Reagan’s Executive Order 12591-3

Posted on February 13, 2019 by Gerald Barnett

President Reagan’s Executive Order 12591 does one more odd thing. It makes the contractor’s title to patents conditioned on a government license. But this government license is not the one required by Bayh-Dole. Here’s Bayh-Dole (35 USC 202(c)(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:

Here’s Reagan:

in exchange for royalty-free use by or on behalf of the government;

Well, “practice” is not “use.” In the Kennedy patent policy, “practice” is defined as “make, use, and sell.” In the Nixon revision to the Kennedy patent policy, “practice” is replaced by “make, use, and sell.” To “practice” an invention means to undertake any of the activities that are subject to an inventor’s exclusive control–the substantial rights in the invention as set forth in a patent. The Reagan revision to Nixon substitutes “use” rather than Nixon’s “make, use, and sell.” In effect, Reagan stipulates a much narrower government license for large companies gaining title to patents on inventions made with federal support than does Bayh-Dole. Furthermore, Reagan stipulates this narrower scope of license for all inventions not owned by any contractor but made under federal contract. Continue reading →

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Reagan’s Executive Order 12591-2

Posted on February 12, 2019 by Gerald Barnett

So far we have discussed President Reagan’s Executive Order 12591 mandating the promotion of commercialization (something not in Bayh-Dole) by having federal agencies grant title to patents (something else not in Bayh-Dole) to all contractors–not just to large companies that otherwise operated still under the Nixon patent policy of 1971:

(4) promote the commercialization, in accord with my Memorandum to the Heads of Executive Departments and Agencies of February 18, 1983, of patentable results of federally funded research by granting to all contractors, regardless of size, the title to patents made in whole or in part with Federal funds, in exchange for royalty-free use by or on behalf of the government;

Reagan’s executive order of course cannot unilaterally amend Bayh-Dole, nor can it ignore other statutes pertaining to ownership of inventions made in federally supported work. It can, however, unilaterally amend the Nixon patent policy to make the defaults under that policy for large companies be the same defaults that small companies and nonprofits have under Bayh-Dole: if a large company gains ownership of an invention made under contract, that company too can elect to retain title, subject to the public interest provisions of the patent rights clause (which are not enforced).

What the Reagan executive order doesn’t make obvious is that under the Nixon patent policy there are two sorts of company contractor–(1) companies, large and small alike, that have established nongovernmental commercial positions; and (2) other companies. A company in category (1) makes and sells products other than to the government. A company in category (2) either does not make and sell product or does so only to the government. Such category (2) companies include contract research organizations that exist to get contracts and deliver back research results, including any inventions that may have been made in the course of the research. Reagan’s executive order mandates that these category (2) companies are “granted title to patents” (or, perhaps Reagan really meant inventions, and perhaps meant allowed to retain title if they have got title) regardless of whether the companies have commercial expertise or market position. That’s a strange way to get about commercialization. Add in as well the companies that don’t have any expertise in making product. The Harbridge House report (1968) found that organizations without expertise were half as likely as those with expertise to succeed at commercialization of federally supported inventions. Shocking!

The Reagan executive order provides a further revision of the Nixon patent policy. The Nixon patent policy stated a default of federal ownership in four areas, regardless of what the market status of any contractor might be. The federal government should own when (i) a federal agency intended to develop products to the point of practical application, or (ii) when the federal government was the primary user and contractor ownership might set the contractor up as dominant, or (iii) in research directly concerning public health, safety, or welfare); or (iv) when the contractor was operating a government-owned lab or directing the work of others. The Reagan executive order preempts these conditions for all contractors that would otherwise be subject to the Nixon patent policy requirements.

The effect is somewhat consternating. Continue reading →

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Reagan’s Executive Order 12591-1

Posted on February 11, 2019 by Gerald Barnett

[Some slight elaborations here and there. 1/6/2020. Latker claims he wrote this EO. Makes sense, given the crappy (or clever–but still sloppy) drafting.]

In 1987, President Reagan issued Executive Order 12591, which extended, sort of, the Bayh-Dole Act to all federal contracting. Let’s work through EO 12591 and try to sort out this out. It’s rather a mess. In doing so, we end up with something remarkably simple and direct to say about Bayh-Dole. It is worth working through the details to show how it comes about.

Here’s the relevant bit of Reagan’s EO 12591, with some parts in bold to mark points of interest:

(a) The head of each Executive department and agency, to the extent permitted by law, shall encourage and facilitate collaboration among Federal laboratories, State and local governments, universities, and the private sector, particularly small business, in order to assist in the transfer of technology to the marketplace.

(b) The head of each Executive department and agency shall, within overall funding allocations and to the extent permitted by law:

(4) promote the commercialization, in accord with my Memorandum to the Heads of Executive Departments and Agencies of February 18, 1983, of patentable results of federally funded research by granting to all contractors, regardless of size, the title to patents made in whole or in part with Federal funds, in exchange for royalty-free use by or on behalf of the government;

Let’s go down the rabbit hole. Reagan’s February 18, 1983 Memorandum, however, does not mention commercialization. Here:

To the extent permitted by law, 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.

Other than that Bayh-Dole is now Chapter 18, not Chapter 38–there is no chapter 38—of federal patent law, the memorandum extends at least some Bayh-Dole treatment to any contractor not otherwise specified by Bayh-Dole–any contractor other than a small business or nonprofit. Continue reading →

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Federal law on inventions made with federal support, 4

Posted on February 6, 2019 by Gerald Barnett

One cannot read “contractor” in Bayh-Dole and assume that “contractor” only refers to the initial or prime contractor. One must always look to the circumstances of a given contract to determine whether others have been made parties to the funding agreement. A contractor may add parties to a funding agreement by any assignment, substitution of parties, or subcontract of any type. Let’s work through some examples. We will start with more overt examples and then look at stuff that is not what you find in the usual glossy accounts of Bayh-Dole.

Consider some examples.

(1) Nonprofit subject invention assignment.  Bayh-Dole requires federal agencies to require nonprofit organizations, if they assign a subject invention, to require the assignee to comply with the nonprofit’s patent rights clause. See 35 USC 202(c)(7)(A):

In the case of a nonprofit organization, (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)

This provision then shows without the second set of parentheses in the standard patent rights clause at 37 CFR 401.14(k)(1).

Rights to a subject invention in the United States may not be assigned 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 will be subject to the same provisions as the contractor;

If a nonprofit assigns a subject invention to a company, even under the cover of an exclusive patent license, the company becomes a party to the funding agreement–becomes a contractor–and any inventions acquired by the company arising from federally supported research or development are then also subject inventions. Furthermore, the company is obligated to handle those inventions, just as with the assigned invention, under the nonprofit patent rights clause. Specifically, the company-assignee agrees–as a party to the funding agreement–to dedicate income earned with respect to subject inventions to the specified public purposes. Continue reading →

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Federal law on inventions made with federal support, 3

Posted on February 5, 2019 by Gerald Barnett

Now, let’s emphasize a few points.

There are at least three ways that a contractor may come to own an invention made with federal support:

  • inventors assign their inventions
  • state law (in some cases, such as Ohio Rev Code 3345.14)
  • by making inventors parties to the federal funding agreement.

In the last instance, a contractor turns inventors into contractors rather than takes ownership of inventions from inventors. There are other ways, too–for instance, by bequest, by a court’s finding of equitable title (an implied, compulsory assignment), by exclusive license that grants all substantial rights.

Bayh-Dole’s standard patent rights clause (at 37 CFR 401.14(f)(2)) requires contractors to require certain employees to make a written agreement to protect the federal government’s interest. Let’s explore this written agreement and its status within the federal contracting environment of specialty statutes, the Reagan patent policy that modifies the Nixon patent policy, and Bayh-Dole.

The written agreement requirement is oddly worded. Had Bayh-Dole been intended to apply directly to inventors, the law could (perhaps) have openly required inventors to disclose inventions or to assign or license inventions to the federal government or to contractors as may be provided for under the law. As the Supreme Court noted in Stanford v Roche, the law nowhere does this, and if Congress intended such an outcome, it would have to make its intent to do so manifestly clear. Continue reading →

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Federal law on inventions made with federal support, 2

Posted on February 4, 2019 by Gerald Barnett

Next, we add citations and qualifications to ground this framework.

Specialty statutes for specific federal purposes control federal claims of ownership of inventions made under federal contract.

See the list of such statutes at 35 USC 210. If a specialty statute controls, it takes precedence over any executive branch policy.

The Nixon patent policy as amended by Reagan’s executive order otherwise controls federal claims of ownership of inventions made under federal contract.

See 15 USC 2218(d), which requires federal agencies to use the Nixon patent policy for fire prevention and control research:

All property rights with respect to inventions and discoveries, which are made in the course of or under contract with any government agency  pursuant to this chapter, shall be subject to the basic policies set forth in the President’s Statement of Government Patent Policy issued August 23, 1971, or such revisions of that statement of the policy as may subsequently be promulgated and published in the Federal Register.

In 1983 Reagan issued a Memorandum to federal agencies to require the application of requirements “the same or substantially the same” as Bayh-Dole for research and development contracts to parties not otherwise addressed by Bayh-Dole:

To the extent permitted by law, 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.

Reagan got the chapter wrong–it’s Chapter 18, not 38. And his Memorandum would not be “permitted by law” if it was not published in the Federal Register as required by 15 USC 2218(d). Reagan fixed this in 1987 with executive order 12591, which cites the Memorandum and the Nixon patent policy, and was published in the Federal Register:

(4) promote the commercialization, in accord with my Memorandum to the Heads of Executive Departments and Agencies of February 18, 1983, of patentable results of federally funded research by granting to all contractors, regardless of size, the title to patents made in whole or in part with Federal funds, in exchange for royalty-free use by or on behalf of the government;

Bayh-Dole preempts the specialty statutes and the Nixon policy (i) when a federal contractor owns an invention:

See the Supreme Court decision Stanford v Roche (2011):

But because the Bayh-Dole Act, including §210(a), applies only to “subject inventions”— “inventions of the contractor”—it does not displace an inventor’s antecedent title to his invention. Only when an invention belongs to the contractor does the Bayh-Dole Act come into play.

Continue reading →

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Federal law on inventions made with federal support

Posted on February 4, 2019 by Gerald Barnett

First, the brief version:

Specialty statutes for specific federal purposes control federal claims of ownership of inventions made under federal contract.

The Nixon patent policy as amended by Reagan’s executive order otherwise controls federal claims of ownership of inventions made under federal contract.

Bayh-Dole preempts the specialty statutes and the Nixon policy (i) when a federal contractor owns an invention:

Because a federal contractor obtains assignment;

–or–

Because a federal contractor makes inventors become federal contractors who own their inventions.

and (ii) for all research or development contracts, requiring at least government license and the right to march-in.

Reagan’s executive order requires federal agencies to follow something almost like Bayh-Dole unless a specialty statute requires otherwise.

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Bush v Kilgore v the Old Order v Now

Posted on February 1, 2019 by Gerald Barnett

In 2005, Nicholas Steneck at the University of Michigan taught a course in the history of science–“Science, Technology and Society–1940 to the Present.” Here’s his lecture outline for the part about federally funded science and engineering during World War 2:

President Roosevelt was persuaded to ask Vannevar Bush for his views on how government ought to fund science after the war, given how things were done during the war. See Nathan Reingold’s account in “Vannevar Bush’s New Deal for Research: Or the Triumph of the Old Order.”

Prof. Steneck outlines two competing proposals, one from Senator Harley Kilgore, and the other from Dr. Bush: Continue reading →

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The new rule

Posted on January 29, 2019 by Gerald Barnett

I once created a game I called “Tradition.” I was trying to find games with simple rule sets. In Tradition, the only rule was you could make a rule or make a move. At the outset, then, the only move is to make a rule. A move that ends the game immediately is to make a rule that there can be no more moves. That’s equivalent to messing up the chess board, say. Otherwise, the challenge in Tradition is to create rules and moves that are worth conforming to and performing. In a way, Tradition is rather like an open-ended discussion or conversation, where there are tacit rules and moves that each participant recognizes and which may be brought into play.

In what sense is exploration and discovery more like an open-ended discussion than it is something “systematic” and “managed”? If we know what we are looking for, or where we are going to find it, we might mount a systematic effort to find it. Create a grid and start digging. But if there are countless combinations to consider, such systematic brute force methods don’t answer. Instead, we have to rely on intuition, luck, prepared mind, serendipity, accidents. We do things without “management” approval, outside what “management” can imagine. Such actions look imprudent, ill-advised, lacking theoretical justification, lacking good experimental design, outside established consensus, looney, a waste of effort, impractical, bad for one’s career, people will laugh or won’t listen.

You know, like thinking that stomach ulcers might be caused by a bacterium rather than stress. Or that continents drift. Or that hand washing can save mothers’ lives during child birth. Continue reading →

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Inventor freedom and the unexpected model of innovation, 1

Posted on January 28, 2019 by Gerald Barnett

Consider an alternative to the present university administrator mania for patenting. Let’s start with inventor freedom and then look once more at what I call Vannevar Bush’s unexpected model of innovation.

There are difficulties in the effort. First, the social sciences have a long history of proposing “models” of innovation. Anything anyone might say then can be fitted into a “model,” reduced to social scientific debate, and secured by experts in the field as a species of their own making. Just as one engaging in politics is expected to bluff and deceive, one engaging in what looks like policy discussion will be expected to propose a policy–or if not, a policy will be constructed from the discussion and then critiqued. What if, however, one proposes a policy that has as its aim to beat back policy? A bill of rights for freedom from policy. A sort of “policy-left,” a recursion on policy, a use of policy to limit policy. Not so much anti-policy policy as exploiting policy to prevent policy from exploiting anything else. The one thing policy chokes on is policy that argues that policy is not the best honesty. Continue reading →

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