Posted on December 24, 2010 by Gerry Barnett

Here is a question. Is it a violation of Bayh-Dole for a university to sue a company for infringement of a subject invention for a monetary settlement?

Bayh-Dole sets out its objectives in 35 USC 200. We are not talking here about the secret objectives that university patent administrators believe were the real objectives of the law. No, here we are looking at public text and reasons. Bayh-Dole says, use the patent system to promote the use of federally supported inventions. Bayh-Dole goes on to define practical application and carry this definition throughout the law and the SPRC. Bayh-Dole says, among other things, collaborate with industry, prefer small companies, promote free competition, promote commercialization and public availability of inventions, and protect the public from "nonuse or unreasonable use" of inventions.

Circular A-110, which applies to federal grants to universities, says more: inventions and patents acquired by a university are to be held in trust, with the university acting as trustee, for the beneficiaries of the project or program under which the property was acquired or improved. Even if a university acquires title, it is as a trustee, not as an owner looking out for its own interests. University IP policies that require assignment to protect the interests of the university thus are dubious when it comes to compliance with 2 USC 215.37.

We turn then to infringement litigation. If someone is making unreasonable use of a subject invention, then perhaps there's a rationale to sue for infringement. What might that look like? For instance, if an invention is part of a standard, and a company is representing itself as practicing the standard when it is not (but still practicing the invention), then it makes sense to defend the quality of the standard by asserting infringement.

But if a university is sitting on a subject invention unlicensed and a company shows up working within the scope of a patent on that invention, is that a basis for a trustee for the beneficiaries to do some suing? It would depend in part on whether the company is one of those beneficiaries, or is serving those beneficiaries. Clearly the university itself is not a beneficiary. It's the trustee! To proceed, under Bayh-Dole, the university would have to show damage to someone other than the university*.

I'm thinking that it is not consistent with Bayh-Dole for a university to litigate for infringement where it is essentially a troll, with no licenses in place to practice the invention, and no active development by those licensees. It would make for an interesting defense, as universities come trolling. No university litigation for infringement without stating a Bayh-Dole / A-110 cause of action.