Bayh-Dole for university faculty

Let’s put Bayh-Dole plainly for university faculty.

  • Under federal patent law, inventors own their inventions.
  • Federal patent law does not require inventors to use the patent system.
  • Federal patent law does not require inventors to assign their inventions.
  • Bayh-Dole is part of federal patent law and does not change these aspects of federal patent law.

Thus, under Bayh-Dole, faculty inventors own their inventions, even when those inventions are made in projects receiving federal support. Under Bayh-Dole, faculty inventors have no obligation to use the patent system. Nothing in Bayh-Dole requires a university to take ownership of a faculty invention or gives a university any special privilege, right, or mandate to take such ownership.

Bayh-Dole applies only after a federal contractor has acquired ownership of an invention. There are two ways for such a thing to happen:

  1. an inventor assigns an invention made in work supported by the federal government to a federal contractor; or
  2. the federal contractor makes inventors parties to the funding agreement and therefore makes them also contractors, so all their inventions are subject inventions, even if not assigned to the prime contractor.

Is that clear enough? We can go down rabbit holes filled with university gophers and moles, but do we have to? Yes, of course we do. That’s the only way to flush out the gophers and moles.

Let’s consider alternative 1. A faculty inventor assigns.

If a faculty inventor assigns ownership of an invention made with federal support, it must be for other reasons than Bayh-Dole or federal funding or a university’s obligations to the federal government. The faculty inventor

  • (i) has chosen to do so, or
  • (ii) has promised to do so, or
  • (iii) has invented under circumstances under which it is equitable to find that the inventor has an implied obligation to assign, such as

the faculty inventor

  • was hired to invent; or
  • was assigned to conduct experiments; or
  • is an officer of the university with an equitable duty to assign.

But nothing in Bayh-Dole or the patent rights clause can force an inventor to use the patent system or to assign an invention. Assignment is by choice, prior promise, or equitable circumstances that indicate an implied contract or duty to assign.

But before anyone jumps to the idea that a faculty inventor is just another ordinary employee, consider university policy that assures faculty of freedom of research and publication, along with tenure–faculty are not at-will employees, and the university disclaims the right to assign faculty to research or to interfere with their publication of scholarship. This is the *starting point* for a discussion of university patent policy, not something to be stuffed into a corner as fluffy nostalgia for a lost era of idealistic sentiment.

A patent is a publication. The basic exchange of the patent system is that an inventor publishes fully a meritorious invention and in exchange receives an exclusive right to the invention. The patent represents both elements of the exchange–to obtain the patent, the inventor must publish the invention. Thus, to force an inventor to obtain a patent in order to gain the benefit of the inventor’s exclusive right, a university must force the inventor to publish in the patent literature. You can see that such a forced publication violates a faculty inventor’s freedom to publish–something assured under most universities’ formal policies. The freedom to publish policy does not read–“you are free to publish everything except discoveries that university officials decide are valuable or inventive–in which case you must give up your freedom to publish.”

Consider, too, the effect of a university patent policy that then defines an “invention” as pretty much anything that a university official decides is an invention–patentable or not patentable, inventive or not inventive–a technology, an improvement, a software, know-how, whatever. With a definition of invention so expansive, the university asserts by policy that faculty may publish whatever university officials choose not to claim. That’s hardly an expression of a “freedom” to publish. From the perspective of faux Bayh-Dole advocates, the freedom of the faculty is a bad idea that must be curtailed whenever there’s an opportunity for the university to step in and attempt to make money, or to help someone else make money. As one senior administrator at a major public university put it to me, “We own everything faculty do, we just don’t tell them that unless we have to.” The administrator was wrong with regard to the university’s formal policies–but in his mind, his assertion was true, and that was enough.

Thus, university administrators operate with the idea that faculty are not ordinary employees–they are worse off than ordinary employees. Where an ordinary employee would be asked to obligate only those inventions that were made with the employer’s resources or on the employer’s time or in the direction of the employer’s business, a faculty “employee” is often required to obligate any invention made within the faculty member’s area of expertise, whether or not inventive or patentable. While an ordinary employee has the freedom to use his or her expertise outside of paid work to invent, university administrators claim that faculty don’t have any such right. The mindset is–if you invent outside of the university, then you have deliberately chosen to deny the university the benefit of your effort, and that’s a personal conflict of interest with your obligations to the university and to the public.

According to this perverse way of thinking, the university should own anything that you invent outside the university if you could have invented within the university. With that assertion, you can see that university administrators think it is only equitable that the university own everything a faculty member does that in any way could pertain to anything that a university licensing office might want to seek to profit from (or prevent the faculty member from profiting from, or prevent faculty members from getting the idea that there are some things of value that the university does not claim to own). This over-claiming of inventions by an employer runs directly against the idea of equitable ownership of inventions made by employees. Faculty would have more rights as ordinary employees than they do under the overclaiming of university administrators. This overclaiming can be persuasive–the court in the case of Yale v Fenn argued that Professor Fenn had a greater obligation than an ordinary employee to reveal to Yale the value of his inventions–basing that ruling in part on a wholesale misrepresentation of Bayh-Dole by university attorneys.

A faculty inventor might choose to assign an invention to the university for management. There are even good reasons, in some cases, to do that. But beyond choice, if a university administration seeks to compel assignment, whether by a policy statement or by threats to ruin one’s career, the administration attacks the foundation of the university itself. Faculty are not ordinary employees–but the argument goes the opposite direction from that given by university administrators. Faculty are not employees for their research activities–they are not servants of a university master; the university does not have the right to assign research tasks to faculty, nor to control or approve faculty research. If a university policy or patent agreement demands the assignment of all inventions made within the scope or course of employment, the scope of that demand is necessarily limited to only those inventions for which the university assigned the work or had the right to assign the work. For most university faculty, that is a narrow scope indeed.

Now let’s consider alternative 2. The university makes a faculty member a party to the funding agreement.

This was the approach that prevailed under federal funding regulations prior to Bayh-Dole. Faculty investigators were parties to the funding agreement and subject to the same agreement as their universities with regard to the disposition of inventions. While university administrators won’t admit it, and refuse to comply, Bayh-Dole’s standard patent rights clause reproduces this same result, but using a different method (because Bayh-Dole works through patent law, not federal procurement regulations).

Bayh-Dole operates by requiring federal agencies to use a standard patent rights clause unless they can justify an alternative. Bayh-Dole stipulates the provisions for the standard patent rights clause. The patent rights clause in each funding agreement controls the disposition of inventions made under that funding agreement. Bayh-Dole provides that a contractor that obtains ownership of a patentable invention made with federal support may choose to retain that ownership, provided that the contractor complies with the patent rights clause.

The standard patent rights clause contains provisions not in Bayh-Dole. One of these provisions requires the contractor to require inventor-employees to make a written agreement to protect the government’s interest. The act of requiring the written agreement turns those inventor-employees into subcontractors under the definition of “funding agreement.” Since inventors own their inventions under federal patent law, and the written agreement makes inventors parties to the funding agreement and therefore also contractors, their inventions become subject inventions. It’s just that the inventors get a different version of the standard patent rights clause when they own than do their employers.

When a university complies with the standard patent rights clause, it makes its inventors parties to the funding agreement and also therefore contractors. Faculty inventors, then, get offered the same basic deal offered to universities–at the same time. According to the inventor standard patent rights clause, inventors are to be treated as if small business contractors. Inventors are not “last in line,” as Senator Bayh put it, but rather are first in line–as the Supreme Court ruled, rejecting Bayh’s argument.

Here’s that basic deal in Bayh-Dole (35 USC 202(a)):

Each nonprofit organization or small business firm may, within a reasonable time after disclosure as required by paragraph (c)(1) of this section, elect to retain title to any subject invention . . .

The rights of the nonprofit organization or small business firm shall be subject to the provisions of paragraph (c) of this section and the other provisions of this chapter.

Paragraph (c) then lays out the provisions that must be in the standard patent rights clause.

Faculty inventors are treated as “small business firms” when they make the required written agreement to protect the government’s interest. They can then elect to retain title to any subject invention that they own, provided that the invention is disclosed timely to the federal government. Their ownership is then subject to the patent rights clause that applies to them–37 CFR 401.9, not 37 CFR 401.14.

Most notable in the inventor patent rights clause is that there’s  no obligation to file a patent application. Further, there’s no paragraph (d)(2) from the standard patent rights clause–no requirement that the federal government may take ownership of any invention for which a faculty inventor chooses not to apply for a patent. A faculty inventor does not have to use the patent system and does not have to give up ownership of a subject invention to the federal government if the faculty inventor does not file a patent application, and does not have to assign the invention to anyone else–at least not as a matter of Bayh-Dole and its patent rights clauses.

The faculty inventor, in his or her written agreement agreement under the funding agreement promises to disclose the invention to the university, so that the university can disclose the invention to the federal government. The faculty inventor also agrees to establish the government’s rights in the invention–either a license or assignment or nothing at all, depending on the circumstances.

Thus, when a university complies with Bayh-Dole’s standard patent rights clause, it makes faculty inventors parties to the funding agreement, they become contractors, their inventions become subject inventions, and they are governed by the inventor patent rights clause in the funding agreement–and they are not forced to use the patent system at all, nor are they forced to assign their inventions to the university. An obligation to assign inventions to the university arises only if they have acted or promised to do so entirely separate from anything to do with their federal funding.

Treated as a small business contractor by the implementing regulations of Bayh-Dole, a faculty inventor has no constraints on assigning a subject invention. A faculty inventor may assign to anyone or no one. If the faculty inventor assigns a subject invention to the university, then the university must manage the invention under the nonprofit version of the standard patent rights clause–as it has agreed to do, as a party to the funding agreement. But if the faculty inventor assigns a subject invention to an entity that’s not a party to the funding agreement, then the invention passes out of the control of the patent rights clause–just as happens for any small business that retains title to inventions made with federal support that it has acquired, and unlike the control of the nonprofit patent rights clause, that applies through any assignment of a subject invention.

Once a nonprofit acquires a subject invention, it cannot avoid the nonprofit version of the standard patent rights clause by assigning the subject invention. But faculty inventors and small businesses can–and that’s Bayh-Dole. (There’s an argument that the Bayh-Dole’s policy in 35 USC 200 applies to any invention arising in federally supported research or development, regardless of initial owner or later assignment–a public covenant with a working requirement with a requirement to promote free competition that runs with any patent property right on such inventions–but since I’m apparently the only one making the argument and everyone else I know ignores 35 USC 200 in their university practice, let’s not bother further with Bayh-Dole’s stinking, useless, fluffy statement of policy–the rule of law only goes so far as administrative convenience suggests.)


Where do we get to down this rabbit hole? For university faculty, Bayh-Dole is simple:

Make the written agreement to protect the federal government’s interest in subject inventions.

The university then makes faculty inventors in essence small business contractors under the federal funding agreement.

Faculty inventors then disclose their subject inventions to the university, which is obligated to disclose them to the federal government.

That is the sum of a faculty member’s obligations under Bayh-Dole. Everything else is conditional on the faculty member choosing to use the patent system or choosing to assign a subject invention to another party to the funding agreement that has an obligation to use the patent system–or give up ownership to the federal government.

To chase out the moles and gophers:

Faculty inventors have no obligation under Bayh-Dole to use the patent system.

Faculty inventors have no obligation to assign their subject inventions, other than if they have promised to assign those inventions entirely outside anything to do with federal funding.

Universities under Bayh-Dole and the nonprofit version of the standard patent right have no right, obligation, mandate,  or special privilege to take ownership of faculty subject inventions. Anything to the contrary is a misrepresentation of the law and the standard patent rights clause.

If a faculty inventor does choose to use the patent system, then the faculty inventor has obligations to the federal government under the written agreement and under the inventor patent rights clause–to continue the patent application and maintain any issued patent or offer the rights to the federal government; to include a notice of federal funding and rights in any issued patent; to report on the utilization of subject inventions; to prefer US manufacturing in exclusive licenses in the United States to use or sell; to agree to march-in for nonuse of the invention or failure to reasonably satisfy public needs or failure to prefer US manufacturing.

If a faculty inventor assigns a subject invention to the university, then the university must comply with the nonprofit standard patent rights clause. The faculty inventor’s obligations then are restricted to those remaining in the written agreement–to disclose the invention and to sign papers necessary to allow patent applications to be filed.

If a faculty inventor assigns a subject invention to any entity that is not a party to the funding agreement, then the subject invention passes out of the control of any version of the standard patent rights clause. It is no longer a subject invention–it is not an invention owned by a party to the funding agreement. Bayh-Dole no longer applies. The body of federal law that Bayh-Dole preempts (but didn’t repeal) then comes into play. Since that law has been largely neglected for 35 years, it is not clear at all what might happen.

It may be that the assignee would have to request from the federal agency that funded the work a determination of rights in the invention–back to the system created by the Kennedy and Nixon executive branch patent policies and the statutes that existed before Bayh-Dole, and still in large part exist where they have not been repealed. In any event, if the assignment is properly transacted, it would be the assignee’s problem to sort out, not the faculty inventor’s. The same is true of any small business that assigns a subject invention–it falls out of the safe (or at least arbitrary) harbor of the Bayh-Dole standard patent rights clause and back into the seas of federal agency requirements.



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