We are working through how Bayh-Dole, a law that requires the patent system be used to promote the use of subject inventions with public benefits on reasonable terms, comes to be a law that gives the impression that required reports of such use must be held as federal secrets. That is, Bayh-Dole appears to require the federal government to withhold from public release any information on the status of subject inventions. It wasn’t this way in the original law. But it’s this way now.
Here is the big scheme of secrecy in Bayh-Dole as it applies to the use of subject inventions, across multiple layers of implementation:
Bayh-Dole
35 USC 200 Use the patent system to promote use of subject inventions.
35 USC 201(f) Practical application requires established use with public benefits on reasonable terms.
35 USC 202(c)(5) Agencies don’t have to require reports of use, but if they do, reports they receive are to be treated as information exempt from federal public disclosure law.
This in a nutshell is the stated goal of Bayh-Dole–subject invention use, with public benefits on reasonable terms, reported to the federal government by the contractor, and kept secret by the federal government.
No one is supposed to know whether Bayh-Dole is successful, so that advocates for the law can say any darned thing they want to about it, and the federal government cannot provide any data to confirm or dispute what they say. Then academics and folks preparing reports to Congress repeat what the advocates say as fact, and gosh it appears that Bayh-Dole has been a wild success. Heck, the advocates for Bayh-Dole produced a report ahead of the 1984 amendments that made it appear that Bayh-Dole was wildly successful *already*–when three years was not even adequate time for the first patents on subject inventions to issue, let alone be licensed and developed into commercial products (or otherwise achieve practical application).
There’s more to the architecture of the law. We have the implementing regulations:
Implementing regulations
37 CFR 401.8 “In accordance with 35 USC 202(c)(5)…” agencies shall not disclose reports outside government.
That is, agencies shall not disclose use reports to the extent that Bayh-Dole provides that they shall not disclose use reports. Notice that the requirement is specific to federal agencies–executive branch, not legislative branch. Further, notice that federal agencies are apparently allowed to disclose reports within government–and that would include reporting to the legislative branch, which is not expressly bound by the secrecy requirements of Bayh-Dole, which concern how federal agencies contract for inventions in research agreements.
37 CFR 401.13 (c) “The President’s Patent Policy Memorandum of February 18, 1983, states that agencies should protect the confidentiality of invention disclosure, patent applications, and utilization reports required in performance or in consequence of awards to the extent permitted by 35 U.S.C. 205 or other applicable laws.“
Notice the structure of this provision. It states what a presidential memorandum states. Essentially, it repeats as regulation an executive branch patent policy requirement–here, President Reagan’s memorandum extending Bayh-Dole’s scope to include all non-small companies as well.
According to the implementing regulations, federal agency nondisclosure is subject to whatever the law requires. For patent applications and technical reports that might disclose a patentable invention, 35 USC 205 applies. But use reports are dealt with by 35 USC 202(c)(5)–and (c)(5) cites FOIA.
There are two ways to read “in accordance with” in these implementing regulations: 1) the cited law requires non-disclosure, so disclosure is prohibited; and 2) to the extent that the law requires non-disclosure, disclosure is prohibited. Put it another way. “In accordance with 35 USC 202(c)(5)” can mean “35 USC 202(c)(5) requires agencies not to disclose reports outside government.” Or it can mean “35 USC 202(c)(5) requires agencies to withhold at least some information from public disclosure, and for that information, agencies are not to disclose outside of government.” There is yet a third sense that may be in play–“Our interpretation of 35 USC 202(c)(5) permits us to write an implementing regulation that requires federal agencies not to disclose reports outside of government, even if this may not have been the intent of Congress.” That is, the claim is that this executive branch interpretation of the law is allowable, and hence can shape the law. It takes some care to distinguish these various senses, and it requires an understanding of the requirement of the law to see that there are distinct differences.
Standard patent rights clause
37 CFR 401.14(a)(h) “As required by 35 USC 202(c)(5)…” agency agrees it will not disclose reports outside government without contractor’s permission.
As is typical in Bayh-Dole matters, people can’t keep a requirement consistent from law to regulation to standard patent rights clause. We have the same “in accordance with” construction, but now it is “as required by.” “As” is a notoriously difficult word to pin down. Does it mean “to the extent”? or does it mean “the law requires what follows”? We might note that if the law indeed requires non-disclosure, then there is no point in a federal agency expressly agreeing not to disclose in a contract with a private party. All that would happen is that the federal agency would acknowledge the requirement of the law. “Law requires that the agency exempt from FOIA any and all use reports.” There would be no “agreement” about the law as a matter of contract. There would be absolutely no point to such an agreement. It would not have any operative substance in the agreement. Consider that, if one feels the urge to read the clause as a simple restatement of “the law.”
If, on the other hand, the law does not actually require non-disclosure–or does not require non-disclosure of everything in every report–then the wording here in the standard patent rights clause easily could be misread to have a meaning outside the authority for contracting established by Bayh-Dole. That is, agencies are made to appear to agree to something that Bayh-Dole does not require (and, given how Bayh-Dole is written, cannot require, given FOIA). Federal agencies are required to agree to non-disclosure because if the law required them to withhold information, it would not be a matter of agreement. That should give some pause as to the meaning of 35 USC 202(c)(5).
It’s clear that 35 USC 202(c)(5) requires something to be put into the standard patent rights clause: the right of the federal agency to require periodic reporting on use. But it is not clear that the clause that follows is intended also for the standard patent rights clause:
Provided, That any such information …. shall be treated by the Federal agency as commercial and financial information obtained from a person and privileged and confidential and not subject to disclosure under section 552 of title 5 of the United States Code.
We might ask, then, whether this “Provided” statement is intended to be part of the standard patent rights clause, or whether it is an obligation placed on federal agencies outside of any standard patent rights clause. Clearly, those drafting the standard patent rights clause considered this conditional statement to be included in the patent rights clause–as a matter, then, of federal contracting, not a matter of statutory restriction. The law, so this reading goes, requires federal agencies to agree to something with contractors when they request reports. The law then doesn’t simply stipulate that all such information received is to be excluded from public disclosure. If Bayh-Dole simply required all such information received to be excluded from public disclosure law, then a federal agency would have nothing to agree to with a contractor on the matter. The agency would be bound by the law, not by a federal agreement with each contractor. So we might conclude (trying to be rational about something so painfully averse to rationality) that Bayh-Dole does not make non-disclosure a matter of law–rather it attempts to place the obligation not to disclose into agency contracting, as if it were a matter of law even though it isn’t.
You can see how we are at a disadvantage. The folks who drafted Bayh-Dole (for political expediency) are the same ones who draft the implementing regulations and the standard patent rights clause–so they can make the law do anything that they can get away with. To challenge their work, one has to do the same surgery–open things up, control the bleeding, find the target, and inspect the work–it’s just that we have to show all that we are doing, and the folks who did the work in the first place can claim it was all done just fine and make things look simple and obvious–when, on inspection, that just isn’t the case.
It’s not that the folks drafting Bayh-Dole do not know how manage this stuff. They make confidentiality quite clear with regard to reports of subject inventions and patent applications in 35 USC 205. Why didn’t they put the use report confidentiality there in 205 as well? Perhaps because the use report confidentiality–at least originally–was conditional on an agency finding that certain information met the requirements of FOIA, while other information did not. If so, then the 1984 change should have done more than change “may” to “shall”–the whole provision regarding use reports should have been displaced to section 205, where the confidentiality is “for a reasonable time.” There is no such limit for information not to be disclosed in 202(c)(5)–at least for whatever information is in fact required by law not to be disclosed.
To complicate already complicated matters, there are two federal laws at work–Bayh-Dole and FOIA, and Bayh-Dole in its typical, weird, convoluted way, references FOIA, but not very well. And FOIA, not Bayh-Dole, controls how laws may reference it to create an exemption to FOIA’s general mandate to disclose. So we have to see how this referencing works. Follow? I know this is difficult, but that’s why you are reading this–to come to understand the difficulty and perhaps gain a perspective on Bayh-Dole, this law that shapes so much of university patent policy and practice.
This is a study in ten parts. Here are the links.
1 1984 amendment from “may” to “shall”; roots of reporting in IPA
2 Bayh-Dole’s focus on use; regulations on reporting
3 1984 amendment in detail; connection between reporting and march-in
4 FOIA 552(b) and Bayh-Dole 202(c)(5)
5 37 CFR 401.8; Bayh-Dole circumvents FOIA
6 FOIA 552(b)(4); Public Citizen v NIH
7 18 USC 1905; Kennedy patent policy march-in; Bayh-Dole march-in
8 Comptroller General reporting; federal agency licensing 209(d) and secrecy
9 Open access records case; distinguishing sensitive info; royalty reporting
10 Public enterprise or scam? public reporting essential; puffery