Bayh-Dole’s Ruby Slippers

This is a story about 35 USC 201(b), 35 USC 202(a), 37 CFR 401.9, and 37 CFR 401.14(f)(2) and (g)(1). These provisions of Bayh-Dole, implementing regulations, and standard patent rights clause, when read together, create ruby slippers. [I’ve revised the Written Agreement to reflect NIST’s efforts to introduce an assignment requirement not authorized by Bayh-Dole–or, really, antagonistic to Bayh-Dole.]

The story requires the usual build up by way of documentation. If you can’t stand the tension, scroll down to the stars.

Here’s the (f)(2) requirement, for each funding agreement (broken up into readable units):

The contractor agrees to require,

That is, the institutional contractor agrees to require–meaning, under the funding agreement containing the standard patent rights clause, the institutional contractor must take a positive action to require, and therefore cannot require anything else–

by written agreement,

That is, the requirement is a written agreement–not merely a policy statement, not something general–and the written agreement establishes the responsibilities of individuals who may invent when they do invent:

its employees, other than clerical and nontechnical employees,

That is, not all employees, but rather only those for which it would be proper for the government to expect an invention deliverable–a clerical or nontechnical employee could not reasonably invent within the scope of his or her employment for the purposes of the federal contract, so no deliverable for them.

And now the delegations:

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

Only an inventor can disclose an invention–it’s what the inventor has conceived. An institution can only guess on what the inventor has done until the inventor has documented the invention. 

Remember, a subject invention is an invention owned by a contractor. A contractor is a party to a funding agreement. If an inventor is not a party to the funding agreement, then any invention made by that inventor is not a subject invention unless a party to the funding agreement has acquired it. Either the inventor must become a party to the funding agreement or must assign the invention to a party to the funding agreement for the invention to become a subject invention within the scope of Bayh-Dole’s control.

An inventor has no obligation under this (f)(2) agreement to disclose any invention until after the institution has acquired it. “Disclose” here does not mean merely to “report” that there’s an invention–“disclose” means to prepare what amounts to the informal specification for a patent application with sufficient information to determine that patent rights are available. This is what an institutional contractor must disclose to the federal agency as a pre-condition to having the right to retain ownership of inventions that the institutional contractor has already acquired.

But if the inventor is also a party to the funding agreement–a contractor–then the inventor has the same status and right under 35 USC 202(a) as the institutional contractor–disclose the invention to the federal government, after such time as the inventor discloses the invention to the inventor’s chosen personnel for patent matters, such as, though not necessarily only, through his or her institution. Having timely disclosed the invention to the federal government, Bayh-Dole then stipulates that the inventor, acting as a small business contractor (see 37 CFR 401.9), has the right to retain ownership of the invention.

For an institutional contractor to acquire an invention that’s not a subject invention, the invention must somehow be first reported to the institutional contractor. For a property right to be acquired, furthermore, there must be something that makes definite the boundaries of the property to be conveyed. There must be some definition of scope of the invention that is the subject of acquisition. It is not sufficient to assert that whatever-it-is-has-been-assigned and later folks will sort out what it was that was assigned.

Here’s the rub. Nothing in Bayh-Dole requires such reporting. An institutional contractor is free to be oblivious to inventions being made under funding agreements. Those inventions are not subject inventions. There’s no Bayh-Dole compliance involved. The federal laws that Bayh-Dole otherwise preempts remain in effect. Federal agencies may have a claim to ownership of such inventions, but may not have a mechanism for discovering that any such inventions have been made. This (f)(2) requirement is not in Bayh-Dole. It is a creature of the implementing regulations, without antecedent in Bayh-Dole. One might wonder, then, whether the (f)(2) requirement, not part of Chapter 18 of Title 35, is itself preempted by Bayh-Dole!

in order that the contractor can comply with the disclosure provisions of paragraph (c) of this clause,

It’s not what you may think. An institutional contractor has an obligation to disclose only if the contractor has i) acquired ownership of an invention otherwise within scope and ii) desires to keep that ownership. It is not the case that the institutional contractor must report every invention made in work with federal support–only those inventions that the institutional contractor has acquired already.

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

This is the NIST addition from May of 2018. NIST’s chief counsel in a set of slides published on the web makes it apparent that he has no idea what the definition of subject invention is or the Supreme Court ruling in Stanford v Roche. In any event, each institutional contractor is to require inventors to assign to the institutional contractor each invention the institutional contractor already owns. Perhaps that covers inventions for which the institutional contractor has a claim to equitable title. Or perhaps it is FUBAR.

and to execute all papers necessary to file patent applications on subject inventions and to establish the government’s rights in the subject inventions.

How could an inventor possibly have any rights to a subject invention by which to “establish the government’s rights” if the inventor has had to assign those rights away to make an invention become a subject invention? Nope–any reasonable interpretation of this (f)(2) agreement has to end up with inventors having rights in their inventions and those inventions being subject inventions. And there is just such a reasonable interpretation available.

The (f)(2) agreement makes inventors parties to the funding agreement, and therefore contractors–small business contractors according to 37 CFR 401.9–and under federal law they own the inventions they make. Those inventions are then “of the contractor” and become subject inventions if patentable and made “under contract.”

Universities don’t comply with the (f)(2) requirement. They don’t require the (f)(2) agreement, and so they don’t make their employees become parties to the funding agreement. Instead, universities substitute draconic assignment requirements–violating their own policies on freedom of research and publication, ignoring the fact that they don’t assign faculty to research nor control their research nor have even the right to control their research. And the universities also violate the standard patent rights clause’s (f)(2) requirement, refusing to comply.

Bayh-Dole provides no special privilege for universities to acquire inventions made in federally supported work. That means that inventors have rights under Bayh-Dole, too–and the (f)(2) agreement is how those rights are established and protect inventors from any other claims a university might make on those inventions as a condition of the federal funding. If a university does not assign a faculty member to work on a federal grant, the university cannot come back later and pretend that it did in order to claim ownership of inventions.


Here’s the thought, then.

University personnel–faculty, students, staff–can make the (f)(2) written agreement on their own initiative. The university is required to require it by federal contract. The university cannot then forbid its personnel from making the required (f)(2) written agreement, even if university administrators make no effort to comply. Any university employee could simply pull down a template (f)(2) agreement and sign it.

The employee becomes a party to the funding agreement through the patent rights clause’s assignment of responsibilities, the employee’s inventions become subject inventions, the employee has the benefit of 35 USC 202(a)’s core provision, that the employee may keep title to any invention, subject to disclosure to the federal government once the employee inventor has disclosed an invention to personnel responsible for the administration of patent matters, such as one’s patent counsel.

The law says the employee contractor does not have to assign to anyone:

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

That does not say, “retain title relative to any demand by a Federal agency to convey title to the government”–it says, generally, “to retain title.” A contractor that acquires title, by disclosing the invention, appears to acquire a right relative to any obligation to assign. Stanford and its AUTM ilk had it all backwards with Bayh-Dole. Bayh-Dole doesn’t void any prior assignment of a subject invention. It (or really, the employer-contractor in complying with the standard patent rights clause) voids any prior obligation to assign to an employer-contractor as a condition of participating in the federally supported work, once an inventor becomes a party to the funding agreement and thus an inventor-contractor.

An inventor-contractor, whatever his or her prior obligation to assign, has the right to retain ownership, subject to disclosure to the federal government. No wonder university administrators refuse to comply with (f)(2)! Doing so would cede inventions to inventor-contractors, who might choose not to work with the university’s technology transfer office. Imagine! They could go off and start companies on their own without the bureaucratic delays, crazy requirements, and bitterness imposed by university administrators. Or assign to any company they wanted. Or publish the invention rights away to the public domain. Or grant everyone a royalty-free non-exclusive license as part of a commons or open source license.

Here then is the proposition. If university personnel want the benefit of Bayh-Dole, and have $200K to fight off university administrators and their gawd awful lawyers, then just make your own (f)(2) written agreements. Use the language of the statute. It might look like this:

Agreement to Protect the Government’s Interest

Title of Proposal:  _________________________________________________

Funding Agency:  ________________        Federal Agreement #: ______________

University:            _________________________________________________

As my employer is required by the standard patent rights clause at 37 CFR 401.14(f)(2) to require, I hereby agree:

(i) to disclose each subject invention owned by the University promptly in writing to personnel identified by the University as responsible for the administration of patent matters;

(ii) to assign to the University the entire right, title, and interest in and to each subject invention made under the Federal Agreement to which the University has an equitable claim, excluding any such claim made as a condition for allowing me to participate in work supported under the Federal Agreement; and

(iii) to execute all papers necessary to file patent applications on subject inventions and to establish the federal government’s rights in the subject inventions.

I understand that by making this written agreement as required, I become a party to the Federal Agreement, that any inventions as defined by 35 USC 201(d) that I conceive or first actually reduce to practice under the Federal Agreement become subject inventions as defined by 35 USC 201(e), and that under 37 CFR 401.9, I am to be treated by the Funding Agency as a small business contractor with regard to the disposition of any subject invention I own and to which the University has no equitable claim as a consequence of requiring me to make this written agreement.

I further understand that I have the benefit Bayh-Dole offers to each small business contractor under 35 USC 202(a); namely, I have the right to retain ownership of each subject invention, provided that I timely disclose the invention to the federal funding agency after having disclosed the invention to personnel of my choosing responsible for the administration of patent matters.

Signed: ____________________________         Date _____________________

Printed Name:  ______________________          [Notary:]


If a university employee makes this written agreement, there’s nothing the university can do to stop it. It’s required by a federal contract. The university must comply, if its employee does! Perhaps what’s wrong with Bayh-Dole is that university employees have worn ruby slippers for thirty years (since, say, the Bayh-Dole regulations were finalized) and not bothered to realize that all they had to was to click the heels together and they would be back in Kansas, not in some university bureaucratic fantasy land run by humbug administrators who are often good people but just as often it seems very poor technology transfer administrators. 

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