When is an invention a subject invention?–1

Posted on August 12, 2019 by Gerald Barnett

[Y’all are reading this one. I’ve made a few edits for clarity. Where it matters I’ve left some strike-throughs.]

A search query here at Research Enterprise recently asked how to determine if an invention is a “government subject invention.” Here is your answer. Keep in mind that Bayh-Dole is poorly drafted, not enforced, not complied with, and there’s plenty of misinformation available that is intended to keep things that way. Universities and academics, in particular, consistently misrepresent the law in policy, in guidance documents, and in articles. But hey, people still want to know what subject invention would be if anyone bothered to follow the law. So here it is.

Here are the key points. For those who want more discussion, that follows.

1. Key points

“Subject invention” is a statutory definition in the Bayh-Dole Act (35 USC 201(e)). An invention is a subject invention when it meets every element of the definition. No one–not an inventor, not a contractor, not a federal agency–can simply declare an invention to be a subject invention. But contractors and inventors can take actions that determine whether an invention meets the definition of subject invention.

The invention must be owned by a party to the funding agreement.

Contractors may receive assignment of the invention or may make inventors parties to the funding agreement. If an invention is not owned by a party to a federal funding agreement, then it cannot be a subject invention. Nothing in Bayh-Dole’s requirements for contractors applies if an invention is not a subject invention. Bayh-Dole’s policy requirements may still apply, but that does not depend on an invention being a subject invention. See Stanford v Roche.

The invention must be patentable or possibly patentable. 

If the inventor does not recognize work as inventive, then it is not patentable. If the invention is not directed at patentable subject matter, it is not patentable. If the invention is not new, useful, and non-obvious, it is not patentable. If the invention has been disclosed publicly for more than a year, it is not patentable. If the invention has not been described in sufficiently complete detail or actually reduced to practice and shown to work in each of its elements as claimed, it is not patentable. If an invention is not in a condition to be patentable, then it is not a subject invention.

The invention must have been made–conceived or testing completed–in a project that has received at least some federal funding for research, experimental, or developmental work. 

Wording here is important. Define a project. If some part of that project receives federal funding, then any invention made in the project is a subject invention if it meets the other elements of the definition. Conception is more than just having an idea or insight–it involves having in mind every element of an invention. It is difficult for conception to be “funded” unless one is hired to invent or a project expressly requires invention to succeed. First actual reduction to practice means testing necessary to demonstrate that an invention satisfactorily performs each function as conceived. An invention is not “made” if it has merely been “conceived.” Thus, what someone has thought up cannot be a subject invention because it has not been reduced to practice–either by description as in a patent application or by actual reduction to practice to demonstrate that what has been thought up actually works. Since a subject invention must be “made” mere conception is not sufficient.

Any party to the funding agreement may make a subject invention, even one recruited to develop a commercial product, if the recruitment takes the form of assignment, substitution of parties, or subcontract. 

The scope of the definition of subject invention depends on the scope of the funding agreement. Contractors may add parties to the funding agreement, and these parties are also contractors. Everything in the law that applies to the initial contractor also applies to each additional contractor as each becomes a party to the funding agreement.

Continue reading →

Posted in Bayh-Dole | Tagged , | Comments Off on When is an invention a subject invention?–1

Bayh-Dole Rooster Farms

Posted on August 6, 2019 by Gerald Barnett

In February 2019, ILR Review published “Academic Entrepreneurship: The Bayh-Dole Act versus the Professor’s Privilege.” The article is paywalled, but a slide version of the paper by the authors is available at the National Academies website.

The authors compare U.S. university startup activity after Bayh-Dole with various European countries, with particular interest in Sweden. European countries, it is observed, envy the success of the U.S. after Bayh-Dole. This is as expectable as it is dismaying. The U.S. metrics for Bayh-Dole’s “success” are, like accounts of the law and its history, largely political spin–a kind of noble cause bullshit (that is, statements that do not have any interest in the truth and instead assert what one aims to make true, or what is made to sound true, or even what one sincerely believes is true but without the effort to validate).

Thus, the question facing European countries’ research invention policies is whether there’s a PhD entrepreneurial “gap” between the U.S. and their university research activities. The authors worry the data, but they don’t worry it nearly enough. Why? Continue reading →

Posted in Bayh-Dole, Policy | Tagged , , , , | Comments Off on Bayh-Dole Rooster Farms

USC still misrepresents Bayh-Dole, 2018 version-Fitt 3

Posted on August 5, 2019 by Gerald Barnett

Now, for comedy. USC turns from the obligations of the Bayh-Dole act for universities to technology transfer:

Benefits of disclosure and technology transfer include:

Bayh-Dole does not require technology transfer. A contractor may comply with Bayh-Dole by using its subject inventions itself, so long as the benefits of that use are available to the public on reasonable terms. Licensing is not required. Transfer is not required.

Furthermore, things are terribly confused by the combination of disclosure with technology transfer. Disclosure can produce none of the claimed benefits to be listed. Disclosure provides patent personnel with information to pass on to federal agencies–that’s otherwise known as a bureaucratic process. Nothing in that produces any benefit to anyone. It is a process that consumes energy. Endothermic. Encoldering. Continue reading →

Posted in Bayh-Dole, Policy | Tagged , , | Comments Off on USC still misrepresents Bayh-Dole, 2018 version-Fitt 3

USC still misrepresents Bayh-Dole, 2018 version-Fitt 2

Posted on August 2, 2019 by Gerald Barnett

[Update 2/10/2021–still misrepresents, still wrong.]

USC’s “Bayh-Dole Act Obligations for Universities” overdramatizes–no, misrepresents–Bayh-Dole. USC turns to its own policies. Even here, things are not quite what they seem.

Under the USC Intellectual Property Policy, with some exceptions called out within the policy, the University owns IP that is produced by its employees in the course and scope of their employment.

No doubt. USC may make a claim to the ownership of IP made in the “course and scope of their employment”–but employment alone is not sufficient to sustain an employer’s claim to own inventions. The Supreme Court in Stanford v Roche reaffirmed that much. There has to be something more–a patent agreement, a provision in an employment contract that stipulates that continued employment is contingent on assignment. And there’s also California Labor Code 2870ff, which requires specific notice of the allowable scope of an employer’s claim.

The issue is whether inventions made by employees under *extramural* federal contracts are produced “in the course and scope” of those employees’  “employment.” We can predict what university attorneys will say–they will be pit bulls to protect their work product.  Continue reading →

Posted in Bayh-Dole, Policy | Tagged , , | Comments Off on USC still misrepresents Bayh-Dole, 2018 version-Fitt 2

USC still misrepresents Bayh-Dole, 2018 version-Fitt 1

Posted on August 1, 2019 by Gerald Barnett

USC has a document on the web titled “Bayh-Dole Act Obligations for Universities” dated Sept 26, 2018 by the “USC Office of Research.” Let’s have a look.

This memorandum provides an overview of University and Federal policies and procedures concerning disclosure of Intellectual Property (IP), and the importance of timely disclosure of IP at USC.

We might note at the outset that Bayh-Dole pertains only to inventions and plant varieties–not to IP generally. USC also overstates the subject matter of Bayh-Dole by conflating Bayh-Dole with “University and Federal policies.” There’s an implication, drawn from the title and this opening statement, that the university’s policies are made to comply with Bayh-Dole. As we will see, this cannot be the case. Continue reading →

Posted in Bayh-Dole | Tagged , , | Comments Off on USC still misrepresents Bayh-Dole, 2018 version-Fitt 1

Study Example 1: “Reasonable terms” in Bayh-Dole

Posted on July 31, 2019 by Gerald Barnett

Here is Joseph Allen, attempting to make the case that “reasonable terms” in Bayh-Dole’s definition of practical application applies only to licensing terms:

Bayh-Dole adopted many of these terms with their original meaning. Section 203 says that the agency funding the research can require the contractor (typically an academic organization) to license others “upon terms that are reasonable under the circumstances” or can issue licenses itself if the contractor refuses in four specific situations.

That’s sort of correct. But section 203 is not limited to nor focused on “academic organizations.” So “typically” is simply wrong. Bayh-Dole includes small businesses as well and where it wants to focus on nonprofits, it does so, as at 35 USC 202(c)(7).

But what Allen points out is a matter of the remedy for a condition that creates march in, not the condition itself. Sloppy, wrong. Allen bases his argument on a defective history. He imagines that the Biddle report went to Roosevelt in 1947, but Roosevelt died in 1945. From that sloppy beginning, more follows: Continue reading →

Posted in Bayh-Dole | Tagged , , , | Comments Off on Study Example 1: “Reasonable terms” in Bayh-Dole

Bayh-Dole Adds Bureaucracy, 2: Complications of Ownership Positions

Posted on July 30, 2019 by Gerald Barnett

So far, this should all be easy and clear. Heh. The Nixon patent policy states the general federal policy for inventions made with federal support. A set of specialty statutes supersede the Nixon patent policy for specific contracting purposes. Bayh-Dole conditionally preempts the statutes and Nixon policy if a party to a federal funding agreement acquires ownership of an invention made with federal support. (Except Bayh-Dole does not preempt Stevenson-Wydler or any later law that cites Bayh-Dole). Heh.

Now, ahem, for some actual complications. Bayh-Dole adds another administrative layer to the mix. Before Bayh-Dole, a nonprofit had to rig for the Nixon patent policy in general (and the patent rights clause codified in the Federal Procurement Regulations at 9-1.107-5). The nonprofit could also be in the NIH and NSF IPA programs, which circumvented the FPR codification. And the nonprofit also had to deal with a number of specialty statutes that preempted the Nixon patent policy (or at least dictated how that policy must be implemented). Bayh-Dole, rather than repealing these various statutes and the Nixon policy, instead conditionally preempts them. Thus, the nonprofit now has to deal with yet another layer of administration–Bayh-Dole on top of specialty federal statutes and the Nixon patent policy.

One big complication is that there has to be two parallel patent rights clauses for any given federal funding agreement, but there isn’t. One patent rights clause must follow the Nixon patent policy in the case that no party to a federal funding agreement owns an invention made with federal support, and the other patent rights clause in the case that a party does own such an invention. These have to be in place at the time of contracting–but federal regulations stipulate only the Bayh-Dole conditions–at 2 CFR 200.315(c) for grants and at 48 CFR 27.303 for contracts.

So things get all messed up at this point. Continue reading →

Posted in Bayh-Dole | Tagged , , , | Comments Off on Bayh-Dole Adds Bureaucracy, 2: Complications of Ownership Positions

Bayh-Dole Adds Bureaucracy, 1: Conditional Preemption

Posted on July 29, 2019 by Gerald Barnett

Bayh-Dole conditionally preempts federal statutes pertaining to the ownership of inventions made with federal support (35 USC 210(a)). If a party to a federal funding agreement acquires ownership of such an invention–a subject invention–then Bayh-Dole conditions, as conveyed through that funding agreement, apply to that invention. If no party to the federal funding agreement owns a given invention, then it cannot be a subject invention, and Bayh-Dole’s conditions do not apply. Bayh-Dole’s preemption operates only for “inventions of a contractor.” Otherwise, the other federal statutes continue to operate, including in the absence of any particular guidance, the Nixon patent policy of 1971.

Thus, even if there were a “gap” in Bayh-Dole, it doesn’t matter because Bayh-Dole is not the only federal word on federally funded inventions. Bayh-Dole is a conditional law that comes into play when a party to a funding agreement acquires title to an invention made under contract. If Bayh-Dole doesn’t apply, then the Nixon patent policy applies, or a federal statute that takes precedence over the Nixon policy applies.

Thus, Bayh-Dole nor its standard patent rights clause needs an assignment clause. If a contractor fails to have a patent agreement with inventors with regard to a given federal funding agreement, it is no big deal. Bayh-Dole doesn’t require the contractor to take ownership of any invention. Even the Nixon patent policy does not require contractors to own inventions made in work with federal support. The Federal Procurement Regulation (1975) based on the Nixon patent policy (and stipulated by the Nixon policy) included a standard patent rights clause that did require a contractor to have a patent agreement with potential inventor-employees, but the FPR was repealed in favor of the Federal Acquisition Regulations and the FAR ignores the Nixon patent policy and only stipulates Bayh-Dole compliance. As a result, we have the Nixon patent policy but without the required regulatory codification, along with a bunch of federal statutes, that apply whenever a contractor does not acquire ownership.

Bayh-Dole adds a layer to the regulatory apparatus. It does not replace all the old layers with a single new layer. It’s just that some folks forget (or want to forget, or never knew) that the old layers continue on. Their effort, then, is to make those layers not operate by somehow getting contractors to take ownership of all inventions made in work receiving federal funding. Forcing contractors to own–forcing inventors to assign to contractors–so that somehow always Bayh-Dole can be invoked to preempt those older layers. It is as if these folks live in a great fear that some invention will fall outside of Bayh-Dole and the Nixon patent policy or some statute dictating ownership will demonstrate that it works just fine. Continue reading →

Posted in Bayh-Dole | Tagged , , , , | Comments Off on Bayh-Dole Adds Bureaucracy, 1: Conditional Preemption

The Arizona Commerce Authority Guidance on Bayh-Dole, 5

Posted on July 26, 2019 by Gerald Barnett

What might the Arizona Commerce Authority do to revise their guidance? Here are some helpful suggestions.

First, audience. Focus on small company issues and leave the nonprofits for another time. There’s plenty written for nonprofits elsewhere. Give an account of Bayh-Dole for the small company folks. Small companies and nonprofits both may be involved in SBIR/STTR funding, either directly from the government or by means of subcontracts. It’s important to know the requirements of prime funding agreements and subcontracts. There are plenty of hairy things going on if one takes government funding. Inventions, rights in data, copyrights, financial controls, reporting. There’s way more bureaucratic red tape than any SBIR/STTR funding is actually worth to most small companies. That’s the first bit of advice.

Second, the pain of red tape. Larger research universities–U of Az, ASU–are used to the bureaucracy and are set up to handle it (for their own advantage), but most small companies are not and they should think twice about accepting federal money for research. If you are not set up for the administrative overhead of SBIR/STTR funding, run away. It’s not for you. It will not help your company. It is not free money. It is not smart money. It is distracting, energy-sucking, bureaucratic bothering money. At best you end up on a poster, with the government writing the caption. At worst you get audited down to accounting for the paper in your printer. Continue reading →

Posted in Bayh-Dole | Tagged , , , , | Comments Off on The Arizona Commerce Authority Guidance on Bayh-Dole, 5

The Arizona Commerce Authority Guidance on Bayh-Dole, 4

Posted on July 25, 2019 by Gerald Barnett

We are dealing with Arizona Commerce Authority advice about Bayh-Dole and IP rights. Almost done. Or fed up. Or bored with such nonsense. But first, march-in. Then general gestures about IP.

The government’s march-in rights are one of the most challenging provisions in Bayh-Dole.

March-in has never been used. The procedures were designed not to operate. Howard Bremer, who had a hand in writing the implementing regulations, bragged about that later. March-is not challenging. It is a non-issue. It is hoodoos on the bayou. Fright time around the campfire. Nothing more.

It allows the funding agency, on its own initiative or at the request of a third party, to effectively ignore the exclusivity of a patent awarded under the act and grant additional licenses to other “reasonable applicants.”

Nothing in Bayh-Dole gives third parties the right to request march-in. The march-in trigger is that the agency receives information that warrants a determination. Third parties might provide such information, and they might request march-in, but they have no standing in Bayh-Dole to do so. The rest of the account is botched, too. The primary march-in compels the patent holder or assignee (of the invention) or the exclusive licensee (whomever holds the rights) to grant further licenses on reasonable terms to a responsible applicant or applicants (not “reasonable” applicants, as the Authority has it in its sloppy botched unedited way). Continue reading →

Posted in Bayh-Dole | Tagged , , | Comments Off on The Arizona Commerce Authority Guidance on Bayh-Dole, 4