an exclusive deal with some agent. That wouldn’t fly, certainly. So it had to be, leave it alone, let the universities work out, each for itself with its own faculty, how it would address inventions, patents, and involvement in innovation, whether via standards, commercialization, public instruction, or even indifference (and institutional indifference can be very effective–ask any parent).
The (f)(2) provision plays a central role in connecting Bayh-Dole with inventors, and making everything work–uniform on the federal agency side (to bake in a preferred model)–but diverse on the university side, pre-approving situations in which an inventor chooses to assign to a university contractor or other qualified assignee, but not requiring such assignment nor dictating where that assignment should be made. The written agreement in (f)(2) is not an employee agreement to assign inventions to the university. These are distinctly different. (f)(2) is federal; takes precedence; makes inventors bit-contractors; turns their inventions into subject inventions from the get-go. An employee invention agreement is state-based; it is subordinate to federal interests; it does nothing with regard to contractor standing or how inventions become subject inventions to be reported. Bayh-Dole works without any such employee agreements. They are not required. They are not necessary to the Act meeting its stated objectives. Benefits of inventions made with federal support may become available to the public in many ways, without a bureaucrat’s thumb in every pie.
If a university desires ownership of an invention, operating under a standard patent rights clause with a properly implemented (f)(2) agreement, a university has the wonderful opportunity to request assignment. Such a request does not have to be backed up by a compulsive exhibition of force or authority. It is as simple as a negotiation–presenting the opportunity–offer, acceptance, and consideration. There is no compliance failure for not getting ownership. There is no failure to meet the objectives of Bayh-Dole for not getting ownership. There is not private action to supplement the drafting failures imputed to Bayh-Dole by requiring present assignments to fix it all, blaming the Supreme Court for ruining a perfectly clever scheme. There is no certain loss of income, even, for not getting ownership. Many folks, including university inventors, share, and give back, and they have for over 100 years, starting at least as early as Frederick Cottrell and his creation of Research Corporation. There is absolutely nothing on the line for universities for not getting ownership.
The Supreme Court advice, then, to get patent agreements in place, is not a mandate to fix a failed scheme, but rather chiding, that if a university wants ownership, then get it the way it has always been done–by agreement. Even that is not advice to force the matter. At present there is a tremendous effort by administrators to get some sort of “leverage” on faculty, to force them to assign inventions. Administrators assert that universities have a “right” to ownership; that it is unethical for faculty to benefit from university resources and not sign over all inventions; that faculty are incompetent and greedy (or indifferent) and only administrators can salvage their inventions for public benefit; that the money to be made by selling off patents to speculators is so great, and so needed, that any imposition on faculty inventors is more than justified. All of this is, frankly, rot. It is a disservice to Bayh-Dole, for all its quirks and limitations, and more so, a disservice to universities, to faculty, to research, and to the role of federal funding in sparking innovation.
It may be banal, but it appears now that it is more important for the university patent management to salvage their claims about ownership than to get on with innovation in innovation management. Where faculty can and will lead, these administrators seek compulsory processes that preserve and extend administrative hegemony. If these folks cannot accept the Stanford v Roche decision, refuse to study Bayh-Dole and understand it, as law, as federal contract, as scheming politics, and are unwilling to change, then it is time to sweep them out rather than hope for a conversion experience. It is not that invention management is a problem–no, invention management is decent enough work. Same for the patent system–we have it, we can deal with it, we can make it work for good if worked sparingly and thoughtfully. It is, rather, the search for a totalitarian reason to be in control that fails universities, fails innovation, fails the role of faculty as leaders of the non-commercial, non-governmental research world. It is the failed reasoning to compel assignment that has to be swept out. Clean the house. Get back to basics. Restore university administration to a supporting rather than dominating role. Refocus the discussion on how to design for innovation rather than stagnation.
This all starts by implementing the (f)(2) written agreement, and recognizing how the standard patent rights clauses in federal funding agreements actually operate. Keep it simple, and a lot of this takes care of itself.