If state university patent policy is actually state law . . .

Posted on July 31, 2018 by Gerald Barnett

Over the course of a number of years, Professor Galen Suppes was involved in litigation with the University of Missouri over rights to inventions. Among other things, the University claimed ownership of inventions that Suppes made at another institution before joining MU, which the other institution had released to him. When Suppes sought to appeal MU’s actions on this and other matters, the university interpreted its policy to preempt the appeal. The policy stated that a faculty member could appeal only if there was no litigation. The idea was a faculty member could not both appeal and sue. But MU pulled a fast one and sued Suppes. Then claimed that its suit against Suppes meant that Suppes lost his right to appeal. You can see where this goes for any appeal that MU might worry about losing. Just sue. No matter. The university has beaten back Suppes at every point.

Professor Dennis Crouch, at PatentlyO, has an interesting commentary on one aspect of the multiple cases, one in which Suppes sued the MU technology transfer office for claiming ownership of his inventions, preventing him from pursuing patents on these inventions, and then doing nothing with the inventions itself. You can see there’s a point to Suppes’s argument. It’s just that Suppes’s petitions were batted back and forth between federal court and state court. State court controls ownership of inventions. Federal court controls patent law and ownership of patents. The state, via MU, claims ownership of inventions and refuses to seek patents on them and refuses to release its ownership claim. State court sides, easily enough, with the state. Federal court declines to get involved.

But here’s Prof. Crouch’s comment:

One way to think about Suppes argument here is to consider the employment contract as a state law that applies to anyone who works for the state (at least this branch of the state). And, the state law says that the University (rather than the inventor) owns the inventions.

Continue reading →

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Mapping Bayh-Dole Flow of Control

Posted on July 30, 2018 by Gerald Barnett

I have updated this article from June 24, 2011  in light of the Stanford v Roche decision. In its previous version, the article sets out the idea that a federal agency has a right to claim title to inventions made in federal funding agreements–and this is indeed the case under various federal laws and the the Kennedy/Nixon executive branch patent policy. Bayh-Dole does not repeal that federal framework. Bayh-Dole preempts that framework (but for Stevenson-Wydler) when a contractor comes to own a patentable invention made under a federal funding agreement. That’s the definition of subject invention. If a contractor doesn’t own it, then it’s not a subject invention, and Bayh-Dole does not apply–but the framework otherwise preempted by Bayh-Dole does apply.

In my earlier account of Bayh-Dole flow of control, then, I have the idea that a federal agency acting under the prior federal framework, may assign to a university (or other federal contractor) the federal agency’s own right to receive inventions as deliverables. That is, the federal agency assigns its side of the federal contract involving inventions to the contractor. If inventors were obligated to assign to the federal government upon request, now they would be obligated to assign to the university upon request–provided that the university “elected” its option under the federal arrangement to receive title.

In that account, then, Bayh-Dole required federal agencies to permit contractors to choose to stand in for the federal agency with regard to inventions as deliverables. The university in essence may request ownership of any invention deliverable that otherwise would be up to a federal agency to request.

It’s a neat scheme–too bad for the drafters of Bayh-Dole that they didn’t think of it. But it’s also not the scheme that is at work in Bayh-Dole, as the Supreme Court made clear. Under Bayh-Dole, a federal agency must use the standard patent rights clause if it cannot justify an alternative clause. But the standard patent rights clause applies only to subject inventions–inventions owned by a contractor–not to any invention made in a project with federal support. Under the SPRC, inventors are obligated (if a university complies) to disclose subject inventions only. That is, inventors agree to disclose those inventions made under federal contract that their employer already owns. And with NIST delegated by the Department of Commerce to look after the SPRC, NIST has added that if the employer already owns an invention made in a project with federal support, then the inventor must agree to assign that invention to the employer. Well, that makes one’s head spin. Apparently, NIST is concerned that if a university has a claim of equitable title in an invention made in a project with federal support, then the inventor must be required to agree to assign legal title to the university, whether the university wants legal title or not.

I have therefore updated the slides. Continue reading →

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Only Bayh-Dole and University Research Enterprise, 5

Posted on July 30, 2018 by Gerald Barnett

We are working to explain a complicated scheme to circumvent federal policy and suppress a public discussion of the merits of doing so. Suppression of public discussion is a pretty good sign that the merits are lacking. Lack of evidence that things are happening in any way close to the aspirational rhetoric is another good sign. But no matter–we are trying to follow the logic and practice to understand the scheme. This stuff isn’t easy, just as any fraud scheme constructed by capable bureaucrats is not designed to be obvious. If it were obvious, it would not be such a successful fraud scheme.

Bayh-Dole may not quite be fraud, but it works on the same principles–sound too good to be true, flatter those in power, suppress reporting, report irrelevant stuff, deceive people with puffy language, disparage anyone who disagrees. If you demand a Bayh-Dole account be simple, so you can understand it without much effort or knowledge, then you are crying out for self-delusion and there are a number of people happy to service your need. Here, we are trying to characterize the canker and come to understand its policy physiology–the illogic by which it operates and what might be done about its dismal outcomes. If all you wanted was that Bayh-Dole sucks and we should shoo the rascals out, you need not have read this far.

It’s clear that Bayh-Dole does not provide a “uniform” approach to invention rights in federally funded research. Rather, Bayh-Dole offers an arbitrary, preemptive default patent rights clause that allows any contractor who gains ownership of an invention made in a project receiving federal support to preempt the purposes of everyone else involved in a given university research project undertaken (and judged by the federal government to be) in the public interest. That is–according to Bayh-Dole, the public purpose objectives of federal agencies in providing grant funding don’t matter. The objectives of university faculty don’t matter. The objectives of research collaborators don’t matter. The objectives of other sponsoring organizations don’t matter. The objectives of inventors themselves don’t matter. Once a university owns an invention made in a federally supported project, the only objective that matters, for Bayh-Dole, is that of the university administrator who controls the invention.

And look at the logic. If an open, declared public purpose should control the management of a subject invention, then there would be no particular need for a university administration to take control of it–the flexible, purpose-oriented Kennedy/Nixon patent policy easily handles the situation. Almost any public purpose one can imagine begins with making a patentable invention available to all involved in the research and all those who are intended to benefit from the efforts of the project. If a university administration comes to acquire ownership of any such invention, then it ought to do just what anyone else who comes to acquire ownership of that invention–manage it to achieve the public purpose of those engaged in the public supported project. Continue reading →

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Only Bayh-Dole and University Research Enterprise, 4

Posted on July 27, 2018 by Gerald Barnett

Consider, then, this (f)(2) written agreement requirement that’s outside Bayh-Dole but made a condition of federal funding agreements anyway. The (f)(2) requirement is most certainly not a private patent agreement between a university as employer and its faculty inventors. It is not the IPA’s required promise to assign inventions on which a nonprofit has decided to file patent applications. It is not an agreement already in place or asserted to be in place by a university patent policy. Unlike the IPA master agreement, which required one agreement with potential inventors to cover all subsequent NIH-funded research, the Bayh-Dole (f)(2) is required each time a funding agreement is put in place. Why would that be?

Ah, that’s the question. The (f)(2) agreement does two things. First, it extends the reach of the government’s interest through to the inventors themselves. If the university declines to “retain title” to inventions it has previously acquired (and so these inventions are subject inventions), then the federal agency may request title. But if the university has obtained only “equitable title,” then the federal agency must rely on the inventor’s (f)(2) agreement promise to establish the government’s rights in subject inventions–and therefore request assignment from the inventor. Of course, if the university does not have equitable title in such an invention, but the invention is otherwise within scope of the funding agreement (though not necessarily Bayh-Dole’s scope, which is in certain respects formally more narrow), then Bayh-Dole doesn’t apply at all, and the invention falls back under the regulations that Bayh-Dole otherwise preempts.

You can see, then, that Bayh-Dole is anything but uniform. It is a carve-out. There are then two regimes always in play. The flexible and public-purposed regime, and the “uniform” regime under Bayh-Dole that applies only when a contractor acquires an invention and that invention is within scope of Bayh-Dole. Continue reading →

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Only Bayh-Dole and University Research Enterprise, 3

Posted on July 26, 2018 by Gerald Barnett

We are working through Bayh-Dole without the cover of the political bluffery that permitted Bayh-Dole to become national policy. Without the bluffery, Bayh-Dole addresses the same situation addressed previously by the IPA program, which in turn took up the Harbridge House report. The Harbridge House report argued that no “uniform” patent policy would meet the needs of all federal agency research work and at the same time address the widely and even wildly varying attitudes regarding patents in industries and even among companies within a given industry. Harbridge House, then confirmed the Kennedy patent policy’s approach of flexibility and primary attention on those practices in particular dealings that best advanced the public interest.

The Kennedy patent policy (1) identified four circumstances in which the government ought to take ownership of inventions regardless; (2) a broad situation in which companies with established commercial positions should be allowed to keep whatever inventions they did acquire, provided they timely develop those inventions for use; (3) and for the rest, an agency should determine whether to grant a request for private ownership of a patent, whether at the time of an award or after an invention has been made.

The four Kennedy default ownership circumstances became exceptional circumstances in Bayh-Dole–difficult to get rather than fundamental public policy. Only the DOE’s nuclear program has managed to be incorporated as a default conditional in the present standard patent rights clause. Continue reading →

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Only Bayh-Dole and University Research Enterprise, 2

Posted on July 25, 2018 by Gerald Barnett

We have worked through the claim that Bayh-Dole created a “uniform” federal policy with regard to inventions made in federally supported research or development. Bayh-Dole creates an arbitrary default for federal policy that applies only when a contractor acquires ownership of an invention made in federally supported research or development. Bayh-Dole permits the default to be changed if a federal agency can justify a different invention policy in any given circumstance, but Bayh-Dole also makes it difficult for an agency to justify any movement from the default.

You might say that Bayh-Dole makes it difficult for federal agencies to manage inventions in a purposeful way directed at a public benefit. No public domain, no research commons, no open tools, no standards formation, no development of industry-ready technology that combines the work of multiple projects at multiple institutions. Regardless of what a federal agency may have as objectives, by default any public benefit–when a contractor gains ownership of an invention–must come through private exploitation of monopoly patent rights without public oversight or accountability. Bayh-Dole makes reports of invention use government secrets, and Bayh-Dole allows federal agencies to waive or ignore pretty much every substantial requirement for public benefit.

Before Bayh-Dole, the federal government operated with a policy that was flexible in the general case with a number of statutes directing invention practice for specific funding situations, such as those having to do with space technologies or nuclear energy. No one had problems with the federal approach but for

(1) university patent brokers, who were bothered by delays in federal agencies trying to decide if it was really good for the public that a university patent broker gained the right to deal in a patent monopoly on a given invention, and

(2) university research administrators, who chimed in that it was just impossible for them to know what to do when faculty mixed funds from two different federal agencies which operate with different invention management requirements, and

(3) pharmaceutical companies, which had staged a boycott of federally funded inventions in the area of medicinal chemistry because they objected to working with compounds–screening, synthesizing–that were to be made available to all. Continue reading →

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Only Bayh-Dole and University Research Enterprise, 1

Posted on July 24, 2018 by Gerald Barnett

Let’s talk only Bayh-Dole and university research. Companies didn’t need Bayh-Dole for the most part, since executive branch patent policy allowed federal agencies to permit company contractors to keep inventions made under federal contracts when they acquired those inventions. There were exceptions–such as for space technologies and nuclear weapons and propulsion–but in these cases there wasn’t any private market to speak of, and in any case, if an invention were seriously worrisome, the federal government could slap a secrecy order on the patent application and no patent would issue for private exploitation. As the Harbridge House report in 1968 pointed out, many companies had little use for the patent system. Only companies in a few industries considered patenting inventions to be a critical practice. Companies didn’t much need Bayh-Dole–they already had a decent deal.

Similarly, contract research organizations did not need Bayh-Dole. Their business model included giving up inventions made under contract to the commissioning party. CROs exist to do research, not to mess around trying to commercialize results under a patent monopoly, especially one withheld from the organizations that contract with them for work. For a CRO, Bayh-Dole’s offer to let them keep what they try to hold back as a deliverable is an empty gesture. A CRO exists to do research for others, not to go into business for itself in competition with research sponsors, and certainly not to deal in patent monopolies. There’s no better way for a CRO to destroy its business than to license a patent exclusively in a field of its research expertise. Every other potential research client will walk away. CROs–for-profit or nonprofit–did not need Bayh-Dole. To the extent that universities step into the CRO model, they also sour their industry collaborations by attempting to deal in patent monopolies. To the extent that Bayh-Dole encourages them to deal in patent monopolies anyway, Bayh-Dole sours university-industry collaborations.

As for federal agencies such as the Department of Agriculture or Department of Transportation or Department of the Interior that aimed to develop new products and then release them for general manufacturing and use, companies did not care about holding patent rights as one player among many in the development activity–they would each get access to the inventions developed by everyone in the form of a completed product ready for production, use, and improvement. Everyone could feed on the competitive value of improvements while minimizing their own financial contribution to the overall effort. Seems really peachy when you think about it. They also didn’t need Bayh-Dole.

Companies in these areas of federal research and development did not need Bayh-Dole. Continue reading →

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Another garbled account of Bayh-Dole

Posted on July 23, 2018 by Gerald Barnett

A new article considering Bayh-Dole asks whether it’s time to rewrite Bayh-Dole. That’s a legitimate question to ask. Unfortunately, the article gets wrong much about Bayh-Dole the way it is. But even a garbled article can prompt a discussion that helps us frame better research enterprise policy. If you want to self-delude about policy, then read stuff by AUTM, AUU, APLU, BIO, PhRMA, or IP Watchdog. If you want to understand Bayh-Dole and related federal law and build a framework for considering policy changes at the federal or university level, then you might read on.

Consider:

The landmark Patent and Trademark Law Amendments of 1980 set the background for how federally funded research moves from laboratory to industry by granting inventors and their research institution the intellectual property rights.

Bayh-Dole does not grant anyone intellectual property rights. See Stanford v Roche. Bayh-Dole applies only after a party to a federal funding agreement has acquired ownership of a patentable invention made under that agreement. Continue reading →

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AUTM’s invitation to delude yourself, 5

Posted on July 20, 2018 by Gerald Barnett

We turn then to the final claim made by AUTM in its “talking points”–the stuff any advocate of Bayh-Dole ought to be repeating to legislators and faculty and anyone else appearing to lack sufficient self-delusion–that none of the fakery presented in the talking points paragraph would be possible without Bayh-Dole:

This would not have been possible without the Bayh-Dole Act.

History. Before the Bayh-Dole Act, the NIH and NSF operated IPA programs that required universities and other nonprofits to take ownership of any invention made with agency support whenever the university or nonprofit decided to file a patent application. The NIH program operated (in a revived form from 1968-1978, the NSF program started in the mid-1970s). Those programs were shut down as ineffective and contrary to public policy in 1978. Bayh-Dole was drafted by the same folks who did the IPA program, and introduced as legislation the year after the IPAs went down.

Everything AUTM attributes to Bayh-Dole was done and could have been done under an IPA program. See the history and critique by David Mowery et al. in Ivory Tower and Industrial Innovation. Moreover, the Kennedy and Nixon executive branch patent policies provided for contractors to own inventions, subject to federal agency approval for those contractors that didn’t have technical capability and a commercial market position–such as universities most universities did not for most inventions made in work they hosted. So even without an NIH or NSF IPA program (with its own subterfuges and end-runs), universities could deal in patent monopolies if they really wanted to. Furthermore, prior to Bayh-Dole and outside of the IPA programs, drugs and vaccines were developed with federal support but not by means of a university-brokered trade in patent monopolies. The Salk vaccine for polio, for instance. Or drugs to treat childhood leukemia.

AUTM recites a fake history, fake outcomes, calls it a success, attributes it all to Bayh-Dole. Pretty cool move.  Continue reading →

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AUTM’s invitation to delude yourself, 4

Posted on July 19, 2018 by Gerald Barnett

We are working through an AUTM effort to get readers–and especially people wishing to influence federal policy makers on matters of inventions and patents made in faculty-chosen and led research–to self-delude themselves about Bayh-Dole. AUTM cites a GAO report from 1998 to back up its “talking points” about Bayh-Dole, so we have done a dive into that report to see whether AUTM’s case holds up. As you might expect by now, AUTM uses its expert position to cheat at Bayh-Dole, figuring folks won’t notice.

Here’s another finding from the GAO report:

Despite the perception that Bayh-Dole is working well, none of the federal agencies or universities we contacted evaluated the effects of Bayh-Dole.

Isn’t that an amazing finding? No-one had evaluated the effects of Bayh-Dole. But they said it was a wild success. And AUTM cites this study to support their claim that Bayh-Dole is a wild success. This is the best they can do! Continue reading →

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