How Bayh-Dole Is Intended to Work, circa 1992, Part 3

We are still working through a passage in a law article from 1992 that sets out how Bayh-Dole is intended to work and addresses questions of faculty ownership of inventions. The issue is not with the author of an article a couple of decades ago, but rather with the very current, continuing appeal that we must consider assertions of how Bayh-Dole was intended to operate rather than reading the law itself–even with all its strangenesses. It is this private control of what was “intended” that is the problem. It was a problem, as well, for Bayh-Dole in Stanford v Roche, where Stanford argued how the law as “intended” to work and the Supreme Court rejected Stanford’s arguments. Not only that, but the Supreme Court rejected Senator Bayh’s arguments, and rejected the arguments of scores of university attorneys who insisted that the world would fall apart if universities did not get outright ownership of whatever their personnel invented if in any way associated with federal funding.

Here’s a bit from the AUTM amicus brief:

Congress enacted Bayh-Dole with the specific purpose of providing universities and other nonprofits with certainty that they would own their federally funded inventions and could enter into collaborative licensing arrangements to commercialize them.

It’s just that nowhere in Bayh-Dole is this “specific purpose” expressed. Go look at Bayh-Dole’s statement of policy and objective at 35 USC 200. No “certainty of title” talk there. Certainty of title–or certainty that a university would own inventions made by people doing research supported by federal funds–simply is not in the law. It’s a fantasy put forward by patent licensing people and by the people who love them. The law, we are told, must be interpreted to enable this fantasy, cast as something that Congress had as a “specific purpose.” The Supreme Court scoffed at such a thing:

It would be noteworthy enough for Congress to supplant one of the fundamental precepts of patent law and deprive inventors of rights in their own inventions. To do so under such unusual terms would be truly surprising. We are confident that if Congress had intended such a sea change in intellectual property rights it would have said so clearly—not obliquely through an ambiguous definition of
“subject invention” and an idiosyncratic use of the word “retain.”

Bayh-Dole, as it is claimed to be intended to work, is an elaborate scam–a scam that has stripped inventors of their rights, has boarded up 50,000 federally supported inventions behind paywalls where they cannot be used even for research, and has cost the American public hundreds of billions in monopoly-priced medicines and hundreds of billions more in lost opportunities.

One last point with regard to this part of our passage’s account of how Bayh-Dole is intended to work. It’s a minor thing that actually isn’t minor:

If faculty develop an invention

In Bayh-Dole, “develop” takes the form of “development.” One “develops” an invention by using technical information to design a new product. Here’s the federal definition from the Federal Acquisition Regulations, Part 35 “Research and Development Contracting”:

“Development,” as used in this part, means the systematic use of scientific and technical knowledge in the design, development, testing, or evaluation of a potential new product or service (or of an improvement in an existing product or service) to meet specific performance requirements or objectives. It includes the functions of design engineering, prototyping, and engineering testing; it excludes subcontracted technical effort that is for the sole purpose of developing an additional source for an existing product.

When one “develops” an invention, one deals with a potential new product based on or incorporating the invention. Development has nothing to do with inventing itself, or as Bayh-Dole has it, “making” an invention. Here is Bayh-Dole’s definition:

The term “made” when used in relation to any invention means the conception or first actual reduction to practice of such invention.

“Conception” and “first actual reduction to practice” are concepts pertaining to the now abandoned issue of who has invented first. Here these concepts are used to define scope rather than priority. A similar thing happens with federal policy under Executive Order 10096 pertaining to federal government claims on inventions “made” by federal employees. “Conception” is a full mental understanding of an invention, plus a recognition that what is understood is inventive. “First actual reduction to practice” involves (among other things) testing necessary to demonstrate that an invention functions in all its conceived aspects as intended. There’s a bunch of technical looseness in all of this anyway, especially what happens to first actual reduction to practice if the testing isn’t necessary to a patent issuing, and in fact happens after a patent has been issued.

But here, for this minor point, it is enough to show that it is entirely another thing to have “develop” used instead of “make.” When faculty develop an invention, they work on creating a product. When faculty make an invention, they conceive it and reduce it to practice, either constructively (without building it or testing it) or actually (by building it or using it and testing it as necessary to support the claims of a patent application).

Our author uses “develop”  without any sense that invent, make, and develop have different definitions in federal contracting (and oddly, no definitions at all in federal patent law, but for here, where Bayh-Dole is a part of federal patent law). There’s no doubt that university administrators, in drafting policy and guidance on Bayh-Dole, happily use develop or create or whatever in place of “invent” or “make.” To their way of thinking, they have chosen a more general term, one without any formal or legal meaning, so they can make up whatever meaning they want, as they see the need.

We might say that our author is repeating what university administrators say about law, reprising their spouting off about how the law is “intended” to work. Perhaps, if we wanted to find some dignity in this account, it might read that “university officials who have historically been often sloppy and even clueless when they aren’t about being deliberately deceptive about federal policy assert that Bayh-Dole works this way” or “university officials assert (without any support whatsoever) that Bayh-Dole is intended to work this way” or “university officials assert that Bayh-Dole is intended to work this way, so we will take their assertion as fact.” One would think an academic author would not take things historically intended as political bluffery as fact. “Develop” suggests that things are here too sloppy by far.


The university can then elect title to the invention and work with the faculty members to apply for a patent and to market the invention.

This article is from 1992–well before Stanford v Roche was decided. We can forgive the author the misconception with regard to Bayh-Dole. Universities cannot “elect title” under Bayh-Dole. There is nothing in Bayh-Dole that allows universities to “take” title or have any special privilege with regard to title to an invention arising in work supported at least in part by federal funds. It is this “elect title” to mean “take title” that is the great university fraud attributed to Bayh-Dole. The “advocates” of this way of thinking will insist until they die that Bayh-Dole was “intended” to operate this way. Anything else would uncover the fraud, or the political bluffery, or the expectation that since nothing political is expected to be taken as true that what has been stated as intended is really nothing but a kind of joke, a children’s pretend game in which what’s said and done is mere play-acting, not morally culpable.

The Supreme Court, however, ruled that Bayh-Dole provides no mechanism for “vesting” title in inventions with contractors–not outright, not by taking, not by giving notice to the federal government, not by the fact of federal funding. Dubilier established that federal funding and use of federal resources was not sufficient grounds for the federal government to have a claim to own an invention–it would certainly be odd then to find a law that gave an organization using federal money and compensated for the use of its resources to have title in inventions without Congress making clear its intent to do so (and navigating how it is that Congress has the authority to reserve exclusive rights in discoveries to anyone but inventors).

work with the faculty members to apply for a patent and to market the invention

There’s nothing in Bayh-Dole about this part. The written agreement requirement in the standard patent rights clause (not authorized by Bayh-Dole) requires contractors to require employees to execute all papers necessary to permit patent applications to be filed and to establish the government’s rights in inventions. “Work with faculty members” here is fluffy language. Inventors are obligated to work with whomever owns the subject invention to apply for a patent. The university, if the inventors have assigned to the university, does not then “work with the faculty members”–the inventors have promised to work with the university (or any other owner of the subject invention–an assignee of the university, or the federal government if the federal government requests title).

More so, there is nothing in Bayh-Dole about “marketing” any invention. The standard in Bayh-Dole is utilization, not marketing. Any “marketing” of an invention is entirely a university (or other patent owner) decision. It has nothing to do with how Bayh-Dole is intended to work. It has to do with how some university officials have intended to exploit Bayh-Dole. That’s a huge difference. In the first instance, one claims the force of federal law. In the second instance, one uses the color of federal law to endorse an action that has nothing to do with that law. Bayh-Dole does not mandate marketing of subject inventions, or commercialization, or licensing, or even ownership of inventions arising in federally supported research or development. To make it appear that somehow the law was intended to work this way is nonsense. But it is worse than nonsense because it participates in the very fraud that it then sets about to discuss as if factually and legally true.

The government receives a nonexclusive, nontransferable, irrevocable, paid-up license (shop-right) to the invention.

It is true that the government receives a license, even a worldwide license, but our author has the scope of the license all wrong.with the inclusion of “shop-right.” Here’s the provision in Bayh-Dole (35 USC 202(c)(4)):

With respect to any invention in which the contractor elects rights, the Federal agency shall have a nonexclusive, nontransferrable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States any subject invention throughout the world

“Practice and have practiced” is much broader than a shop right. In the executive branch patent policy that Bayh-Dole preempts, “practice” means “make, use, and sell.” A shop right is a defense by an employer to a claim of infringement. The federal government is not an employer when sponsoring faculty research hosted by a university. Furthermore, Bayh-Dole requires a license–a license is not a defense to infringement but rather is a promise not to bring a claim of infringement. The “paid up” part of the license means that the licensor–the university–also has no claim for compensation in the Court of Federal Claims under 28 USC 1498 for federal use of its patented subject invention. Further, even if we wanted to muddle things and make a license and a shop-right equivalent, it is clear that Congress intended the United States to authorize the selling of product–not just a fussing around research use of inventions, not “non-commercial” use, as it were. To practice an invention includes selling product incorporating or based on the use of the invention.

We have worked through a description of how Bayh-Dole was intended to work. It is a fair depiction of a faux version of Bayh-Dole. We can’t fault the author for repeating what many university officials and their legal counsels claimed about the intent of the law. And before Stanford v Roche, people who wanted to sit on the fence about the law, or who were fine with university officials using the law as a pretext to go about taking ownership of inventions of all sorts wherever they could claim them, were fine with such an account–what’s the harm in university officials taking the personal property of inventors–rights reserved expressly for them by Congress acting with the authority of the Constitution. But we can fault the author for not bothering to check the claims made for how Bayh-Dole is intended to work, and not bothering to sort out claims–political bluffing–from fact and then conflating claims and fact, so that mere assertions of misty, watercolored intentions could be anything other than private feelings–and not the law at all.

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