Bayh-Dole Government License–7: Software

The webinar then turns to government license in the context of software. Here things get confused again. Bayh-Dole states as policy–not merely rationale–that the patent system is to be used to promote the utilization of inventions arising from federally supported research or development (35 USC 200). Bayh-Dole furthermore establishes a standard for utilization by defining practical application as the utilization of a subject invention such that the benefits of that use are available to the public on reasonable terms (35 USC 201(f)). If a subject invention fails practical application, through nonuse or a failure to take effective steps or not likely to take effective steps, then the federal agency has the right to march-in and compel licensing or do the licensing itself (35 USC 203(a)(1)).

The default, then, is that if a contractor fails timely to take effective steps, the subject invention should be licensed non-exclusively. Only in special cases could the federal government march-in and require an exclusive license (for which, see the requirements on federal exclusive licenses). Again: if you elect to retain title to a subject invention–one you have acquired–then you must achieve timely practical application or license the invention non-exclusively.

Consider, then, this panelist’s response to the scenario in which the only application for a given subject invention is a government use:

“If there’s clearly no application other than a government use application then we likely wouldn’t file. If we could see over the twenty-year life of the patent that there could be a commercial use then we might take a flyer on it.”

Bayh-Dole does not authorize “taking flyers” on subject inventions. That is patent troll behavior–sit on a patent until there’s the prospect of use, and then go to work shaking down companies. Maybe that’s legit for ordinary patents, but Bayh-Dole establishes in federal patent law a policy with regard to patents on subject inventions. One cannot play the troll. One has to offer the non-exclusive license on reasonable terms first–not after filing a lawsuit for leverage. Why? The contractor-troll’s property rights in a patent on a subject invention (a POSI) do not extend to suing to stop use or to even to make money from use–the property right standard is to promote use. One may sue to promote use, not to suppress it, threaten it, or tax it. “Taking a flyer” means sitting on the patent for up to twenty years. There’s nothing in Bayh-Dole that condones that behavior. More:

“One thing that does happen from time to time is that a company will reach out to us and say that they intend to use our intellectual property for the benefit of the government under the government use license and ask for an acknowledgment.

Again, it’s not a government use license. It is a license to practice and have practiced for the United States. There’s not even a restriction to government “purpose.” Certainly not just to “use.”  And it’s not a matter of “IP”–it is a matter of rights in a subject invention. Asking for an acknowledgment is a reasonable request–it reduces the opportunities for a patent holder to come after the company for its practice of the patented invention. But why not make it easy for such companies–post on the web alongside each invention description for ready download an acknowledgment that companies may practice the invention for or on behalf of the United States. Company types in its name, downloads the document, and off it goes. Contractor retains a copy for its impact bean counting, and it’s all good. Continue:

“That particularly happens when there’s software associated with the invention or if it’s just software only and they need for us to release the software in order for them to do the work.”

Now we have strayed outside Bayh-Dole again. Software “associated” with an invention is not the invention. We are talking copyright and technical data here, not patent, not Bayh-Dole. The federal government may well have rights in software, but depending on the contract clause used, those rights may not extend to sharing code with other contractors. If the software is indeed licensed to the federal government with the government’s rights to provide to contractors for government work, then why should a contractor have to show up to request release of the code? It should already have been made available–either delivered to the federal agency or posted for download. And it should already carry the markings that establish the government’s rights in the code.

But no, instead there has to be a millstone tied around the neck of the company requesting access:

“And in that case we’ll do a government use acknowledgment that lays out what the company can and can’t do with the intellectual property and places limits on it must be done specifically for the performance of work for the benefit of the government and gives us some control over it and the other thing it does is it gives us some visibility to the use of our research outputs by government agencies and for us that’s very beneficial.”

Sure–one can work this way. The point is to notice how casually Bayh-Dole’s policy is ignored, how the talk drifts so easily from Bayh-Dole’s government license to “intellectual property” and “research outputs” in general and then to rights that are not a matter of Bayh-Dole, and then to how to tie a company in knots in order to keep control and to get “visibility.” Nothing about taking any special actions to promote use. It is as if Bayh-Dole does not exist, or if it is does, it is the work of a long-absent clockmaker God that has wound it up and does not much care what mere mortals do with it. It may well be that is exactly what Bayh-Dole was intended to be. Sort of a spoof of a law, a little joke played on Congress and the public and inventors working with federal funds for the benefit of nonprofit patent administrators aiming to profit from discoveries directed at public health.

Even if a university (or other contractor) has a patent on some function served by the software, the code itself is merely a mode of using the invention–and only then the code that performs the patented function. Code that handles data input or displaying results and the like may have nothing to do with what’s part of the claimed invention. The fact of subject invention–and patent–does not give the government or anyone else a right to the code, even for government work. Any rights to the code follow other federal contracting requirements–not Bayh-Dole. Bayh-Dole requires a government license to practice and have practiced the invention. That license does not require delivery of *anything*–not code, not antibodies, not prototypes. Those other things may well need to be delivered, but they are not a matter of Bayh-Dole. Clear?

There may well be a non-Bayh-Dole requirement to deliver software made under government contract to the government–there usually is, in fact–but that delivery requirement does not even extend to the delivery of subsequent versions of the software not developed under government contract. Here’s the standard clause for grants (2 CFR 200.315(b)):

The non-Federal entity may copyright any work that is subject to copyright and was developed, or for which ownership was acquired, under a Federal award. The Federal awarding agency reserves a royalty-free, nonexclusive and irrevocable right to reproduce, publish, or otherwise use the work for Federal purposes, and to authorize others to do so.

“Use” is a term of art in patent law. “Use” has a distinctly different meaning with regard to copyright law–here, meaning “any exploitation of the work that the copyright holder otherwise could prevent.” Even here, there still must be, somewhere, a delivery requirement by which the code or other work is provided to the federal awarding agency. Otherwise, it’s rather an empty deal for the federal government–getting a right to reproduce a work that one has not got.

Even if a federal awarding agency has a non-Bayh-Dole license to use the software for its purposes and has received a copy of the work, the government may create its own derivative works and authorize others to do so, but all that does not mean that the government can require delivery of derivative works or other modifications of a code done outside government contract. Any such right is not a Bayh-Dole matter, not part of the Bayh-Dole government license. This would have been a great time for the panel to make the differences clear rather than conflating things without notice. Thus, this commentary, to help them out.

Government agencies are notorious for not supporting the continued development and maintenance of software resources. Funding, so it goes, should support new research, not stuff created yesterday, even if of continuing importance for research. But software, and copyrights, and rights in data are not within the scope of Bayh-Dole. Software–an artifact–is distinct from a patentable invention–an intangible property to which patent rights may attach. The right of the government to manufacture and use patented inventions under 28 USC 1498 does not extend works of authorship. Final bit:

“Honestly software is the driver but we have something that the company needs to have in order to do the work.”

That is–this isn’t a matter for Bayh-Dole at all, even if there were patent rights in some inventive bit implemented with some portion of the code involved. The drive is not patent rights, is not exclusivity, is not investment to “develop” something to the point of use. The software (other than that it may well be a coding mess) has already been developed to the point of use. What the company wants is to use it. Not to make a “commercial” version of it. The code may not ever require a “commercial” version–it could live its entire productive life as open source, used by the government and by its contractors. And here’s the thing: if this is indeed the case, then there is absolutely no justification under Bayh-Dole for a contractor to seek a patent on whatever it is that’s inventive with regard to the code. That patent has nothing good to do to promote the use the software by anyone not working for the government. The software is the driver.

If the software is the driver, then there is nothing for the patent system to add.
Bayh-Dole should not come into play. Perhaps the only reason for a contractor to seek a patent is to prevent the federal government from taking title to the invention and using its authorization under Bayh-Dole to grant an exclusive license, thereby cutting off the contractor from collaborations with companies aiming to use the invention in non-federal government work.  If there’s a firmware implementation or a hardwired implementation in circuitry, perhaps there is a role for a patent. But it would take some work to demonstrate that such was the case. General observation–anywhere (i) anything but patent rights is the driver and (ii) that other thing is ready to be used, then (iii) Bayh-Dole has no role. There’s no private investment to attract. There’s no development to the point of practical application. That’s already happened. There’s no point in fussing that what’s available to all will be used by none because people are showing asking for access who don’t care that others also may be using it–or, more likely, care all the more because others are using it. Common results, common training, common improvements. Network externalities.

Our panelist adds that the “government is de-risking the technology.” Well, yes. But “de-risking” here is illusory. If the “technology”–software, say–has been developed to the point that it can be used, the “risk” of development was “de-risked” by the development itself. The government “de-risked” the technology by paying for the development. The risk involved in adopting or using the technology is entirely different. There, the government’s use is like anyone else’s use–if there are users who are willing to use, their use “de-risks” the decision to acquire by others. The first ones in have to assess the technology on its merits regardless of government use. The next ones in care more to find out what the first ones in know. If they adopt, too, then everyone else wants access because that’s what everyone is using. The reasoning changes from the first three to the next ten to the following hundred. The government license to copyright stuff, like software, “de-risks” use, then, only in so far as the government uses. The license part is to demonstrate that the world does not end because a contractor must give up the right to exclude all others from exploiting the work covered by its copyright. In its way, the idea that there is a “risk” involved if someone adopts a technology outside the safety of a monopoly position is just another campfire horror story told by tech transfer people to keep themselves properly scared to deal in non-exclusive rights only as a last resort.

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