More NIH Bayh-Dole Slop

The NIH cannot get Bayh-Dole right. Or maybe the NIH doesn’t want to get Bayh-Dole right.

Here’s an NIH announcement from 2018 about policy changes, “Notice Regarding 2018 Bayh-Dole Act Final Rule – Rights to Federally Funded Inventions and Licensing of Government Owned Inventions.

It’s an official document, given a tracking number and all–NOT-OD-18-233. One would think someone would check it over. Hey–guess that has to be us:

Recipients of NIH funded research awards are required to report all inventions that result from NIH funded projects.

See the Bayh-Dole Act  at 35 U.S.C. § 200-212 ( ) and the implementing regulations at 37 C.F.R. 401.

Bayh-Dole does not require the reporting of all inventions. If we see the Bayh-Dole Act, we find that contractors are required to disclose only subject inventions, not all inventions, and they are required to disclose those inventions only after subject inventions have been properly disclosed by the inventors, in writing, to the contractor’s designated personnel for patent matters. The Bayh-Dole requirement on disclosure (reporting is different, except if one is content with being very sloppy about it) is specific to inventions (i) made under contract, that (ii) the contractor has acquired, and that (iii) the contractor is reviewing for patentability and interest in retaining. Everything else is not subject to Bayh-Dole nor its reporting. There may be some NIH policy requiring the reporting of everything, inventive or not, owned or not–but that policy isn’t based on Bayh-Dole.

Subject inventions are inventions made under federal contract that a contractor has acquired. Inventions that a contractor does not acquire are not within the scope of Bayh-Dole. That’s the meaning of an invention “of the contractor.”  See Stanford v Roche–clearly, the NIH hasn’t.

More NIH nonsense:

The Bayh-Dole Act permits all funding recipients i.e., universities, nonprofit research institutions, and large and small businesses to retain ownership of the inventions made under federally funded research grants or contract programs, while also giving the government a license to practice the Subject Invention.

Bayh-Dole does not apply to large businesses. Large businesses retain ownership of inventions made under federal funding agreements only to the extent that a presidential executive order allows–EO 12591. Unlike Bayh-Dole, EO 12591 has no standing to take precedence over federal laws that require the disposition of ownership of inventions made under federal contract. NIST, gleefully conflating the requirements for Bayh-Dole and EO 12591, added the EO requirements into the standard patent rights clause. But that’s simply wrong–not that NISTwits would even know it. Where any statute directs otherwise, contractors do not have a right to elect to retain title to their inventions made under contract, subject or not subject. Federal law controls, not the standard patent rights clause under Bayh-Dole, which has no preemption power for large company contractors.

The NIH’s use of “to retain ownership” continues the ambiguity between “gives contractors the power to take title from inventors” and “cedes to contractors the power to resist any federal agency claim to title, once they have got title.” NIST clearly wants the former reading–that Bayh-Dole is about stripping inventors of their inventions in favor of institutional owners. The Supreme Court in Stanford v Roche made clear that latter meaning is the proper one, without which Bayh-Dole is “deeply troubling.”

Bayh-Dole permits nonprofit and small business contractors to retain ownership of the inventions that they acquire ownership of. Bayh-Dole gives them no special right, mandate, privilege, first option to take title.

It is worth pointing out that if actually contractors complied with the standard patent rights clause written agreement requirement–they don’t–they would make their inventor-employees parties to the funding agreement, turning their inventor-employees into contractors under Bayh-Dole’s definitions–and therefore give those inventors independent standing to elect to retain title to their inventions. As contractors, inventors have the same right under 35 USC 202(a) to elect to retain title. The written agreement requirement actually operates–if it ever were to operate–to protect inventors from predatory organizational bureaucrats, preserving Bush’s “free play of free intellects” mantra. But pffft on all that. The NIH does not care for any of this and so won’t bother to be non-deceptive. NIST, too, wants to make inventor rights go away and so adds a stupidly drafted assignment clause to the written agreement requirement, defying the Supreme Court. No one involved in Bayh-Dole machinations seems to think much of inventors. Inventors are like laying hens, good for the eggs.

The government license is to practice and have practiced, lifted from the Kennedy patent policy (1963). There, and going forward, “practice” means “to make, use, and sell.” It’s a broad right.

In return for retaining ownership, funding recipients are required to pursue the invention to practical application,

This is made up nonsense. Bayh-Dole has nothing to do with “funding recipients” and they don’t have any mandate to “pursue the invention to practical application.” The mandate is given in 35 USC 200, Bayh-Dole’s statement of policy–and that policy is directed at the federal agencies. There, the first policy is to use the patent system to promote utilization of inventions arising in federally supported research or development. Utilization is not practical application. These are different, though again sloppy folks won’t notice or care. Utilization is use. Practical application is use with benefits available to the public on reasonable terms.

If a contractor does not achieve, timely, practical application, the government can march-in and require licensing or do the licensing itself under 35 USC 203–but the government never has, not in forty years. The NIH, which has had the most opportunity to march-in, refuses to do so. That means tjat there is no enforcement of any working requirement in Bayh-Dole. Certainly not by the NIH, not for non-use, not for unreasonable use.

such as by licensing the invention under reasonable terms for the benefit of public health

Gibberish. The definition of practical application is that a subject invention is used so that the benefits of use are available to the public on reasonable terms. The public available terms have nothing particularly to do with licensing on reasonable terms. The public available terms involve things such as price and availability and in a form that the public requires and without discrimination. “Licensing under reasonable terms” has to do with march-in compulsory licenses when a contractor fails to achieve practical application or meet demand.

whether the invention is patented or treated as an unpatented biological material or research tool.

More gibberish. If an invention is not patented, then it is not a subject invention because it is no longer an invention that “is or may be patentable.” Such an invention is not subject to Bayh-Dole. Its disposition has nothing to do with “practical application” or “march-in.” This is just NIH nonsense.

Here’s the NIH representation of the NIST stupid assignment requirement in the written agreement (NIH bold):

Requires the funding recipient by written agreement to obtain an assignment from its researchers of the entire right, title and interest in and to each subject invention made under a funding award and to execute all papers necessary to file patent applications and establish the government’s rights in an invention.  37 C.F.R.401.14(f)(2)

This is more misrepresentation. The (f)(2) written agreement requirement works like this. Federal agencies are required to use a patent rights clause in each funding agreement. That clause requires contractors to require their employees to make a written agreement to protect the government’s interest. As part of that written agreement, employees agree to sign papers to establish the government’s rights in subject inventions. They could not do so if they did not own those subject inventions.

The effect of the cascade of requirements from agency to contractor to inventors is that the contractors are required to make the inventors parties to the funding agreement. See 35 USC 201(b) and (c) to see how contractors may add parties to a funding agreement. The (f)(2) requires contractors to add inventors as parties. When the inventors invent, they own their inventions. Those inventions then become subject inventions.

There is a separate patent rights clause for inventors–37 CFR 401.9. Inventors are to be treated as small business contractors. The written agreement has the form of a mini-subcontract specific to things an inventor must do under the funding agreement. And the contractor-employer has no right under Bayh-Dole to demand assignment of any subject invention. See 37 CFR 401.14(g).

The written agreement binds the inventor to the funding agreement, not to the employer. The NIST added assignment clause can operate only so that a contractor require their inventors to assign to the contractor the subject inventions that the contractor already owns. What a garbled mess.

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