Mapping Bayh-Dole Flow of Control

This would be a good time to map out how Bayh-Dole operates.  I’ve put together 10 slides that show the flow of control.   Perhaps this will help folks see what Bayh-Dole does require, and what it doesn’t.

First, let’s look at the law and its implementing regulations.  The law is at 35 USC 200-212 and is part of patent law.   Bayh-Dole is directed at federal agency contracting for research services with universities, nonprofits, and small companies (which I will shorten to universities).  More particularly, Bayh-Dole makes uniform federal agency treatment of inventions as deliverables in funding agreements.   As such, Bayh-Dole does not apply to universities, but rather to agencies.

Bayh-Dole requires the Secretary of Commerce to create implementing regulations.  In particular, it requires Commerce to produce standard patent rights clauses (35 USC 206).   The standard patent rights clauses are at 37 CFR 401.14.  There are two, one for general use, section (a), and one for use under exceptional circumstances, and rights to inventions must be negotiated, section (b).  We will deal only with (a), which we will call the Standard Patent Rights Clause, or SPRC.   The implementing regulations provide for variations from the SPRC to accommodate certain agency-specific matters, treaties, foreign work, weapons and naval propulsion, and exceptional circumstances in general.  For this discussion, we will assume the SPRC is tailored only for agency-specific matters.

Agencies are required to use the SPRC in all funding agreements with universities.  Funding agreements may be in the form of grants, which are regulated by Circular A-110 (now in 2 CFR 215) or contracts, which are regulated by the Federal Acquisition Regulations (FARs) and their defense equivalents, the DFARs.  The SPRC is inserted into these regulations, along with federal agency variations, which the agencies then use to form funding agreements with universities.

As you can see, the flow of control in Bayh-Dole means that universities come to be affected by Bayh-Dole not directly by action of law but as terms and conditions in a funding agreement–essentially, a federal contract into which universities voluntarily enter.

The SPRC is drawn almost entirely from 35 USC 200-204, but includes one key provision that is not in Bayh-Dole proper.  This key provision is found in section (f)(2) of the SPRC.  Section (f)(2) requires, among other things, that universities require of their employees (other than non-technical and clerical employees)–I will call them research employees here for short–a written agreement under which they agree to protect the government’s interest in inventions by a) disclosing inventions to personnel designated by the university, b) signing paperwork to permit patent applications to be filed, and c) signing paperwork to establish the government’s rights in inventions.  For c), this could mean assigning ownership or granting a non-exclusive license to the government, or assigning title or granting a license to others that permits granting a non-exclusive license to the government.   We will discuss this more in a bit.  For now, it is important to see that the SPRC is the contractual means by which agencies manage patent rights in funding agreements, and the (f)(2) agreement is the means by which agencies reach to a university’s research employees to ensure that the agencies obtain rights in inventions, as might be limited by the SPRC.

Here is the funding agreement situation, divided with the agency-university relationship on the left, and the agency-research employees relationship on the right:

The SPRC makes no assumptions about the relationship regarding inventions that might exist between the university and its research employees, other than that they are employees.   It does not require assignment agreements between the university and research employees, nor that the university have an IP policy, nor that the university have a technology transfer office.

We will work through the flow of control by which a funding agreement is established, and then examine what happens when an invention is made. 

The start of a funding agreement is on the right side of the relationship, between research employees and agencies.  A researcher, usually a member of the university’s faculty, decides to conduct a project and writes a proposal, often in response to a request for proposals issued by the agency.  The proposal is submitted to the agency formally through the university.  The agency then reviews the proposal and makes a decision to fund it.   It is rare that a university refuses to submit a proposal from a principal investigator.  It may happen, for instance, when only one proposal on a given grant program is allowed from any one university and multiple proposals are prepared.   A proposal also may not be allowed to go forward if it involves classified research or other research for which the university lacks the resources, such as laboratories with security to handle dangerous substances.  In general, however, the university does not censor proposals, nor does it seek funding and then assign faculty researchers to conduct research not of their choosing.  It is the principal investigators who decide to seek federal assistance.  It is their deal, their choice.  Furthermore, it is the investigators that the funding agency seeks to work with.  It is the investigator’s qualifications and expertise that are reviewed as part of the grant application.  It is a matter of special performance.  If the principal investigator bails from the deal, the award if off unless a substitute investigator is found who is acceptable to the agency.  The university’s role is subordinate to the process–to provide technical services to assist in the application process, and if an award is made, to manage the financial accounting and other regulatory compliance matters on behalf of the agency and the investigators.

The university, then, is something of a steward. Circular A-110 makes this express. In section 37, dealing with intangible property (including inventions), A-110 requires inventions (and other intangible assets) “to be held in trust by the recipient as trustee for the beneficiaries of the project or program”. The university, as a condition of the award, is to act as steward, not master. An understanding of this role shapes much of what follows for invention ownership and innovation practice. Disagreement over this role is the source of many of the problems that arise in the present, now conventional, approach university administrators take to technology transfer.

When a grant is awarded, the federal funding agreement is established.   The agreement has a number of components.  The primary one is the Statement of Work, which is generally the proposal that has been submitted by the principal investigator (PI), the faculty member responsible for the conduct of the work.  The PI hires staff, decides on subcontracting, creates the work plans and designs experiments, assembles the tools, gathers and reviews data, directs reporting and publication, and spends the money.

In addition to the Statement of Work, the funding agreement consists of the appropriate set of regulations that govern the relationship.  If a grant, then Circular A-110.  If a contract, a set of clauses from the FARs or DFARs.   In either case, these will include the SPRC with its (f)(2) agreement requirement.

When the university accepts the funding on behalf of the Principal Investigator for the proposed project, it also agrees to the SPRC.  The university makes a voluntary decision to conduct its affairs in compliance with the SPRC.  The university in accepting the SPRC therefore displaces any university policies or agreements that would conflict with the SPRC.  Put another way, the university cannot accept the SPRC’s conditions while asserting practices for its research employees that are contrary to the SPRC.  This is an important point.  It is not the law that dictates the university’s behavior, but rather it is the university’s own affirmative acceptance that the SPRC is how rights will be managed.

As required by the SPRC’s section (f)(2), the university requires its research employees to make a written agreement to protect the government’s interest.   In directing its research employees to make this agreement, the university releases them from any conflicting agreements or policies (including IP policies and conflict of interest policies) that it may otherwise require them to follow.  The (f)(2) agreement permits research employees to sign away patent rights or grant licenses as may be required by the funding agency, or by another organization that gains standing under the SPRC to direct such activity.

Now the research gets going and an invention is made.  In terms of the SPRC, this means that an invention is conceived or first actually reduced to practice.  (It does not include constructively reduced to practice–such as by filing a patent application).   What happens then?

Inventions that are made in performance of work under the funding agreement by university research employees are “subject inventions”.    As confirmed by the (f)(2) agreement, research employees have agreed to disclose subject inventions to the personnel the university designates to receive such disclosures.   These personnel could be technology managers in a tech transfer office, or legal counsel, or an external foundation or other invention management organization.  (The personnel could also be principal investigators or department chairs, but I don’t know of any university that has done this.)

Per the SPRC, the university is responsible for reporting subject inventions to the funding agency.   Then someone–the agency, the university, and the inventors–has to decide what to do with the invention.  There are various options.  The effect of Bayh-Dole now becomes evident.  Rather than agencies insisting on a first right to obtain title to inventions made with federal support, Bayh-Dole requires the agencies to use the SPRC.  The SPRC, in turn, allows the university to “elect to retain title” to subject inventions.  This phrase has been the subject of a lot of recent dispute.  It does not mean that the university must own by automatic vesting all subject inventions made by its research employees, and it does not mean that by electing to retain title a university somehow thereby obtains title, nor does it mean that research employees have no other legal options but to assign to the university.   Rather, “retain title” means that the university may intervene in the (f)(2) relationship it has been instrumental in establishing, and forestall the agency from requesting title from the university’s inventors.   In essence, the university stands in for the agency to undertake the objectives of Bayh-Dole, the primary one of which is to use the patent system to promote the utilization of inventions made with federal support.

By making uniform federal agency procedures for inventions, Bayh-Dole relieves agencies of the administrative burden of case-by-case review of each request by a university to manage subject inventions.  In place of such review, crafting of individual agreements, and continual oversight of progress, Bayh-Dole substitutes a set of standard requirements built into the SPRC to govern university behavior.

It is important to recognize that the university has no mandate nor obligation under the SPRC to retain title, to manage inventions, to file patent applications, to seek out licensees, to start companies, to attempt to develop commercial products, or to make money through licensing and infringement litigation.   Any decisions that a university makes on these matters arise entirely from the university’s own motivations–that is, from the motivations of the individuals that the university assigns to the task of making such decisions, and to the arrangements they make, as stewards, with inventors and on behalf of the beneficiaries of the project in which the invention has been made.

If the university does not elect to retain title, here’s what happens:

If the university declines to retain title, then the relationship with the agency shifts to the right side of the diagram, the investigator side.  University administration is then all but out of the picture.   The agency deals directly with university inventors under the (f)(2) agreement.  The agency may request title to the invention, and if it does so, the agency may file patent applications on behalf of the government, or it may simply let the invention enter the public domain.  If the agency does not desire title, then under Bayh-Dole (35 USC 202 (d)), the agency may allow the inventors to “retain title” if they so request.

The procedures for allowing inventors to retain title are set forth in 37 CFR 401.9, which forms something of a mini-Bayh-Dole Act for inventors working directly with the government.   Inventors are required to comply with a subset of the SPRC, acting in the place of the contractor as a substituted party:  offering title back if they don’t continue with a patent application in the US or any foreign country, marking patents with a federal funding legend, reporting progress toward utilization, requiring substantial manufacturing in the United States for exclusive licenses, and accepting government march-in rights if the inventors or their licensees fail to make progress or are unable to meet certain other conditions.

Notably, there are no default restrictions on the inventors’ assignment of title, sharing of royalties, preference for small business, and other provisions that are required of contractors generally or universities in particular (though such restrictions could be added on a case-by-case basis if an agency desired to do so).

If, however, the university elects to retain title, then the picture changes to left side of the flow diagram and the relationship the university has with the funding agency.

The primary matter for the university when it elects to retain title in a subject invention is that it can indeed obtain the rights that are necessary for it to meet the conditions of the SPRC.   The conventional answer is that the university must obtain ownership of the invention.   But the SPRC does not say that university ownership is required.  The SPRC provides that the university retain title–that is, intervene so that the agency does not act on the (f)(2) agreement with inventors.   After retaining title, the university is to file patent applications and grant or have granted a non-exclusive license to the government (SPRC section (b) does not specify who grants the license).   Similarly, SPRC (f)(1) provides that the contractor will “execute or have executed . . . all instruments necessary to (i) establish or confirm the rights the Government has . . . and (ii) convey title to the Federal agency when requested . . . .”   At each point the language avoids stipulating that the contractor must do these things.  The contractor, if it cannot do these things, must be able to require others to do these things, and thus the language is sufficiently broad to allow a variety of situations, not restricted to university ownership.

One of these situations involves the use of an invention management organization, such as an affiliated research foundation or a professional invention management firm.  The SPRC provides that a university may assign its SPRC rights to such an organization, provided that organization take on the SPRC responsibilities that the university has agreed to.   This situation was very common when Bayh-Dole was passed (though now many universities have adopted an in-house technology transfer model and advocate against the use of agents).  It is therefore understandable that Bayh-Dole would be drafted to permit the continued use of research foundations as agents.

The other situation is less discussed and involves allowing the inventors to maintain title to inventions but requiring sufficient cooperation between the university and inventors to meet the obligations of the SPRC–a non-exclusive license to the government, reporting on utilization, preference for small business and US manufacture, and the like.  All of this can be accomplished without the university taking ownership of the invention or requiring ownership to pass to a designated agent.   Nothing in the SPRC actually requires the university to compel inventors to assign their rights to subject inventions.  Furthermore, nothing in the SPRC requires the university to have agreements in place to ensure assignment.  Even 37 CFR 401.9 does not indicate that the only way inventors can end up with ownership is by means of the 401.9 process, at the end of a line of choices by the university and agency. 401.9 merely is at the end of those choices. But inventors start out with ownership, and nothing in the SPRC requires the university to disturb that ownership when it elects to retain title. Assignment, if it is desired, could be entirely voluntary on the part of the inventors.  If the university is unable to obtain an agreement that permits it to meet its SPRC obligations on terms it finds acceptable, then the university always has the option to decline to retain title, and turn the management discussion over to the agency and inventors.

Given all this, if a university does seek assignment, it has three routes to it.  One involves having an agreement in place with inventors under which they agree to assign such inventions.  This could be an employment agreement with an invention clause, a separate agreement that is required for employees to participate in sponsored research, or a policy requirement that is met when an invention is made using university facilities or other resources.  Despite claims that such an agreement is required by Bayh-Dole, or essential to compliance with Bayh-Dole, an assignment agreement is not required.  The university could leave it as a voluntary arrangement, as described above, negotiated on its own terms to the satisfaction of both the university and its inventors, dealing as equals and with nothing forcing the issue one way or another.  If no arrangement can be made, then the university declines to retain title, and the agency takes the lead in discussions with the inventors. While this approach is rather attractive in organizations that are based on respect rather than distrust, love of process, and self-interest, there is a third approach available as well.  This approach involves relying on the (f)(2) agreement, which like the language pertaining to government rights in the event of a contractor electing to retain title, is also drafted without specifying who is authorized to request paperwork to permit patent applications to be filed or establish the government’s rights in subject inventions.

When a university elects to retain title, it has standing under (f)(2) to request assignment, just as the agency would have, were the university to decline to retain title.  Thus, even in the absence of an employment agreement or other private invention assignment arrangement, the university has available the (f)(2) agreement on which it can rely to obtain assignment of subject inventions.  The university may request assignment be made to itself, or to another organization that it designates (and which meets the requirements of the SPRC).  In this way, the SPRC is self-implementing.  It does not require any further policy, agreements, or administrative offices on the part of the university.  The (f)(2) agreement is sufficient. This approach is remarkable in its simplicity.

Once the university and the inventors have worked out an arrangement that meets the requirements of the SPRC, the university can file patent applications, grant the government a non-exclusive license, and set about using the patent system to promote the utilization of subject inventions, collaborate with industry, help small businesses, stimulate American manufacturing, encourage competition and commercialization, prevent adverse effects on further research, protect the public public from non-use or misuse of inventions, and reduce administrative overhead–all those good things in 35 USC 200.

This then is an overview of the flow of invention management control under Bayh-Dole, a law applicable to federal agencies that then use a standard patent rights clause in funding agreements with universities.  Universities, in turn, agree to the SPRC to obtain funds on behalf of their investigators, who have their own relationship with the funding agencies.   The SPRC serves to protect the public, inventors, industry, and government from the choices and practices of university administrators in the absence of case-by-case agency review of every subject invention that university administrators or their patent agents might seek to manage.  In all of this, the (f)(2) agreement is pivotal, as it provides the link between the university and its research employees with regard to those employees’ obligations to the government.

It is a shame, then, that I don’t know of a single university that implements the (f)(2) agreement as it is specified in the SPRC.  When I asked about this agreement early in my work at the the University of Washington, the Director of Technology Transfer put it off, saying, “We won’t do it until an agency specifically requires us to comply.”  Instead, universities substitute policy statements and assignment requirements directed at the *university* for the *university’s benefit*, not to protect the *government’s rights* as the SPRC directs.  No wonder administrators and university attorneys are increasingly strident about assignment agreements.  They are attempting to find a way to comply with the SPRC without actually following the requirements that the SPRC lays out for them.

I wonder if it might not be a better relationship all the way around if university administrators were to follow the SPRC, pull out of their increasingly corporate model of ownership and control, and return university research to the course that made it so highly attractive to the government and the public, and the envy of the rest of the world–that of providing the greatest freedom possible to university investigators to invent, act on opportunity, and where institutional resources are desired, to create an arrangement that works for the local circumstances as they present.  It takes a pretty special group of researchers and administrators to be ready to take on the capabilities and mutual respect assumed by Bayh-Dole.   An approach to federally funded research that opts for freedom makes just this assumption and stands to present to the world the most effective approach to advancing science, research, innovation, and community development.

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8 Responses to Mapping Bayh-Dole Flow of Control

  1. David says:

    Excellent post. If no university is implementing (f)(2) as it is specified in the CFR, why is this not being caught as an “exception” in institutional single audits or other visits from cognizant agency auditors?

    • Administrator says:

      Good question. A number of years ago there were some audits for the federal funding statement in patents, and the word spread quickly and folks went back and redid a lot of patents where they had ignored the marking requirement. Auditors are only as good as what they look to audit. They don’t appear to audit for a number of things in the SPRC:

      (1) the use of funding in excess of costs–it is to be used for scientific research or education. My sense is that universities use it for *any* kind of research plus they use it to support other things in technology transfer besides subject inventions (like, starting companies on business ideas, not inventions).

      (2) costs directed at non-subject inventions. The SPRC expressly allows use of funds to support costs of managing subject inventions, not any inventions in university portfolios. I know of no university that breaks out its licensing income for subject inventions and accounts for it separately.

      (3) Annual reporting of utilization. It is not clear that agencies require annual reports, and it is not clear that universities provide these reports, and when they do, they carry the information required.

      (4) Confirming license to the government. Some agencies require this with diligence. Others appear not to follow up requiring the paperwork.

      (5) Education program to make research employees aware of the importance of timely disclosure. There may be a web site here and there, or a brochure. But I don’t think anyone has been audited to confirm the education exists, is up to date (especially in light of Stanford v. Roche!), and is effective.

      From an entirely different angle, universities are now expected to track IP on their books as part of the implementation of GASB Statement 51. That will mean some interesting decisions regarding valuation and whether an invention is for university use (a research tool) or for marketing to others, which in turn might set up further interesting issues with regard to unrelated business income tax.

      • David says:

        >>Auditors are only as good as what they look to audit.

        Quite so. This might be an interesting leverage point for many of the issues about which you are concerned. A letter to the director of audit at ONR (or some such) might place some of these issues on the record, as might an informational inquiry to the professional staffs of one or more of the accounting standards boards. I say this as someone generally quite sympathetic to the Bayh-Dole framework but also sharing many of your reservations about cynical institutional actions and postures.

  2. Administrator says:

    Yes, ONR would be the place to start, as they have contractor audit figure out–and hey, their west coast office is only a few blocks away here in Seattle. But mostly, the funding agencies don’t appear to care much beyond getting final invention reports squared with invention disclosures, seeing agency and contract show up on the face of issued patents with govt rights legend. Some may even ask for utilization reports. Otherwise, it appears that universities are being allowed to make it up as they go.

    The underlying concern is not to trip universities up on technicalities, but rather to show that these little things are adding up to a seriously problematic attitude about invention, innovation, research, and science.

  3. Tim says:

    Excellent post, very informative. Is this flow chart the same when we start talking about subcontractors? Does 401.14(g) put the subcontractor is the shoes of the contractor? Suppose a university is a grant recipient and gives the money to some company (first-tier subcontractor), but does not comply with the Regulations and does not get any agreement in place between the company and the university. Suppose further that the first-tier contractor works with an inventor (no agreement in place), and that inventor conceives of the invention, and it is reduced to practice utilizing the first-tier contractor’s resources using the grant money. Where would the onus of reporting subject inventions lie in that situation? First-tier contractor, the inventor? I’ve got to believe that some people in university offices have no idea of their obligations once they receive government funding, and are simply handing out money to projects they think will be fruitful.

    • Administrator says:

      Tim–a number of questions, and many variations. Let’s assume compliance, first. The funding agreement is broader than the SPRC, so there may be other clauses pertaining to the procedures for subcontracting. Circular A-110 (2 CFR 215.5) deals with subawards in grants, and puts universities and non-profits on notice that they must comply with the Circular (and therefore with the SPRC, since it’s included by reference at 215.36(b)). For contracts, the FARs have various requirements for subcontracting, such as agency approval (see FAR 44.201-1, for instance). So before there can be a subaward or subcontract, the recipient or contractor (as the case may be) has to follow other requirements of the funding agreement. If there’s breach of contract, then the government has remedies. For a grant, these include termination (215.61) and enforcement (215.62). For a contract, there are dispute provisions in the FARs, such as FAR 52.233-4.

      401.14(a)(g) provides that the SPRC flows down for grants and contracts with nonprofits and small businesses, the patents rights clause appropriate to other subawardees is applied from the FARs or DFARs, and provides further (3) that for contracts, subcontractors end up with a contract with the government regarding inventions. Essentially, this is a substitution of parties, which is anticipated in the definitions at 401.2(a). In that case, (g) puts the subcontractor in the position of the contractor with regard to a patent rights clause, but the particular clause may be the same SPRC agreed to by the contractor or may be another patent rights clause required by the FARs. Of course, if there are exceptional circumstances, then there can also be a custom subcontracting clause as well. Note that under (g), it is the subcontractor who has the obligation of reporting any subject inventions of the subcontractor. Since the contractor agrees not to have any interest in those inventions–at least not as a condition of the subcontract, and therefore not within the funding agreement–the contractor has no obligation nor standing to report a subcontractor’s subject inventions. For contracts, FAR 52.227-11 is the primary clause, and it directs contractors to FAR 27.3 to determine how to construct the flow down invention rights clause in the subcontract.

      Now, non-compliance. Since these are matters of contract, it isn’t appropriate to say–well, the subawardee/subcontractors just have to do it, since it’s the law. It’s a matter of contracting and delegation, agency review and approval, and remedies for breach. If the recipient/contractor fails to flow down the appropriate clause, then the subcontractor does not have any obligation to report inventions. If the subcontractor is complicit in the use of federal funds, the government may have remedies against both the contractor and subcontractor.

      If the subcontractor worked with an inventor but lacks an invention agreement and/or hasn’t required (f)(2) agreement, then it’s not an invention “of the subcontractor”, and the government doesn’t have assurance of rights, the contractor doesn’t have rights, and the subcontractor doesn’t have rights in the invention.

      As to your last thought, the money doesn’t come to university offices for redistribution–it comes to the university specific to a proposal with a detailed budget that has been submitted and approved for funding. Often subcontractors have been identified in the proposal as well. In my experience, university sponsored projects administrators are very careful with subcontracting. For grants, where most of their activity is, subawards are with other universities and non-profits, and everyone follows Circular A-110. Where there are contracts, the biggest challenge is deciding whether the SPRC applies or another clause in the FARs.

      • Tim says:

        So assuming noncompliance (out of ignorance), is there any kind of amnesty to rectify the situation? Can the inventor(s) who had no invention agreement in place with the subcontractor, go to the grant awarding federal agency and say “We know now that there were supposed to be some disclosures made. We didn’t, we’re sorry. But we’ve got this groovy invention and we would like to retain title. We know that federal money touched this project and thus subject to Bayh-Dole. What can we do to make things right?” I wonder how willing the federal agency would be to deal with this kind of stuff even after the deadlines for disclosure had passed. This stuff is just really fascinating!

        • Administrator says:

          There are two forms of non-compliance. One is with the contractor failing to flow down obligations in a subcontract. The contractor is liable for that, but the inventors engaged by the subcontractor are not. Bayh-Dole applies to federal agencies, directing them to use a particular contracting clause. It does not apply to the inventors. They have done nothing wrong. They never bargained to deliver title to invention, and there is no law that says they must give up title anyway–not to the subcontractor, not to the contractor, not to the government. This is a risk agencies run in choosing who to enter into funding agreements with. The law doesn’t create a bunch of contracting apparatus only to say, that’s for show, really the law reaches to inventors anyway, so even if they are ignorant of the source of funds and never agree to the terms and conditions that are supposed to go with those funds via contract, somehow they still must comply as if they did. Why have the whole apparatus for contracting if the contracting doesn’t matter?

          If the contractor fails to flow down obligations, that’s a breach. The subcontractor, if it does not know the source of funds and what the contractor should be requiring, is not in breach of contract (and certainly not in breach of Bayh-Dole–since it doesn’t apply to the subcontractor anyway) in not having an invention assignment agreement with the inventors or an (f)(2) agreement with them. I don’t see any liability the subcontractor or inventors are exposed to. They haven’t breach a contract, they haven’t broken the law. The invention rights the agency bargained for are not available via contractual requirements. The agency has remedies against the contractor for this, but the agency does not have the reach to demand the invention from inventors anyway, and the contractor cannot say, “federal law requires that you disclose and assign on request to the government, even if we screwed up and didn’t do the subcontract properly.” I don’t know whether the government could use the breach as a defense for infringement if the inventors were to bring an action. But the government might be able to sue the contractor for whatever the settlement is for such an action.

          The SPRC (d) sets out when the government can obtain title–including when the contractor fails to disclose. But if the contractor fails to flow down the SPRC, then what the subcontractor does is not a subject invention, and is not subject to disclosure, and if it was subject to disclosure, that responsibility would be with the subcontractor as well, under the patent rights clause flowed down. The contractor would be exposed to misspending money, but the subcontractor if acting without knowledge would not be.

          Again, federal money touching a project is not the determinant of the government’s interest in inventions under funding agreements. What matters is the flow of contracting requirements from the agency to contractor, and from contractor to its employees and subcontractors, and for subcontractors to their employees.

          There are other holes: the SPRC does not deal with inventions made by clerical and non-technical workers–they don’t have to report or assist or establish the government’s rights, nor does it deal with non-employees–visitors, informal collaborators, volunteers. If, however, the university demands that these other folks sign invention agreements with the university, so that the university claims ownership (or the right to claim ownership) of what they do on the project, then one could argue these are “inventions of the contractor made in the performance of the funding agreement” and thus are subject inventions, reportable, and subject to the university’s obligations under the SPRC. In such a case, however, it is the university expanding its claims (without any mandate to do so–certainly not in the SPRC), and offering those additional rights to the government.

          Consider–a university research is working with federal funds. She talks with a friend at a company about a problem in her research. The friend suggests a clever approach and there’s an invention. The friend has an employment agreement that says she will assign to the company, and the invention, is within scope of that agreement. The friend’s co-invention is not subject to the SPRC even though the invention is a subject invention as far as the agency and contractor is concerned. The SPRC is concerned specifically with is the title to invention that the contractor has the means to obtain–from its own research employees, not from everyone else. That is, inventions “of the contractor”. There are no no-collaboration/non-disclosure/review before publishing/trade secret requirements in federal funding agreements unless there is classification or other exceptional circumstances (such as NASA’s FAR Supplement (d)(3) variation on 52.227-14 (see NASA FAR Supplement 1852.227-14–restricting publication or release of computer software). Bayh-Dole does not mandate that there cannot be such disclosure (could blow patent rights), collaboration (could move inventions to non-contractors, could make for joint ownership), or consulting (could move results of projects outside funding agreement performance for development rather than remaining within the funding agreement). These are not the concern of Bayh-Dole, and are not in any way prevented by the SPRC. The SPRC is not set up to ensure that universities obtain exclusive title to all potential inventions that could arise as a result of university researchers doing work. The law does not support university administrative claims that it does, or should, or that was the intent. It is, in fact, shocking that university administrators would even be making such claims! Universities in particular operate open labs and encourage publication and public engagement. The impetus to argue against these freedoms merely to get monopoly patent positions from which to make money and litigate while claiming public interest and necessity to support private investment in inventions is most incredibly wrong-headed. The internet would never have happened, if university patent administrators of today had been there to prevent collaboration, prevent working standards, lock up rights for future sale to a monopolist. What cool stuff are they prepared to suppress today? 3d printing? Synthetic biology? Regenerative medicine? Energy storage? There are plenty of excellent opportunities to screw things up, and there’s every indication that university patent administrators are prepared to do this–and say it is in the public interest to do so. Wowser.

          Bayh-Dole is set up with an assumption that contractors will try to limit their exposure to subject inventions, so there are procedures by which the government can review determinations of subject inventions and contractors can appeal government decisions. One would think these appeals would be to argue an invention is not subject after the government has said it is. But the university practice appears to go the other way–the administrators assert that things are subject inventions when they very well may not be, and then aim to use the SPRC in some way to force assignment and prevent independent deployment of the inventions.

          In Stanford v. Roche, Roche made this point–that Stanford never produced the funding agreements that they claimed resulted in the inventions, never showed that the inventions came within the statements of work of those agreements. Stanford merely asserted that the inventions were subject, and then tried to invoke Bayh-Dole to claim that they had ownership regardless of the SPRC contracting, regardless of the requirement to have an (f)(2) agreement, regardless of the approval for the post-doc to spend 9 months at the company learning its proprietary technology. Stanford argued (and a gaggle of university administrators agreed), that the contracting was just for show and did not matter, that Bayh-Dole applied directly and vested title with the university. The CAFC said, follow the contracts, and the Supreme Court agreed.

          The contracts matter. Universities holding monopoly patent rights from federally supported research does not. The idea behind the SPRC is that universities might manage invention rights that inventors request that they manage, not that universities have a mandate to compel such rights from inventors, and prevent anyone else from participating. It is entirely possible for university administrators to compel rights and shut down collaboration, with policy, rhetoric, and bullying. But federal research and innovation policy, and Bayh-Dole in particular, with its SPRC, has absolutely nothing to do with it.