IP Advocate: Does that mean that the university automatically owns inventions made with federal funds? That the inventor is required to assign their invention to their university?
Dr. Barnett: No - Bayh-Dole does not require assignment of inventor's patent rights to his or her university for federally funded research.
IP Advocate: Why is that?
Dr. Barnett: Because, at a minimum, Bayh-Dole was drafted to recognize the existing diverse practices that were in play at the time. Some universities had their own patent licensing offices, others used affiliated research foundations, and others contracted for patent management services as needed. The law did not aim to eliminate some of these practices. In that regard, it is rather deftly drafted to give universities a lot of range in what they can do. The aim of the law is to bring coherence to the federal side of the relationship. More importantly, the broad objective of Bayh-Dole, to use patent rights to promote the use of federally supported inventions, has little to do with the university hosting the research. It's only when a university has a reason to advance the government's interest that Bayh-Dole gives it the opportunity to step into a management role with regard to inventions and patents.
IP Advocate: Was Bayh-Dole intended to benefit universities?
Dr. Barnett: Whatever the motivations that prompted folks to support Bayh-Dole, the law as it stands aims to protect the government's interest in an invention - there is no language or intent that suggests that a university is to operate in its own best interest to exploit the invention or patent rights. While self-interest is not a bad thing in itself, there's nothing in Bayh-Dole that makes this a requirement. If there is a weakness in Bayh-Dole, perhaps it is that the law underestimated how susceptible university personnel can be to self-interest, even while engaged in publicly funded research with express claims that the results are in the public interest. One has to end up with the equation institutional self-interest = public interest for this to work. It's not a workable equation. It's certainly not in Bayh-Dole.
IP Advocate: Dr. Barnett, take us into the letter of the law. Where does it specify all of this?
Dr. Barnett: The actual language relating to what written agreements are required is found in Section 37 of the Code of Federal Regulations, Part 400. The standard contract clauses are set out in 401.14(a), and it is these that form the obligations on a university contractor when a federal award is made. Part 401.14(a) (f) is headed clearly "Contractor Action to Protect the Government's Interest". This is very important - again - the Act is not about university profit - it is about advancing the public interest in research it funds. Certainly there is provision for a university to profit from the licensing patents (whether done directly or through an invention management agent). But even when that happens, the Act makes it clear that the royalties are to be shared with inventors and the remainder used for "scientific research or education" (see 37 CFR 401.14(a) (k) (3).
This provision has been generally read to set up a squabble between inventors and the university administration over how licensing revenue over costs will be handled. This also is a faulty assumption propagated by administrators. Actually, Bayh-Dole allows all the proceeds from licensing to be treated as an expense "incidental to the administration of subject inventions" and allocated to the inventors entirely. One can see that universities are called out as stewards.
If an agency allows university inventors to retain their personal rights to inventions, the Act does not require any such allocation of income for scientific research or education. It is only when the university shorts the inventors the full amount of the income less their other costs that the Act steps in to guard against the steward dipping into the funds for its own purposes. One may note, as well, that the Act does not even restrict the "scientific research or education" to the host university's own accounts. I don't know of a university, however, that actually tries to support research or education using Bayh-Dole income other than in its own operations. It's all very narrow and selfish, from a public perspective.