Here’s a passage from Rutgers’ patent policy:
D. Reservation of Rights in Sponsored Research. Ownership of patents arising from work sponsored by Federal agencies shall be subject to the provisions of Public Law 96-517, the Bayh-Dole Act as amended, other applicable law, and the provisions of this patent policy. The Bayh-Dole Act clearly sets forth as the objective of Congress the utilization of the patent system to “effectuate the transfer of government-funded inventions to the public,” and gives nonprofit institutions a right of first refusal to title in inventions resulting from research performed with the support of Federal contracts and grants.
Let’s see how many ways this bit of policy is wrong.
(1) “shall be subject to the provisions of Public Law 96-517, the Bayh-Dole Act as amended.” Bayh-Dole does not apply to university work. Bayh-Dole applies to federal agencies. Bayh-Dole requires federal agencies to use a standard patent rights clause prepared by the Department of Commerce, and establishes how this standard patent rights clause may be modified. It is the patent rights clause in any given federal funding agreement that controls the disposition of inventions made with federal support, and there it is because each university agrees to the terms and conditions of the federal funding agreement. See 2 CFR 215 for the typical funding agreement.
(2) “Ownership of patents.” The standard patent rights clause has nothing to say about ownership of patents. It discusses the ownership of inventions, and in particular places conditions on “contractors” such as universities if they come to own inventions made with federal support, of if they assign their interest in such inventions to anyone else. What the standard patent rights clause is concerned with is the limits of a federal agency’s expectations that in providing funding for support it is also buying up all inventions made with that support. The standard patent rights clause does not reach to ownership of inventions–that’s a matter of patent law and private agreements.
(3) “other applicable law.” But the standard patent rights clause *does* make a requirement that universities delegate responsibility for certain invention matters to inventors. That is the (f)(2) provision of 37 CFR 401.14(a). This provision is not in the Bayh-Dole Act, but is authorized by the Act. It is a matter of federal contracting, not federal law. Thus, the Rutgers policy, by demanding everyone conform to the Act (as if Rutgers were a federal agency) but not including the standard patent rights clause (which actually is what Rutgers agrees to each time it accepts a federal grant), the policy all but stipulates non-compliance as a condition of employment. Without being hasty, I doubt that Rutgers implements the (f)(2) agreement as required by the standard patent rights clause.
(4) “The Bayh-Dole Act clearly sets forth as the objective of Congress.” Well, the objectives of the Bayh-Dole Act are given at 35 USC 200. They are clear enough, true. The policy’s quote isn’t found there, however. Ah, heck, I’ll quote the statement objectives in full. Check for yourself:
It is the policy and objective of the Congress to use the patent system to promote the utilization of inventions arising from federally supported research or development; to encourage maximum participation of small business firms in federally supported research and development efforts; to promote collaboration between commercial concerns and nonprofit organizations, including universities; to ensure that inventions made by nonprofit organizations and small business firms are used in a manner to promote free competition and enterprise without unduly encumbering future research and discovery; to promote the commercialization and public availability of inventions made in the United States by United States industry and labor; to ensure that the Government obtains sufficient rights in federally supported inventions to meet the needs of the Government and protect the public against nonuse or unreasonable use of inventions; and to minimize the costs of administering policies in this area.
There may be some statement somewhere using “effectuate” to discuss the Bayh-Dole Act, but it is not in the Bayh-Dole Act’s statement of the objectives of Congress. Thus, the quoted phrase “effectuate the transfer of government-funded inventions to the public” requires attribution, because it is not, despite the implication of the policy statement, from Bayh-Dole’s objectives.
Bayh-Dole’s objectives focus on the “utilization” of inventions, collaboration between universities and industry, and industry’s opportunities to compete, engage in free enterprise, commercialize inventions, and make inventions publicly available. In terms of march-in rights, the emphasis is on “practical application” (my bold):
(1) action is necessary because the contractor or assignee has not taken, or is not expected to take within a reasonable time, effective steps to achieve practical application of the subject invention in such field of use;
“Practical application” is a defined term in Bayh-Dole (and the implementing regulations, and the standard patent rights clause):
The term “practical application” means to manufacture in the case of a composition or product, to practice in the case of a process or method, or to operate in the case of a machine or system; and, in each case, under such conditions as to establish that the invention is being utilized and that its benefits are to the extent permitted by law or Government regulations available to the public on reasonable terms.
If one wants a standard for whether Congress’s objectives for Bayh-Dole are being met, this definition provides it: (1) inventions are used; (2) benefits of the inventions are available to the public; (3) on reasonable terms.
The objective is not transfer of the inventions to the public, but the practical application of inventions, so that benefits of that use are available to the public–and on reasonable terms. Too bad “reasonable terms” did not get a definition, or elaboration in the standard patent rights clause. Essentially the policy writers have aimed to write their ideas about “technology transfer” and “invention licensing” into the patent policy as if these were mandates of federal law, when they are not–they are just cooked up in the black cauldrons of administrators’ desires. The aim of policy is to force everyone to accept these ideas, and the way to do it is claim federal law. That’s malicious or grossly negligent, not merely clever or “just a matter of interpretation.”
(5) “gives nonprofit institutions a right of first refusal to title in inventions.” Total nonsense. The Supreme Court in Stanford v Roche set aside this argument, which the Solicitor General made, along with the vesting argument. Bayh-Dole gives no one any ownership of any invention, or any first right of refusal to title–as if inventors of subject inventions are forced by the law to offer to assign title to the university that hosted their work. It’s not some tiny technical issue, either. It’s big and obvious:
Nowhere in the Act is title expressly vested in contractors or anyone else; nowhere in the Act are inventors expressly deprived of their interest in federally funded inventions. (p. 8.)
The Bayh-Dole Act does not confer title to federally funded inventions on contractors or authorize contractors to unilaterally take title to those inventions; it simply assures contractors that they may keep title to whatever it is they already have. (p. 11)
It would be noteworthy enough for Congress to supplant one of the fundamental precepts of patent law and deprive inventors of rights in their own inventions. To do so under such unusual terms would be truly surprising. We are confident that if Congress had intended such a sea change in intellectual property rights it would have said so clearly–not obliquely through an ambiguous definition of “subject invention” and an idiosyncratic use of the word “retain.” (p. 14)
There is no vesting, no authorizing, no mandate, no first right of refusal.
(6) “resulting from research performed.” The scope described is too broad. The standard patent right clause defines “subject invention” (following the definition provided by Bayh-Dole):
Subject invention means any invention of the contractor conceived or first actually reduced to practice in the performance of work under this contract, . . . .
The inventions that are subject to the standard patent rights clause are those made “in performance of work” not “resulting from” that work. There is a difference, and the implementing regulations for Bayh-Dole make an effort to show how. 37 CFR 401.1:
To the extent that a non-government sponsor established a project which, although closely related, falls outside the planned and committed activities of a government-funded project and does not diminish or distract from the performance of such activities, inventions made in performance of the non-government sponsored project would not be subject to the conditions of these regulations. An example of such related but separate projects would be a government sponsored project having research objectives to expand scientific understanding in a field and a closely related industry sponsored project having as its objectives the application of such new knowledge to develop usable new technology.
The scope of interest is not everything invented as a result of research, but the stuff invented because the invention comes within the “planned and committed” activities of the funded project–as, for instance, evidenced by the written proposal or statement of work. The example hammers this home by showing that if a federally funded project was for basic research and during it one invented using that knowledge, if the application in an inventive way of knowledge discovered was not part of the “planned and committed” activities, then the invention is not subject to the standard patent rights clause. The invention is not a potential deliverable to the government.
The implementing regulations for Bayh-Dole worry that contractors might attempt to claim a narrower scope for subject inventions than the funding agencies expect. But just the opposite has happened–the universities have spun a version of Bayh-Dole’s scope that is much broader than the definition of subject invention sets out or the implementing regulations anticipate. Why? Because, apparently, university administrators wanted to claim that federal law demanded that they take everything, and to comply, they had to take as much as they could, “just in case,” you know to “comply” or something, with um, whatever it is that the law was about.
The controlling criterion is not whether federal funds were used to develop knowledge or trigger an insight, but that any invention (“which is or may be patentable”) was set forth within the written and agreed upon work plan. “Resulting from” is not the same as “contracted to perform.” This is basic stuff in contracts–defining the deliverables. That’s what the standard patent rights clause is all about–what potential invention rights deliverables to the government can an inventor cause to be withheld by assigning the invention rights to an approved invention management agent, or requesting the federal agency that the inventors be allowed to retain those rights. One might phrase it: “is the invention a deliverable within the statement of work to be performed?” If so, then it is a subject invention. If not, then it is not subject to the patent rights clause of the federal funding agreement, and the federal agency has no claim on the invention.
*****
The Rutger’s policy statement is wrong in many ways about Bayh-Dole. Yet the policy asserts that a wide range of “personnel” and “all other persons” must “abide by this patent policy as a condition of employment or study.” Outrageous. In essence, the policy asserts that everyone must agree with the policy, even where it gets federal law and contracting entirely wrong and asserts a claim on their work that cannot be supported. And of course the policy claims ownership of inventions “that result from” use of university resources rather than that are specifically intended in the conduct of work with those resources. One could invent years later, as the “result” of having used university resources. Surely the university does not intend to reach into the future in such a fashion. But given the other problems with the policy, perhaps it does.
It might well be that one could argue, gosh, it’s all so technical perhaps they just got a bit confused. But this is the most important point in almost any university’s patent policy. Bayh-Dole is the reason universities revised their patent policies from equity to ownership; federal funding constitutes the majority of the funding most universities get for research. If there is any point that a university patent licensing office ought to be clear on, it’s Bayh-Dole, and office after office is not clear on it. One would think, after the lecture by the Supreme Court, universities like Rutgers would revise their patent policies to conform to the Court’s decision. Of course, they have not. It would appear to be contempt of court not to revise one’s policy statements, especially if those policy statements are used to assert a claim of ownership over a wide range of work done by faculty, students, and visitors to the university. I would think that such a claim, knowingly or negligently false, would render the policy unenforceable with regard to federally funded inventions.
Here is the Eastern Michigan University patent policy statement on the matter:
In Public Law 96-517, “The Patent and Trademark Amendments of 1980, ” commonly known as the Bayh-Dole Act, the federal government has given non-profit organizations and small businesses right of first refusal to title in inventions made in the performance of government grants and contracts, with some limited exceptions. This Act clearly sets forth, as the objective of Congress, the utilization of the patent system “to effectuate the transfer of government-funded inventions to the public. ” In accordance with this Act, and absent contractual provisions to the contrary, the University shall retain title to all Transferable Technology developed under Sponsored Research Agreements funded, in full or in part, by the federal government.
Here is Wayne State:
| In Public Law 96-517, “The Patent and Trademark Amendments of 1980”, the federal government has given non-profit organizations and small businesses right of first refusal to title in inventions made in the performance of government grants and contracts with some limited exceptions. This act clearly sets forth, as the objective of Congress, the utilization of the patent system “to effectuate the transfer of government-funded inventions to the public.” |
In Public Law 96-517, “The Patent and Trademark Amendments of 1980,” the federal government has given non-profit organizations and small businesses right of first refusal to title in inventions made in the performance of government grants and contracts with some limited exceptions. This act clearly sets forth, as the objective of Congress, the utilization of the patent system “to effectuate the transfer of government-funded inventions to the public.”
It seems the bad language has made its way to a number of universities that haven’t bothered to change their policies, even after the Supreme Court essentially told them they must.