Another question on RE: Are data rights subject to Bayh-Dole?

Are data rights subject to Bayh-Dole?


Sigh. Yes, in a way.

Data rights generally involve the right to control disclosure and/or use of technical information generated within research, experimental, or development work. While some data may involve copyrights (as in selection and arrangement of data as an original work of authorship, or data that takes the form of drawings, photographs, or text that is otherwise covered by copyright), the primary method of establishing and controlling data rights is by means of trade secret, which involves information with economic value and that is not generally known to the public and for which the proprietor makes reasonable efforts to prevent public disclosure. Research data, upon creation/collection, is not likely to be publicly known, may or may not have economic value, and the means for preventing disclosure is typically by a non-disclosure agreement or is established by an implied duty of non-disclosure or by privilege (as in attorney-client privilege).

Does Bayh-Dole protect trade secrets? No, not directly, but generally Bayh-Dole restricts federal government disclosure of some information reported by contractors pertaining to subject inventions. Does Bayh-Dole deal in copyrights? No.

Contractors are not constrained by Bayh-Dole in their use or disclosure of data developed under federal contract, other than in two obscure circumstances for data essential to the practice of a subject invention: (1) the contractor has failed to disclose the subject invention or failed timely to achieve practical application and a federal  receives title to the subject invention–the standard patent rights clause stipulates that the contractor does not retain a non-exclusive license to practice the invention; and (2) a federal agency grants an exclusive license in that invention, following a march-in process, that conveys all rights in the invention to an exclusive licensee. In either case, the contractor would not have sufficient rights to use the data to practice the invention because the contractor would no longer have the right to practice the invention. But the contractor could still disclose the data and use the data for anything other than practicing the invention. But this is very obscure stuff, nearly pigs with wings. The general answer is “no” and you can stop reading now and go have a social life.

Bayh-Dole has three parts. A general part, a part that federal agencies must apply to contractors, and a part that applies to federal agency licensing of inventions acquired by the federal government. Bayh-Dole stipulates that a standard patent rights clause must be used in all funding agreements for research, experimental, or development work unless a federal agency can justify different requirements. The standard patent rights clauses (there are three, and a baked in determination of exceptional circumstances) are at 37 CFR 401.14 and 37 CFR 401.9. For “non-federal entities” receiving federal grants, Bayh-Dole shows up at 2 CFR 200.315(c). Data rights are at 2 CFR 200.315(d) and (e).

Under 315(d) we have:

(d) The Federal Government has the right to:

(1) Obtain, reproduce, publish, or otherwise use the data produced under a Federal award; and

(2) Authorize others to receive, reproduce, publish, or otherwise use such data for Federal purposes.

There’s no definition of data here, so the term has its common meaning–“factual information used as a basis for reasoning, discussion, or calculation.” To the extent that data comes within the scope of 2 CFR 200.315(d), it’s clear that Bayh-Dole is considered to have a scope that is distinct from that of data rights. 2 CFR 200.315(d) states that the federal government has a right to release data, but does not require the federal government to do so. The federal grant regulations also speak to FOIA release of data, at 2 CFR 200.315(e). If the government makes policy with force of law based on published findings supported by a federal grant, then if there is a FOIA request for that data, the federal agency must request it and disclose it via FOIA.

As an aside–isn’t it strange that the federal government could base regulations on published research findings for which it has not reviewed the data or done its own research to confirm the findings with its own data? Isn’t that remarkably strange? Isn’t it remarkably strange that if published findings appear such to form the basis for a regulation with the force of law, that the federal agency would not require delivery of the backing data without having to wait for a FOIA request? Especially given how much really bad, awful, just isn’t so scientific and clinical research is being published. One would almost suspect that federal agencies might engage in mercenary science–cause “science” friendly to a government purpose to be published, and then use the published findings to create a regulation that forces public compliance. One might almost think in such cases one has an ideology backed by scientific trappings rather than something based on science.

If the federal funding is a contract rather than a grant, then the data requirements are set out in the Federal Acquisition Regulation and its agency-specific implementations. The “Rights in Data–General” clause is at 48 CFR 52.227-14. Here, data is defined:

Data means recorded information, regardless of form or the media on which it may be recorded. The term includes technical data and computer software. The term does not include information incidental to contract administration, such as financial, administrative, cost or pricing, or management information.

And there’s also form, fit, and function data:

Form, fit, and function data means data relating to items, components, or processes that are sufficient to enable physical and functional interchangeability, and data identifying source, size, configuration, mating and attachment characteristics, functional characteristics, and performance requirements. For computer software it means data identifying source, functional characteristics, and performance requirements but specifically excludes the source code, algorithms, processes, formulas, and flow charts of the software.

For any of this data, the government has an unlimited right of use, except in the exceptions:

(1) Except as provided in paragraph (c) of this clause, the Government shall have unlimited rights in –

(i) Data first produced in the performance of this contract;

(ii) Form, fit, and function data delivered under this contract;

(iii) Data delivered under this contract (except for restricted computer software) that constitute manuals or instructional and training material for installation, operation, or routine maintenance and repair of items, components, or processes delivered or furnished for use under this contract; and

(iv) All other data delivered under this contract unless provided otherwise for limited rights data or restricted computer software in accordance with paragraph (g) of this clause.

Paragraph (c) exceptions concern copyright and data not first produced under federal contract. The FAR also contains Bayh-Dole provisions with respect to inventions–but nothing in Bayh-Dole restricts the right of the federal government to use data produced under a federal contract. The issue for Bayh-Dole has to do with information necessarily bound to inventions made under federal contract–the disclosure of an invention–and the release of that information by the federal government to the public other than by publication by the USPTO as part of the patenting process.

Bayh-Dole is part of federal patent law. It concerns inventions. Its definition at 35 USC 201(d):

The term “invention” means any invention or discovery which is or may be patentable or otherwise protectable under this title or any novel variety of plant which is or may be protectable under the Plant Variety Protection Act (7 U.S.C. 2321 et seq.).

Bayh-Dole’s statement of policy and objective starts out with a reference to inventions:

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;

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;

to promote the commercialization and public availability of inventions made in the United States by United States industry and labor;

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

Bayh-Dole’s statement of policy and objective is general. It applies to both contractor ownership provisions and to federal agency licensing. Bayh-Dole lays out expressly what must be in any default patent rights clause in a federal funding agreement (35 USC 202(c)) and what must be in federal invention license agreements (35 USC 209(d))–along with other conditions in determining whether a license can be exclusive and other conditions placed on the choice of licensee (which is odd–US manufacturing is made a pre-condition of any license–not just exclusive licenses–rather than required as a term of the license. That means US manufacturing is, like the requirement for a plan, a matter of the choice of licensee, not a condition of the license itself. And there is no plan requirement on the contractor ownership side of invention ownership and licensing–contractors don’t have to provide a plan for the use of any subject invention, and do not have to require a plan of any potential licensee.

This is one of the two *key* things that Bayh-Dole changed: under the Federal Procurement Regulation (and the Kennedy and then Nixon patent policies), nonprofits generally were required to make an argument–i.e., provide a plan–that demonstrated that the public would be better served by their exclusive control over an invention than by the federal government making the invention available to all. The other key thing, of course, is the express authorization that federal agencies can deal in exclusive licenses, including ones that amount to assignment of the invention–all the while keeping the terms of those licenses a government secret.

The repeated theme of Bayh-Dole’s statement of policy and objective is the use of “inventions arising in federally supported research or development.” The requirement is that the patent system be used to achieve the stated objectives–promote utilization, promote free competition and enterprise, promote commercialization and public availability of inventions made in the U.S., protect the public from nonuse and unreasonable use of these inventions. If there were no patent rights, then the federal government would not need to acquire sufficient rights in inventions for its own use or to protect the public. The rights the government acquires are rights to practice and have practiced any subject invention (i.e., to make, use, and sell), the right to receive ownership of any subject invention upon specified failures or choices of a contractor that owns a given invention, and the right to march-in to require licensing (or to license directly) a subject invention under four specified circumstances.

To the extent that a subject invention includes data that demonstrate that an invention works for its intended purpose, those data may have to be reported to the federal agency as part of the disclosure of a subject invention.

Bayh-Dole defines a subject invention (35 USC 201(e)) as:

any invention of the contractor conceived or first actually reduced to practice in the performance of work under a funding agreement: Provided, That in the case of a variety of plant, the date of determination (as defined in section 41(d) [1] of the Plant Variety Protection Act (7 U.S.C. 2401(d))) must also occur during the period of contract

To first actually reduce an invention to practice, one must necessarily have “data” to show that the invention does indeed function as conceived.

Here’s the Bayh-Dole disclosure requirement (35 USC 202(c)(1)):

That the contractor disclose each subject invention to the Federal agency within a reasonable time after it becomes known to contractor personnel responsible for the administration of patent matters, and that the Federal Government may receive title to any subject invention not disclosed to it within such time.

The implementing regulations expand on the disclosure requirement in the standard patent rights clause (37 CFR 401.14(c)):

The contractor will disclose each subject invention to the Federal Agency within two months after the inventor discloses it in writing to contractor personnel responsible for patent matters.

Thus, the disclosure obligation kicks in only when a contractor’s patent personnel receive a compliant disclosure from inventors. The standard patent rights clause requires contractors to require inventors to disclose inventions only when those inventions are subject inventions–that is when the contractor has acquired an invention made in performance of work under federal contract. If a contractor has not acquired a given invention, it is not a subject invention and there is no Bayh-Dole requirement that it must be disclosed by either the contractor (under the standard patent rights clause) or the inventor (under the written agreement required by the standard patent rights clause). This little bit of stupidity was introduced by the 1984 amendments to Bayh-Dole, apparently to let the university patent management offices off the hook for being diligent to identify and obtain disclosures of those inventions that the offices would then choose to patent.

The law is what it is. We cannot assume that a law was intended to mean something that runs directly against what the law as written provides. The Supreme Court followed this same principle in deciding in Stanford v Roche that Bayh-Dole nowhere provides any vesting of inventions, any mandate that contractors own inventions, or that contractors have some special right to acquire inventions.

The disclosure to the agency shall be in the form of a written report and shall identify the contract under which the invention was made and the inventor(s). It shall be sufficiently complete in technical detail to convey a clear understanding to the extent known at the time of the disclosure, of the nature, purpose, operation, and the physical, chemical, biological or electrical characteristics of the invention.

Here’s where “data” comes into the disclosure requirement–“sufficiently complete in technical detail.” Broadly, that completeness will involve “data”–primarily technical data such as specifications, if not drawings and flow charts, chemical formulae, procedural steps; but potentially also performance data–where that data is necessary to achieve the “technical detail” necessary to convey the required understanding of the invention.

And some “data” pertaining to publication, which is really more like “information pertaining to publication actions,” and not “data” in the sense of collected information pertaining to the function, operation, and application of a given invention:

The disclosure shall also identify any publication, on sale or public use of the invention and whether a manuscript describing the invention has been submitted for publication and, if so, whether it has been accepted for publication at the time of disclosure. In addition, after disclosure to the agency, the Contractor will promptly notify the agency of the acceptance of any manuscript describing the invention for publication or of any on sale or public use planned by the contractor.

Bayh-Dole then controls federal agency handling of invention disclosures (35 USC 205):

Federal agencies are authorized to withhold from disclosure to the public information disclosing any invention in which the Federal Government owns or may own a right, title, or interest (including a nonexclusive license) for a reasonable time in order for a patent application to be filed.

This part simply “authorizes” federal agencies to withhold invention disclosures from the public. This clause is broader than just subject inventions–notice how the wording avoids “subject invention” and instead uses “any invention in which the Federal Government owns or may own a right, title, or interest (including a nonexclusive license).” That scope of invention is broader, even, than Bayh-Dole–it extends to the Nixon patent policy claims, and to federal laws that Bayh-Dole preempts when an invention is a subject invention, and to inventions made by government employees and subject to Executive Order 10096.

But “authorization” to withhold invention disclosures does not mean federal agencies must withhold that information. A federal agency clearly could still disclose inventions that it has a right to own (as those made by federal employees under EO 10096). And then there’s a blanket exclusion, apparently directed at any legal procedure that would require disclosure:

Furthermore, Federal agencies shall not be required to release copies of any document which is part of an application for patent filed with the United States Patent and Trademark Office or with any foreign patent office.

This is a strange bit, given that now the USPTO publishes patent applications. Again, this provision is general–it is not specific to any document received from a contractor which is part of patent application. And at the same time, it is oddly narrow–it does not include documents that are part of a plant variety certification process.

Bayh-Dole also includes a requirement that federal agencies may ask for regular reports on the utilization of subject inventions (35 USC 202(c)(5)):

The right of the Federal agency to require periodic reporting on the utilization or efforts at obtaining utilization that are being made by the contractor or his licensees or assignees:

The federal agency does not have require reporting, but if it does, the reports appear to be material to the federal agency’s right to determine whether the contractor has taken or is expected (by the federal agency, perhaps) to take “effective steps” to achieve practical application of each subject invention. There’s no reason for such reports to include either technical data or performance data–it would be sufficient to report that prototypes had been built, or that product testing was progressing, or that a first commercial sale had been achieved–this sort of stuff would be information, but not data. However, to the extent that a contractor does provide data, that data gets handled along with any other information provided by the contractor under a general exclusion from FOIA disclosure (and fails to comply with FOIA with its exclusion):

Provided, That any such information as well as any information on utilization or efforts at obtaining utilization obtained as part of a proceeding under section 203 of this chapter shall be treated by the Federal agency as commercial and financial information obtained from a person and privileged and confidential and not subject to disclosure under section 552 of title 5.

This clause, too, was affected by the 1984 amendments to Bayh-Dole–the “shall be” previously was “may be”–a huge difference. In “may”–*if* information meets FOIA’s exception requirements, it does not have to be disclosed under FOIA, but that does not limit a federal agency from disclosing the information anyway (though there’s a bunch more going on). The “shall” means not only that information *not* within a FOIA exemption must still be treated as if it were, but that for information within a FOIA disclosure exemption the federal agency cannot outside of FOIA go ahead and disclose the information on its own determination. That is, regardless of whether reported information is commercial or financial, the federal agency must treat it as if it were, even if it is not. The standard patent rights clause goes further still (37 CFR 401.14(h)):

As required by 35 U.S.C. 202(c)(5), the agency agrees it will not disclose such information to persons outside the government without permission of the contractor.

The “as required” clause either misrepresents what 202(c)(5) requires–an exclusion from FOIA–or means that whatever overstatement is made here in the patent rights clause, the actual meaning is what is provided by 202(c)(5). Thus, here, in 401.14(h), we see that the agency agrees not to disclose rather than agrees to treat information as exempt from FOIA, and furthermore agrees to the contractor having a veto over federal agency disclosure–even apparently if that disclosure might be required, say, by operation of law.

But that’s not all. At 37 CFR 401.8, the implementing regulations cite both Bayh-Dole and the standard patent rights clause for authority to extend the secrecy requirement on invention use reports even further:

In accordance with 35 U.S.C. 202(c)(5) and the terms of the clauses at § 401.14, agencies shall not disclose such information to persons outside the government. Contractors will continue to provide confidential markings to help prevent inadvertent release outside the agency.

It’s not merely that the federal government is constrained with regard to public disclosure, but also more generally, information apparently must remain within the federal agency that receives it. The weirdness is that 401.8 cites 401.14 as its authority, when the authority should be 35 USC 202(c)(5) for use reports and 35 USC 205 for anything having to do with the invention.

Thus, to the extent that a contractor provides data in any invention utilization report, that data becomes, for the government, a secret. Oddly, then, if a contractor wants to extend the scope of a federal agency’s secrecy requirements, the contractor should pack as much technical information about an invention into its federal reporting–Bayh-Dole then requires the federal agency not to disclose this information to the public, even if this information is not technically essential to the invention but might serve to show that effective steps are being taken to achieve practical application. There is no “reasonable time” limit on how long the federal government must keep such information secret.

We can now come back around to the original question–Are data rights subject to Bayh-Dole?


But Bayh-Dole does make invention disclosures and invention use reports a government secret, excluded from FOIA even if FOIA does not exclude certain information from disclosure. To the extent that that government secrecy requirement is a matter of “data rights,” then–since this secrecy requirement is in Bayh-Dole, at 35 USC 202(c)(5) and 35 USC 205–some data rights clearly are subject to Bayh-Dole. Bayh-Dole restricts the right of the federal government to disclose data associated with subject invention use reports. Bayh-Dole also authorizes federal agencies to withhold data pertaining to inventions in which the government has an interest (regardless of whether those inventions are subject inventions). Other than that, data rights are in federal grant and contract regulations and are distinct from Bayh-Dole. For contractor trade secret claims, in addition to restricted rights data under the FARs, see FOIA exceptions to disclosure, especially exception 4.

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