NIST makes Bayh-Dole a vesting statute

NIST has issued its final rule on Bayh-Dole and disregards the Supreme Court on the ownership of subject inventions. The Supreme Court was clear that Bayh-Dole’s definition of subject invention means that an invention must be “owned by the contractor” to be a subject invention and that Bayh-Dole does not apply to any invention that is not a subject invention:

But because the Bayh-Dole Act, including §210(a), applies only to “subject inventions”—“inventions of the contractor”—it does not displace an inventor’s antecedent title to his invention. Only when an invention belongs to the contractor does the Bayh-Dole Act come into play. 

Here’s NIST’s revision to (f)(2) of the standard patent rights clause:

to assign to the contractor the entire right, title and interest in and to each subject invention made under contract

It’s really a nonsense change. Think about it. A subject invention is one owned by a contractor. Thus, inventors are now required make a written agreement “to protect the government’s interest” to assign to contractors the inventions the contractors already own. 

What a hash. Some implications.

First, this new clause voids any university policy or agreement that stipulates a present assignment. The new clause clearly requires a promise to assign, not a present assignment.

Second, the new clause creates a woeful ambiguity with regard to the definition of “contractor.” Since the (f)(2) written agreement requirement, when complied with, results in technical employees becoming parties to the funding agreement, and therefore contractors for the purposes of the (f)(2) obligations, the revised clause can be read to require inventors to assign subject inventions to themselves. Or, rather, that though the revised (f)(2) uses the “assign” wording, it actually cannot operate because the object of the assignment is now hopelessly ambiguous.  Which of the “contractors” within the definitions of funding agreement and contractor are required by NIST’s new requirement? NIST doesn’t say–and NIST has no clue.

Third, the scope of the patent rights clause is any subject invention made in the performance of work funded in whole or in part by the federal government. That is, not simply inventions made “under contract” but inventions made in a project for which the federal government provides at least some funding under a funding agreement. The “under contract” language ignores the definitions present in the rest of the regulatory structure and the scope guidance in 37 CFR 401.1.

[Or, even more oddly, NIST’s new language requires assignment of subject inventions made “under contract” but not “under grant” or “under cooperative agreement.” What’s with that? Why should there be any such difference in the management of subject inventions between federal procurement and federal subvention? Why should contractors be required to require their employees to assign to the contractors what the contractors already own but only if the funding agreement instrument is a contract?]

[Bayh-Dole’s implementing regulations allow federal agencies to replace italicized words in the standard patent rights clause with specifics–so, “contract” may be replaced with the specifics of any qualifying funding agreement. But in NIST’s published rule, “contract” is not italicized. So it reasonably means “contract” rather than “grant” or “cooperative agreement.” If we run around asserting that we know what  NIST meant even though NIST’s words don’t support it, then we are also sort of asserting that NIST is a bunch of bumbling, sloppy idiots who can’t write rule changes. So there. ]

Fourth, if inventors are required to assign to their host organization, then the revision makes a hash with regard to the further provision that the inventor sign papers to establish the government’s rights in inventions–what papers could those possibly be, if the inventor has just agreed to assign all inventions that the contractor already owns to the contractor? Total hash of an already half-hashed patent rights clause.

Fifth, since universities don’t comply with the (f)(2) requirement anyway, it will be interesting to see how the new rule changes their practice. [My guess is that the universities will be consistent and continue not to comply. They will assert that they have policies and agreements in place that make the (f)(2) agreement moot. That is, they consider the (f)(2) written agreement requirements as their own check list for demands to be made on their employees. But then (f)(2) fails in its purpose of making inventors also parties to the funding agreement and inventions do not become subject until a contractor owns them. During that time of not being subject inventions, those inventions–patentable, made in projects with federal funding–are subject to all those other federal laws still in effect. That makes for an interesting dynamic. Can a university demand ownership of inventions that, under the pre-Bayh-Dole federal regime–are deliverables to the government?]

For all that, the new rule purports to make Bayh-Dole become a vesting statute, full faux Bayh-Dole.

Bayh-Dole is part of federal patent law. The Supreme Court argued in Stanford v Roche that Congress never intended with Bayh-Dole to make a sea-change in the ownership of inventions. It doesn’t matter whether the law might vest inventions with host organizations or might arbitrarily require host organizations to require inventors to assign inventions to the host organizations. Same result, same statutory authority to force the change in ownership. If there had been such authority in Bayh-Dole, the Supreme Court would have found it. But the Supreme Court ruled that this statutory authority to compel a change in initial invention ownership does not exist in Bayh-Dole. It does not matter how someone tries to screw things around. There’s no statutory authority in Bayh-Dole to compel inventors to assign inventions to any host “contractor.” NIST has pulled the requirement to do so from its posterior cortex.

In the end, though, the new rule will be cited as “federal law requires inventors to assign their inventions to the university that hosts their federally supported research.” Bayh-Dole becomes a vesting statute–the Supreme Court be screwed–and a bunch of university patent administrators who failed with Stanford v Roche will be pleased to have this confirmation of the faux Bayh-Dole.

Now I get to add annotations to fifty or so Research Enterprise articles that the past mechanics of the (f)(2) requirement have been made obsolete.

In the end, there’s only one route left–repeal the damn law, scatter the folks who want to speculate on monopoly patent rights arising from publicly funded research, and work to undo the damage done to university-hosted, faculty-led research, which ought to be one of the few places in the world in which independent research can be conducted with institutional-scale resources. Instead, university research is reduced to a worst case scenario–anything important that’s discovered passes into the hands of bureaucrats, to be sold off as a patent monopoly for its speculative value or more likely held for two decades in the mistaken hope that it might be some day sold off for its speculative value.


This entry was posted in Bayh-Dole and tagged , , , , . Bookmark the permalink.