We are explaining why, despite widespread insistence by folks who set themselves up as experts, there’s no obligation in Bayh-Dole for inventors to disclose inventions made under a federal contract. The first point to be made is that if one looks at the statute, there’s no disclosure requirement at all for inventors, only for contractors, after inventors do disclose–and the contractor has acquired title.
The standard patent rights clause authorized by Bayh-Dole includes a provision addressing inventor disclosure that’s entirely outside Bayh-Dole (there is no statutory authority in Bayh-Dole to require inventors to disclose anything to their employers–but what’s to stop meddling?). But even the standard patent rights clause provision does not actually require inventors to disclose inventions–disclosure is conditioned on a contractor’s compliance with the contractor’s disclosure obligation, and the contractor’s disclosure obligation only shows up after an inventor has disclosed the invention to the contractor. And a contractor is not required to get disclosures. With no inventor disclosure, there is no contractor compliance problem. So the patent rights clause in Bayh-Dole totally messes things up–unless its purpose is to keep inventors free (somewhat) from bureaucrats forcing them to use the patent system or to give up their rights to inventions.
A part of my brain, at this point, tells me that those drafting Bayh-Dole simply did not have a full deck. Perhaps they wrote in haste. Perhaps they weren’t up to it. But Latker was involved, and Latker was involved in drafting the Federal Procurement Regulations and the standard patent rights clause there, which makes things work. Here’s the FPR patent rights clause:
The Contractor shall obtain patent agreements to effectuate the provisions of this clause from all persons in his employ who perform any part of the work under this contract except nontechnical personnel, such as clerical employees and manual laborers.
Those patent agreements must allow the contractor to keep records to show conception or first actual reduction to practice, and to ensure timely identification and disclosure:
The Contractor shall establish and maintain active and effective procedures to ensure that Subject Inventions are promptly identified and timely disclosed. These procedures shall include the maintenance of laboratory notebooks or equivalent records and any other records that are reasonably necessary to document the conception and/or first actual reduction to practice of Subject Inventions, and records which show that the procedures for identifying and disclosing the inventions are followed.
In Bayh-Dole, there is no record keeping standard or requirement. Just an obligation to “instruct” employees on timely invention reporting. The FPR clause makes professional sense. Bayh-Dole’s version, four years later, is rank amateur.
(Again, for all the folk taken with the delusion that the government owned all inventions–look here–the arrangement is assign unless you don’t have to. In the IPA program, operating under the FPR policy, a nonprofit did not have to assign as a matter of standing agreement with the NIH or NSF–the government could obtain ownership only if the contractor decided not to file a patent application–essentially Bayh-Dole.
Bayh-Dole changed nothing over the FPR except to broaden the (b)(2) greater rights determination so that the contractor determined the greater rights rather than the government for those nonprofits not already in the IPA program (just canceled as ineffective and contrary to public policy–oh well) and for nonprofits working with all those federal agencies other than the NIH and the NSF–that is, for the agencies that provided only a small portion of the extramural funding going to nonprofits.
The defense departments historically insisted on allowing contractor ownership; while NASA and the Department of Energy were relieved of the burden of statutes to go through the greater rights determination to hand things back. And it was a fuss between Purdue Research Foundation and the DOE that got Senator Bayh into the mix to make Bayh-Dole bi-partisan. If only Bayh had won re-election we would not have been saddled with this ugly bit of law. Maybe we would have gotten Harrison Schmitt’s version instead. Bayh-Dole changed almost nothing for the universities that were receiving the bulk of federal funding. Just repeating because you will read otherwise from people who are bluffing and want you to fool yourself.)
The FPR also requires that the patent agreement must effectuate the ability of the contractor to assign inventions to the federal government. A contractor cannot assign inventions to the government unless the contractor acquires title to those inventions. Therefore, the patent agreement with employees must include an obligation that employee inventors assign their inventions made under contract:
The Contractor agrees to assign to the Government the entire right, title, and interest throughout the world in and to each Subject Invention, except to the extent that rights are retained by the Contractor under paragraphs (b)(2) [greater rights determination] and (d) [retention of a nonexclusive license when the government acquires title] of this clause.
The contractor agrees to assign title to the Government unless the Government provides otherwise. The patent agreement has to include a promise by inventors to assign to the contractor. That’s the only way the contractor can comply. A promise to assign amounts to an equitable claim to title by the contractor–each subject invention will be “of the contractor” because the contractor must require inventors to promise to assign. (And for any of you who know a university administrator smitten with present assignment mania, suggest that they go read Breyer’s dissent in Stanford v Roche. Spoiler: Breyer argued that promise to assign and present assignment amounted to the same thing and magical changes in wording should not matter.)
There was no assignment requirement for inventions in the 37 CFR 401.14(f)(2) written agreement for 38 years of Bayh-Dole, and only last May 2018 did NISTwits add an assignment requirement–but for subject inventions, which are inventions that the contractor already owns, and owns not by any operation of Bayh-Dole, which does not concern inventions until after they become owned by the contractor.
Again, the mind flies to “clueless” and returns, with searching eyes, asking why must national innovation policy be run by NISTwits. Wouldn’t the most wonderful regulatory change NIST could propose be for NIST to get out of the Bayh-Dole tampering business altogether?
With no requirement in Bayh-Dole that inventions made under contractor must be either disclosed to or assigned to contractors, inventions cannot become subject inventions by operation of Bayh-Dole. That is not a mistake. It is public policy. It’s the law. And it makes perfect sense. Bayh-Dole is part of patent law. By contrast, the Federal Procurement Regulations were a codification of executive branch policy. Patent law does not compel inventors to use the patent system. Patent law does not compel inventors to give up the rights secured to them by the Constitution. Bayh-Dole as part of patent law cannot require inventors to use the patent system or to give up their rights to inventions without Congress making clear that it intends to require inventors to give up their rights and at the same time be forced to use the patent system. And the moment that Congress tried to make Bayh-Dole do that, we would question the authority of Congress to secure for non-inventors the exclusive right to inventors’ discoveries.
Bayh-Dole is deeply flawed from the get-go. Amateurish. Bungled. Even its complications are evidence of the incompetence with which it has been drafted–perhaps it is the lack of careful review. Perhaps it was a deliberate attempt to be as ambiguous as possible to allow the greatest freedom to twist meanings around in the implementing regulations and patent rights clauses after the law was passed. Either way, Bayh-Dole is a monsterpiece of a law. Here is the FPR patent rights clause requirement when a Contractor does not assign a subject invention to the federal government:
With respect to each Subject Invention to which the Contractor retains principal or exclusive rights, the Contractor:
Hereby grants to the Government a nonexclusive, nontransferable, paid-up license to make, use, and sell each Subject Invention throughout the world by or on behalf of the Government of the United States (including any Government agency) and States and domestic municipal governments.
Either way, then, under the FPR patent rights clause, the contractor must own the invention in order to comply–either to assign to the government or to grant the government its license. Thus, under the FPR patent rights clause, the patent agreement with employees must include a promise to assign each invention made under contract “to effectuate” the provisions of the patent rights clause.
In the FPR, it all works. There is a logical sense to it. In Bayh-Dole, nothing works. There is no obligation to assign, and the wording is inconsistent–is it a report or a disclosure or just making known? Oh, who cares. Bayh-Dole reads like it was written by an amateur contract attorney out of depth trying to write in statutory style. Oh, wait. Latker, former patent examiner. Right.
Let’s return now to Bayh-Dole, having seen how four years earlier the federal government had the competence to provide a logical order to its patent rights clause.
Bayh-Dole’s standard patent rights clause makes a most strange requirement (37 CFR 401.14(f)(2):
The contractor shall instruct such employees through employee agreements or other suitable educational programs on the importance of reporting inventions in sufficient time to permit the filing of patent applications prior to U.S. or foreign statutory bars.
Notice that the contractor merely must provide instruction to employees on the “importance” of timely “reporting” of inventions. There is no requirement to disclose! And we are in the same section where folks created the written agreement requirement and listed what must be in the written agreement. And didn’t put disclosure in that agreement, but instead put it a sentence away and made disclosure a non-required action that followed on instruction–the instruction may be placed in “employee agreements” but does not have to be, and the “employee agreements” clearly are not the “written agreement” just established by (f)(2). Neither the “written agreement” nor the “employee agreements” is referred to as a “patent agreement” though the “employee agreement” might be–it is just that this “employee agreement” is entirely optional and has no requirement to that inventors must disclose their inventions to their employer. Just that the employer must instruct employees about timely disclosure.
Nothing in this requirement to instruct carries any penalty for failing to instruct. If a contractor fails to instruct, nothing happens–no federal request for title, no march-in, no suspending contractor administrators from their heels over a pit of hungry federal officials. Furthermore, while contractors are to require employees to make a written agreement to protect the government’s interest in subject inventions, including (in addition to disclosing inventions) executing papers to permit patent applications to be filed and establishing (assigning to, licensing to the government) the government’s rights in subject inventions, there’s no penalty for a failure of inventors to assign inventions, to disclose inventions, and not even any obligation that they keep records that would show what inventions were conceived or first actually reduced to practice under federal contract.
Now let’s read carefully: Bayh-Dole’s standard patent rights clause requires inventors to agree to disclose
The contractor agrees to require, by written agreement, its employees, other than clerical and nontechnical employees, 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
If the requirement ended there, we would be done. There would be a requirement to require inventors to disclose. But that’s not where the requirement ends–there is a restrictive clause appended:
in order that the contractor can comply with the disclosure provisions of paragraph (c) of this clause
Timely disclosure so the contractor can comply. But the contractor has no compliance obligation whatsoever until the inventor has disclosed to the contractor’s patent personnel. You now can see the crock up from the 1984 amendment that changed the reporting deadline from when an invention was “made” to when it was “disclosed to” the patent folk. If a contractor had an obligation to report each subject invention within in two months of it being made, then for any invention that the contractor claimed outright (via patent agreements and policy statements or even for some state universities state law), those patent folk would have to be out finding those inventions and disclosing them within two months. They would have to get off their backsides and get out into labs. That wouldn’t do, so they got the law changed for their convenience. Poor babes. But in changing the law, they did not bother with how the change affected disclosure. Now inventors are required to disclose only when the patent folk have a disclosure–if the patent folk don’t have a disclosure, then the contractor is not obligated to disclose, and inventors therefore are not obligated to disclose–until they disclose!
If an inventor does not disclose in writing to patent personnel what the contractor must disclose to the federal government if the contractor acquires ownership, then the contractor has no disclosure obligation. Since Bayh-Dole does not require contractors to disclose unless their patent personnel are disclosed unto by inventors in writing, inventors have no obligation to disclose. They would have an obligation to disclose if Bayh-Dole had been left in its original condition–with contractors required to disclose each subject invention timely after the invention had been made. But hacks of failed architecture lead to more defects in strange places, requiring more hacks–yet another sign that NISTwits don’t have a clue what they are doing, fussing over a failed architecture, introducing more failure, and by doing so, they claim, they will “unleash” American “innovation.” Oh boy.
There’s further confirmation in Bayh-Dole that inventors have no obligation to disclose their inventions to their employer-contractors under Bayh-Dole. We have seen that inventors are to promise to disclose so that the contractor can comply with the contractor’s obligation. But the contractor’s obligation only comes about when an inventor discloses–fully. Bayh-Dole’s implementing regulation also includes a patent rights clause for inventors, when they own a subject invention. (And inventors’ inventions made under contract become subject inventions when inventors are made parties to the funding agreement, which is what the (f)(2) written agreement requirement does–sigh–it’s spaghetti code.) Here’s 37 CFR 401.9, which NIST also proclaims that it doesn’t understand:
Agencies which allow an employee/inventor of the contractor to retain rights to a subject invention made under a funding agreement with a small business firm or nonprofit organization contractor, as authorized by 35 U.S.C. 202(d), will impose upon the inventor at least those conditions that would apply to a small business firm contractor under paragraphs (d)(1) and (3); (f)(4); (h); (i); and (j) of the clause at § 401.14.
There are a bunch of things going on. The key points is that inventors are treated as small business contractors–they are parties to the funding agreement–and as small business contractors, inventors have the full benefit of 35 USC 202(a), the basic right established by Bayh-Dole:
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:
Inventors are required to disclose through their employer (that’s (c)(1)) but the subject invention remains one owned by the inventor, and by the action of 35 USC 202(a) neither the employer nor the federal agency has the right to take title from the inventor–the inventor is assured of the right to elect to retain title. That could not be if anything else about federal law required the inventor to give up title. And this right of the inventor is a right of federal law–and that right trumps enforcement of contracts under state law. It’s heady stuff if one bothers to read the law and one’s head is not clouded with what university administrators and old boy Bayh-Dole pundits insist the law must be.
This 37 CFR 401.9/35 USC 202(a) combination is pretty much the only protection for inventors in all of Bayh-Dole. Why is it that universities and NIST are so hot to remove it? The Supreme Court in Stanford v Roche found the lack of third party protections in Bayh-Dole “deeply troubling,” saved only by the realization that Bayh-Dole deals only with a squabble between federal agencies and organizational contractors when the contractors get title. But inventors are not those organizational contractors, and when they own, Bayh-Dole excludes the organizational contractors, just as it does when other subcontractors made parties to the funding agreement own subject inventions (see 37 CFR 401.14(g)(1)).
Under Bayh-Dole’s inventor patent rights clause, inventors have no obligation to file patent applications. Nor does the federal government then have any right to request title. If an inventor does not disclose the invention to anyone responsible for patent matters–for the employer or for him/herself–then the inventor has no obligation to disclose anything to the federal government. An inventor can publish and blow patent rights and there’s nothing in Bayh-Dole to prevent or penalize such action. If an inventor does disclose, and elect to retain title, the same result. Only if an inventor files a patent application do the rest of the limited requirements of the inventor patent rights clause come into play.
There you have it. A law so mind-bogglingly stupid that I have to spend 5,000 words to explain that inventors have no obligation under Bayh-Dole to disclose anything, and if they do disclose, it is whenever they want, and they can report, publicize, or make known all they want but it is not a disclosure for Bayh-Dole’s purposes unless it is a written report that includes an enabling specification–a record of conception–of an invention that has been reduced to practice (with at least conception or first actual reduction to practice documented to have been done under federal contract) and is owned by the contractor (either the employer or the inventor, if the employer has complied with the (f)(2) written agreement requirement–most do not) and is delivered to contractor personnel responsible for patent matters.
In brief. Under Bayh-Dole, inventors don’t have to disclose inventions made under contract, and if they do choose to disclose they can take their time, or they can blow patent rights, and it just doesn’t matter for Bayh-Dole compliance.
Contractors are required to instruct inventors about timely disclosure–but that’s only by way of warning about bar dates to patenting. There’s no penalty if inventors blow those bar dates. If inventors do disclose, then the contractor has two months to disclose in turn to the federal government.
But contractors have no obligation to compel such disclosure from inventors. So long as an invention has not been made, or made under contract, or acquired by the contractor, or disclosed to patent personnel (such disclosure meeting all the requirement for such disclosure), the contractor also has no disclosure obligation. The folks who monkey with Bayh-Dole edited out that obligation when they changed “made” to “disclosed to”–university patent administrators were relieved that they didn’t have to do a darned thing, and the monkeys making the changes didn’t have a clue that they screwed up the already tenuous structure of the law.
In the simplest brief.
Under Bayh-Dole, inventors disclose when it suits them.
Contractors must disclose to the federal government within two months of receiving a conforming disclosure from inventors, but contractors don’t have to get any disclosures.
So disclose if you feel like it.
WTF. Bayh-Dole is such a dismal thing. Unleashing American innovation by futzing around with Bayh-Dole is hopeless stuff.