Here’s another question on RE: “is an exclusive license of technology and an assignment the same thing?”
Answer: yes and no.
Let’s talk exclusive license and assignment of inventions rather than technology. An assignment expressly conveys title to an invention. An exclusive license, if it transfers all substantial rights in an invention, functions effectively as an assignment. Otherwise, it’s just an exclusive license. So, no and yes.
Here’s a federal court discussion (Mann v Cochlear, quoted in Azure v CSR):
A patent owner may transfer all substantial rights in the patents-in-suit, in which case the transfer is tantamount to an assignment of those patents to the exclusive licensee, conferring standing to sue solely on the licensee.
The court in Azure v CSR outlines the issues involved:
We must also consider a non-exhaustive list of rights for determining whether a licensor has transferred “all substantial rights” to the licensee, including:
(1) the nature and scope of the right to bring suit;
(2) the exclusive right to make, use, and sell products or services under the patent;
(3) the scope of the licensee’s right to sublicense;
(4) the reversionary rights to the licensor following termination or expiration of the license;
(5) the right of the licensor to receive a portion of the proceeds from litigating or licensing the patent;
(6) the duration of the license rights;
(7) the ability of the licensor to supervise and control the licensee’s activities;
(8) the obligation of the licensor to continue upaying maintenance fees; and
(9) any limits on the licensee’s right to assign its interests in the patent.
That’s some list, with plenty of room for cleverness to see how close one can come to assignment in an exclusive license without, somehow, assigning the invention. The Azure court cites a number of cases and concludes:
when all rights or all substantial rights have been transferred, the transferee—and not the transferor—is the effective owner for purposes of standing.
The Azure court considers then some situations in which less than all substantial rights might appear not to be transferred in an exclusive license. Just to give you the flavor of the interpretative challenge involved, consider a situation in which the licensor retains the right to practice the exclusively licensed invention. Is the exclusive license a transfer of ownership combined with a grant back of an exclusive license? Or is the exclusive license actually a sole license–a nonexclusive license combined with a promise not to grant any other licenses? The pathway chosen appears to make a substantial difference in understanding the nature of the action enabled by the license document.
Universities routinely use exclusive license contracts, They reserve rights for educational use and for a license to the U.S. government (if the invention comes within Bayh-Dole’s patent rights clause). But they grant all substantial rights to the licensee (make, use, and sell); the license is usually for the term of the patents, but for breach; the licensee has the right to enforce the patents; and the university asserts no control over the licensee’s activities but for a right to audit for proper payment of royalties. For most of the nine concerns listed by the Azure court, these university licenses function as assignments. Courts looking at such practice have determined these exclusive licenses are in effect assignments.
All this gets interesting with subject inventions owned by nonprofits under Bayh-Dole’s standard organizational patent rights clause at 37 CFR 401.14. Bayh-Dole restricts nonprofit assignments at 35 USC 202(c)(7)(A):
a prohibition upon the assignment of rights to a subject invention in the United States without the approval of the Federal agency, except where such assignment is made to an organization which has as one of its primary functions the management of inventions (provided that such assignee shall be subject to the same provisions as the contractor)
There is no such restriction on assignments by small businesses. Here’s the structure of the provision: The federal agency gets a right to approve any assignment by a nonprofit but that right of approval is waived if the assignment is to an invention management firm. Back when Bayh-Dole was passed, the reference would have been primarily to Research Corporation, which handled much of the university patenting business, or to cover the general case if a university acquired an invention and then assigned that invention to a university-affiliated research foundation to do the patenting and licensing.
There’s one stipulation that rides with any such nonprofit assignment, whether it is pre-approved or not: the assignee must accept the nonprofit’s patent rights clause–that is, the standard patent rights clause (usually), with paragraph (k) implementing 35 USC 202(c)(7)’s requirements–including the restriction on assignment, sharing royalties with inventors, and a limitation on the use of income earned with respect to the invention (after allowed deductions for administration of subject inventions must be used for scientific research or education).
Now if a nonprofit could effectively assign an invention by calling the transaction an exclusive license, it could avoid the requirements that Bayh-Dole places on nonprofit exploitation of inventions. All the nonprofit would have to do is exclusively license each subject invention to a for-profit company to handle such transfers. Since that company would be pre-approved as an invention management organization, that would be the end of the stipulations on what nonprofits could do. That for-profit company could then assign inventions (“exclusively sub-license”) as it pleased, without any requirements on that assignment, on sharing royalties with inventors, or on the use of income earned with respect to the invention.
That would be clever, but it would be effectively only if Bayh-Dole was understood merely to throw bureaucratic roadblocks up for nonprofits. With a bit of snark, 35 USC 202(c)(7)(A) would read: “if you are too dull witted to call a transaction an assignment rather than an exclusive license, then you have to share royalties with inventors and agree to restrict how you use any net income, while smart, clever nonprofits exclusively license and are home free.” The idea would be that federal law creates a disincentive for nonprofits to use instruments titled assignment in favor of instruments that do effectively the same thing titled exclusive license. That interpretation makes Bayh-Dole at this point an empty, useless shell of itself. Oh, wait–it is anyway!
A more thoughtful reading of 35 USC 202(c)(7)(A) is that once a nonprofit acquires an invention arising in federally supported research or development, that nonprofit and any subsequent controller of the invention must act as a nonprofit. Freedom from the nonprofit requirements comes when the nonprofit or as it were the effective nonprofit assignee breaks up the patent monopoly and licenses less than all substantial rights–such as granting the exclusive right to sell only, or grants an exclusive license for substantially less than the entire term of the patent–such as the time restriction on such exclusive licenses by nonprofits to other than small companies in the original 1981 Bayh-Dole (and which was quickly removed in the 1984 amendments).
If a nonprofit doesn’t break up the patent monopoly in a given transaction, then any recipient of all substantial rights–whether by transfer of title or by exclusive license–must take on the role and responsibilities of the nonprofit. That makes good policy sense, even if you don’t like it. If the government is going to impose greater public protections on nonprofit handling of inventions, then it makes sense that nonprofits should not so easily circumvent those public protections merely by changing the title of the transfer document from assignment to exclusive license and playing a bit of dipsy-doodle with wording here and there (such as insisting that title to patents stay with the nonprofit–which means nothing since Bayh-Dole’s requirements are directed at title to inventions).
So, assignment of title and exclusive license can be different. But they also may be equivalent. An exclusive license to all substantial rights in an invention operates, effectively, as an assignment. A transaction that does not break up the patent monopoly such as by limiting the extent of exclusive rights or by limiting the duration of exclusivity to significantly less than the entire term of the patent is in effect an assignment, no matter what a transaction document is labeled.
Most university exclusive licenses function as assignments. Where Bayh-Dole applies, this means that billions of dollars made by companies accepting these effective assignments have failed to comply with the nonprofit patent rights clause–they have not shared royalties (if they sublicense) with inventors, and they have not deducted only the administrative expenses incidental to the administration of subject inventions before allocating the balance to the support of scientific research or education. We are talking billions of dollars that have been diverted from inventors, research, and education and into the pockets of companies, in breach of Bayh-Dole.
Not many folks seem to care, however. Bayh-Dole seems to inspire a deep apathy for compliance. Perhaps that’s why those that advocate for a faux version of the law affect such a love for it–a law that “works” (even if it is really a dismal failure), only when it is mostly ignored.