COMMITTEE 402: UNIVERSITY INTELLECTUAL PROPERTY LICENSING
Subject 1 Bayh-Dole Act As Affecting Inventorship
PROPOSED RESOLUTION 101-1.
RESOLVED, that the Section of Intellectual Property Law favors in principle the Constitutional
principle that the inventor is the original owner of an invention for purposes of Federal patent
law and retains the right to assign the invention at any time;
RESOLVED, that the Section of Intellectual Property Law favors in principle the rights of
contractors to retain ownership of subject inventions made by an inventor under a funding
agreement as defined under 35 U.S.C. §201 of the Bayh-Dole Act (35 U.S.C. §§200-212) and as
implemented at 37 CFR 401, Presidential Memorandum on Government Patent Policy to the
Heads of Executive Departments and Agencies dated February 18, 1983, and Executive Order
12591, Facilitating Access to Science and Technology dated April 10, 1987
RESOLVED, that the Section of Intellectual Property Law favors in principle that, outside of
funding agreements, the inventor retains the right to freely assign the invention at any time, and
the rights of the contractors to retain ownership of subject inventions made by an inventor under
a funding agreement do not affect the rights of inventors to assign their inventions made outside
of the funding agreement;
RESOLVED, that the Section of Intellectual Property Law favors the principle that Bayh-Dole
Act (35 U.S.C. §§200-212) and as implemented at 37 CFR 401, Presidential Memorandum on
Government Patent Policy to the Heads of Executive Departments and Agencies dated February
18, 1983, and Executive Order 12591, Facilitating Access to Science and Technology dated
April 10, 1987 does not reverse the Constitutional principle that the inventor is the original
owner of a patented invention; and
NOW THEREFORE, the Section supports an interpretation of the Bayh-Dole Act which does not
reverse the Constitutional requirement that an invention be first owned by an inventor.
PROPOSED RESOLUTION 101-2.
RESOLVED, that the Section of Intellectual Property Law favors the principle that Bayh-Dole
Act and as implemented at 37 CFR 401, Presidential Memorandum on Government Patent Policy
1
to the Heads of Executive Departments and Agencies dated February 18, 1983, and Executive
Order 12591, Facilitating Access to Science and Technology dated April 10, 1987 does not
interfere with private party contracts or assignments affecting the rights in a patented invention
to the extent that the private party contracts or assignments were made prior to entering into the
funding agreement; and
NOW THEREFORE, the Section supports an interpretation of the Bayh-Dole Act which does not
interfere with private party contracts or assignments affecting the rights in a patented invention
made outside of a funding agreement.
PROPOSED RESOLUTION 101-3.
RESOLVED, that the Section of Intellectual Property Law supports the rule in Board of Trustees
of the Leland Stanford Junior University v. Roche Molecular Sys. Inc.
583 F.3d 832, 249 Ed. Law Rep. 612, 92 USPQ2d 1442, Fed Cir, 2009, confirming that the
Bayh-Dole Act and as implemented at 37 CFR 401, Presidential Memorandum on Government
Patent Policy to the Heads of Executive Departments and Agencies dated February 18, 1983, and
Executive Order 12591, Facilitating Access to Science and Technology dated April 10, 1987
does not interfere with private party contracts or assignments affecting the rights in a patented
invention to the extent that the private party contracts or assignments were made outside of the
funding agreement; and
NOW THEREFORE, the Section supports filing an amicus brief on the side of Respondents
defending the rule that the Bayh-Dole Act does not interfere with private party contracts or
assignments affecting the rights in a patented invention made outside of a funding agreement in
the Supreme Court, which has granted a petition for review of the Federal Circuit’s decision. (Bd. of
Trustees of Leland Stanford Jr. University v. Roche Molecular Systems, 09-1159 (Supreme Court
2010).).
Past Action
The ABA IPL Section has not approved resolutions directly on point, but has approved the
following which are consistent with the principles of contractor ownership and preventing
compulsory licensing of intellectual property. The ABA IPL Section has approved the following
resolutions preventing compulsory licensing of intellectual property, which would be consistent
2
with resisting an interpretation of Bayh-Dole which breaches private party licensing in favor one
party as opposed to another party:
AR87-R101-7 (Passed 2002): Section reaffirms its opposition, in principle, to statutory
provisions permitting compulsory licensing of patents and, Specifically, the Section
opposes enactment of the “Affordable Prescription Drugs and Medical Inventions Act'”
H.R. 1708, 107th Congress, as introduced on May 5, 2001 and thereafter referred to the
House Committee on the Judiciary and House Committee on Energy and Commerce, or
similar legislation.
AR108-1 and 413-1 (Passed 2006): Section reaffirms its opposition, in principle, to
statutory provisions permitting compulsory licensing of patents, and Specifically, in
furtherance of such principle, the Section opposes any state, local or territorial legislation
that provides for compulsory licensing of a patented product or process.
SP 81-R6; ABA 77A (Passed 1976, Retained 1997; Retained 2007): ABA opposes in
principle the adoption of agency regulations or the enactment of legislation which would
require access to, or mandatory licensing of, a contractor's background patents as a
prerequisite to approval of a government research and development contract.
The ABA IPL Section has approved the following resolutions supporting the retention of
ownership by a contractor vis-à-vis the Government in the context of procurements and funding
agreements, which is consistent with allowing an interpretation of Bayh-Dole which allocates
rights only between the Government and private parties without necessarily allocating rights
between the private parties:
SP 81-R6; ABA 77A (Passed 1976, Retained 1997; Retained 2007): ABA opposes in
principle the adoption of agency regulations or the enactment of legislation which would
require access to, or mandatory licensing of, a contractor's background patents as a
prerequisite to approval of a government research and development contract.
SP 63-R406-4 (Passed 1984, Retained 1999; Retained 2009): Section favors in principle
that title to data developed under a Government contract should remain with the contractor
with a non-exclusive royalty free license to the Government to use for government purposes.
SP 40-R107-1 (Passed 1985, Retained 1999): Section favors in principle the presumption
that confidential technical data and computer software disclosed to agencies of the United
States Government under contracts with the Government remain the property of the
contractor unless the agency can demonstrate that unlimited rights in the agency are
necessary to accomplish the objective of the contract under which the data was obtained.
AR118-R107-5 (Passed 1992, Retained 2003): Section favors, in principle, the establishment
of federal acquisition regulations under which the rights of a contractor or subcontractor in
proprietary technical data are established independently of the Government's competitive
reprocurement needs.
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The ABA IPL Section has approved the following resolution supporting the principle of
the inventor being the original owner of a patented:
R101-5 (Passed 2004): Section reaffirms its support in principle for enactment of
legislation providing that the right to a patent shall belong to the inventor who first files
an application for patent containing an adequate disclosure (35 U.S.C. §112) of the
invention or, in the event of an assignment of rights, shall belong to the assignee thereof,
and Further, the Section supports concomitant efforts to conclude international patent
harmonization agreements that incorporate such principle, and In addition, the Section
rescinds the following past actions as potentially inconsistent with the foregoing: 1992 AR73R102-8; Defeated by ABA 1993, 1991 AR58-R102-1, 1987 SP 57-R102-1, and 1967 S.SP 71.
Discussion
Background on Bayh-Dole
The Bayh-Dole Act1, through Federal Acquisition Regulations and/or 37 CFR 401 apply
to the typical government funding agreements: procurement contracts, grants, and cooperative
agreements.2 While seemingly an obscure act, Bayh-Dole is often held up as one the most
important pieces of legislation governing patent rights resulting from collaborations between
private institutions and the Government, and is a model on which other countries have based
their attempts to promote technology transfer between Government and the private sector.
Under Bayh-Dole, small businesses, universities, and other non-profit organizations may
elect to retain title to subject inventions rather than conferring title to the Government.3 In
return, the Government receives a license right to the subject inventions to use for Government
purposes (including procurement).4 Pursuant to executive order, these same rights are conferred
on large contractors5 to the extent permitted by law.6
1
Bayh-Dole Act, 35 U.S.C. §§ 200-12.
2
35 U.S.C. § 201(b).
3
35 U.S.C. § 202.
4
35 U.S.C. § 202(c)(4)( the Government shall receive "nonexclusive, non-transferable,
irrevocable, paid-up license to practice or have practiced for or on behalf of the United States
any subject invention throughout the world."). See also FAR 52.227-11(d)(2) and DFARS
252.227-7038(d)(2).
5
The term "large contractors" is intended to cover any organization or person that does
not qualify as a small business or nonprofit organization under the Bayh-Dole definitions. See
35 U.S.C. § 201.
6
Executive Order 12591. See also Memorandum on Government Patent Policy to the
Heads of Executive Departments and Agencies (February 18, 1983). The basic government
4
The rights extended are specific to those accruing under only funding agreements, where
the invention is first conceived or actually reduced to practice. 7 Thus, unless the work is being
performed outside of the United States,8 the Government typically only obtains a license right as
opposed to ownership to the subject invention.9 Importantly, this definition specifically
disclaims certain inventions: i.e. those which are outside of the statement of work of a funding
agreement.
For instance, in Rutgers v. United States10, the Court of Federal Claims found that an
invention conceived during a contract but outside the statement of work was not a subject
invention. The Court reached this decision even though the statement of work was later
modified to include the invention since there was no evidence that the invention was later
actually reduced to practice under the contract having the enlarged statement of work. In
contrast, in Mine Safety Appliances Co. v. United States11, since the first reduction to practice of
an invention occurred between contract phases but was within the statement of work, the
resulting invention was deemed a subject invention since it has a “close and umbilical
connection” to the work.
It is important to understand that, while the Government acquires rights in subject
inventions, conversely, the Government does not acquire rights in other existing inventions
unless specifically provided for.12 If background inventions are needed, the Government is
required to pay for the licensed use for these background/non-subject inventions.13 As such, for
license, and march-in rights, are also applied to large businesses under 35 U.S.C. § 210(c), unless
provided otherwise in agency-specific statutes.
7
Funding agreements contracts include grants, contracts, and cooperative agreements.
Procurement contracts do not include other contracts, such as Cooperative Research and
Development Agreements (CRADA)s and Other Transactions.
8
FAR 27.303(e) and FAR 52.227-13.
9
FAR 52.227-11 (small contractor) and DFARS 252.227-7038(h)(large contractor).
10
51 U.S.P.Q.2d 1642; 41 Fed.Cl. 764 (Fed. Cl. 1998).
11
150 U.S.P.Q. 453 (Ct. Cl. 1966).
12
E.g., DFARS 252.227-7038(i), DEAR 952.227-13 (c)(1)(v), & NFS 1852.227-70 (c)(2)
(stating that no rights are obtained in "any invention other than a subject invention").
13
E.g., FAR 27.306 (requiring head of agency approval for licensing background
inventions for use by the Government within meaning of 28 U.S.C. § 1498(a)), FAR 27.201
(requiring authorization and consent clauses to prevent injunctions for use of non-subject
inventions within meaning of 28 U.S.C. § 1498(a)); and DFARS 227.7004 (discussing Defense
Department regulations for settlement of claims and licenses). This requirement is also
consistent with Article 31 of Annex 1C, Agreement on Trade-Related Aspects of Intellectual
Property Rights, to GATT (Uruguay Round) and North American Free Trade Agreement
(NAFTA) as set forth in FAR 27.204.
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background inventions which are not subject inventions, the Government must acquire a license
to use the patents in the same manner as a private individual. In this sense, there is no
requirement that all necessary inventions have their ownership bundled in one entity, but instead
there is an understanding that the Government will only obtain rights in those inventions to
which the contractor is able to obtain title.
It is also important to understand that Bayh-Dole and its implementing regulations
require the contractor to have a proper system in place to ensure the Government obtains its
rights in subject inventions. Bayh-Dole requires the contractor provide record keeping to ensure
that the Government obtains the benefit of the acquired right.14 The entire reporting system is
predicated on the business having such a plan, and the patent clauses actually require large
contractors to ensure that such a plan exists in order to adequately track and report inventions.
Indeed, the assurance that such a plan exists is a condition of compliance with the clause in the
first place and can be grounds for withholding of final payment.15 Thus, there is a contractual
requirement for which effectively requires that the contractor obtain the necessary assignments
from the inventor for subject inventions, and there is no express revocation of the background
rule that the invention is first owned by the inventor.16
Among these reporting requirements is a requirement to report subject inventions,17 and
after reporting the existence of the subject invention, the contractor is required to inform the
Government18 whether the contractor will be keeping ownership of the invention (i.e., title) and
in which countries. The contractor must also inform the Government where it is declining title
as to filing in other countries, or failing to make a maintenance fee payment, or otherwise
allowing the application to go abandoned in situations where the contractor is otherwise not
maintaining protection for the subject invention.19 Where the Government also declines title so
as to allow the invention to go abandoned or become unenforceable, Bayh-Dole allows the
Contractor and Government to allow the inventor to have title.20 It is important to note that the
inventor could also be an assignee of title if the contractor directly assigns the invention to the
inventor instead of declining title, which is a more likely situation since directly assigning title
would allow the contractor to obtain royalties for the subject invention.
14
E.g., FAR 52.227-11(e)(2) & DFARS 252.227-7038(e)(5)(requiring giving instructions
to employees on compliance), and DFARS 252.227-7038(c)(1) & NFS 1852.22770(e)(1)(require administration of patent rights sufficient to identify inventions within 6 months).
15
E.g., DFARS 252.227-7038 (k)(1) & NFS 1852.227-70(g)(1)(i)(withholding of final
payment for failing to establish and maintain procedures to assure that subject inventions are
identified and disclosed.).
16
See Beech Aircraft Corp. v. EDO Corp., 990 F.2d 1237, 1248, 26 USPQ2d 1572, 1582
(Fed. Cir. 1993).
17
E.g., FAR 52.227-11(c)(1) (disclosing new inventions); DFARS 252.227-7038(c)(1).
18
FAR 52.227-11(c)(2); DFARS 252.227-7038(c)(2).
19
35 U.S.C. §202(c); FAR 52.227-11(d); DFARS 252.227-7039(d).
20
35 U.S.C. §202(d); 37 CFR 401.9.
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Thus, Bayh-Dole provides a comprehensive framework to ensure that the subject
invention is commercialized at some level, either by the contractor, the Government, or the
inventor if both the contractor and Government would otherwise allow the patent to go
abandoned. However, Bayh-Dole at best allocates rights between the Government and the
commercial sector, and outside of a situation where all of the private parties are participants in a
funding agreement, does not purport to allocate rights among private parties.
Background on Stanford Junior University v. Roche
In Board of Trustees of the Leland Stanford Junior University v. Roche Molecular Sys. Inc., 583
F.3d 832, 92 USPQ2d 1442 (Fed Cir, 2009), the Federal Circuit reviewed a Northern District of
California decision that found claims of three patents invalid for obviousness and a counterclaim
for judgment on an ownership claim was subject to California statutes of limitation. It affirmed
and vacated parts of the lower court ruling. At issue for purposes of this Resolution, the
discussion on this case will relate only to those portions affecting inventorship and the BayhDole Act, 35 USC §200-210 (“Act”).
As background, the patents claimed methods for quantifying Human Immunodeficiency Virus
(HIV) in human blood samples using polymerase chain reaction (PCR) and correlating those
measurements to the therapeutic effectiveness of antiretroviral drugs. The National Institutes of
Health funded the research. Inventors were researchers at Stanford who also worked on PCR
techniques at Cetus, a private company. Each of the three inventors signed an agreement with
Stanford agreeing to assign his rights to inventions to the university. One of the inventors, Mark
Holodniy, later signed an agreement with Cetus actually assigning all present rights to the
company at the time of the agreement, as well as “’title, and interest in each of the ideas,
inventions and improvements’” that Holodniy may devise ‘as a consequence of’ his work at
Cetus.”
Several years afterwards, Cetus was purchased by Roche who obtained all rights in Cetus’
inventions. Independently, Stanford was receiving funds from the NIH relating to HIV research,
some of which were spent on the invention made by the inventors. Stanford filed a patent
application from which the patents claimed ultimate priority and covering the invention, declared
the patent application to cover a subject invention due to the funding from the NIH, and formally
notified the government it was retaining title to the inventions under the Bayh-Dole Act, 35 USC
§§200-212.
Roche was already using the inventions. After negotiations for licensing from Stanford failed,
this litigation ensued.
The district court had held the Bayh-Dole Act negated the second assignment between Cetus and
Holodniy because the Bayh-Dole Act empowered Stanford to take complete title to the
inventions by reason of the holding in Central Admixture Pharmacy Services, Inc. v. Advanced
Cardiac Solutions, P.C.., 482 F.3d 1347 (Fed.Cir.2007). The Federal Circuit disagreed and
noted that Cent. Admixture had held that when the Bayh-Dole Act's provisions are violated, the
government could choose to take action and title to the patent may be voidable. It is not void:
title remains with the named inventors or their assignees. Nothing in the statute or regulations
indicates title is automatically forfeited. Id., 1352-53. Thus, the Bayh-Dole Act and the holding
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in Cent. Admixture did not automatically void the second assignment to Cetus as it at most
provided the Government a discretionary option to patent rights.
The district court had also ruled that under 35 U.S.C. § 202(d), the inventor could keep title to
his inventions only if a contractor did not elect to retain title to a subject invention. Stanford
argued the inventor’s rights were contingent on his obligations to assign them to Stanford, and
that Stanford's subsequent election of title gave it all patent rights. 583 F.3d 832, 844.
The Federal Circuit disagreed. Stanford was entitled to claim whatever rights were still available,
including the rights of the co-inventors who had not transferred their rights prior to the election.
This inventor, however, transferred his rights to Cetus more than six years before Stanford
formally notified the government of its election of title. Citing Cent. Admixture, the Federal
Circuit noted that as the Act does not automatically void ab initio the inventors' rights in
government-funded inventions, it saw no reason why the Act voids prior contractual transfers of
rights. Id., at 844 citing 482 F.3d at 1352-53,
The Federal Circuit also noted the Sixth Circuit had already rejected the District Court’s
interpretation of the Act’s effect in University of Pittsburgh v. Townsend, 2007 WL 2263079,
2007 U.S. Dist. LEXIS 56860 (E.D.Tenn. Aug. 3, 2007), aff'd, 542 F.3d 513 (6th Cir.2008). The
University of Pittsburgh in a case with effectively identical facts cited the Northern District of
California's analysis of the Act in the current case. 2007 WL 2263079, at *20-21, 2007 U.S. Dist.
LEXIS 56860, at *59-61. The Townsend district court rejected the position, noting “the
University's ostensible exercise of its right to title ... occurred after Dr. Townsend's assignment to
CTI.” Id. at *20-21, at *60-61. As such, the Federal Circuit held that the contractor cannot use
35 U.S.C. § 202(d) as a mechanism to void a prior transfer of rights merely by electing title to
the subject invention. Moreover, since Bayh-Dole was designed solely to regulate the
relationship between the Government and small businesses, there is no like requirement to
govern the relationship between small businesses and their inventors. Thus, any rights retained
by the Government to take title are at the Government’s option and do not automatically require
that the contractor retain a similar take-title rights for prior assigned subject inventions. As such,
since Holodniy had previously agreed to assign title to the invention to Cetus under the second
assignment, Holodniy could not later assign title to the same invention to Stanford as there was no
ownership interest remaining to then assign.
Question on Certiorari
Whether a federal contractor university's statutory right under the Bayh-Dole Act, 35
U.S.C. §§ 200-212, in inventions arising from federally funded research can be
terminated unilaterally by an individual inventor through a separate agreement purporting
to assign the inventor's rights to a third party.
Summary of the Parties Positions
Stanford’s position is that this case raises important issues bearing on whether the university and
the federal government’s rights under the Bayh-Dole Act, 35 U.S.C. §§ 200 et seq. are allowed
to be terminated by an individual inventor through a separate agreement that purports to assign
the inventor’s rights to a third party. Stanford argues that through the Bayh-Dole Act, Congress
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intended to end uncertainty regarding title to federally funded inventions. It is Stanford’s
position that Congress enacted the Bayh-Dole Act to promote commercialization and public
availability of subject inventions. Stanford contends that these goals are accomplished by
vesting ownership of subject inventions in small business firms and nonprofit organizations,
including universities like Stanford that elect to retain title to any subject invention. Therefore,
Stanford maintains that an individual inventor cannot defeat Stanford Universities’ right to elect
to retain title to the patents-in-suit.
Roche’s position is that this case does not raise important issues relating to Stanford’s or the
federal government’s rights under the Bayh-Dole Act, rather Roche contends that this case is
limited to an atypical factual situation that triggers application of settled principles of contract
interpretation. Roche agues that that neither Sanford’s nor the government’s rights in the
patents-in-suit have been affected by the assignment to Cetus, since Stanford co-owns the patents
through assignment agreements from two of the other three inventors. Roche contends that at the
time when Stanford informed the federal government that it elected to retain title to the
inventions under the Bayh-Dole Act, one inventor’s interest in the patents had already been
assigned to Cetus several years earlier. Roche argues and the Federal Circuit agrees, that under
principles of contract interpretation, the language of assignment agreement between an inventor
and Stanford was a mere promise to assign rights in the future. By contrast, the assignment to
Cetus effected a present assignment of the inventor’s future inventions to Cetus. The Federal
Circuit concluded that Roche possesses an ownership interest in the patents-in-suit that deprives
Stanford standing to sue Roche for patent infringement.
9