Bayh-Dole Basics 6: enforcement

Posted on July 2, 2018 by Gerald Barnett

Back in February and March 2018, Research Enterprise published a series on Bayh-Dole basics. Here’s one more entry in that series.

As a first approximation, there is no enforcement of Bayh-Dole. Bayh-Dole is a do WTF you want law. University talk about compliance is for show.

  • Bayh-Dole establishes a public covenant that runs with property rights in patents on inventions arising in federally supported research and development, but no-one bothers with it.
  • Bayh-Dole authorizes standard patent rights clauses to be used in all federal funding agreements with nonprofits and small businesses for experimental, developmental, and research work, but almost every provision of these clauses can be waived or is ignored.
  • Bayh-Dole authorizes federal agencies to grant exclusive licenses (to the point of assignment) in inventions the federal government owns, but there is no public oversight of agency licensing programs.
  • Bayh-Dole requires invention use reports to be held as government secrets, provides no point of access for public or inventor appeals, sets out virtually no penalties for breach of the patent rights clause, and designates no one to enforce patent rights clauses.

A federal agency’s remedy for a university failing to report a subject invention is to request title to the invention. The agency must make this request within 60 days of “discovering” the failure to report. Otherwise, most everything else arises as a conditional within the standard patent rights clause, may be waived by the federal agency, the federal agency has no obligation to act on the rights provided it by the patent rights clause, and if a federal agency does act, it is to require a correction (such as amending a patent to carry a proper notice of federal funding and rights, or issuing a required government license).

Thus, while federal agencies generally comply with Bayh-Dole, there is no mandated government oversight of their behavior. Enforcement of the statute is largely a matter of university administrative objection and complaint.

But universities almost never comply with the Bayh-Dole public covenant (35 USC 200) or the standard patent rights clause (37 CFR 401.14), and their non-compliance is rarely enforced–and not at all for key provisions material to actual research innovation practice.

In particular, universities ignore restrictions on subject invention assignments (they hide invention assignments in exclusive patent license agreements); ignore the written agreement requirement to protect the government’s interest (they attempt instead to claim ownership of all inventions); and ignore restrictions on the use of income with respect to subject inventions (deducting unallowable expenses and using the balance as they please).

In all, there is no enforcement, there is very little to comply with that cannot be waived, and universities ignore key provisions that if followed would have a substantial effect on their patent policies and licensing practices.

 

 

 

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Utilization and commercialization in Bayh-Dole

Posted on June 29, 2018 by Gerald Barnett

Bayh-Dole’s stated policy and objective is utilization of inventions arising in federally supported research or development–not specifically commercialization:

. . . use the patent system to promote the utilization of inventions arising from federally supported research or development . . .

In the implementation of the federal licensing side of Bayh-Dole (37 CFR 404), this is the only statement of policy that is repeated as the policy control for management of inventions owned by the federal government. One may indeed “commercialize” an invention. That certainly is one form of utilization. However, it is not the only form of utilization, not necessarily the best form of utilization, not necessarily the first form of utilization, and nothing in Bayh-Dole gives a mandate that commercialization is the desired outcome. Utilization is the general standard. Practical application–utilization with benefits available to the public on reasonable terms–is the standard set out in the march-in procedures.

Furthermore, the term commercialization is itself utterly ambiguous. It could mean the production and sale of products incorporating or based on patented inventions. But commercialization also is used to mean the attempt to get someone to produce and sell products–a “process” so to speak, rather than a result. University technology transfer diagrams of the commercialization process typically end at licensing, not a the production and sale of a product. Perhaps that’s because production and sale of a product under a university patent license is so rare that even the blandly dishonest PR folks in universities hesitate to claim it. And commercialization as a process can mean merely handing–offering to hand, hoping to offer to hand, having a policy that makes it possible to hope to offer to hand–patents to speculators who then would be given the mandate to make the attempt to produce or sell products–or at least generating a “revenue stream” (i.e., make money) by exploiting the patent rights in some way (even suing companies that are utilizing a patented invention, if that’s what it takes). Continue reading →

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Bayh-Dole for university faculty

Posted on June 28, 2018 by Gerald Barnett

Let’s put Bayh-Dole plainly for university faculty.

  • Under federal patent law, inventors own their inventions.
  • Federal patent law does not require inventors to use the patent system.
  • Federal patent law does not require inventors to assign their inventions.
  • Bayh-Dole is part of federal patent law and does not change these aspects of federal patent law.

Thus, under Bayh-Dole, faculty inventors own their inventions, even when those inventions are made in projects receiving federal support. Under Bayh-Dole, faculty inventors have no obligation to use the patent system. Nothing in Bayh-Dole requires a university to take ownership of a faculty invention or gives a university any special privilege, right, or mandate to take such ownership.

Bayh-Dole applies only after a federal contractor has acquired ownership of an invention. There are two ways for such a thing to happen:

  1. an inventor assigns an invention made in work supported by the federal government to a federal contractor; or
  2. the federal contractor makes inventors parties to the funding agreement and therefore makes them also contractors, so all their inventions are subject inventions, even if not assigned to the prime contractor.

Is that clear enough? We can go down rabbit holes filled with university gophers and moles, but do we have to? Yes, of course we do. That’s the only way to flush out the gophers and moles. Continue reading →

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Three ways Bayh-Dole advocates abuse their audiences

Posted on June 27, 2018 by Gerald Barnett

Folks who advocate for Bayh-Dole generally abuse their audiences three ways.

First, they recite fake history. 

Bayh-Dole did not make any great change in ownership of inventions made in projects receiving federal support, especially for universities.

Prior to Bayh-Dole, contractors could own such inventions.  The Kennedy and Nixon executive branch patent policies expressly permitted contractor ownership. If a contractor had an established non-governmental commercial position, for instance. Or if a contractor otherwise petitioned for ownership and a federal agency determined that such ownership might advance a public purpose. The Department of Defense notably routinely permitted contractors (many of which had established non-governmental commercial positions) to own inventions made in projects receiving federal support.

For nonprofits, the NIH and NSF Institutional Patent Agreement programs permitted nonprofits to own inventions made in projects with federal support. The requirements for ownership were in many ways even more favorable than those of Bayh-Dole, with less fussy paperwork. The one place then that we should *not* expect to see much change in university invention practice based on Bayh-Dole is with NIH and NSF funding–the sources of the majority of most universities’ federal funding. Continue reading →

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The rule of law

Posted on June 26, 2018 by Gerald Barnett

Let’s look at Bayh-Dole and subject inventions from another angle. Same material as in our last article, developed a bit differently.

Nothing in federal patent law requires an inventor to use the patent system. Nothing in federal patent law vests ownership of an invention in anyone other than the inventor. There’s no “invent for hire” as there is in patent laws elsewhere. Now look at Bayh-Dole. Bayh-Dole is part of federal patent law. What do you expect?

Yes, of course. Bayh-Dole does not require inventors to use the patent system. And Bayh-Dole does not force inventors to give up ownership of their inventions.

If we go looking through Bayh-Dole, we find these points to be true. There’s nothing in Bayh-Dole that forces inventors to file patent applications or to assign their rights in an invention to anyone.

The Supreme Court in Stanford v Roche was clear: Bayh-Dole applies (for its contracting part) only to subject inventions. A subject invention is an invention owned by a contractor and which is otherwise patentable and made in work receiving federal support.

If a contractor is an organization, then the contractor, to come within the scope of Bayh-Dole, must acquire an invention through some means other than Bayh-Dole, since Bayh-Dole offers no means to acquire the invention. Patent law does not force inventors to give up their inventions nor does it force inventors to use the patent system.

A subject invention then is an invention for which an inventor has already given up ownership, not one that an inventor is required to assign to a contractor.

Are you with me so far? Continue reading →

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Bayh-Dole applies only to subject inventions

Posted on June 25, 2018 by Gerald Barnett

Bayh-Dole has three parts–a contracting part, a federal licensing part, and a general part. The general part includes 35 USC 200 (statement of policy and objectives), 35 USC 210 (precedence and general requirements), and 35 USC 211 (antitrust). When people talk about Bayh-Dole, however, the most often are referring to the contracting side–35 USC 202-204. They also ought to include the definitions at 35 USC 201, which are mostly all directed at contracting. When people say Bayh-Dole applies to all federally funded inventions, they are wrong in multiple ways. Bayh-Dole applies to federal agencies, not inventions, requiring the agencies to use definitions and deliverables in their funding agreements. Bayh-Dole’s contracting provisions apply to subject inventions, not all inventions. And the inventions that matter are not only those made with federal funding, but those made in work that receives federal funding, even if some invention made within the scope of that work was not made with federal funds.

Let’s get down to it, then, on contracting Bayh-Dole.

Bayh-Dole applies only to inventions owned by a contractor

Bayh-Dole applies only to subject inventions. Supreme Court:

the Bayh-Dole Act . . . applies only to “subject inventions”—“inventions of the contractor”

Subject inventions are patentable inventions made in work under a funding agreement that are owned by a contractor–any party to the funding agreement. It is the contractor’s ownership that brings an invention within the scope of Bayh-Dole. It is not merely the fact of federal funding or even that an invention is or may be patentable. And nothing in Bayh-Dole provides a mechanism, mandate, or right for an invention that is not a subject invention to be turned into one. Nothing in Bayh-Dole authorizes a change in ownership of any invention.

Bayh-Dole is part of federal patent law. Nothing in federal patent law compels an inventor to use the patent system. Nothing in federal patent law vests the ownership of inventions other than with the inventor. We might expect, then, that Bayh-Dole also does not require inventors to use the patent system and does not divest inventors of the ownership of their inventions. No matter what words we might encounter–even from dazed and confused NIST chief legal counsel–the reasonable interpretation will be one that does not require the use of the patent system and does not divest inventors of their inventions. And, indeed, neither Bayh-Dole nor the standard patent rights clause authorized by Bayh-Dole requires inventors to use the patent system or to assign their rights to any other party. Continue reading →

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The AUTM CEO’s Speech, Fitt 4

Posted on June 22, 2018 by Gerald Barnett

We are about done with the AUTM CEO’s speech at the NIST symposium on “unleasing American innovation.” Yes, it is trash, so we are trashing it. But there’s a purpose here. It’s not just that there is a difference of opinion–CEO says “$67 billion” in research, context-free, and he is entitled to his opinion, but who should give a rip about his opinion if it is uncoupled from reality? It may be his opinion, but it is not a professional opinion. It is an eyes rolled back in the head bozonet opinion, a hope, a dream, an administrative habit of self-glory, or in this case AUTM-glory.

Reminder: for NIH and NSF university research funding, Bayh-Dole changed nothing. Oh, the paperwork. Nothing. The NIH and NSF used the IPA program restarted in 1968 to end-run the Kennedy/Nixon executive branch patent policies. The NIH had over 70 universities and nonprofits signed up to its IPA program when the IPA program was shut down in 1978 for being ineffective and against public policy expectations. Bayh-Dole–introduced 1979, failed initially, passed with scheming late 1980, effective mid-1981–merely replaced the IPA program with new bureaucratic paperwork, similar gesturing toward public interest, and the same implied fundamental premise to take inventions from inventors and slide them over as patent monopolies to a university’s favorite companies. We will meet this implied fundamental premise stated expressly by the AUTM CEO in a few minutes.

If one wants to look for a Bayh-Dole effect at universities, one has to look at something other than NIH and NSF projects producing inventions. The effect will have to be in DOE funding or NASA funding or Department of Interior funding, where Bayh-Dole made a substantive change in invention management regulations. But of course, those agencies provide only a tiny portion of most universities’ federal research budget.  Continue reading →

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The AUTM CEOs Speech, Fitt 3

Posted on June 21, 2018 by Gerald Barnett

We are working through a recent talk by the CEO of the Association of University Technology Managers at a symposium hosted by NIST on “unleashing American innovation.” The AUTM CEO now turns to a deeper neurosis that has almost nothing to do with Bayh-Dole’s effects:

At the end of the day, it is the companies’ reliance on a predictable and fair patent process that encourages the company to license those nascent inventions from public sector research institutions like universities and hospitals.

This is twisted, and nonsense. Bayh-Dole deals with requirements after a contractor finds a way to acquire an invention made in work receiving federal support. Although Bayh-Dole is part of federal patent law, it does not alter the “patent process.” Not ownership of inventions. Not the patent application process. There’s nothing then for companies to rely upon that’s any different than otherwise. The “process” of patenting that comes into play has next to nothing to do with Bayh-Dole–which applies to federal agencies–and even next to nothing to do with the standard patent rights clause. The “process” that matters has to do with how owners of subject inventions behave. For that, Bayh-Dole asserts a public covenant that runs with each invention arising in federally supported research or development and includes a public interest apparatus in the law and in the standard patent rights clause–it’s just that no one bothers to comply with any of this but for the most superficial paperwork requirements.

Bayh-Dole does nothing to dictate the disposition of patents held by federal contractors, other than to create “uncertainty” about monopoly positions when a contractor doesn’t use an invention or is unreasonable in its exploitation of an invention. Terrible thing–sure is lucky that no federal agency has ever bothered to act in the public interest in breaking up monopoly positions for nonuse, unreasonable use, or for any other public interest reason.

A “predictable and fair patent process” might be a “fair, reasonable, and non-discriminatory license.” That would encourage *lots* of companies to “license” a given invention. But if there were no patent at all, then there would be no need to take a license at all. And if the federal government owned each invention and dedicated it to the public, then we’d have an expanded public domain for basic research results. Pretty good deal. Pity that the folks at AUTM have killed the research public domain.

I have yet to hear a company official say anything like “whew–it sure is great that I can get to negotiate for six months with university bureaucrats for a 35-page exclusive patent license that forces me to commercialize an invention rather than just gaining access to this invention from reading a published paper or talking with the inventor. Thanks be to Moloch for Bayh-Dole!” Continue reading →

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The AUTM CEOs Speech, Fitt 2

Posted on June 20, 2018 by Gerald Barnett

We are working through a speech that the CEO of the Association of University Technology Managers gave at a recent symposium sponsored by NIST with the dubious title “Unleashing American Innovation.” Our CEO has made pompous claims about his organization and recited a fake history of federal ownership of inventions made in extramural research to back up those claims, along with a presumption that inventions made in research hosted by universities of necessity must be university inventions. We reach the CEO’s pivotal question about pompous claims, fake history about the government, and presumptions about university ownership expectations:

So the question is, “Why is that important?”

The “that” here is so full of ambiguity. We might ask, Why is this fake history and chronic administrative delusion important? The fakery and lies are important because without them, people would see rather clearly the nature of the bargain that Bayh-Dole proposes, which is nothing like what the AUTM CEO depicts.

We read on:

Well, AUTM has been collecting technology transfer statistics since 1991.

And before 1991, AUTM also collected technology transfer statistics, just in a different form. But “technology transfer statistics” is not the same as statistics specific to performance under the Bayh-Dole Act. Technology transfer is not even specific to patentable inventions–it may include software, biomaterials, and know-how. Technology transfer may involve research-based inventions and inventions that have not been made in research settings. Technology transfer can involve inventions in research funded by industry sponsors where the sponsors hold a license in any results upfront, without any need for there to be patents or marketing or commercialization. And for AUTM, keep in mind that a “commercialization license” is any deal resulting in $1,000 or more, regardless of whether anything “licensed” is ever used, developed, or sold as a product. So take a breath. Continue reading →

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The AUTM CEOs Speech, Fitt 1

Posted on June 19, 2018 by Gerald Barnett

As part of NIST’s recent symposium on “unleashing American innovation,” the CEO of the Association of University Technology Managers (AUTM) read a talk. Let’s work through his talk and see what we can learn. I have made a transcript so you can follow along.

All right. Thank you. As Marcia has mentioned, I’m the CEO of AUTM and we are the nonprofit leader in supporting the development and commercialization of university and nonprofit research that is changing the world.

It’s weird to hear someone claim that a professional lobbying organization is “the leader” in “supporting” anything. What does it mean to “lead” in “supporting” “commercialization” of “research”? It’s rather like a cheerleader taking credit for the football team by talking about being better at cheers than others. The strange word among all these strange words (and thus the quote marks) is “supporting.” One might think that “supporting” suggests that university inventors might turn to AUTM for assistance when they–the investigators–see a reason to develop or commercialize their “research” (or, perhaps, patentable inventions). That’s the idea of “support”: “It looks like we need some cheerleaders here, folks–let’s contact AUTM, the leader in that sort of thing.”

“Support” implies that AUTM is not the primary actor–that some non-AUTM actor makes the decision to develop and commercialize and some non-AUTM actor does the actual work. Since AUTM’s members are mostly university licensing officers, the AUTM CEO’s use of “supporting” further suggests that AUTM’s members are also involved in support, and aren’t the ones making the decisions and doing the work. In part, this suggestion is entirely spot on–AUTM’s members don’t, for the most part, have the standing to decide what “research” should be developed and commercialized. But in another part, this suggestion is almost entirely wrong, because many AUTM members will assert that they have the responsibility and authority under their universities’ patent policies to make such decisions on behalf of the university and therefore they do not merely “support” development and commercialization–they do the development and commercialization on behalf of their universities.

Perhaps the AUTM CEO means that AUTM the organization “supports” the AUTM members in their attempts to do it. AUTM cheerleads the cheerleaders who claim that they should decide what the football team will do next. After all, if one decides the play on the field, it is so much easier to plan out the proper cheers.

The CEO in fact has it backwards–universities pay the dues for their licensing professionals to join AUTM and attend AUTM’s conferences and those licensing professionals make most of the presentations. AUTM is the leader in extracting money from universities–the universities support AUTM, not the other way around. If AUTM went out and raised its own money, and used that money to assist universities, then perhaps we could talk about AUTM’s support.

And even if one allowed AUTM its claim that it supported “development and commercialization of university and nonprofit research,” we would still have to point out that virtually none of that “research” is in fact “commercialized.” Most of it stales behind patent paywalls, not available for direct access by industry, not even for research purposes. For AUTM, “commercialization” means creating patent positions and offering these for exclusive licensing. Supporting “commercialization” means encouraging universities to find ways to create more patent positions. What is “commercialization” where nothing comes out the other end? Constipalization?

As for the tag “that is changing the world”–what does that tag modify? Research? Or the development and commercialization (of research)? Or is it the act of  supporting? Perhaps it doesn’t matter–the AUTM CEO wants everyone to understand that AUTM supports stuff that changes the world. The implication, of course, is that those changes are a good thing. But the CEO could be correct in his claim and the changes in the world could be nasty ones. Continue reading →

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