One way Bayh-Dole destroys innovation opportunity in the U.S.

When Bayh-Dole came into effect in 1981, it had this requirement for subject inventions retained by contractors (35 USC 202(c)(3)) (my bold):

(3) A requirement that a contractor electing rights file patent applications within reasonable times and that the Federal Government may receive title to any subject inventions in the United States or other countries in which the contractor has not
filed patent applications on the subject invention within such times.

Three years later, in 1984, Bayh-Dole was amended by PL 98-620, which made significant changes throughout. At 202(c)(3), the requirement to file patent applications was changed:

(3) That a contractor electing rights in a subject invention
agrees to file a patent application prior to any statutory bar
date that may occur under this title due to publication, on sale,
or public use, and shall thereafter file corresponding patent
applications in other countries in which it wishes to retain title
within reasonable times, and that the Federal Government may
receive title to any subject inventions in the United States or
other countries in which the contractor has not filed patent
applications on the subject invention within such times.

The “reasonable times” requirement then was interpreted by the implementing regulations finalized in 1987 thus (37 CFR 401.14(a)(c)(3)):

(3) The contractor will file its initial patent application on a subject invention to which it elects to retain title within one year after election of title or, if earlier, prior to the end of  any statutory period wherein valid patent protection can he obtained in the United States after a publication, on sale, or public use.

“Within reasonable times” becomes within one year after election to retain title. But this bit of the patent rights clause dates from 1987–three years after Congress amended Bayh-Dole to remove the “reasonable times” and replace it with “before a bar date.”

[For what it is worth, the 1982 interim implementation of Bayh-Dole in the form of Circular A-124 has the term as two years:

(3) The contractor will file its initial patent application on an elected invention within two years after election or, if earlier, prior to the end of any statutory period wherein valid patent protection can be obtained in the United States after a publication, on sale, or public use. The contractor will file patent applications in additional countries within either ten months of the corresponding initial patent application or six months from the date permission is granted by the Commissioner of Patents and Trademarks to file foreign patent applications where such filing has been prohibited by a Secrecy Order.]

The implementing regulations also add a time requirement for foreign patent applications–generally, ten months after the U.S. filing:

The contractor will file patent applications in additional countries or international patent offices within either ten months of the corresponding initial patent application or six months from the date permission is granted by the Commissioner of Patents and Trademarks to file foreign patent applications where such filing has been prohibited by a Secrecy Order.

After AIA first to file was implemented, in 2011 202(c)(3) was altered yet again:

(3) That a contractor electing rights in a subject invention agrees to file a patent application prior to the expiration of the 1-year period referred to in section 102(b), and shall thereafter file corresponding patent applications in other countries in which it wishes to retain title within reasonable times, and that the Federal Government may receive title to any subject inventions in the United States or other countries in which the contractor has not filed patent applications on the subject invention within such times.

Section 102(b) deals with the effects of disclosure on patentability–basically reinterpreting the one-year grace period following disclosure of an invention for first to file. Note: there is now no “reasonable times” requirement. Just any time before the end of the grace period following one’s own public disclosure of the invention. But here’s the corresponding bit in the standard patent rights clause, following a NIST workover:

(3) The contractor will file its initial patent application on a subject invention to which it elects to retain title within one year after election of title or, if earlier, prior to the end of any statutory period wherein valid patent protection can be obtained in the United States after a publication, on sale, or public use. If the contractor files a provisional application as its initial patent application, it shall file a non-provisional application within 10 months of the filing of the provisional application. The contractor will file patent applications in additional countries or international patent offices within either ten months of the first filed patent application or six months from the date permission is granted by the Commissioner of Patents to file foreign patent applications where such filing has been prohibited by a Secrecy Order.

Things keep getting longer and more turgid. The patent rights clause now is far afield from Bayh-Dole. Bayh-Dole dropped the “reasonable times” wording in favor of any time before a statutory bar date and then that became just before a bar date established by an inventor-related disclosure. These changes reflect a fundamental shift in the federal policy that informs the law. Bayh-Dole’s requirement is to file before a bar date. The patent rights clause requirement is to file within a year of electing to retain title. Those are very different policies. There is no foundation in Bayh-Dole for the present patent rights requirement. That requirement–to file within a year–places substantial strain on patenting decisions, especially by small companies. Without a substantial equity investment or passing the invention off to a wealthy company, a small company will have a difficult time affording a U.S. filing let alone the costs of filing foreign applications.

It is not at all clear how often federal agencies pick up the foreign patent rights when a contractor does not file foreign applications. I would expect almost never. Practice under the patent rights clause policy ends up creating in the U.S. patent exclusions and fragmented ownership claims scattered among multiple–scores–of contractors in every area in which there’s substantial federal funding for research, while leaving the invention free for use everywhere else.

The effect of Bayh-Dole as implemented is to make use and development of such inventions more difficult in the U.S. Everywhere the federal government decides to focus its funding–as on some important health issue–Bayh-Dole practice shuts down industry access in the U.S. in favor of university bureaucrats attempting to find a speculative patent investor wanting to make a profit over what, by the choice of the bureaucrats is made into a “high risk, high return” proposition.

The requirement to file patent applications within a year of notice to retain title discriminates against small companies (and thus runs against Bayh-Dole’s stated policy at 35 USC 200 to promote maximum participation by small business firms). The requirement to file early also interferes with patenting strategies–a contractor may have to file before actual reduction to practice, creating problems in drafting and prosecution and running up patenting costs. And, most importantly, the whole scheme ends up fragmenting patent rights in an area of developing technology and locking those rights up through a monoculture patent bureaucracy that chooses to deal by default with exclusive patent licenses only, and lacking an immediate licensee willing to pay for foreign rights, patent monopolies for the U.S. only. We end up screwing ourselves to subsidize the profit dreams of patent bureaucrats and patent monopoly speculators.

[And–since the AIA revisions to Bayh-Dole, there is no authority in the law to require contractors to file patent applications on subject inventions within any specified time–not one year, not two years. The only requirement authorized by Bayh-Dole is to file within the grace period for one’s own public disclosures of the invention. In other words, if you are going to publish the invention, then you must timely file a patent application or give up title. But if one never publishes, then there’s absolutely no obligation to file a patent application in Bayh-Dole. But NIST, asleep at the wheel as it is, keeps driving as if Bayh-Dole still authorizes a specific time in which a patent application must be filed. ]

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