Why the NIH fuss with Moderna over inventorship doesn’t matter, but does

The New York Times ran a story today that Moderna and the NIH are having a spat over inventorship on a patent application covering aspects of the Moderna mRNA vaccine.

The N.I.H. had been in talks with Moderna for more than a year to try to resolve the dispute; the company’s July filing caught the agency by surprise, according to a government official familiar with the matter. It is unclear when the patent office will act, but its role is simply to determine whether a patent is warranted. If the two sides do not come to terms by the time a patent is issued, the government will have to decide whether to go to court — a battle that could be costly and messy.

From the looks of this–at least from the NYT’s account–one has to ask just what the NIH is thinking, if anything at all. It appears to be a fuss of incompetence. But then, the NYT article only gets at a bit of the problem, if it is even a problem. Let me explain.

First, the NIH has funded Moderna to do the research and development, much of the funding coming under a BARDA contract. Moderna is not a “small business” and was not in 2020, when the BARDA contract was signed. Thus, Bayh-Dole doesn’t apply directly. However, executive branch patent policy requires federal agencies to use a patent rights clause:

agency policy with respect to the disposition of any invention made in the performance of a federally-funded research and development contract, grant or cooperative agreement award shall be the same or substantially the same as applied to small business firms and nonprofit organizations under Chapter 38 of Title 35 of the United States Code.

Here, Chapter 38 is now Chapter 18–the Bayh-Dole chapter. But the policy goes on to explain that federal agencies can waive whatever of Bayh-Dole-like requirements they want, including for co-sponsored and joint research. So who knows what BARDA did with its contract–and as far as I know, the crucial bits of the patent rights clause have not been released to the public.

No matter what BARDA did under executive branch patent policy, Bayh-Dole does have one tiny–significant–bit that applies to any funding agreement, at 35 USC 210, which concerns the “precedence of this chapter” of Bayh-Dole law. Here it is, at 210(c):

(c) Nothing in this chapter is intended to limit the authority of agencies to agree to the disposition of rights in inventions made in the performance of work under funding agreements with persons other than nonprofit organizations or small business firms in accordance with the Statement of Government Patent Policy issued on February 18, 1983, agency regulations, or other applicable regulations or to otherwise limit the authority of agencies to allow such persons to retain ownership of inventions

This first part is to confirm the flexibility of federal agencies to waive Bayh-Dole requirements whenever they feel the need, in contracts with other than nonprofits and small businesses. But there’s a catch:

except that all funding agreements, including those with other than small business firms and nonprofit organizations, shall include the requirements established in section 202(c)(4) and section 203.

Section 203 has to do with march-in–a strange, never-used idea that if a federal contractor gains ownership of an invention made in federally contracted work, then the federal government may require the contractor (or any subsequent assignee or exclusive licensee) to license the invention on reasonable terms, or if the contractor (or other) won’t do that, then the government can grant the license(s).

More important is 202(c)(4). Here it is:

(4) With respect to any invention in which the contractor elects rights, the Federal agency shall have a nonexclusive, nontransferrable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States any subject invention throughout the world:

In executive branch patent policy, which Bayh-Dole was designed to replace, and from which Norman Latker copied this part of 202(c)(4), “practice” means, expressly, “to make, to use, and to sell.” To use this same construction and not intend for it to carry the same definitional meaning would require drafting to go out of its way to supply a new definition and call attention to that difference. That hasn’t happened with Bayh-Dole. Whatever Norman Latker may have intended, Congress surely did not intend such subtlety, as the Supreme Court reasoned with another part of Bayh-Dole, having to do with the meaning of “retain.” If BARDA followed the law, its 2020 contract with Moderna would have to carry this license to practice the invention provision. If Moderna gets a patent on anything that has arisen in work supported even in part by federal funding, the federal government has a license to the invention (not just a license under the patent) to make it, use it, and sell it, and authorize others to do so as well, so long as doing so is “for” or “on behalf of” the United States. That’s broad, unconditional, and irrevocable.

Obtaining a license to an invention, rather than simply a promise not to sue under a patent, means that there is an implied duty to deliver to the government the invention–the documentation that describes the invention in its entirety, not merely the bits that support the claims that the contractor has chosen to pursue. Any bit of the invention, if it “is or may be” patentable, must be disclosed to the government, or the contractor’s ownership of the entire invention is subject to a government request for title. Under 35 USC 202(a), a contractor may retain title to inventions made in federally funded work only if those inventions are disclosed to the federal government. Again, Bayh-Dole is directed to inventions, not patents on inventions. Thus, if Moderna, say, were to hold back some aspects of its inventions and not disclose them to the federal government, then that may well trigger the government’s right to request title to those inventions under 35 USC 202(c)(1):

(1) That the contractor disclose each subject invention to the Federal agency within a reasonable time after it becomes known to contractor personnel responsible for the administration of patent matters, and that the Federal Government may receive title to any subject invention not disclosed to it within such time.

There’s all sorts of slop in this requirement, but in its broadest sense, if a contractor withholds information that could have been claimed in a patent application but wasn’t (for whatever reason, such as hard to enforce, maybe difficult to get allowed, or lacking business purpose to patent rather than hold as trade secret), then the government may request assignment of the entire invention. Of course, maybe BARDA was being dumb and didn’t put in this disclosure requirement, or did but messed with it. Even so, how does the government get a license to make, use, and sell any given invention and not receive from the contractor the information necessary to do so–not just an unpublished patent application, but all the information pertaining to that invention that would support any claims that might be made in a patent application, even if the contractor chose not to include those claims.

On the face of it, the federal government should have an unconditional license to make, use, and sell Moderna covid inventions, and authorize others to do so “for or on behalf of the United States.” There’s no need for march-in, which is burdened with unworkable procedures (by design, according to Howard Bremer). The government can authorize production and sale of the Moderna vaccine or any vaccine that might use Modern inventions made in federally funded work. That the government hasn’t done so is the great mystery. Perhaps just incompetence. Maybe the lack of will. Or maybe the fecklessness about Bayh-Dole that is NIST, the department within the Department of Commerce delegated to deal with Bayh-Dole.

As for dealing with the rest of the world, Bayh-Dole 210(c) has this to say after requiring 203 and 202(c)(4) in all funding agreements, ever:

Provided, That the funding agreement may provide for such additional rights, including the right to assign or have assigned foreign patent rights in the subject invention, as are determined by the agency as necessary for meeting the obligations of the United States under any treaty, international agreement, arrangement of cooperation, memorandum of understanding, or similar arrangement, including military agreement relating to weapons development and production.

By 2020, ramping up to deal with Covid, BARDA surely understood the problem to be global. Did BARDA include provisions to address global matters? Apparently not. What was the thinking there? Help a company be first, and take credit for that, who cares if  the rest of the world pay monopoly prices?–that’s the price we all pay to ensure that the NIH gets credit for helping companies make drugs and the like. It rather looks that way. Any outcome not contested by the government is de facto the policy of the government.

Now because Bayh-Dole is sloppy and federal agencies are clever, especially the NIH, where Norman Latker worked as he was drafting the provisions that would end up in Bayh-Dole, it is possible that BARDA decided that its 2020 Moderna contract was not, very technically, a “funding agreement.” NIH has come up with a workaround to Bayh-Dole by asserting, in essence, that if they don’t call it a contract, grant, or collaborative agreement, then it isn’t a funding agreement. It’s an “other transaction.” In which case, who knows what invention and technical information deliverables BARDA negotiated.

If the NIH is all upset about its inventors not being included on Moderna patents, perhaps the reason is that BARDA screwed up, or got very clever, and didn’t include the government license required by 202(c)(4). If BARDA did include the government license, then NIH is wound up over mostly nothing here. The government license operates as a conditional joint ownership of each subject invention. Each joint owner, the contractor and the federal government, may practice the invention (and have it practiced) without owing anything to the other or needing permission of the other–except for exclusive licenses and litigation to enforce patent rights. Bayh-Dole calls the transaction a license, but it’s really more than that. It’s more like an assignment of joint, undivided interest in the invention, with the government asserting (for nonprofits) the right to veto assignments of subject inventions under some conditions. If, however, the federal government did not get its license, then the NIH might be now regretting its contracting and one route to recover rights is to claim inventions were jointly invented with NIH personnel contributing.

Well now. We might ask some questions. Did the NIH personnel now identified by the NIH as inventors ever file an invention disclosure with the NIH? The NIH requires “Employee Invention Reports” to be made “immediately.” Did the NIH inventors file any EIR? If they didn’t, well, then there’s something to Moderna’s argument that NIH folks, while perhaps really helpful, didn’t see what they were doing as inventive. If they had, then they would have filed an EIR right away. If Moderna argued otherwise, they would end up making it appear that NIH folks had violated NIH policy, a not nice thing to do. So Moderna assumes that NIH folks complied with NIH policy, and didn’t invent. Interestingly enough, contemporaneous recognition by the inventor of something being inventive has long been required as a condition of patentability. If you don’t recognize what you have done as inventive, then it–what you have done–is not patentable. In a first to file world, all this gets mostly lost, but there’s a trace of it still there.

In first to file, the contribution by others involves a determination of “derivation.” For there to be a basis for such a proceeding, however, the folks excluded from someone’s patent application have to have got their own application filed–and within one year of the first publication of a claim that might be contested. Did the NIH file such a claim? It doesn’t look like it has. Did the NIH file its own patent application, based on what its own personnel may have done? It doesn’t look like it. But now the NIH is all a-bothered. Moderna’s point is that it had already got the mRNA sequence it needed, and by the time the NIH personnel had sent over their mRNA sequence–exactly the same, apparently–Moderna didn’t need the NIH’s contribution. Moderna, it would appear, did not need the NIH sequence and so did not “derive” anything from the NIH personnel’s effort to contribute. That would appear to be a fair thing. If the NIH folks had been inventing by coming up with their version of the right sequence, then, in a first-to-file world, they would have filed their application immediately and settled things out later. But did the NIH do any such thing? No, apparently not.

No doubt the NIH expected patenting behavior such as DARPA has with, say, AbCellera Biologics, a Vancouver BC-based biotech firm. There, AbCellera and NIH inventors are listed together on a patent application for a covid-related invention. (Yes, how do NIH inventors get onto a DARPA-funded grant? I don’t know. Life is too short as it is.) In the case of Moderna, however, Moderna has not listed government funding with its inventions, and has not listed government scientists as inventors. It may well be the case that for what Moderna claims in its patents, and the circumstances of the interactions between Moderna personnel and NIH personnel, Moderna has it right. It claimed what its personnel invented and didn’t derive those inventions from NIH work subject to an NIH patent claim.

For the NIH, then, the problem is not really getting its inventors on Moderna patents, but rather dealing with why there is (apparently) no 202(c)(4) government license requirement in its BARDA or other contracts, whether “funding agreements” or clever “other transactions” that are contracts but aren’t called contracts. With a government license, it really doesn’t matter whether the government is a joint owner of any particular patent.

If you have read this far, I’m really, really sorry. None of this much matters. Moderna has said it won’t enforce its patent during the pandemic, which may last forever if politics continues as it has. The NIH could request that Moderna put this promise in writing and sign it, and that becomes something that other companies can rely upon. What’s lost of course is the technology delivery expectations that run with a license to an invention rather than a promise not to enforce a patent right to exclude others. But screw-ups are screw-ups, even when they are federal government screw-ups involving billions of dollars, a pandemic, and people’s lives. The show, even a clown show, must go on.

As for the government license and the more widely talked about but useless march-in rights, these don’t matter either. Federal agencies don’t understand these rights and don’t use them. NIST goes so far as to call the government license a “government use” license, utterly mischaracterizing the scope, with “use” supposed to be more like “non-commercial internal research futzing.” NIST’s account of Bayh-Dole is a disservice to the public and to Bayh-Dole. The wording in the Bayh-Dole license provision is clear–practice means to make, to use, and to sell. The scope is not government “use” but any governmental “purpose.” That NIST folks cannot tell the difference, or don’t care, or are too clever for their own good–pick ’em–means pretty much the same thing: NIST shouldn’t have anything to do with administration of Bayh-Dole regulations.

As for the NIH, they’ve never marched-in, never used their government license rights to make, use, and sell or authorize others to do so, never used “exceptional circumstances” to mean “anything having to do with public health unless we determine otherwise,” as it did from 1963 to 1983 under executive branch patent policy. NIH and the Department of Commerce created Bayh-Dole. It’s their cock-up and they’ve even gone further and cocked-up their cock-up. It’s a cock-up raised to the power of cock-up. Now the NIH fusses over adding its inventors to a Moderna patent application, which is simply not relevant. The public gains no advantage from the fuss or its outcome. Moderna won’t enforce the patent, so the NIH has no prospect of charging for licenses. The NIH has no history of enforcing Bayh-Dole delivery requirements for inventions or for licenses. The NIH routinely ignores or waives Bayh-Dole requirements. The NIH actively works around Bayh-Dole with Other Transaction Authority games. The NIH in this mess of hundreds of millions in federal contracts with Moderna never bothered to get invention assignments from its inventors and file its own patent applications. There’s nothing the public gets out of NIH fussing with Moderna over inventor names at this point. It’s an empty, useless, wasteful fuss. Invention theater, angst about reputation, fiddling while Rome burns.

For forty years, the NIH has operated with a working policy of making biotech and pharma companies wealthy at public expense on the premise that such wealth is necessary for profit-driven companies to determine the future of public health. Public health becomes a private market to exploit as broadly as possible, not an area for collective care. The NIH has been in the business of attempting to create modernas, or at least chasing companies that that might be modernas and providing funding so they might be even bigger modernas, or bigger targets for acquisition by big pharma companies. What the NIH wants is credit–credit for making companies successful with new public health products. Moderna, by not adding NIH inventors to its patents, has crossed up this NIH desire for credit, and so NIH strikes back with a meaningless fuss about inventorship rather than asking for (or funding) the transfer of all the requisite technology to allow the federal government to practice and have practiced the vaccine that Moderna is now making, but apparently not enough of.

And we haven’t even got to whether the Moderna vaccination is effective after six months, prevents infection and transmission or just decreases symptoms (in which case, more people walk around with covid but don’t know it and so are more likely to transmit it), has benefits that outweigh its dangers for many healthy individuals, might mess up the evolution of the virus towards more virulent strains, and might interfere with one’s immune system so that one is more likely over time rather than less likely to get covid– “breakthrough cases”–or whether there are more effective treatments now that don’t involve vaccine-like gene therapy messing with everyone’s mRNA–stuff that the NIH ought to be tracking, studying, and publishing continuously on rather than dicking around about who of its people should be named on a Moderna patent that the company says it won’t even try to enforce.

If the purpose of pouring hundreds of millions of dollars into a company that hadn’t produced a single product was to obtain a full account of a vaccine, how to produce it at scale, and how to handle it for storage, distribution, and administration, then NIH ought to have contracted for these things from the get go. These are not unobvious things. They are required by law. There are protocols laid out to get the necessary information (such as Unlimited Rights in Data), so long as one doesn’t get clever and design around them. I know, it’s only a pandemic and millions of lives in the balance, so we ought not expect the NIH putting its best personnel onto contracting hundreds of millions of dollars and managing the relationships to have delivery of all the information necessary to “transfer” the “technology” to every company qualified to step up to manufacture and distribute a long-term safe, effective, virus-quelling vaccine.

Instead, even with all the misplaced fussing, it appears that the NIH has stuck to its decades-long working policy of making a virtue of allowing its contractors hold sufficient rights and information that they become monopoly vendors, so that speculators can trade on the value of these companies owning and dealing in essential treatments in matters of public health. What’s happened is not a technical mis-doing by Moderna. It’s a long, chronic, major mis-doing by the NIH. That mis-doing won’t get corrected by the NIH getting its personnel named as inventors on a Moderna patent.

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