I have made the claim that Bayh-Dole nowhere expressly authorizes federal agencies to enforce patents on federally owned inventions. There’s no express authorization for federal agencies to enforce patent rights. But perhaps there’s an implied right for the government to issue patents to itself and thus give itself a power to exclude all others from the practice of an invention when the government did not have that right before the patent.
Let’s look at the provision of Bayh-Dole that could be used to get close to such an authorization. 35 USC 207(a)(3) authorizes federal agencies to:
(3) undertake all other suitable and necessary steps to protect and administer rights to federally owned inventions on behalf of the Federal Government either directly or through contract, including acquiring rights for and administering royalties to the Federal Government in any invention, but only to the extent the party from whom the rights are acquired voluntarily enters into the transaction, to facilitate the licensing of a federally owned invention;
You might say, “this is a catch-all clause authorizing anything else that possibly might be done with patents, and so necessarily must include suing citizens for using them.” It’s not that easy.
First, look at the context. The “all other . . . steps” is not just anything to do with patents but rather “to protect and administer rights.” Well, 35 USC 207(a)(1) covers protecting
(1) apply for, obtain, and maintain patents or other forms of protection in the United States and in foreign countries on inventions in which the Federal Government owns a right, title, or interest;
Nothing there about enforcing–just obtaining and maintaining patents. Patents are clearly intended to be a form of “protection.” Protecting inventions. Yes, implied generally in “protect” is the idea that a patent protects an invention by providing the right to exclude all others by means of a civil action for infringement. But here we have Congress authorizing federal agencies to do specific things, and is being pretty particular about just what–apply for, obtain, maintain. And the “obtain” is rather sketchy at that, because it amounts the government giving itself a right. But other things are missing. Enforcement is not there. Nor is defending a patent against a claim of invalidity. Odd to leave these out.
Enforcement, in particular, one would think would be of the essence in obtaining patent. Why would Congress authorize federal agencies to get patents if not to be able to sue citizens for using inventions covered by the patents? Well there are other possible reasons to have patents–to publish in a national forum, to raise the prior art standard for future claims of invention, to contribute to a standard, to acknowledge significant advances made by federal workers, to preserve publicly funded inventions not otherwise disclosed from being patented by any private party that then might suppress use or extract otherwise unnecessary rents from both the federal government and the public for the use or benefit of use of the invention. In turn, open access to an invention means that there can be both competition and collaboration with regard to the invention as people learn to use it, study it, adapt it, and develop it for commercial applications or mass production. These uses of a patent, however, are not what a patent speculator thinks of, and while these uses do indeed “promote the progress of the useful arts,” they do not rely so much on the idea that in return the federal government should have a right to exclude all citizens from using the claimed invention, suppress use or demand payment for use.
But we don’t find enforcement in 207(a)(1). Get patents, maintain patents. Not defend the validity. Not enforce.
207(a)(2) covers administrating:
(2) grant nonexclusive, exclusive, or partially exclusive licenses under federally owned inventions, royalty-free or for royalties or other consideration, and on such terms and conditions, including the grant to the licensee of the right of enforcement pursuant to the provisions of chapter 29 as determined appropriate in the public interest;
Here we find Congress deals with enforcement–but it is in the context of licensing. A federal agency may license so that a licensee has the right to enforce a patent. Chapter 29 of 35 USC is all about remedies for infringement. That’s interesting. The only license that could possibly do that is an exclusive license that grants all substantial rights in an invention. Congress authorizes federal agencies to use exclusive licenses as a vehicle for assigning inventions. Once an invention is assigned (by means of an exclusive license), then the licensee indeed has the right to enforce the patent on the claimed invention–which once was federally owned and now is licensee-owned.
207(a)(2) then is about licensing and gets into how licensing can include assignment, and assignment permits a licensee to enforce the patent. Licensing is furthermore qualified by “on such terms and conditions . . . as determined appropriate in the public interest.” Section 209 will deal with all that in detail, but “in the public interest” is an important qualifier here. No license may have terms and conditions that do not address “the public interest.” That is, federal agencies may license without terms and conditions–that would be a public license in the form of disavowing enforcement of the patent. Any terms and conditions, then, imply the right to enforce. But if there’s a right to enforce, then it is qualified by a determination that that right to enforce is “appropriate in the public interest.” It’s not just a bare naked right to enforce. And it’s not the “public interest” that federal patent law promotes or there would be no need at all to mention it here. It’s a different public interest that rides on top of federal ownership of inventions, that shapes how federal agencies, when they get themselves patents, are permitted to deal in those patents.
We might put the implication of “as determined appropriate in the public interest” to mean, “as determined appropriate in the public interest to promise to sue citizens for the use of an invention to support the private exploitation of the invention.” We might ask, when is it ever appropriate for the government to throw itself in with some citizens and companies, which it favors with a license, in order to set up a situation in which it then promises to sue other citizens and companies? Once the federal government starts licensing, what makes it appropriate to then stop licensing and decide then to sue to give advantage to those already licensed? Makes one’s head fizz. But 209 gets at these issues. There, we will find, that basically federal agencies can never grant exclusive licenses that give licensees the right to enforce. And there’s no authorization under which a federal agency, once it starts licensing non-exclusively, has any authority to discriminate other than on the basis of plans submitted for marketing or development of an invention.
It’s clear that 207(b) does not authorize federal agencies to enforce patents, but does contain the implication that there may be “terms and conditions” placed on federal patent licenses and the basis to enforce those terms and conditions would have to be the threat of a suit by the federal government. If a licensee breaches those terms and conditions, then the federal government might sue for breach–but it may also sue, if the licensee makes or uses the invention or sells product incorporating the invention or based on the use of the invention–for infringement. But that implication is tempered first by whether any such suit is “appropriate in the public interest.” And that implication is tempered second by Bayh-Dole’s policy stipulation that the patent system is to be used to promote the utilization of inventions arising in federally supported research or development. That would include inventions made by federal employees and acquired by the federal government or inventions made by contractors and acquired by contractors and then for some reason acquired by the federal government.
If federal agencies must use the patent system to promote utilization of inventions, then where exactly does a federal agency have the right to enforce patent rights to suppress utilization or disrupt utilization? And if not to suppress utilization, then in what sense does the federal government incur financial “damages” from a citizen or company using a federally claimed invention? It would appear that those financial damages would have to be determined to be “appropriate in the public interest.” And that would have to be something other than “we sue for money because we can.” It would appear that federal agencies cannot sue to enjoin use and cannot sue for money “because they can”–Bayh-Dole makes it clear they cannot just sue. This is not ordinary patent law and practice. Bayh-Dole modifies patent law for patents on federally owned inventions. And in doing so, it makes it impossible for federal agencies to enforce patents.
We will leave open for a bit longer the prospect that in prohibiting the use of the patent system to suppress making and using an invention, Bayh-Dole leaves open the possibility that federal agencies might yet have authority to exclude the sale of products based on inventions–to the extent prohibiting sales might be determined to be in the public interest. More head fizz here.
Now we look at 207(a)(3) again. (a)(3) follows (a)(1) and (a)(2) and its “undertake all other . . . steps to protect and administer rights to federally owned inventions.” “Rights to” inventions are those patent rights. Protecting patent rights is what (a)(1) is all about. Administrating patent rights is what (a)(2) is all about. (a)(3) is a “savings” clause that provides that if something is like (a)(1) and not listed there, it still is authorized if “suitable and necessary.” Same for (a)(2) licensing.
Enforcement is not protecting an invention by means of a patent. Enforcement is exploiting the patent right by means of a civil action against infringement. Enforcement is not protecting and is not administrating. Enforcement is not even like the instances given by (a)(3) to illustrate what it means by “other steps”–to acquire rights from third parties or administrating royalties. Enforcement is unlike these instances. It is to use the power to exclude to shut down use or extract compensation for “damages.”
Enforcement, also, is not a “step.” A step is a stage along the way to a particular goal. Bayh-Dole uses “step” in its specification of march-in based on a failure to timely achieve practical application of a subject invention (35 USC 203(a)(1)):
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;
The use of “step” in 35 USC 207(a)(3)’s “all other suitable and necessary steps” is much the same–steps are stages along the way to achieve some objective. A step to achieve protection or to administrate (i.e., license) a patent. Thus, a federal agency might acquire rights to some other invention and thus be in a position to license both this acquired invention with a federally owned invention. Acquiring an invention would be a step in the process of licensing the federally owned invention. Suing someone for using an invention that a federal agency would like to license to someone else does not appear to be a step in the process of licensing the invention. It is something else altogether. Suing someone for using an invention after the federal agency has granted a license that’s less than all substantial rights to some other entity also makes no sense. The agency would grant a license to the second user. And if the federal agency has granted all substantial rights, then the agency no longer has standing to sue–it has, under 35 USC 207(a)(2) granted that right away to its exclusive licensee.
It’s not even clear, then, that enforcement could ever be considered a “step” in protecting “rights” or in administrating “rights.” It is something else.
Bayh-Dole sets the conditions on which federal agencies might do so. My argument is that those conditions end up being an empty set.
Bayh-Dole prohibits federal agency use of the patent system that would not promote utilization (35 USC 200).
Bayh-Dole requires that any other steps to use the patent system must be necessary (35 USC 207(a)(3)).
And Bayh-Dole does not expressly authorize federal agencies to enforce patents, while authorizing all sorts of other things, with conditions and restrictions.
Even the authorization to allow non-federal licensees to enforce patents on federally owned inventions ends up being nearly impossible once all Bayh-Dole’s conditions are met.
While the patent system provides patentees in general with the right to exclude all others, Bayh-Dole as part of federal patent law suspends this general right for federal agencies. Federal agencies have no express authorization to enforce patents on federally owned inventions, even if patent law expressly authorizes patentees in general. Bayh-Dole makes clear that federal agencies are not in the general class of patentees–even if federal agencies before Bayh-Dole were in the class of patentees in general.
207(a)(2) provides express authorization to federal agencies to grant the “right of enforcement” to licensees. One might then argue that for a federal agency to have the right to grant a right, the federal agency must itself have that right. The logic does not follow. A nonprofit organization may have bylaws that prohibit it from engaging in commerce and yet it may license a patent that permits the licensee to engage in commerce. While the nonprofit has a technical right to sell product, it has constrained itself not to do so, and thus while it may deal in a right it does not have that right itself. Similarly for the federal government. Bayh-Dole is in effect its bylaw that prevents the federal government from enforcing patent rights even though patents come with a federal authorization to enforce patent rights. That authorization is thwarted by Bayh-Dole for federal agencies.
Might “protect” also include “enforce”? One certainly might assert that it does, just as I am asserting that it does not. But these assertions rest on different foundations. To assert that protect includes enforce, one has to show how enforcement is coordinate with protecting and administrating. Where Congress chooses to call out enforcement–as it does in 207(a)(2)–it uses enforcement. Why would anyone think that Congress, in feeling the need to call special attention to the right of enforcement in licensing, would choose to hide authorization for federal agencies to engage in enforcement in the term protect? To do that takes special twisting of words. To assert the contrary, that protection does not include enforce, one twists no words–Congress chose not to use enforce where clearly it could do so if it had chosen to do so. But where it felt the need to distinguish between applying for a patent and obtaining a patent and maintaining a patent, Congress chose not to add “enforcing” a patent. The plain reading is that Congress did not intend Bayh-Dole to authorize federal agencies to enforce patent rights. They could deal in patents, but not enforce them. If a patent on a federally owned invention is to be enforced, the invention must be licensed exclusively to the point of assignment, and if a federal agency can meet the conditions Congress placed on exclusive licensing, then the exclusive licensee may enforce the patent.
If utilization is in the public interest as an express policy of Bayh-Dole–and it is–then federal agency enforcement to preclude utilization is not authorized. If any enforcement (if protect could possibly secretly include enforcement) must be necessary, then somehow excluding use or demanding payment must be construed as a necessary step to achieve something “on behalf of the Federal government.” It is difficult to understand how either excluding use or demanding compensation for financial damages in anyway promotes utilization of a federally owned invention. The public, threatened with federal action to exclude its use of an invention or a demand for compensation for the damage to the federal government from such use, would struggle to understand how such threats could determined to be “appropriate in the public interest.” “We must threaten you in these ways because it is for your own good.” Not really.
To adapt the Supreme Court’s commentary on interpretations of “retain” in Bayh-Dole, we might say that “we are confident that if Congress had intended to authorize federal agencies to sue citizens for utilizing inventions arising in federally supported research or development as a necessary means to promote the public’s utilization of those inventions, it would have said so clearly–not obliquely through an idiosyncratic use of the word “protect.”