Seven Ways Universities Commonly Fail to Comply with Bayh-Dole

Posted on August 17, 2016 by Gerald Barnett

University patent administrators and patent policies make a fetish out of compliance with Bayh-Dole. What’s funny is how this fetish is about selective compliance–compliance that advances the power and freedom from accountability for administrators, at the expense of faculty and students, and in defiance of the Bayh-Dole Act. It’s as if Bayh-Dole was only half a law, a law to establish a well paid administrative class that can operate with impunity when it comes to federally supported inventions–inventions, one would think, that are near the heart of desirable federal research outcomes.

Here’s a list of seven areas in which university administrators routinely thumb their noses at Bayh-Dole, sometimes out of ignorance, sometimes with disregard, and sometimes just because they can. In all cases, however, non-compliance points to a failure to respect the law as well as to an institutional incompetence, or negligence, or even malpractice in managing inventions and invention policy.

1 Fail to implement the (f)(2) agreement

The (f)(2) agreement is not in Bayh-Dole itself, but rather is in the standard patent rights clause authorized by Bayh-Dole:

(f) Contractor Action to Protect the Government’s Interest

(2) The contractor agrees to require, by written agreement, its employees, other than clerical and nontechnical employees, to disclose promptly in writing to personnel identified as responsible for the administration of patent matters and in a format suggested by the contractor each subject invention made under contract in order that the contractor can comply with the disclosure provisions of paragraph (c), above, and to execute all papers necessary to file patent applications on subject inventions and to establish the government’s rights in the subject inventions.

The fundamental action of Bayh-Dole is to require federal agencies to use a standard patent rights clause by default in all their grants for research, development, and experimental work at nonprofits and small businesses. This standard patent rights clause forms the agreement between the federal government and a university with regard patent rights in inventions made by investigators hosted by the university. The (f)(2) agreement is an, if not the, essential element of this agreement regarding the government’s interest in these patent rights. When a university requires its research personnel to make a written agreement to protect the government’s interests, the university necessarily includes those personnel as conditional parties to the funding agreement–when they invent with federal support, they become contractors, and as they own their patentable inventions, those inventions become subject inventions–inventions subject to the standard patent rights clause.

Here are the core properties of the (f)(2) agreement. Continue reading →

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Wisconsin continues to defy the US Supreme Court, five years on

Posted on August 15, 2016 by Gerald Barnett

Here is an excerpt from the University of Wisconsin’s current patent policy regarding the Bayh-Dole Act, under the heading “Federal Agreements”:

In order to expand public use of inventions and in recognition of the need for establishing government-wide policies for the allocation of rights to Federally supported inventions, Section 6 of Public Law 96-517 dealing with the disposition of rights to inventions made with Federal assistance was adopted and became effective on July 1, 1981. That section of the law provides, in general, that universities have the first right to take title to inventions resulting from research supported by Federal funding.

The introductory part of the first sentence is administrative fantasy. It’s close to reality, but isn’t.

In order to expand public use of inventions

The Bayh-Dole Act sets out the “policy and objective” of Congress (35 USC 200) with regard to inventions made with federal support–not just any inventions. Whatever anyone else might have wanted Bayh-Dole to do, Congress made sure that it would do its own speaking on the matter. The first stated objective in Bayh-Dole is “to use the patent system to promote the utilization of inventions arising from federally supported research or development.” Well, you might think, that part sounds a lot like “expand public use of inventions.” But the Wisconsin policy is written in a kind of clever code, while the Congressional intent is plain. I will explain. Continue reading →

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The tick bites deeper into the neck

Posted on August 12, 2016 by Gerald Barnett

I know, most of you don’t have time to work through 50 pages of close reading of a university patent policy, with all its levels and inconsistencies and misrepresentations and foolishnesses. Here’s a summary:

FSU’s patent policy violates Florida state law

  • expands grossly what it can claim beyond securing patents on work product
  • ignores the requirement to review and agree before claiming ownership
  • treats royalty sharing as a generous perk rather than consideration for assignment
  • requires inventors to concur in the university’s non-compliance
  • does not provide for reporting all assignments and agreements to the state

FSU’s patent policy guidance misrepresents and misapplies state and federal law

  • Florida Statue 1004.23
  • Bayh-Dole Act 35 USC 200-212
  • Federal patent law and copyright law

FSU’s patent policy and guidance is ambiguous, inconsistent, overreaching, and deceptive

  • ownership claims are overbroad and random
  • guidance varies from policy
  • policy is inconsistent internally and with other policies, such as academic freedom

FSU administrators seem to believe that

  • administrative self-interest matters more than consideration of inventor contribution
  • policy binds inventors, not administrators
  • university legal counsel is reserved for administrative use against inventors

There you have it. In simple terms, a garbled mess. In slightly less simple terms, a nasty, clever, non-compliant policy that is both incompetent and deceptive, while appearing to be legal and proper. The tick of bureaucracy bites deeper into the neck of research enterprise.

 

 

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Florida State’s garbled mess of patent guidance

Posted on August 11, 2016 by Gerald Barnett

[Updated with new accounts of garbledness and bad juju. This policy just keeps giving.]

Florida State University’s “Office of Commercialization” starts a guidance web site off with an enumeration of points about intellectual property. Here’s the first point:

Employee Guideline: US laws state that inventors (relevant to patent protection) or authors (relevant to copyright protection) own what they invent or create, except when they are employees, where employment policies come into play. Most universities like FSU request disclosure and can waive ownership back to the individual in certain circumstances, otherwise will ask to have it assigned to FSU in return for an active commercialization program. If successful, royalties on sales are split with the inventors or authors.

Some general observations regarding the bolded parts.

  • Federal patent law does not state that inventors own their inventions.
  • There is nothing in federal patent or copyright law about exceptions based on employment.
  • Employment policies don’t matter anyway. Written agreements with employees do.
  • Universities don’t now request disclosure of inventions; they require it. Most universities do not require comprehensive disclosure of copyright works.
  • Universities don’t “ask” for assignment; they require it and often now demand it upfront, before any review for “waiver.”
  • An “active commercialization program” is not the basis for a demand to assign, nor is it consideration for such assignment–at most universities the demand is based on employment or use of resources, not on the existence of a technology transfer program.
  • Royalties are any consideration for a patent license, not merely a share of sales; most university sharing of royalties is not based on sales, as most licensed inventions do not result in a commercial product. Universities demand “license issue” fees, milestone payments, and equity as ways to receive revenue without the sale of any product.

If you are game, let’s work through these points. Our working premise is that words matter in policy statements, that meanings–shared, common meanings–matter. When a university administration creates official documents representing the basis for intellectual property management practices, the statements it makes also should matter. Such statements are part of the institutional “offer” to inventors regarding their work. These statements should not be cleverly written to deceive, to hide, to spin, or to confuse. Continue reading →

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Stanford v Roche was not about how to make Bayh-Dole into a vesting statute

Posted on August 1, 2016 by Gerald Barnett

The Stanford v Roche decision was not at all about the proper technical steps to make Bayh-Dole into a vesting statute. Even the Court’s minority opinion–what the lawyer-krakkens fixated on–was a musing on whether there should be any difference in the equitable ownership of an invention whether the ownership was promised in the future (“I agree to assign”) or assigned now for future inventions (“I hereby assign”). Both seem to accomplish the same result, and both have uncertainties. The first promises to assign once an invention has been identified and meets the conditions specified. The second assigns an utterly undefined thing that does not exist and becomes effective only when an invention is made and is found to meet the conditions specified. But the issue in Stanford v Roche was not about the form of the assignment, but the fact that an equitable interest had been conveyed and nothing in Bayh-Dole voided that conveyance.

Look at the scenario. University has a patent policy that says inventors own whenever possible. The university only requires ownership inventions when it must by contract. A university lab director is on the technical advisory board of a company. He wants his post-doc to work at the company for nine months to learn its new technology. The company agrees, on the condition that anything the post-doc invents as a result of his work at the company is assigned to the company. Post-doc agrees, and signs an agreement that says he will assign and hereby does assign all such inventions to the company. The university agrees with this arrangement.

At this point, everything follows the university’s patent policy. Continue reading →

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11 rationalizations regarding university compulsory patent ownership

Posted on August 1, 2016 by Gerald Barnett

Given that university patent administrators don’t write about the reasons why a comprehensive, compulsory invention assignment policy is such a good thing, especially when coupled with a monopoly-seeking exclusive licensing program, I will identify some possible arguments in favor of such a happy combination and sketch the problems with them. Of course, I can be accused of constructing straw man arguments, not the actual arguments that have been used. But those actual arguments, apparently, are secret, if not fantasies, so until those get trotted out to be considered, these will have to do.

1) Compulsory assignment is required by federal law for inventions made with federal support.

This claim is made, for instance, in the patent policies at the University of Southern California and the University of Iowa. The US Supreme Court expressly rejected this claim in Stanford v Roche. There is no basis for the assertion.

2) Compulsory assignment is required to comply with federal law for inventions made with federal support.

This claim is made by patent attorneys and university administrators. The University of California made this claim in requiring all employees to sign a revision of the patent policy that included a present assignment. Both NASA and the NSF make this argument in their policy documents. There is nothing in Bayh-Dole or in the standard patent rights clause authorized by Bayh-Dole that requires university ownership of inventions made with federal support. There is a requirement, however, that universities require their research personnel to make a written agreement to protect the government’s interest, including assigning or licensing their inventions to the government–but universities do not comply with that requirement. Instead, they substitute a requirement that research personnel assign to the university. That is, the reason that the requirement to assign to the university appears necessary is that the university has refused to comply with the terms of its federal contract. “Because we choose not to comply, you must assign so that we can comply anyway.” Continue reading →

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Listing Our Way to a Uniform Compulsory University Patent Policy

Posted on July 31, 2016 by Gerald Barnett

I have yet to see a cogent argument for comprehensive, compulsory invention assignment policies at universities.

There was a time, years ago now, when most universities had no patent policy at all. Time goes by, and Archie Palmer rallies universities to write patent policies. A wide range of responses. Some university policies–especially those written by medical faculty–forbid patenting. Many others authorize use of university resources to assist inventors, create committees to review circumstances, and expect an equitable share of any patent income. Most policies refer invention management to one or more external invention management agents. Often, Research Corporation. Bayh-Dole hits, and university patent administrators assert that federal law now vests with the university ownership of inventions made with federal support. (It wasn’t true.) They insist that patent policies must change to “comply” with the law. So university patent policies are changed to require assignment of inventions made with federal support as something of a scavenger hunt paperwork formality for filing patent applications.

At the same time, the argument is made that it would be unfair and unmanageable to have one policy for federally supported inventions and another for all the rest, so for administrative convenience (and “fairness”) policies were expanded to include all inventions. If university ownership of inventions was federal policy and the law of the land for federally funded inventions, it must be good for all inventions. And, for completeness, the definition of invention was expanded to include most anything except “traditional scholarly materials.”

In 2011, the US Supreme Court ruled in Stanford v Roche that the Bayh-Dole Act does not vest ownership of inventions with universities. Continue reading →

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Comply with commitments under federal regulations

Posted on July 30, 2016 by Gerald Barnett

Restoring voluntary assignment for university inventors is the first step in reconditioning university invention management–and putting that management on a road of development consistent with university mores and roles. Voluntary assignment can be accomplished a number of ways. I will outline a few here.

  1. correct interpretation of policy–often policies are drafted with a narrow scope on claims but that scope has been expanded by administrative interpretation
  2. change policy–often the change does not have to involve dramatic redrafting
  3. change acceptance practice in the IP office
  4. implement (f)(2) properly for subject inventions
  5. change state law (for public universities)

We’ve worked through a number of points: reading patent policy statements carefully often results in the discovery that they in fact endorse voluntary assignment and limit compulsory assignment to a narrow set of situations. Policy can be changed, too, to remove the apparatus–often inept, often clutter, often designed to deceive or permit administrators to change their interpretation of the policy later–that doesn’t work and creates much of the problem, bitterness, and liability in the present compulsory, comprehensive “dual monopoly” approach to university patent management.

Apart from these two strategies, one can also often use language built into most patent policies to defend against the problems of agency when a university takes ownership of patentable inventions (and non-inventions, and whatever). Policies often provide a review step prior to a university asserting a claim and also provide for the university to choose to stop managing an invention it has demanded assignment of. There is rarely any requirement in policy that university administrators must demand assignment of all inventions, or that once assigned, all inventions must be pursued for “commercialization.” There are, however, statements that if the university does not file a patent application, it will offer the rights back to the inventors or, in the case of federal funding, to the federal government.

Let’s look, then, at the federal regulatory context for voluntary assignment. Continue reading →

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The NSF recommends bureaukleptic compliance

Posted on July 29, 2016 by Gerald Barnett

Here’s interesting guidance in a footnote to the current NSF statement of terms and conditions for grants to universities:

NSF silliness

Footnote 2 offers a “reminder” that universities should adopt a present assignment in “employee assignment agreements.” The idea is that somehow a minority opinion musing on the magical effect of “hereby assign” has turned into the idea that universities to comply with the standard patent rights clause must require immediate, upfront assignment of future inventions, before any are made, for a university to comply with “its responsibility under the Bayh-Dole Act.” This advice is outside the standard patent rights clause itself and outside the authority of the Bayh-Dole Act itself. And it has nothing to do with the Supreme Court’s ruling in Stanford v Roche.

The Supreme Court was clear: Bayh-Dole doesn’t vest title or require the assignment of title to the university of inventions made with federal support. If a university wants title, the Supreme Court reminded Stanford and other universities, they can do it the way it is normally done, with a patent agreement: Continue reading →

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New Mis-Guidance on Bayh-Dole for Universities

Posted on July 28, 2016 by Gerald Barnett

There’s a very nice guide on the internet to managing federal grants, “A Guide to Managing Federal Grants for Colleges and Universities [now behind a paywall, apparently].” The Guide is published by Atlantic Information Services and looks like it was published this year. The primary author is a research programs officer at a major public university. The Guide does a good job describing intellectual property and condensing federal requirements into understandable segments. But when it comes to Bayh-Dole, the Guide makes a number of mistakes that contribute to the continuing mischaracterization of Bayh-Dole and its proper implementation.

The Guide focuses on the conditions for a patentable invention, pointing out the new, useful, and non-obvious components of patentable subject matter. That’s fine, but the Guide misses the conception plus reduction to practice plus recognition by the inventors that their work involves an inventive element. (An inventor doesn’t go–is it new, useful, and non-obvious? Oh, it’s an invention! One goes–look what I thought up–it works! It’s an invention! Now, is it patentable?) Conception and reduction to practice are key elements that determine when an invention has been made, and therefore also when an invention is potentially within scope of the standard patent rights clause requirements. For the management of inventions made in the context of federal funding, the critical term is “subject invention”–

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

–plus stuff about plant variety protection. An “invention” is one that “is or may be patentable.” That’s a nice restriction that most university patent policies these days ignore. The phrase “of a contractor” means “owned by a contractor.” That is, an invention is not subject until it is owned by a contractor–that is, by a party to the funding agreement.

(Unless the contractor has implemented the (f)(2) written agreement requirement in the standard patent rights clause, then no invention will be a subject invention unless the contractor finds a way to obtain assignment of each invention (except in at least Florida and Ohio, where there are state laws that decree that public universities own certain inventions). If a university has obtained a patent agreement with a present assignment, that might do the trick, too–it’s just a question of whether the (f)(2) written agreement requirement–even if not implemented by a university contractor–preempts the operation of these other strategies, or whether a failure to comply with (f)(2) renders these other strategies void–but all this is for another time).

To be “made,” an invention must be conceived (all elements of the invention held in the inventor’s mind), reduced to practice (practiced to show all elements function as expected or described so one can see that all elements will so function, or described as in a patent application so that one with ordinary skill in the art might practice the invention without undue experimentation), and recognized as an invention by the inventor. Once an invention is made, it becomes “subject” if either the conception or the practice of the invention was within a funding agreement’s “planned and committed” activities. That is, the written statement of work anticipates either conception or first actual reduction to practice. If not, then the invention is not a subject invention, even if closely related to the federal funding, or even if benefiting from ideas or resources made available by the federal funding unless the work leading to the invention “diminishes or distracts” from the federally funded project. [Update: there is more to this determination–and that has to do with looking forward, rather than back in time, and turns on the meaning of federal funding “in part” supporting work.] Continue reading →

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