WTF is the Bayh-Dole Coalition’s “What is the Bayh-Dole Act”?–3

[This article published before I finished it! — so there will be updates as I add citations and discussion.]

We have been through the Bayh-Dole Coalition’s nonsense about Bayh-Dole. I’ve provided some brief comments. Now let’s work through some of those comments with more detail. The Coalition claims that Bayh-Dole “empowers” contractors to “take” ownership of inventions within the scope of the patent rights clause included with each funding agreement. (Well, actually, the Coalition gets the scope wrong, but I don’t have it in me to keep repeating their dumdrum.) But the Supreme Court looked squarely at this issue and ruled that the claim repeated by the Coalition is not the law. Perhaps the Coalition thinks the Supreme Court is wrong. But it’s a variety of contempt of court to state their (wrong, discredited) claim as if it were true, when it’s not.

Empower.

The Supreme Court in Stanford v Roche ruled that Bayh-Dole did not “empower” anyone to “take” ownership of inventions:

Nowhere in the Act is title expressly vested in contractors or anyone else; nowhere in the Act are inventors expressly deprived of their interest in federally funded inventions.

. . .

The Bayh-Dole Act does not confer title to federally funded inventions on contractors or authorize contractors to unilaterally take title to those inventions; it simply assures contractors that they may keep title to whatever it is they already have.

“Empower” is wrong. The Supreme Court said it was wrong. Members of the Coalition filed amicus briefs in the case that the Supreme Court showed were wrong. But the Coalition cannot admit they were wrong and persist–contemptuously, deceptively, stupidly–in repeating their claim as if it were authoritative, true.

During.

And the scope is not inventions made “during” federally funded research. Here’s Bayh-Dole (35 USC 200):

inventions arising from federally supported research or development

The Coalition’s “during” if fundamentally different from Bayh-Dole’s “arising from.” “During” is a time function. “Arising from” is not limited to the time during which research is conducted, nor to just that research that is paid for with federal funds, but rather has to do with the consequences of conducting research and development. The implementing regulations here, at 37 CFR 401.1, give an example to make clear that neither chronology nor separate accounting are controlling factors in determining the scope of a funding agreement:

The time relationship in conducting the two projects and the use of new fundamental knowledge from one in the performance of the other are not important determinants

and

Separate accounting for the two funds used to support the project in this case is not a determining factor.

How hard is it to use “arising” just as the law does?

More from Bayh-Dole (35 USC 201(e)):

any invention of the contractor conceived or first actually reduced to practice in the performance of work under a funding agreement

Bayh-Dole further explains (35 USC 201(b)) that the scope of a funding agreement includes

the performance of experimental, developmental, or research work funded in whole or in part by the Federal Government.

The “work” is not just what is paid for with federal funds. The “work” here, is the overall project, for which the federal government is asked to provide at least some support. Inventions might arise in parts of the overall “work” that are not paid for with federal funds. These inventions, too, may come within the scope of Bayh-Dole. There’s even more. “Funding agreement” also

includes any assignment, substitution of parties, or subcontract of any type entered into for the performance of experimental, developmental, or research work under a funding agreement as herein defined.

A contractor may add additional parties to a funding agreement. The work that those new parties do is also “performance of work under a funding agreement.” A nonprofit assigning a subject invention to a company “for development” or to another nonprofit “for licensing” brings that assignee under the funding agreement. Same for subcontracts, or swapping in a research foundation for a university. A fair restatement of this part of Bayh-Dole is that it “allows contractors and those that they assign to or subcontract with to retain ownership of inventions that they have acquired and which have arisen in work funded at least in part by the federal government.”

The distinction between “during” and “arising from” is actually huge and points to a failure to be attentive to the law, even while posturing to provide an authoritative summary of the law.

An invention may be made “during” work that’s federally supported and not be in performance of work under a funding agreement. An invention might have nothing to do with the overall project but be made during the research. Similarly, an invention might be made after the federal funding portion of a given project has ended, such as in the case that a contractor assigns an invention to another party and this other party “develops” the invention by making additional inventions–which may well be still made in performance of work under the funding agreement.  Such development is expressly provided for by the language of Bayh-Dole. “Arising from” takes in those inventions directed at the objectives of an overall project, when those inventions come to be owned by any party to the funding agreement, that is, any “contractor” (not just the small business or nonprofit that was the first contractor to accept federal support).

University practice citing Bayh-Dole is all over the place, and mostly non-compliant. Many universities now put their disclosure forms behind a login so they are not readily available. But here are a few that are available.

UC Berkeley

This section must be completed to assure that inventors and the University meet any obligations to sponsors. Include all agencies, organizations and companies that provided funds or resources that were used by any inventor in research that led to the conception or reduction to practices of this invention.  In the event that no grant funds were used in the development of this invention, please write “None” in the space provided.

Recites Bayh-Dole’s wording used in the definition of a “subject invention.” But it is not material whether an inventor used resources or someone else used the resources. An inventor need not be a resource-users. The form omits “actual” from “reduction to practice” and adds a superfluous “s” to “practice.” What matters is whether the invention, having been made–conceived and reduced to practice–comes within the scope of the patent rights clause of a federal funding agreement. That is, is the invention within the “planned and committed” activities under the funding agreement? (As provided by 37 CFR 401.1.) It does not matter whether “grant funds were used in the development of this invention.” “Development” is the wrong word anyway. The concern is the conception of the invention–and there, since, conception takes place in one’s mind, it is difficult to see how grant funds would be used there at all. So we are left with actual reduction to practice–building of a prototype or testing to demonstrate that each element of the invention works as conceived. Was this activity within the “planned and committed” activities of a federal grant or otherwise did not distract or diminish work under that grant? If so, then if the invention is assigned to the university or the university has made an inventor a party to the funding agreement, then the invention must be disclosed to the federal agency; otherwise, no disclosure to the government is required, even though UC Berkeley still requires disclosure to the university’s licensing office.

Again, UC Berkeley gives wrong guidance. Is the invention within scope of a federal patent rights clause? To answer that question, one needs a description of the nature of the invention and a copy of the funded grant proposal. “We discovered a new class of compounds that may treat cancer.” “We were part of a project that received federal funding to look for new compounds that might treat cancer.” Looks like a match.

Michigan State

MSU is required to report all inventions made with Federal funding to the relevant agency, so it is imperative that you provide details on all federally funded inventions, in particular the agency and the grant number. Please list all other potentially relevant grants, funds, collaborations, or materials received from third parties such that we can do the appropriate reporting to the sponsoring groups and determine if there are any pending license rights to the invention. 

Misstates Bayh-Dole and ignores Stanford v Roche. Bayh-Dole does not require disclosure of all inventions made with federal funding. Inventions become subject inventions only when a contractor acquires title to them. Either the university acquires title or the university makes the inventor a party to the funding agreement–and hence a contractor. In this second instance, the inventor is required to disclose to the federal agency under 37 CFR 401.9, not the university under its patent rights clause at 37 CFR 401.14. “Made with” is also wrong. “Arising from” is the statutory language. “Made with” funding is something of an absurdity, unless a prototype was built out of dollar bills or something. Separate accounting is not determinative. Was the invention, once made, conceived or first actually reduced to practice in a project that also has received federal support? An invention might be reduced to practice by someone paid with federal funds but not be within scope of Bayh-Dole’s patent rights clause if the work on the invention was not planned and committed and did not prevent the planned and committed work from getting done. “We invented a device to monitor the temperature of the fridge in which we store stuff for our federal grant to look for compounds to treat cancer, and we still got our proposed grant work done.” Not a subject invention. But you’d not know that from MSU’s disclosure form guidance.

University of Missouri–Kansas City

INVENTION SUPPORT:  Because the University is required to report all inventions made with federal funding to the relevant agency, details on all federally funded inventions should be provided, including the particular agency and the grant number. In addition, please list all other potentially relevant grants, funds, collaborations, or materials received from third parties so that the University can do the appropriate reporting to the sponsoring groups and determine if there are any obligations to third parties with respect to the invention.

We find the same misrepresentation of Bayh-Dole as above. The concern is not “federally funded inventions.” That is not just an administrative shorthand for what everyone knows is something else. It is just wrong. The Bayh-Dole standard is an invention owned by the university and which was conceived or first actually reduced to practice in the performance of work that also received federal funding. Want to be short and imprecise about it, but still accurate? “Inventions made in work receiving federal funding.” It is federally funded work that matters, not federally funded inventing. The funding supports (at least in part) the work. An invention arising from the work, made within scope of the work, conceived within scope of the work, built and tested within scope of the work–these are all accurate if not sufficiently broad on their own to get at things.

What becomes obvious as one works through the bad guidance on these forms–misrepresenting Bayh-Dole and the university’s obligations, leaving out the part that Bayh-Dole’s patent rights clause for the university does not come into play for disclosure until the university has acquired ownership, and getting it wrong about scope, all the while using defined terms from the patent rights clause without making that clear–“invention,” “conceived,” “reduced to practice,” “made,” and the like–is that the disclosure form is wrongly positioned in the work flow. These universities use the disclosure form to start their management procedures, as a basis for them to take action. But to put the form there means that they ask inventors to make determinations about scope and the like–stuff that the administrators clearly cannot even get right.

A better process is to ask for basic information about the invention–what is it and who has worked on it. Then decide whether to acquire.  The university can look up the current and recent past funding for those involved and ask whether the invention is within scope of that funding agreement. Once the university has acquired an invention, then it may request any additional documentation to allow the university to determine whether it must disclose the invention to a federal agency. The universities don’t just get Bayh-Dole wrong, and screw up on which patent rights clause controls, but they also don’t have even the basics of the process of “disclosure” down. They haven’t thought it through. They have not got a grasp of the details. They write sloppy guidance. There’s no excuse not to get things right, other than they are just not up to the task of doing so. Which makes one wonder how they are coping with anything else that requires a degree of care.

University of Minnesota

Funding Sources.Please list all sources of funding related to the conception and development of this intellectual property (include federal (e.g. NIH, NSF, USDA, VA, etc.)and non-federal (e.g. foundation, industry sponsored, gifts, etc.).).

Minnesota adds, in bold:

It is important that this information is accurate and complete because sponsors may have certain rights in the intellectual property. If no funding was used, write “None” in the table. Please provide PDF copies of any Notice of Grant Awards (NOGA’s) when you submit this disclosure.

“Funding related to the conception and development of this intellectual property” is very strange. Minnesota conflates inventions and works of authorship, and so feels the need to abstract to “intellectual property” rather than focus on inventions and use “invention.” “Funding related” is terribly broad. What does it mean for funding to be related to some other thing, like an invention? It is a mess wrapped in a muddle. Here, the funding is related to “the conception” of “intellectual property”–which does not work at all for works of authorship. “Related” clearly is wrong. What the university needs is scopes of work for funding agreements, and the university already has those filed away in its sponsored projects office. It’s just laziness not to go get those agreements when it needs them. And then Minnesota drops “actual reduction to practice” and replaces that phrase with “development.” What does “development” mean here? Test? Improve? Change the best mode? Add stuff around the invention to make it easier to use? Make it look like a product? It’s difficult to say. But Bayh-Dole does not worry about “development” any more than it does “research.” These are not concepts of scope of claim but rather types of work under which the federal government has an interest in adjudicating ownership claims once a contractor has acquired ownership.

Minnesota adds “If no funding was used, write ‘None’ in the table. As we have seen, “using” funding is not determinative of Bayh-Dole scope. “No funding was used” implies separate accounting, which is one of the easiest dodges to try to avoid a sponsor’s claim of interest in an invention. USC used that dodge back in the 1940s with the U.S. Navy, and lost in Mine Safety Appliances. UCLA used that dodge with Medivation to trick the company into sponsoring research on the series of compounds from which Xtandi was developed, but not gaining access to a second series of compounds that UCLA kept secret from the company but which were arguably within scope. So, yeah, “funding used” is wrong. “If no extramural funding supported any part of the project from which the invention has arisen, write ‘None.'”

Universities expanded the scope of their patent policies claiming that Bayh-Dole required them to do so. They were wrong about Bayh-Dole, as the Supreme Court made clear, even though scores of university attorneys signed on to amicus briefs in the case arguing that somehow Bayh-Dole gave universities rights outright in inventions. They were wrong, but expand they did. Once they had expanded claims to ownership in place, it does not matter what Bayh-Dole says–unless one aims to void their new policies based on the fraud of claiming that federal law (Bayh-Dole, the standard patent rights clause) required the expansion. Otherwise, Bayh-Dole could be repealed for all that but universities would not back down an inch on their expanded ownership claims. It’s just that they have no legitimate basis for their expanded claims. It’s not in the law, it’s bad for academic science, it’s bad for technology transfer, it’s bad for use and development.

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