The NIH’s View of Bayh-Dole Compliance, 3

Posted on May 22, 2018 by Gerald Barnett

We are working through NIH guidance on Bayh-Dole reporting requirements. In the process we are making note about how thoroughly NIH misrepresents Bayh-Dole. Sloppy? Indifferent? Does it matter?

The next bit is going to be a bother:

If it helps, just assume that NIH has things backwards. Then it almost makes sense. The Supreme Court made it clear in Stanford v Roche that inventors own their inventions, even those made with federal support. Bayh-Dole does not disturb that ownership. Bayh-Dole gives no special privilege for anyone to take ownership of inventions from inventors. Bayh-Dole manages the priority of claim between a grantee/contractor and the federal agency only once a grantee/contractor has taken ownership of an invention from an inventor. Continue reading →

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The NIH’s View of Bayh-Dole Compliance, 2

Posted on May 21, 2018 by Gerald Barnett

A while ago, I worked through a slide in an NIH presentation about Bayh-Dole compliance. The conclusion there was that the presentation was sloppy, lacked important details, and misrepresented the Bayh-Dole standard patent rights clause. There are other accounts of Bayh-Dole compliance from NIH. Let’s look at another, the NIH version of the iEdison “Intellectual Property Reporting Guidelines.”

In this document we have a table that shows the differences between paper and iEdison reporting, along with the various requirements. Take a look at the first requirement:

Let’s work through this restatement of the (f)(2) written agreement requirement. There’s much that is not compliant. First, the written agreement at (f)(2) of the standard patent rights clause is specific to subject inventions–not “all” inventions but only those inventions owned by the contractor, the “grantee.” The NIH ignores the distinction–and just where making that distinction would matter. The NIH goes further out on a limb:

The agreement to be obtained by the grantee/contractor organization is that the employee will abide by the terms of the patent rights clause.

The (f)(2) agreement has no such requirement. Here’s what does happen: when a contractor/grantee complies with the (f)(2) written agreement requirement (no one does–ha!), it makes each employee a party to the funding agreement. The part of the funding agreement that becomes the employee’s personal responsibility is to disclose subject inventions (we will get to this) to the contractor/grantee, to sign papers to permit patent applications to be filed, and to sign papers to establish the government’s rights in subject inventions. NIST has added an additional obligation, that the employee must assign subject inventions to the contractor/grantee, which makes garble of the written agreement. Continue reading →

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Bayh-Dole Up Your Counsel, 4

Posted on May 18, 2018 by Gerald Barnett

We are working through the UpCounsel account of Bayh-Dole. It’s not all terrible. There are some useful points to come. Overall, however, the work here is sloppy, misleading, not what one would expect for a barrel full of part-time legal help offering their services.

Does the Bayh-Dole Act Have Any Controversies?

One of the lesser-known details of this law is that Bayh was a lame duck member of the Senate at the time. His term had ended after he lost his re-election bid to Dan Quayle, who would later become Vice President. This act was Bayh’s last major legislation, but it had political opponents.

Yup.

Outgoing President Jimmy Carter considered a pocket veto. He didn’t believe that such important legislation should happen during a lame duck session. He also wanted a more comprehensive law. Eventually, Carter’s advisers persuaded him to sign the bill, which he did on December 12, 1980.

And that proposed law was backed by Sen. Harrison Schmitt, the former astronaut, with many co-sponsors.

Since Bayh and Dole had to work together quickly, the law had a few omissions.

No–they had plenty of time, starting with the introduction of S. 414 in 1979. Omissions? What omissions?

The largest one is how the law applies to nature and the human body. The Supreme Court eventually ruled in Molecular Pathology v. Myriad Genetics that a business couldn’t claim ownership of genes.

This is an issue for patent law, not Bayh-Dole. Bayh-Dole applies to federal agencies. Perhaps UpCounsel thinks of these as “government bodies.” There we go. Clueless garble.

Continue reading →

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Bayh-Dole Up Your Counsel, 3

Posted on May 17, 2018 by Gerald Barnett

I won’t belabor the problems in the next section of UpCounsel’s account of Bayh-Dole. The major provisions of Bayh-Dole are 1) a public covenant that runs with patent property rights on inventions arising in federally supported research or development–and specifically on a new category of patentable invention defined in federal patent law call the subject invention; 2) authorization for federal agencies to deal in exclusive licenses for inventions acquired by the federal government; 3) restrictions on how federal agencies can contract for inventions as research deliverables, including the specification of provisions to be included in standard patent rights clauses unless a federal agency can justify an exception.

What Are the Major Provisions of the Bayh-Dole Act?

The major provisions of the Bayh-Dole Act are as follows:

All non-profits can retain a full claim on innovations made with the help of federally-funded research. Universities also fall into this category. The only exception is if the government states upfront that it will keep ownership of any innovations discovered during the project.

Nonprofits can choose to keep title to federally supported inventions that they have otherwise acquired ownership of. There are multiple exceptions to the standard patent rights clause. The “exceptional circumstances” determination does not merely involve the government taking ownership–any change to the standard patent rights clause must follow the exceptional circumstances determination.

Universities can and should file patents on their innovations. Otherwise, the government retains the right to take control of the invention. The Bayh-Dole Act attempts to legislate universities into more aggressive reactions to innovation.

There is no “can and should.” If a university has obtained ownership of a federally supported invention, it has an obligation to file a patent application. There is absolutely nothing in Bayh-Dole that “attempts to legislate universities into more aggressive reactions to innovation.” That’s laughable, if even comprehensible. Bayh-Dole is directed at federal agencies. At best (where at best may mean less horrific), Bayh-Dole prevents federal agencies from readily requiring inventions as research deliverables and makes it more difficult for those in federal agencies who desire to grant broad public access to such inventions to be able to do so. Continue reading →

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Bayh-Dole Up Your Counsel, 2

Posted on May 16, 2018 by Gerald Barnett

This is UpCounsel’s 11 minute Q & A on the Bayh-Dole Act. We are working through it, Mystery Science Fiction Theatre 3000 style. Are you Joel? Am I Tom Servo? And who is the mad Dr. Forrester who keeps making us deal with these Bayh-Dole fakographic/FAQ/Q&A “summaries”?

What Does the Bayh-Dole Act Do?

The federal government funds countless projects in a given year. Some of them lead to innovations worthy of patents. Prior to this legislation, inventors of any such innovations had to sign over ownership to the United States.

“Countless” is hype. Inventions, not “innovations.” And what makes an invention “worthy” of a patent other than that it is new, non-obvious, and useful? Oh–perhaps it is whether a university administrator thinks the patent can be exploited to make money. In any event, this part is garble.

As for the second sentence, it simply isn’t true. The IPA program permitted over 50 universities and nonprofits to take ownership of inventions made with NIH and NSF funding–the primary funding sources for universities. For other inventions, the executive branch patent policy permitted agencies to allow nonprofits to retain ownership of inventions based on a case-by-case determination that such ownership would be in the public interest. The objection raised by Bayh-Dole advocates was that these determinations could take a long time, and federal agencies did not always agree that a private patent monopoly was in the public’s interest. Bayh-Dole precludes case-by-case determinations and arbitrarily requires federal agencies to allow nonprofits to retain ownership of inventions made in projects receiving federal support, regardless of any given nonprofit’s capability to manage inventions, its past performance, and the purposes of the federal funding.

With the introduction of this legislation, the federal government negated its claim on patents. As of 1980 [sic], inventors from small businesses working for the government could earn patents. Non-profits that receive federal funding can also gain patents.

Bayh-Dole limits how federal agencies can claim inventions arising in projects receiving federal support. Bayh-Dole allows federal agencies to determine there are exceptional circumstances and require assignment of inventions. It’s just that Bayh-Dole requires a convoluted, contestable process for that determination. Continue reading →

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Has NIST finally created a foobar standard patent rights clause?

Posted on May 15, 2018 by Gerald Barnett

Words in laws ought to mean something.

According to Bayh-Dole’s standard patent rights clause, the initial contractor must require its employees to make a written agreement to establish the government’s rights in subject inventions.

But, but, but . . . subject inventions are defined as ones already owned by the contractor.

Inventors then must have no rights in subject inventions with which to establish the government’s rights. On the face of it, the written agreement here makes an empty requirement: inventors must agree to establish the federal government’s rights in inventions for which they don’t have any rights to establish the federal government’s rights.

Same for the NIST addition of an assignment requirement. Inventors have nothing to assign to the contractor, either, if a subject invention is already on that the contractor has already acquired. The contractor is required by NIST to make inventors promise to assign the inventions that the inventors have already assigned.  Continue reading →

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Bayh-Dole Up Your Counsel, 1

Posted on May 15, 2018 by Gerald Barnett

A lawyer staffing service and web site, UpCounsel, has a friendly page that offers “everything you need to know” about the Bayh-Dole Act. They promise you can learn what you need with an “11 min read.” I think it’s something of a bait page, slapped together to get search engine hits rather than to provide anything close to accurate information about Bayh-Dole. Let’s see.

What Is the Bayh-Dole Act?

The Bayh-Dole Act gave universities, non-profits, and other small businesses the ability to earn patents to inventions. This law settled a longstanding issue about the patenting of federally-funded projects.

Bayh-Dole gives no-one any “ability” to “earn patents.” Nor did it settle any issue regarding patenting of “projects.” There’s no way you would learn anything from these two sentences, and if you already know what they were “intended” to mean, then you could not possibly learn anything new from them, as they merely remind you of what you already know.

The Bayh-Dole Act establishes patent property rights pertaining to inventions arising in federally supported projects (35 USC 200) and which are owned by a party to the funding agreement. We might call that a public covenant that runs with such inventions. Patents on inventions arising in such projects are not ordinary patents. There are restrictions on how a patent owner may use such a patent. Bayh-Dole also authorizes federal agencies to grant exclusive licenses to inventions owned by the federal government, but only after an agency makes a determination that an exclusive license is necessary. Finally, Bayh-Dole sets limits on the interest a federal agency can have in an invention arising in a federally supported project after a nonprofit or small business contractor has acquired ownership of such invention. Such inventions are called “subject inventions” and Bayh-Dole’s contracting provisions apply only to subject inventions, and not to inventions before they become subject inventions. Continue reading →

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NIST smokes Stanford v Roche, 2

Posted on May 14, 2018 by Gerald Barnett

Let’s get simple about the NIST rule change on assignment of subject inventions. This requires logic. I’m sorry about that. I know it’s not the Bayh-Dole way.

Supreme Court: Bayh-Dole applies only to subject inventions. A subject invention is an invention already owned by the contractor and made in a project with federal support. Nothing in Bayh-Dole gives a contractor any special right to acquire an invention made in a project with federal support.

Consequence: Any invention made in a project with federal support and not owned by a contractor is subject to the laws and regulations other than those that Bayh-Dole preempts. Bayh-Dole did not repeal those laws and regulations–only asserted precedence over them for its subject matter, namely, subject inventions.

Bayh-Dole: A contractor is any party to a funding agreement. Parties can be added by assignment, substitution of parties, or subcontract.

Now the fun: Bayh-Dole’s standard patent rights clause has a requirement not in Bayh-Dole. Each initial contractor must require its employees to make a written agreement to protect the federal government’s interest in subject inventions, including to establish the government’s rights in those inventions.

Conclusion: the subject inventions here cannot be ones owned by the initial contractor. They must be subject inventions owned by the inventors.

When the initial contractor requires the written agreement, it makes those employees parties to the funding agreement–that is, the initial contractor makes inventors become contractors. As contractors, when they invent, they own their inventions, and those inventions become–voila–subject inventions. Continue reading →

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The mistaken assumptions of Bayh-Dole, 2

Posted on May 11, 2018 by Gerald Barnett

We are working with an article by Sean O’Connor to get at an underlying problem with discussion of Bayh-Dole. O’Connor, a law professor, appears to be working diligently to find a way to “fix” Bayh-Dole so that universities end up owning faculty inventive work as a requirement of federal funding.

We might then argue that Bayh-Dole’s “failure” (in the eyes of university administrators and the legal professionals who advise them, badly) is actually quite an intelligent public policy expectation. If faculty inventors choose not to assign inventions to the university that hosts their work, then federal agencies must deal with them under the inventors patent rights clause–37 CFR 401.9–not the nonprofit patent rights clause–37 CFR 401.14. The mistaken assumption is that Bayh-Dole’s public policy was to include whole sections of the law that everyone should work diligently to ensure that they never operate.

Bayh-Dole provides for inventors to own their inventions and even to be preserved from predatory actions by the organizations that host federally supported research, but apparently the assumption is that the law here is bad and noncompliance–a kind of administrative disobedience–virtuously restores for the law what surely it must have intended but failed to provide–institutional ownership of all inventions made with federal support. That’s faux Bayh-Dole in a nutshell. But that is not Bayh-Dole, even if some folks continue to enjoy being confused on the matter, and even if some of them make good money going around the country giving talks as if their confusion was newly discovered clarity.

We can see then that Bayh-Dole was drafted by people with an expert awareness of university invention policies and practices. The drafters knew the IPA program and chose not to re-implement the IPA assignment requirement. Bayh-Dole preempts the authority of any standing federal claim to own inventions made in federally funded projects. Instead, federal agencies must derive their authority to claim ownership of inventions from Bayh-Dole. As the Supreme Court held, Bayh-Dole applies only to subject inventions–only to those inventions that a contractor has already come to own. The (f)(2) written agreement extends the scope of the law to all inventions made by inventors who are parties to the funding agreement, not just to the institutional contractors that initially accept federal funds. In all of this, there are no mistaken assumptions regarding university invention agreements and assignment requirements. Continue reading →

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The mistaken assumptions of Bayh-Dole, 1

Posted on May 10, 2018 by Gerald Barnett

I know this article by Sean O’Connor on the mistaken assumption in Bayh-Dole is six years old and I have discussed this issue previously, but since it is out there on the web, and as far as I know it hasn’t been retracted, I write another counterpoint to it. Perhaps the purpose served is to create a discussion, at least, with regard to the defects in Bayh-Dole.

The context of O’Connor’s analysis appears to be that university ownership of faculty inventions is a good thing, that Bayh-Dole set out to accomplish that, but screwed up with a mistaken assumption regarding an utterly basic requirement. Bayh-Dole could be fixed and so ensure that institutions rather than inventors control inventive work supported by public money.

Simply: folks drafting Bayh-Dole were mind-numbingly ignorant. Inventors are stupider. University ownership of inventions is virtuous. Bayh-Dole should serve virtue, not stupidity. And it can, but to make the law work, given its origin in ignorance, universities must repudiate academic freedom, tenure, and the freedom of research and publication. Then all will be well.

Sean O’Connor starts “Mistaken Assumptions: The Roots of Stanford v. Roche in Post-War Government Patent Policy” with this claim:

The Bayh-Dole Act of 1980 was built on a mistaken assumption that “contractors”—recipients of federal funding—were securing assignments of inventions from their employees.

O’Connor never identifies anyone involved in drafting Bayh-Dole who evidenced this mistaken assumption. Not Latker, not Bremer. The Bayh-Dole Act was drafted by Norman Latker at the NIH. I’ve talked with the person who typed the draft for Latker so it would not be traced to his government typewriter. Latker is recognized by “Bayh-Dole Central” as one of the “founding fathers” of Bayh-Dole. Another “founding father” is Howard Bremer, then patent counsel for the Wisconsin Alumni Research Foundation and head of the Society of University Patent Administrators (now called AUTM). Latker and Bremer previously had revived the NIH’s Institutional Patent Agreement program, which created master agreements between the NIH and universities concerning research inventions–but which excluded faculty investigators from being parties to that agreement.

The IPA program was used to circumvent both the Kennedy executive branch patent policy and the Public Health Service’s implementation of that policy. Under the IPA program,  NIH-funded inventions could make their way as patent monopolies to private corporations with the assistance of university-affiliated patent brokers, who provided served as “middlemen” to cover the trail from public money to private monopoly. The private monopoly, it was argued, was necessary for there ever to be public benefit from such federally funded research. If university faculty discovered a cure for cancer–so the argument went–no company would bother to create a product based on that discovery unless it was first assured of a patent monopoly. Continue reading →

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