Bayh-Dole Basics, 1: public covenant

Posted on February 22, 2018 by Gerald Barnett

The Bayh-Dole Act is part of federal patent law. Bayh-Dole establishes a policy (35 USC 200) regarding the use of the patent system for inventions arising in federally supported research or development. This policy establishes the property rights in patents on such inventions.

See 35 USC 261:

Subject to the provisions of this title, patents shall have the attributes of personal property.

For patents on inventions made with federal support, Bayh-Dole establishes the provisions of the title (that is, patent law, Title 35) that specifically apply.

These policy provisions establish a public covenant that runs with any invention made with federal support. Bayh-Dole’s public covenant includes using the patent system:

working requirement: to promote the utilization of inventions arising from federally supported research or development

free competition requirement: to ensure that inventions made by nonprofit organizations and small business firms are used in a manner to promote free competition and enterprise without unduly encumbering future research and discovery

United States manufacturing requirement: to promote the commercialization and public availability of inventions made in the United States by United States industry and labor.

Bayh-Dole then establishes procedures responsive to this policy in the cases of (i) federal contracting and (ii) ownership of inventions by the federal government. Bayh-Dole’s statement of policy applies in both situations.

Regardless of the statement of specific obligations, Bayh-Dole’s general statement of policy applies and changes ordinary inventions into inventions that carry a public covenant that runs with patent property rights in those inventions.

 

 

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Mississippi State University misrepresents Bayh-Dole

Posted on February 20, 2018 by Gerald Barnett

Here’s Mississippi State University’s Office Technology Management answering the question “Why does the University patent technology?”

It is required under federal grants – The University is required to patent and commercialize the technology under terms of the Bayh-Dole Act. If the University elects not to patent the discovery, the sponsoring federal agency may request ownership of the patent rights.

Untrue and misleading.

Bayh-Dole doesn’t require patenting, and doesn’t require commercialization. Let’s examine the assertions here with some care to see the details of the corruption.

Let’s start with the big picture. “The University is required to patent” makes it appear that Bayh-Dole requires the university to own federally supported inventions. How else can the university be required to “patent” a “technology.” But in the Bayh-Dole regime, it is the university’s own doing to claim ownership of inventions made with federal support–and that choice has nothing to do with Bayh-Dole. Continue reading →

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The bozonet on mount stupid

Posted on February 19, 2018 by Gerald Barnett

I mentioned “mount stupid” last week in a three-part article on the University of Utah. Mount stupid is a bit of a meme derived from accounts of the Dunning-Kruger effect, which I have referred to in developing an account of bozonet formation. Kruger and Dunning found that individuals with little grasp of an area of knowledge or practice lacked the ability to judge their own ability relative to the ability of others. As they put in their rather famous article: “Unskilled and Unaware of It: How Difficulties in Recognizing One’s Own Incompetence Lead to Inflated Self-Assessments,” the less one knows, the more one is likely to overrate their ability.

Here’s the abstract from the paper (my emphasis):

People tend to hold overly favorable views of their abilities in many social and intellectual domains. The authors suggest that this overestimation occurs, in part, because people who are unskilled in these domains suffer a dual burden: Not only do these people reach erroneous conclusions and make unfortunate choices, but their incompetence robs them of the metacognitive ability to realize it. Across 4 studies, the authors found that participants scoring in the bottom quartile on tests of humor, grammar, and logic grossly overestimated their test performance and ability. Although their test scores put them in the 12th percentile, they estimated themselves to be in the 62nd. Several analyses linked this miscalibration to deficits in metacognitive skill, or the capacity to distinguish accuracy from error. Paradoxically, improving the skills of participants, and thus increasing their metacognitive competence, helped them recognize the limitations of their abilities.

The mount stupid meme is found in a graph that depicts the idea behind this research. In a graph of confidence vs expertise, there’s a big hump of confidence (“mount stupid”) with low expertise, descending into a valley as expertise increases, and rising again with more than average expertise.  Continue reading →

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You should want to see Bayh-Dole operate as written. Here’s why.

Posted on February 16, 2018 by Gerald Barnett

Let’s start with some Bayh-Dole basics.

Bayh-Dole preempts all other statutes but Stevenson-Wydler on matters of federal policy on inventions made in research contracts (35 USC 210). Bayh-Dole is the only authority on the matter.

Bayh-Dole requires federal agencies to use as a default a patent rights clause, and stipulates what must be in that clause. There are, actually, four such clauses (37 CFR 401.14(a)-(j), (l) [small business]; 37 CFR 401.14(a)-(l) [nonprofit]; 37 CFR 401.14(b) [nuclear power]; and 37 CFR 401.9 [inventors]).

Thus, whatever either a federal agency or contractor has by way of rights in an invention made with federal support comes by means of the default patent rights clause, unless a federal agency can justify a new clause based on “extraordinary circumstances” or another enumerated condition.

Consider, then, these observations of Bayh-Dole’s default patent rights clause for nonprofits.

The federal government may acquire ownership of a subject invention only as provided by the default patent rights clause.

That clause establishes the conditions on which the federal government may take title (37 CFR 401.14(a)(d))–failure to report, failure to elect to retain title, failure to file a patent application, failure to maintain a patent.

There is no other way for the government to require assignment of an invention, but for the conditions established by the default patent rights clause. There can’t be another secret patent rights clause that says if the first one doesn’t work, then this secret other patent rights clause applies.

Are you with me so far? Continue reading →

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How Bayh-Dole complicates the definitions in Stevenson-Wydler

Posted on February 15, 2018 by Gerald Barnett

The only law that Bayh-Dole does not expressly supersede is the Stevenson-Wydler Act. It’s worth comparing language in the two laws, as Bayh-Dole draws from Stevenson-Wydler, but then works its own magic. Consider the definition cascade on inventions.

Here’s Stevenson-Wydler:

(7) ‘‘Invention’’ means any invention or discovery which is or may be patentable or otherwise protected under title 35, United States Code, or any novel variety of plant which is or may be protectable under the Plant Variety Protection Act (7 U.S.C. 2321 et seq.).

Here we have the same extension of invention to include plant varieties that Bayh-Dole makes, but Bayh-Dole does so as part of federal patent law. That is, Stevenson-Wydler refers to patent law for part of its scope, but Bayh-Dole amends federal patent law. Absent in Stevenson-Wydler are two key elements of the definition as used in Bayh-Dole. There is no “of the contractor” to force the definition to operate only when a contractor has acquired ownership of a given invention. And there is no “in the performance of work” requirement that opens the definition up to issues pertaining to the scope of the “performance” that a given contract supports at least in part.

More Stevenson-Wydler:

(8) ‘‘Made’’ when used in conjunction with any invention means the conception or first actual reduction to practice of such invention.

The definition of “made” is directed at the earliest date upon which the invention might be claimed and has nothing to do with whether the making was done under contract. Further, there’s nothing additional about the PPVA. Under Stevenson-Wydler, one has to match conception and first actual reduction to practice to the PPVA.

Bayh-Dole, however, uses two definitions–invention and subject invention: Continue reading →

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Whistling all the way to the bank, revisited 3

Posted on February 14, 2018 by Gerald Barnett

Having established the contracting problem for government-sponsored “basic research,” let’s get into how the patent administration folks got into changing things around from government ownership (with its open access, often without conditions or formalities) to institutional ownership (or, more accurately, foundation ownership substituting for university ownership, with an expectation of suppression of access in favor of seeking an exclusive license), when the institutions didn’t have policies and practices that swept up all such inventions from their inventors.

In its Institutional Patent Agreement (IPA) program, the NIH signed a master agreement with each university that under which the university agreed to be required to have a patent agreement with each employee involved in the federally funded research that provided that if the university chose to file a patent application, then the employee-inventor agreed to assign the invention to the university. That is, once the university had prepared a patent application, then the employee-inventor promised to assign the invention to the university. The policy was “catch only what you intend to eat” not “catch everything and release only what you are forced to release.” That is, the IPA program required selective logging, not clear cutting.

A university’s management of the invention was subject to the IPA program master agreement. The IPA program was shut down in 1978, just as the NIH was attempting to make the program government wide (and so would permit the pharmaceutical industry to use universities to catch potentially therapeutic compounds in all federal research, not just research supported by the NIH and NSF).

Bayh-Dole attempts to rebuild the IPA program, but now as a matter of patent law. Thus, we have a law that stipulates a “standard patent rights clause” that looks a great deal like the IPA master agreement template–and we might expect this to be the case, given that the IPA master agreement, and Bayh-Dole, and the standard patent rights clause were all drafted, it appears, by the same person, the late Norman Latker, one-time patent counsel at the NIH. Continue reading →

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Whistling all the way to the bank, revisited 2

Posted on February 13, 2018 by Gerald Barnett

The “Whistling” article struggles with the problem of the standard patent rights clause language about “electing to retain title.” I’ve wondered over this wording for years. It appears to be at the heart of the “cleverly crafted scheme” to intercept invention deliverables from the government to universities, where private patent brokers could serve as a conduit to convey the inventions to the pharmaceutical industry and to speculative investors (usually hoping to sell later to the pharmaceutical industry). This may seem to be a strange concept, so I’ll repeat it, slowly.

The government sponsors research and asserts a right to inventions as deliverables. This is a basic situation in any contract research situation–the sponsor of the work sets the terms on which the money is available. There are two areas to address–the scope of inventions that the sponsor has an interest in, and the rights the sponsor gets to those inventions.

As for the scope of inventions, a contract has to specify whether the inventions of interest include inventions the contractor already has that will be involved in the work or necessary to use the results (“background IP”), inventions that the contractor may make but which are not directed at the research deliverables the sponsor desires (such as research tools or discoveries that are otherwise unrelated to the research but happen to have arisen while conducting the research specified by the contract).

As for scope of rights, a sponsor may expect title (that is, ownership of the invention and the right to control patenting) or may be satisfied with a license (exclusive, perhaps, which may amount to ownership but without the full right to control patenting; or non-exclusive).

Again, there are two essential elements of scope: what inventions? with what rights?

Now consider an additional complication. Continue reading →

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Whistling all the way to the bank, revisited 1

Posted on February 12, 2018 by Gerald Barnett

Back in 2010, I wrote an article titled “Whistling all the way to the bank.” The article explored the problem of compensation tied to the argument that the Bayh-Dole Act was a “vesting statute” that vested ownership of inventions made with federal support outright with the organizations that hosted the research. This wasn’t even “invent for hire”–the vesting argument was that Bayh-Dole preempted common law with regard to federally supported inventions, so that universities (especially) owned the inventions outright, or when they “elected title,” or prevented inventors from assigning their inventions except to the universities, or gave the universities a first right of refusal for assignment–the truth had to be in there somewhere.

My point was that if universities are misrepresenting Bayh-Dole, that it’s not a vesting statute (and it is not), then when they take title to inventions, it is “their own doing.” That is, Bayh-Dole does not vest title with the university, so if university administrators take title anyway, and their universities are instruments of the state, then they are the state taking personal property for public purposes, and that’s essentially an eminent domain procedure that lacks just compensation. It is not just compensation for a university to offer to share a royalty from licenses that may never happen and where the university does not accept a requirement to obtain one or more such licenses–even if it would be adequate consideration for a contract under which an inventor voluntarily agreed to assign the invention.

I was right about the vesting argument–the Supreme Court rejected the idea of Bayh-Dole vesting the next year, in 2011 in its Stanford v Roche decision. Continue reading →

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Bayh-Dole in another simple diagram

Posted on February 9, 2018 by Gerald Barnett

Bayh-Dole conflates three distinct forms of federal contracting for research and then moves one form–university-hosted research–into the category of another, procurement from commercial firms. Here’s the diagram:

 

The effect of Bayh-Dole is depicted by the blue arrows.

The box on the left is labeled “CRO”–contract research organizations. When one contracts for research with a CRO, typically all IP developed in the contracted work is a deliverable. The CRO makes its way based on winning contracts and doing great work, not on trying to sell product to consumers. The research is the CRO’s product. For federal government work, CROs may take the form of government labs (GOCO), cooperative research centers (FFRDCs), non-profits, and for-profit companies. What defines the relationship is the nature of the procurement and the organization’s mode of operation, not the tax standing of the organization. Thus, universities, when they operate a federal lab (as in the case of, say, the JPL) or set up a research institute specific to federal contract, operate in the mode of a CRO. In a CRO relationship, inventions are another deliverable. The government would reasonably expect to own any such inventions created under a CRO contract.

The center box is labeled “COM”–commercial firms. Continue reading →

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University of Utah’s Mount Stupid Disclosure Claim, 3

Posted on February 8, 2018 by Gerald Barnett

Now let’s look at what the University of Utah requires by way of assignment. My snark controls have apparently failed. I will try to line out at least some of the snark. Here is a link to the template Assignment Agreement (warning, the link downloads a Word document). The template gives as author Amy Wildermuth, presently identified as the university’s “chief sustainability officer” and a law professor. While there may have been changes to the template, here’s what she has drafted (or at least what she left her name on–geez folks, at least convert your files to pdf or at least purge the identifying information in Word before posting):

As part of my participation in University Research, I agree to the following:

1. Circumstances Under Which University Has Ownership of Intellectual Property. Pursuant to this Assignment, I agree to assign, and do hereby assign, to the University all of my rights, title and interests in and to the intellectual property described below that I create, alone or in cooperation with others, under any of the following circumstances:

Here we have the awful “present assignment” language that indicates a lack of understanding of Justice Breyer’s dissent in Stanford v Roche. A typical condition for university-based lawyers. But no matter that Breyer argued that present promises to assign future inventions should not be magically different from present assignments of future inventions. Let’s look at what Utah claims:

a. I create the intellectual property in connection with research supported or funded by or through the University; for example, commercially sponsored research and federally funded research (“University Research”);

We will get to the laughable but otherwise sad definition of intellectual property in a bit, but for now, it’s enough to note that the assignment is broadly drafted–“in connection with” is wildly broad. “In connection with” is not “within the scope” of an extramural research contract or even work assigned by the university and so “on the university’s time.” For that matter, “in connection with” is not even “with the aid of” university funding. The operative connective is “in connection with.” One could sit at home and have a realization that the project at the university was going off in an uninteresting direction. The realization would be “in connection with” the supported research but not within the scope of that research or within one’s university assignment (“we assign you to discover how wrong we have been to assign you to this work”). On the face of it, the claim is broader than Utah state invention law permits. I know. Who cares? Continue reading →

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