In the implementation of Bayh-Dole, then, employee-inventors own unless they assign rights, such as to an institutional Contractor. We can use “Contractor” with a capital “C” to follow the usage in the Federal Procurement Regulation’s patent rights clause that implements the Nixon patent policy.
If employee-inventors assign to the Contractor, then the standard patent rights clause at 37 CFR 401.14 applies. If they do not assign, then the inventor patent rights clause at 37 CFR 401.9 applies. If they are not contractors–that is, not parties to the funding agreement–then they are not subject to the funding agreement, and neither 37 CFR 401.14 or 37 CFR 401.9 applies to them or their inventions. Bayh-Dole provides no compulsory mechanism for inventions to become subject inventions other than the standard patent rights clause’s requirement that Contractors require employee-inventors to make a written agreement that makes those employee-inventors parties to the funding agreement. Inventions become subject inventions in Bayh-Dole compliant practice because inventors agree to become parties to the funding agreement, not because Contractors force them to assign their inventions.
It’s just that Contractors do not comply with the (f)(2) written agreement requirement, and so employee-inventors are routinely not parties to federal funding agreements, their inventions made with federal support are not subject inventions, and due to the fine mess of amendments and presidential memos and executive orders demanding Bayh-Dole rather than a more general policy, there is no other mechanism by which the federal government has an interest in such inventions–not by specialty statutes, and not by the now superseded Nixon patent policy, and not by federal regulation, since the Federal Procurement Regulation was abandoned in favor of the Federal Acquisition Regulation, which implements only Bayh-Dole and not executive branch patent policy for inventions made under contract that are not subject inventions.
NIST’s changes to the (f)(2) written agreement requirement make the muddle still worse. NIST requires Contractors to require certain employees to make a written agreement to assign subject inventions to the Contractor. That requirement cannot reach to inventions owned by parties that are not parties to the funding agreement. Inventions owned by non-parties, as it were, can never be subject inventions. The NIST assignment clause cannot force employee-inventors to give up ownership of their inventions to the Contractor, but only require them to give up ownership in those inventions in which the Contractor holds equitable title. If the employee-inventor has no obligation to assign any given invention to the Contractor, then nothing in the NIST addition changes that outcome. If it did, then NIST would have ignored the Supreme Court ruling that Bayh-Dole has nothing to do with Contractors acquiring inventions made with federal support. Since Reagan’s EO 12591 requires federal agencies to follow Bayh-Dole, NIST as a federal agency must do so, even for matters not otherwise within the scope of Bayh-Dole, such as inserting an assignment clause into a Bayh-Dole authorized patent rights clause.
The essence of Bayh-Dole is not the vesting disenfranchisement of inventors that university administrators and their attorney advisors found so enticingly wonderful; nor is it the compulsory disenfranchisement of inventors that NISTwits have found so necessary; nor is it a bumbling lapse in federal policy over decades of review based on a report from 1947 that might be construed to have forgotten that companies, to obtain rights to inventions from employees, must have some agreement beyond mere employment. No, the essence of Bayh-Dole, like the FPR from which it copies, often badly, is that the federal government is indifferent to whether a Contractor or an inventor owns any given invention made with federal support. What matters is that inventors are parties to the funding agreement and subject to that funding agreement but with a patent rights clause tailored for inventors–implied sole proprietors–rather than for-profit or nonprofit institutional contractors.
Since the federal government does not contract directly with each potential inventor, it requires that each Contractor to do so, making each inventor a party to the funding agreement, subject to the patent rights clauses of that funding agreement. If the inventor owns, the controlling patent rights clause is 37 CFR 401.9. If the inventor assigns to the Contractor, the controlling patent rights clause is 37 CFR 401.14. The bridge between these two clauses is the (f)(2) written agreement requirement, the “patent agreement” of the FPR patent rights clauses.
If inventors are not parties to the funding agreement, then they are not within the scope of anything in Bayh-Dole. They would still be within the scope of specialty statutes and the Nixon patent policy, but the amendment to Bayh-Dole at 35 USC 210(c) implementing the Reagan Memorandum of 1983 and the subsequent Reagan EO 12591 require the application of Bayh-Dole as a matter of express policy and implied practice. If it were not for these changes, then inventions made with federal support, even if not owned by a contractor, would come within the scope of federal specialty statutes or the Nixon patent policy.
Bayh-Dole compliance, however, is a mess. Contractors do not comply with the (f)(2) written agreement requirement. Federal agencies do not enforce the (f)(2) written agreement. No one audits for compliance with (f)(2). NISTwits claim not to understand what 37 CFR 401.9 is for. University administrators claim (f)(2) is merely a mandate for them to demand ownership of all inventions made with federal support from their employees, as if the Supreme Court had ruled the opposite of what the Court in fact had ruled. Thus, inventions made with federal support are never subject inventions when made. Inventors have no duty to disclose these inventions under Bayh-Dole or executive branch patent policy, nor to assign them, nor to file patent applications, nor to attempt to commercialize them, nor to grant the federal government any license, nor to offer any benefit to the public on reasonable terms. In short, such inventions are just inventions, and inventors may do what they want with them, using the patent system or not, subject to whatever demands an employer might make–provided that nothing in those demands can have anything whatsoever to do with Bayh-Dole or with resources made available for inventors’ use as a consequence of federal funding.
Innovation from research is difficult enough–even to advance research and science and technology. To deal with such a mess of policies and laws created by government lawyers, university-affiliated patent attorneys, policy wonks, and industry lobbyists is almost unbearable. It is little wonder that people make up whatever sounds plausible and tinker with regulations as they will to make themselves feel better about whatever it is they find they like. It must be satisfying to have one’s urges come to be thought of as endorsed by the power of federal law. No doubt that is the goal of the policy wonk, the lobbyist, the government lawyer, or the university counsel. We might ask, however, if such a situation is has much likelihood of providing any support for research-based innovation. Perhaps our best alternative to making a clean sweep of laws, policies, and patent rights clauses–if not the whole cantankerous system of university granting of research awards–is to make the law and regulations so cumbersome and unenforceable that good things might yet happen despite it, despite the sincere university administrators and their patent attorneys excited by the uncritical expenditure of funds on patenting, and despite the speculators willing to bet that they can acquire low and sell high, with universities getting only 1% or 2% of the deal, if that.
Bayh-Dole clearly depends on contractors acquiring ownership of inventions made with federal support before the law places conditions on that ownership. But Bayh-Dole does not require contractors to acquire ownership.
While executive orders cannot alter law, they can alter the effect of law and procedures under law. Bayh-Dole does not require inventors to do anything–they do not have to disclose inventions, they do not have to assign inventions, they do not have to use the patent system, they do not have to grant the government licenses to their inventions. But Bayh-Dole’s standard patent rights clause requires Contractors to make their employee-inventors parties to the funding agreement and therefore subject to a patent rights clause–just not the Contractor’s patent rights clause.
If inventors are not parties to the funding agreement (because a contractor does not comply with the written agreement requirement, or because the contractor insists that the written agreement made as required by the patent rights clause does not also become part of the funding agreement according to Bayh-Dole’s definition at 35 USC 201(b)), then the invention is free of all federal claims, for ownership, for a government license, for any sort of special public interest apparatus.
Given that Bayh-Dole provides nothing for enforcement of the law or compliance by either agencies or contractors with the standard patent rights clause, and federal agencies have shown no interest in enforcing the patent rights clause in general, but for certain paperwork requirements involving disclosure, election to retain title, and filing patent applications, and certainly no interest in enforcing the (f)(2) written agreement–for all this as given–the necessary outcome is this:
Bayh-Dole gives contractors the choice of whether inventors will be parties to the funding agreement, and their inventions subject to the welter of administrative controls and obligations, or whether their inventions will be ordinary inventions, apparently free from any and all institutional or governmental claims or public interest controls.
Let that sink in. Contractors decide whether the federal government has any rights whatsoever in inventions made with federal support. If a Contractor makes an inventor a party to the funding agreement, then the inventor is subject to 37 CFR 401.9 and inventions made with federal support are subject inventions–and the Contractor can have no interest in any such invention if the inventor discloses the invention and elects to retain title. If a Contractor does not make an inventor a party to the funding agreement, then the inventor has no obligations whatsoever to the federal government. If a Contractor quite apart from Bayh-Dole obtains assignment of an invention made with federal support, then the invention becomes a subject invention subject to 37 CFR 401.14.
Finally, I used “apparently” with regard to an inventor’s obligations, if an inventor is not a party to a funding agreement but the invention was made with federal support. There’s one section of Bayh-Dole that applies, without regard to subject inventions, without regard to compliance with the (f)(2) written agreement requirement, without regard to specialty statutes, without regard to who owns a given invention, and that’s 35 USC 200, Bayh-Dole’s statement of policy and objective. That statement is the statement of federal policy that displaces both specialty statutes and executive branch patent policy.
It is the policy and objective of the Congress to use the patent system to promote the utilization of inventions arising from federally supported research or development . . .
The use of “policy” is material. This is no mere restatement of intentions and purposes. It is a policy, just as the Nixon patent policy was a policy, and it constrained federal agency contracting and contractor compliance. And this policy is not restricted to subject inventions, as was the invention in dispute in the case of Stanford v Roche. This policy applies to all inventions “arising from federally supported research or development.” While the rest of Bayh-Dole fusses over the disposition of rights in subject inventions as between a contractor and a federal agency (and with federal agency licensing of inventions owned by the federal government), this statement of policy lays out the fundamental public covenant that runs with the use of federal funds allocated to non-federal research or development–the patent system is to be used to promote utilization of these inventions, not to suppress that utilization. There is more to explore with regard to Bayh-Dole’s policy, but in its general framework, it is clear. The ownership of inventions is a non-issue–for Bayh-Dole, it does not matter whether the inventor owns, a Contractor owns, or the federal government owns. What matters is that everyone involved accepts that if an invention arises from federally supported research or development, patent rights are different, that the patent system is to be used to promote use. Given that Bayh-Dole is part of federal patent law, Bayh-Dole’s policy can be read as a general restriction on remedies for infringement.
Here’s 35 USC 261:
Subject to the provisions of this title, patents shall have the attributes of personal property.
Bayh-Dole’s statement of policy at 35 USC 200 is such a provision. The property rights in patents on inventions arising from federally supported research or development are subject to 35 USC 200.