I made this a twitter thread. I’ll post it here as well and work to round it out as I have time. It’s the flip side of being blunt about what happens under Bayh-Dole if an inventor does not assign an invention made in federally funded work to a federal contractor.
Under Bayh-Dole (35 USC 201(b)) federal contractors can add parties to any funding agreement. These parties become, by definition (35 USC 201(c)), contractors, and Bayh-Dole’s patent rights clauses apply to those new parties.
A new party may be added by any federal contractor to a funding agreement by “any assignment, substitution of parties, or subcontract of any type” (35 USC 201(b)). The patent rights clauses flow down to new parties based on what those new parties are. There’s one key exception to the flow down when adding parties. We will come back to that.
If the new party is a nonprofit, then the nonprofit patent rights clause applies–37 CFR 401.14 with paragraph (k).
If the new party is a small business, then the small business patent rights clause applies–37 CFR 401.14 without paragraph (k).
If the new party is a large business, then the small business patent rights clause applies (as conflated with executive branch patent policy by a clueless or mischievous NIST) except that the clause does not preempt federal statutes that require federal ownership of inventions.
And if the new party is an individual, then the individual inventor patent rights clause applies–37 CFR 401.9.
Contractors are free then to add parties doing so is up to them. It is not a requirement of Bayh-Dole. It is up to federal contractors whether to make individuals who might invent parties to any given funding agreement. Not Bayh-Dole. Not a Bayh-Dole “intent.”
But there’s a provision in the small business/nonprofit patent rights clause that’s not in Bayh-Dole or, arguably, authorized by Bayh-Dole. Call it rogue executive branch policy to exploit a situation created by Bayh-Dole.
In the default patent rights clause, at 37 CFR 401.14(f)(2), contractors are required to make potential individual inventors make a “written agreement” to protect the *government’s* interest.
The structure of the “written agreement” requirement makes it clear that to comply, contractors must substitute inventors as parties. The inventors must agree to sign documents to establish the government’s rights in subject inventions. Thus, the inventors *must have rights*.
The inventors must have rights–ownership rights–in their inventions. That’s just regular federal patent law in operation. But for those inventions to be *subject* inventions, those inventions must be owned by a contractor–a party to the funding agreement.
The (f)(2) written agreement *must make potential inventions parties to the funding agreement.* That’s not Bayh-Dole. That’s a rogue executive branch patent policy exploit of Bayh-Dole.
If the (f)(2) written agreement does not make inventors parties to the funding agreement, then their inventions are not subject inventions, and contractors have no standing under Bayh-Dole to force inventors to assign (“to comply with Bayh-Dole” nonsense), per Stanford v Roche.
If the inventors are not parties to the funding agreement, then NIST’s 2018 assignment provision doesn’t operate, since it is directed at subject inventions–which must be ones owned by a contractor. The only contractor would be the organization–and clearly it *doesn’t own*.
The (f)(2) agreement is construed to require contractors to get assignments from all employee inventors, but this is deeply wrong–contrary to Bayh-Dole (which does not authorize such things), the Supreme Court (which ruled the same), and the (f)(2) requirement itself.
The (f)(2) requirement is rogue executive branch policy. It’s rogue because it has not gone through the “exceptional circumstances” process set out by Bayh-Dole–by federal law. Think of it kindly as a noncompliant standing exceptional circumstance.
The (f)(2) written agreement is clearly *not called a patent agreement* even though the provisions on which it is based–FPR long form (e)(3), short form (e)(1), and IPA IV(a) all expressly use “patent agreement.”
(f)(2) is not a *patent agreement*. It is a substitution of parties. It makes inventors parties to the contractor’s funding agreement, makes inventors contractors. It enables 37 CFR 401.9 for those inventors. They have the benefit of 35 USC 202(a)–to retain title themselves.
There’s a good argument that any contractor forced assignment of an invention made under a federal funding agreement without contractor compliance with (f)(2) is void.
Note that afaik the universities in their fuss over Bayh-Dole as a vesting statute in Stanford v Roche did not bring up the (f)(2) written agreement. Why not? If it was a patent agreement, surely it would have helped their case.
But (f)(2) would not help them if Stanford hadn’t complied. (It hadn’t). And it wouldn’t help that there was no assignment requirement in (f)(2). (f)(2) didn’t require inventors to assign to contractors, but conditionally to assign or license to *the federal government*.
The (f)(2) written agreement *displaces* a contractor’s standing to demand assignment of inventions made in federal work as a condition of participating in that work–either for pay from the award or use of contractor resources committed to the work.
The (f)(2) written agreement, combined with 37 CFR 401.9 inventor patent rights clause, is the cornerstone of *inventor* rights under executive branch policy implementing Bayh-Dole. If there is anything redeemable in Bayh-Dole, it’s this executive branch exploit.
With compliant (f)(2) substitution of parties written agreements in place:
*inventors are parties to the funding agreement–they are small business contractors.
*inventors have the federal right to retain title, subject to disclosure and notice, under Bayh-Dole 35 USC 202(a).
*inventors cannot be forced to use the patent system.
*if inventors do use the patent system, then various public protections (if ever used) apply as restrictions on patent property rights, as they do for small business contractors.
There’s an exception to the flow down. If a nonprofit adds a party by assignment of a subject invention (including assignment by exclusive license of all substantial rights), then the assignee must accept the *nonprofit* patent rights clause regardless. 35 USC 202(c)(7)(A).
That exception is the cornerstone of Bayh-Dole reasonable terms price controls. Nonprofits must break up their patent monopolies (to promote “utilization” and “free competition”). For-profits taking assignment must adopt nonprofit restrictions on use of invention income.
Nonprofit open access in turn addresses reasonable price, short of antitrust behaviors (price fixing, market power price gouging, market power suppression of use or competition, etc).
Think Stanford v Roche was “wrongly decided”? Refuse to comply with (f)(2)? Don’t care what it does? Don’t accept 37 CFR 401.9? What a lawless charade you are.
Please, may they fail.