We are working through Bayh-Dole’s statement of policy at 35 USC 200 on the premise that this statement of policy, a part of patent law, has a material effect on the patent property rights of all inventions within the scope of this policy. Since federal statutes and procurement regulations with regard to federal interest in inventions made with federal support are hugely broad, Bayh-Dole also must be just as hugely broad if it is to preempt every last bit of them.
Bayh-Dole does not repeal the federal invention procurement parts of statutes; rather, Bayh-Dole preempts those parts when its conditions go true–when an invention arises in federally supported research or development and more particularly when a contractor acquires title to an invention conceived or first actually reduced to practice in performance of work that is at least in part under a federal funding agreement (including any assignments, substitution of parties, or subcontract of any type that extend the funding agreement). So, 35 USC 200 necessarily is both broad and material.
We continue with 35 USC 200’s policy. “It is the policy and objective of Congress . . . ”
to promote collaboration between commercial concerns and nonprofit organizations, including universities;
Again, collaboration is scoped broadly. Collaboration is not restricted to subcontracts on federal funding agreements shared between nonprofits and commercial concerns. Nor to licenses. Nor even to “commercialization” of inventions into products. The requirement of 35 USC 200 policy is the promotion of collaboration. For each action that a patent holder may take under 35 USC 200, the burden is to demonstrate that this action promotes collaboration in addition to promoting utilization and maximum participation by small commercial concerns. One does not comply with one part of 35 USC 200 and get the rest of the policy waived as no longer relevant. No–each additional statement adds to the requirements on holders of patents on 35 USC 200 inventions.
Here is a GAO report regarding collaboration among federal agencies and with “private and nonprofit sectors”:
Agencies can enhance and sustain their collaborative efforts by engaging in the eight practices identified below. (GAO-06-15) Agencies should:
Define and articulate a common outcome.
- Establish mutually reinforcing or joint strategies.
- Identify and address needs by leveraging resources.
- Agree on roles and responsibilities.
- Establish compatible policies, procedures, and other means to operate across agency boundaries.
- Develop mechanisms to monitor, evaluate, and report on results.
- Reinforce agency accountability for collaborative efforts through agency plans and reports.
- Reinforce individual accountability for collaborative efforts through performance management systems.
We might expect, then, reports of outcomes of a similar nature with regard to collaboration between nonprofits and commercial concerns to comply with 35 USC 200–create joint strategies, leverage resources, establish compatible policies, report results, and emphasize organizational and individual accountability. These would be outcomes of compliance with Bayh-Dole. To argue that these are not needed or are incidental window dressing is to argue that Bayh-Dole is defective law or is only good law when it receives a convenient, private, selective, self-serving interpretation.
We must also note that the collaboration goes both ways. If a small company owns an invention within the scope of 35 USC 200, it has an obligation to show how its use of the patent system promotes collaboration with nonprofits. With the extension by Reagan of Bayh-Dolish terms to non-small companies, these non-small companies also have this same obligation to collaborate with nonprofits. But do they? Does AUTM ever report such things? No, of course not.
to ensure that inventions made by nonprofit organizations and small business firms are used in a manner to promote free competition and enterprise without unduly encumbering future research and discovery;
The “without unduly” part was added in a later amendment to Bayh-Dole. There is so much going on with the “without” and the “unduly” and “encumbering” that one is tempting to give up. But let’s look at the first part. 35 USC 200 policy is to ensure that inventions are used to promote free competition and enterprise. Let’s set aside the problem that nonprofits and businesses don’t make inventions (showing again the coves that drafted Bayh-Dole were institutional patent administrators)–inventors make inventions. The problem for organizations that own inventions arising from federally supported research and development is that their actions with regard to any patents, to comply with 35 USC 200, must ensure promotion of free enterprise.
It is clear that non-exclusive licensing of inventions would generally promote free enterprise, but if such licensing were to be indifferent, then other organizations might establish exclusive positions in improvements and applications and block free competition by “freely competing” to prevent further competition by use of the patent system. But 35 USC 200 policy forbids such allowing such behaviors, so the non-exclusive licensing that’s indicated includes the right to exclude those who exclude others from using or developing the same inventions. Again, the threshold appears to be “the point of practical application” as stated in the Kennedy patent policy–that between invention and this point, the patent system is to be used as an inclusive engine of research and development and not for unrestricted private exploitation. If unrestricted private exploitation of patents on inventions arising in federally supported research and development was indeed the objective of Bayh-Dole, then there was absolutely no purpose in including any of the requirements in 35 USC 200 but for the last one, having to do with the reduction of administrative costs.
Thus, to ensure the promotion of free competition and enterprise, inventions under 35 USC 200 pretty much have to be made available to others, even if owned by a commercial concern. That’s the statutory mandate of 35 USC 200.
to promote the commercialization and public availability of inventions made in the United States by United States industry and labor;
This provision is not a mandate to “commercialize” inventions. Look first to the modifying restrictive clauses–inventions made in the United States by United States industry and labor. 35 USC 200 promotes both commercialization and public availability of such inventions–ones made in the United States, ones made by United States industry and labor. Commercialization is not public availability restated. Public availability is not merely a possible consequence of commercialization. These are parallel, equal, independent outcomes that share a common basis in United States industry and labor based in the United States.
One might get the reasonable idea that whatever else happens, compliance with 35 USC 200 requires patent holders to “promote” United States based making of products through both commercialization and public availability. Put simply: anyone should be allowed to make and use such inventions in the United States; and anyone should be have the right to sell products based on such inventions in the United States, provided that their actions are in the public interest (no false advertising or faulty quality, for instance, and no blocking of other competitive research or development prior to achieving the point of practical application).
Nothing, of course, is so simple. Bayh-Dole turns 35 USC 200’s “promotion” into 35 USC 204’s “preference” for United States manufacturing, and provides federal agencies with the right to waive the requirement, even while making it appear that this requirement is the most important one in the entire statute. Here, at least, “promote” means something akin to “make a superficially acceptable effort” but only if one grants an exclusive license to use or to sell in the United States. 35 USC 204 doesn’t apply to patent holders who never license at all–they just sit on their patents–or who license non-exclusively in the United States–two organizations rather than just one, and then those two licensees are free to sell product never made in the United States. 35 USC 200, however, stipulates that a patent holder of an invention within scope of 35 USC 200 must demonstrate that any action promotes commercialization and public availability of such inventions using United States industry and labor here in the United States. While 35 USC 204 creates a loophole for exclusive licenses to use and sell, it does not repeal 35 USC 200’s general policy–which remains in effect for all other exploitation of an invention, including non-exclusive licensing.
to ensure that the Government obtains sufficient rights in federally supported inventions to meet the needs of the Government and protect the public against nonuse or unreasonable use of inventions;
35 USC 200 sets forth two requirements here. The first has to do with the Government’s rights. Government in the Kennedy and Nixon patent policies was not just the federal government but rather included state and domestic municipal governments. No “Government” was to be sued for infringement or to have a claim filed against it for compensation for the practice or having practiced any invention within scope of 35 USC 200. The requirement here, however, is wildly open-ended–what are the “needs of the Government”? And how are those needs not already met by the combination of (i) specialty statutes for inventions in specific areas of federal interest; (ii) executive branch policy and procurement regulation with regard to inventions otherwise made with federal support; and (iii) the use of the Court of Federal Claims to award reasonable and entire compensation for any other use of patented inventions by the federal government? That is, what are the “sufficient” rights that Bayh-Dole refers to when Bayh-Dole preempts federal statutes and replaces executive branch patent policy and regulations?
An examination of Bayh-Dole indicates that these rights are (1) the right to request title to subject inventions that are not disclosed, or for which a contractor declines to retain title, or having elected to retain title, fails to file a patent application, prosecute the patent application, or maintain or defend an issued patent; (2) a paid-up license to practice (make, use, and sell) and have practiced any subject invention; (3) the right to receive reports of utilization of subject inventions.
The second requirement has to do with a patent holder’s exploitation of 35 USC 200 inventions–nonuse and unreasonable use. But for here, there is no working requirement in federal patent law. Clearly, Bayh-Dole creates such a working requirement for inventions arising in federally supported research or development. The public is to be protected from nonuse of such inventions. A patent holder, then, has an obligation to work the invention–to use the patent system to promote utilization. If not, the federal government has the right to intervene on behalf of the public. If a patent holder cannot demonstrate that its actions promote the utilization of a 35 USC 200 invention, then the federal government is to have, under Bayh-Dole, the right to protect the public.
This right with regard to nonuse takes the form of the march-in procedure at 35 USC 203. The federal government may require the owner of a subject invention to grant a license when such
action is necessary because the contractor or assignee has not taken, or is not expected to take within a reasonable time, effective steps to achieve practical application of the subject invention in such field of use
Practical application in turn is defined as “use . . . with benefits available to the public on reasonable terms” (35 USC 201(f)). If an owner of a subject invention hasn’t worked the invention and a federal agency doesn’t expect it to work the invention anytime soon, then the federal government is supposed to intervene and protect the public. 35 USC 200 doesn’t stipulate that the federal government has sufficient rights to put on a show of protecting the public without ever bothering to do so, or to use the mere threat that it might intervene to protect the public to ensure that contractors put on a good sideshow of appearing to work inventions that they are not working at all. No, the point of 35 USC 200 and 35 USC 204(a)(1) is that the federal government is expected to intervene whenever there’s nonuse after a “reasonable time”–regardless of any activity in assigning a given invention, or licensing it. The standard is not that patent administrators have done a brisk business in speculating on patent rights, but that the invention itself has been worked and benefits of that use are available to the public on reasonable terms. The entire definition must be met, including that the terms of any product available to the public are “reasonable”–and in many situations, the only term that matters in making benefits available to the public is *price.* We might put it this way–“reasonable” is what the Court of Federal Claims would determine the federal government should owe for its own use, were it exposed to such a claim.
This brings us to the second part of the government’s “rights sufficient” under 35 USC 200: unreasonable use of inventions. These rights are not rights having to do with antitrust or patent misuse–the government already has these rights without Bayh-Dole. The rights to protect the public from unreasonable use must have to do with an invention owner exploiting a patent in a manner that fails to meet any of 35 USC 200’s statement of policy other than nonuse–failure to encourage maximum participation by small businesses, failure to promote collaboration between nonprofits and commercial concerns, failure to promote free competition and enterprise, failure to ensure the promotion of US-based manufacturing for commercialization and public availability of inventions. The implication is that the fundamental requirement on the patent system’s use for inventions within the scope of 35 USC 200 is that the public have reasonable access to the inventions and to any products based on the inventions.
This reasonable access premise runs against the abstract idea that the patent system’s incentive for holders of patents is that they have, short of violating antitrust law, free run with regard to how they deal in a monopoly right to exclude others from practicing the inventions as claimed in all variations, applications, and functional equivalents by those patents. While such free reign may operate for patents generally, it clearly does not for Bayh-Dole patents. These patents are constrained by multiple requirements that collectively demand in all but the most strange and creative situations that between the time of invention and the development of the invention to a point of practical application that inventions be made broadly available, that patent owners promote use, access, and participation by others in research and development efforts, and that the results of this activity are available to the public at reasonable prices–not monopolistic prices, not prices propped up because no-one else can conduct research or do development within the scope of the claims of a given patent, even if the patent holder is not developing the invention in those areas (a form of nonuse).
The policy mandate of Bayh-Dole, embedded in federal patent law, is that patents on inventions arising in federally supported research or development must be used to promote the use of those inventions, not to exclude use, and that others may expect reasonable access to those inventions–small companies, for-profits and nonprofits, competitors and new companies, United States-based manufacturers, and the general public. A patent holder gains the benefit of the patent monopoly only insofar as the patent holder works a given aspect of an invention, and only then when the patent holder makes benefits of that use available to the public at a price set as if the patent holder had competition, even if it for some valid reason does not.
What is all very strange is that this account of 35 USC 200 flies against the claims made by the most vocal advocates for the Bayh-Dole Act. They claim that Bayh-Dole is successful precisely because everyone ignores its requirements–that Bayh-Dole is a law of lawlessness, that everywhere Bayh-Dole appears to require the federal government to act to protect the public interest it should be interpreted to mean that it doesn’t. That’s just what the university lawyers in Stanford v Roche argued and the Supreme Court rule against them. The words of the law are not just fluff to be picked over to create a self-serving interpretation that runs against what a reasonable reader–such as a Supreme Court justice, say–might understand the words to mean. The biggest advocates of Bayh-Dole actually hate the law and work against its operation. No wonder they fight so hard to prevent any public discussion of Bayh-Dole that does not start with fake history, fake law, and fake success.
and to minimize the costs of administering policies in this area.
Finally, we reach the strangest bit of Bayh-Dole’s policy statement–that it is important, with research that aims to transform our society through the discoveries of science and medicine, to minimize the costs of administration. That’s fine, as far as it goes, but it is a strange thing to place in such a law. One might think that we would benefit still more by ensuring that the administration at least of the policy set forth by 35 USC 200 was fully funded as necessary to accomplish the objectives of the law. Rather than minimizing costs, the policy here ought to be ensuring that there is sufficient budget for the costs that the public is well served. Instead we have a law that has so little funding that it is not enforced, there’s no oversight, everything is kept secret, and people exploit patents at will, as if the mere exploitation of patent monopolies–or even speculation over the future value of such patent monopolies–was the goal of federal policy all along.