Research Enterprise

We have been discussing contractor-side practices to circumvent Bayh-Dole. We can finish with yet another:

4) circumvention by regulatory procedure, by which federal agencies may reduce the attraction of contractor-side exploits that don’t end up serving the public interest.

Circumvention by Regulatory Procedure

Bayh-Dole doesn’t actually dictate the patent terms of federal funding agreements. Actually, it is more of an administrative bottleneck, requiring default terms but leaving it to federal regulations to set out the actual terms for standard patent rights clauses. In fact, there are four such standard patent rights clauses (one for nonprofits, one for small businesses, one for inventors, and one for use in funding agreements involving certain weapons systems). There could be even more. Bayh-Dole permits agencies to vary from these defaults, but stipulates procedures for such changes. Thus, in a way, Bayh-Dole does absolutely nothing to assure “uniformity” or “certainty of title.” All Bayh-Dole does is to state defaults to be used in standard patent rights clauses and then make it a bother to try to change them. The regulations go further this way than does the statute, adding bother upon bother to the prospect of change, whether to the basic rights proposition or to march-in.

Oddly, Bayh-Dole has no enforcement requirements for the government side of the patent rights clauses. While Bayh-Dole makes it difficult for federal agencies to change the terms they put in a patent rights clause, Bayh-Dole makes it easy for federal agencies to then ignore any of the default terms having to do with federal–public–interest in the patent rights clause. The government does not have to require title in cases of contractor default or mis-doing, does not have to exercise its rights under its non-exclusive license to practice and have practiced, does not have to march-in, does not have to be bothered by exclusive licenses that are assignments, does not have to be bothered by exclusive licenses in the US that don’t require US manufacturing, does not have to worry about preferences for small business, does not have to watch how nonprofits spend licensing income, does not have to require reports on the use of subject inventions. Really, doesn’t have to do a darn thing. Continue reading →

Circumventing Bayh-Dole is easy. University administrators have been circumventing Bayh-Dole since the law became effective in 1981. Consider next

2) circumvention by exploit–to use Bayh-Dole’s limitations to end up with the best deal under Bayh-Dole and avoid public covenant requirements.

Circumventing Bayh-Dole without Noncompliance 

Our next circumvention is distinctive because it does not involve a failure to comply with Bayh-Dole. Instead it exploits the architecture of the Bayh-Dole apparatus. Under Bayh-Dole, universities have no obligation to take assignment of inventions made with federal support. Even if a university implements the (f)(2) written agreement requirement in the standard patent rights clause–which makes most any invention otherwise within scope of a federal funding agreement also a subject invention–the university does not have to own the invention.

If the university does not own a subject invention, then a different invention rights clause comes into play, that of 37 CFR 401.9. That invention rights clause instructs federal agencies to treat inventors as small business contractors but with even fewer restrictions than normal small business contractors. Under 401.9, inventors have no restrictions on assignment or use of income from licensing, don’t have to prefer small businesses, and even might not have to grant the government a royalty-free license. The inventor patent rights clause is the most advantageous of all the patent rights clauses that have been created under Bayh-Dole’s authority. Continue reading →

Circumventing Bayh-Dole is easy. University administrators have been circumventing Bayh-Dole since the law became effective in 1981. Let’s look at three sorts of circumvention:

1) circumvention for non-compliant convenience–to make Bayh-Dole do even better what people claim Bayh-Dole was intended to do;

2) circumvention by exploit–to use Bayh-Dole’s limitations to end up with the best deal under Bayh-Dole and avoid public covenant requirements; and

3) circumvention by practice to upset the premises of Bayh-Dole while complying with the terms of the standard patent rights clause.

These are all contractor-side practices. We can finish with yet another:

4) circumvention by regulatory procedure, by which federal agencies may reduce the attraction of contractor-side exploits that don’t end up serving the public interest.

Circumvention by Non-compliant Convenience

Rather than implementing the written agreement requirement in (f)(2) of the standard patent rights clause, university administrators instead created the idea that Bayh-Dole vested ownership of inventions with the universities that hosted federally supported research. And when the Supreme Court in Stanford v Roche ruled that the law did not support such vesting by research hosts (who are not necessarily even legitimate employers), university administrators switched to requiring “present assignments” for any and all future inventions, patentable or not. They’d rather do what they want to do than to do what the standard patent rights clause requires them to do, which is to implement the (f)(2) written agreement clause.

If one wanted to put this practice as a quip, Bayh-Dole’s standard patent rights clause stipulates that universities give inventors the choice of assigning to the federal government or to a non-federal patent broker, but university administrators fear such a choice and instead prevent it from ever operating, in defiance of the standard patent rights clause. Continue reading →