Bayh-Dole Basics, 4: contractor comments

Posted on March 7, 2018 by Gerald Barnett

Bayh-Dole defines anyone on the other side of a funding agreement from a federal agency as a contractor.  The term is arbitrary and misleading. Let’s look at both aspects.

The standard patent rights clause requires the contractors that host federally supported research to subcontract with their employees–to require their employees to make written agreements as individuals to protect the government’s interest in inventions made with federal support. This is the (f)(2) written agreement requirement.

The effect of a contractor-host doing this is to make those written agreements take precedence over the contractor-host’s own requirements on the matter. There aren’t competing agreements–the contractor-host’s and the written agreement–because the contractor-host must require the written agreement. The contractor-host cannot require the written agreement and at the same time require something other than the written agreement. The written agreement takes precedence.

Those employees then become contractors, too. Contractor, then, wherever it appears in the standard patent rights clause, necessarily will be a collective term for the contractor-host and all the contractor-employees. The standard patent rights clause instructs federal agencies to treat the contractor-employees when they invent as small business contractors. They are, in effect, sole proprietorships.  Continue reading →

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Bayh-Dole Basics, 4: contractor

Posted on March 6, 2018 by Gerald Barnett

A primary focus of Bayh-Dole is the disposition of invention rights in funding agreements between federal agencies and nonprofit organizations and small businesses. Funding agreements can take the form of contracts, grants, and cooperative agreements, and these agreements are extended by assignment, substitution of parties, and subcontracts of any type.

The party on the other end of a funding agreement from a federal agency is defined by Bayh-Dole to be a contractor:

The term “contractor” means any person, small business firm, or nonprofit organization that is a party to a funding agreement.

The definition makes it clear that individuals–persons–may be contractors, as well as can nonprofits and small businesses. Anyone on the other side of a funding agreement from a federal agency is a contractor. There can be multiple parties to a funding agreement; thus, there can also be multiple contractors. Wherever “contractor” is used in the standard patent rights clause, one cannot assume that the reference is to the organization that has contracted to receive the federal funding. “Contractor” does not mean “the university,” for instance–it means any party to a funding agreement.

The standard patent rights clause, in fact, requires a nonprofit or small business to make its non-technical or clerical employees become parties to the funding agreement as individuals. That’s the (f)(2) written agreement requirement. This requirement is not in Bayh-Dole, but has been added to the standard patent rights clause in implementing Bayh-Dole (as has a parallel requirement on subcontracting). Anyone relying only on the Bayh-Dole statute alone does not have enough information to understand how patent rights clauses operate in federal contracts.

If a university or small business complies with the standard patent rights clause, each individual inventor, when he or she makes an invention in performance of work under a funding agreement, is also a contractor. Since inventors own their inventions under common law, and each nonprofit or small business contractor has made the inventors contractors, their inventions are “subject inventions”–patentable inventions owned by a contractor and made in performance of work under a funding agreement.

There is no need for an inventor to assign an invention to his or her university for the invention to be a subject invention. Nor, in Bayh-Dole, is there any obligation that an inventor do so. In fact, Bayh-Dole provides for a patent rights clause specific to inventors (see 35 USC 202(d) and 37 CFR 401.9). Under the inventors’ patent rights clause, federal agencies are to treat inventors as if they are small business contractors–but with even more freedom than provided to regular small business contractors.

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Bayh-Dole basics, 3: funding agreement comments

Posted on March 5, 2018 by Gerald Barnett

Bayh-Dole uses the definition of “funding agreement” for much heavy lifting. The definition does much more than merely restrict Bayh-Dole’s interest to grants, contracts, and cooperative agreements. The definition establishes the scope of the law to include experimental work, developmental work, and research involved in any such grants, contracts, and cooperative agreements. Experiment, development, and research are not just a pile of synonyms for whatever work is performed under a grant, contract, or collaborative agreement. For instance, consider these definitions from OMB Circular 11 (1998) (via a Rand report):

Basic Research

Systematic study directed toward greater knowledge or understanding of the fundamental aspects of phenomena and of observable facts without specific applications toward processes or products in mind.

Applied Research

Systematic study to gain knowledge or understanding necessary to determine the means by which a recognized and specific need may be met.

Development

Systematic application of knowledge toward the production of useful materials, devices, and systems or methods, including design, development, and improvement of prototypes and new processes to meet specific requirements.

There are other definitions around, of course, but the gist here is that research involves something systematic–there’s a protocol, a planned set of actions, no going off topic. Second, research is about greater knowledge–whether basic or applied–while development is about applying knowledge to do something, such as build a prototype of something useful. Development is the process by which products get created, for instance. Thus–and this is important–the definition of funding agreement is broad enough to take in both the university-hosted research and the “commercialization” of product development that applies the new knowledge created by the university-hosted research. Continue reading →

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Bayh-Dole Basics, 3: funding agreement

Posted on March 2, 2018 by Gerald Barnett

Bayh-Dole requires federal agencies to use a standard patent rights clause in every funding agreement for experimental work, development, or research, unless they can justify something different.

A “funding agreement” is defined (35 USC 201(b)) as

any contract, grant, or cooperative agreement entered into between any Federal agency, other than the Tennessee Valley Authority, and any contractor for the performance of experimental, developmental, or research work funded in whole or in part by the Federal Government.

Bayh-Dole then expands the definition of funding agreement to include other agreements:

Such term includes any assignment, substitution of parties, or subcontract of any type entered into for the performance of experimental, developmental, or research work under a funding agreement as herein defined

If we remove qualifiers, we see the basic structure:

Any agreement for the performance of work funded at least in part by the Federal Government, including any assignment, substitution of parties, or subcontract of any type.

Keep in mind, of course, that the “work” is some form of research or development work, and that the agreement must have the form of grant, contract, or collaborative agreement. If the work is not for research or development, then the agreement is not within the definition of funding agreement. If the agreement is not a grant, contract, or collaborative agreement–some other sort of agreement–then, too, the agreement is not within the definition of funding agreement.

A funding agreement need not provide funding for the entire work–the definition anticipates that the “work” may be funded from other sources as well, and the work may be sequenced in time, so that the federally funded part may come before other work (such as research that feeds into development).

A funding agreement extends to include any type of assignment, substitution of parties, and subcontract. Assignment of the funding agreement itself, assignment of the patent rights clause in the funding agreement, assignment of subject inventions–all are assignments of any type that extend the definition of “funding agreement.”

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Bayh-Dole basics, 2: subject invention comments

Posted on March 1, 2018 by Gerald Barnett

There are three categories of invention in Bayh-Dole–inventions arising in federally supported research or development, subject inventions, and inventions owned by the federal government.

The general scope of Bayh-Dole given in 35 USC 200 is that of “inventions arising in federally supported research or development.” Bayh-Dole imposes on the patent property rights in these inventions a working requirement, a free competition requirement, and an American manufacture requirement. These requirements do not apply to patents on ordinary inventions, ones made outside the scope of Bayh-Dole, which is part of federal patent law.

Bayh-Dole introduces the definition of “subject invention” into federal patent law to address inventions made in federal contracts for research and development work. The four standard patent rights clauses established under Bayh-Dole’s authority all depend on this definition of subject invention. The federal government may acquire inventions (as from its employees) that are not subject inventions. Thus, the sections of Bayh-Dole pertaining to federal administration of inventions do not use “subject invention.” Continue reading →

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Bayh-Dole Basics, 2: subject invention

Posted on February 28, 2018 by Gerald Barnett

For federal research and development contracts, Bayh-Dole defines a new category of invention in federal patent law, the “subject invention.”

A subject invention is an invention that

  • is or may be patentable
  • is owned by a party to a funding agreement
  • was either conceived or first actually reduced to practice in the performance of work under a funding agreement.

(A subject invention may also be a non-patentable plant variety.)

Nothing in Bayh-Dole gives a party to a funding agreement any special right to own any invention arising in federally supported research or development. The Supreme Court in Stanford v Roche was clear on this point. No-one has a special right under Bayh-Dole or in the standard patent rights clause in any funding agreement to own, to take, to have an option to, or have a mandate to acquire any such invention.

Bayh-Dole’s patent rights clause requirements become effective when a party to a funding agreement acquires ownership of an invention within the definition of “subject invention.” Only then does the invention becomes a subject invention–only when it is owned by a party to a funding agreement.

A subject invention and the property rights in patents on subject inventions are established by federal patent law. A subject invention does not lose its special status when it is licensed or assigned, even if assigned to a company (as is often the case with exclusive licenses) or to the federal government.

Bayh-Dole makes clear that a subject invention is not an ordinary invention, and a patent on a subject invention is not an ordinary patent. Subject inventions are controlled by standard patent rights clauses that federal agencies must use in funding agreements. The property rights in patents on subject inventions are restricted by Bayh-Dole’s statement of policy and objective, 35 USC 200.

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Mississippi State University misrepresents Bayh-Dole, 2

Posted on February 27, 2018 by Gerald Barnett

Mississippi State provides us with this diagram of the “commercialization” process that ends up with a singular “license.” What goofiness–an assertion of order in an activity that is almost always disorderly. According to the diagram, “ideas” get “protected” and then “marketed” for the formation of a singular “license.” Notice that we don’t start with an invention, but with an idea. We also don’t start with research, nor with a hunch, nor with working with a company or a farmer on a problem. Ideas pop out of the void to be captured by university administrators using policy claims to “intellectual property.” All subsequent work is intended to result in a license. Isn’t it strange that the end point is a license and not a commercially available product? One might think that exclusive patent licenses are the expected product of research programs and not “commercial utilization.”

I will skip over the silliness of the commentary that accompanies the process diagram, other than to point out that a provisional patent application does not provide a year of “protection.”

Bayh-Dole does not require institutional ownership of inventions. Bayh-Dole anticipates that institutions will not claim ownership. In that case, there’s a separate patent rights clause specific to inventors–inventors are to be treated as small business contractors, but with more freedom than under the standard small business patent rights clause. Why do institutions then work so hard to cut off this inventor-based approach in Bayh-Dole, when that’s the approach with the greatest freedom, the approach that most closely follows the approach that led to the modest success of invention licensing in the 1920s through 1960s? It was that modest success that Bayh-Dole advocates pointed to get Bayh-Dole passed–“see, universities are doing a great job–by allowing inventors to pass their inventions to invention management foundations or publish them or whatever.” Where did this become “universities will do an even better job by owning all inventions, denying inventors any freedom to decide, and cutting inventors and their research collaborators off from any further access to their inventions except for use within the institution itself?” Continue reading →

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“Only assholes get patents…”

Posted on February 26, 2018 by Gerald Barnett

Slashdot points to a recent blog post by Marco Arment on dealing with feature copying and imitation in software apps. Arment summaries copyright and trademark angles, noting that neither provides much defense. He then moves on to patents:

Only assholes get patents. They can be a huge PR mistake, and they’re a fool’s errand: even if you get one ($20,000+ later), you can’t afford to use it against any adversary big enough to matter.

Don’t be an asshole or a fool. Don’t get software patents.

This is a tough lesson for patent-centric university administrators to learn. Arment is discussing “apps”–software for smart phones and the like. But much the same thing applies in other areas of software development. Universities are in denial that in many areas of technological development, they play the asshole, all the while making it appear virtuous to do so.  Continue reading →

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The booger way of innovation

Posted on February 24, 2018 by Gerald Barnett

Consider these two pathways by which universities might acquire inventions under Bayh-Dole’s patent rights clause.

1. Non-compliant. University by policy asserts ownership of all inventions made by faculty. University refuses to comply with the (f)(2) written agreement requirement in Bayh-Dole’s standard patent rights clause. [That’s one of the non-compliant parts of this approach] Inventions arising from federally funded work are not subject inventions until the university has acquired them, so the university insists that it must acquire them, and so turn them into subject inventions. [Which is nonsense, but that’s how these things go.]

If the university subsequently decides not to elect to retain title to a subject invention, or not to file a patent application, or not to prosecute the patent application, or not to maintain the patent, then under the standard patent rights clause, the government has the right to obtain title. [But if an invention never becomes a subject invention, then whatever rights the government may have *do not arise through Bayh-Dole* because the contracting part of Bayh-Dole applies only when an invention has become a subject invention–that is, has been acquired by a party to a federal funding agreement.]

The university can re-assign the subject invention to the inventors, but only with federal agency permission, and only if the university also requires the inventors to accept the nonprofit version of the standard patent rights clause, 37 CFR 401.14. See (j)(1).[But in non-compliant practice, university administrators do things such as “waive” rights to inventors or require inventors to obtain rights back from federal agencies or mostly just foot-drag hoping that the inventors will give up or demand that the inventors license rights back from the university (and pay to do so) rather than the university give up its ownership of the invention.]

Continue reading →

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Bayh-Dole basics, 1: public covenant comments

Posted on February 23, 2018 by Gerald Barnett

University patent administrators ignore Bayh-Dole’s statement of policy at 35 USC 200. At best, they treat it as a statement of objectives, not policy, and that these objectives are a problem for Congress if no one bothers to accomplish them. For university patent administrators, inventions made with federal support are ordinary inventions secured with bothersome bureaucratic requirements. And for all that, Bayh-Dole itself does not bother to require reporting that would ascertain whether the patent system has been used to promote the use of each invention made with federal support, to promote free competition and enterprise, or to promote American manufacturing.

But Bayh-Dole’s statement of policy and objective is not merely a statement of purpose. If Congress had intended that, Bayh-Dole would have a statement of purpose, or a statement of objective, and would not use the term “policy.” But Bayh-Dole uses policy, and the term should be given effect, not treated as surplusage or fluff–that is, not treated how university administrators draft and interpret their own patent policies.

A reasonable understanding of “policy” in Bayh-Dole’s statement of policy and objective is that Bayh-Dole’s policy replaces executive branch executive orders that establish a policy for the management of inventions made in federal contracting or acquired by the federal government. In this regard, Bayh-Dole’s statement of policy sets out a regulatory framework with regard to both the patent property rights in federally supported inventions–whether held by a contractor or by the federal government–and stipulates how the federal government may deal with contractors with regard to rights in inventions as contract deliverables. But Bayh-Dole does more: it places this policy statement in patent law. Continue reading →

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