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Total compliance with Bayh-Dole assignments must be goal

By Jesse Schwartz
Published: March 13th, 2019

The recent update in federal regulations regarding Bayh-Dole compliance has some university TTO leaders wondering just how much is enough when it comes to getting faculty inventors to sign over their intellectual property. Is anyone really getting 100% compliance from faculty? Is an 80% or 90% compliance rate good enough?

Not really. While it is true that hardly anyone gets 100% compliance with anything, you still must strive for it with Bayh-Dole assignments, say several IP attorneys. The risk is too great if it turns out that one of the few patents not assigned to the university turns into something big and your researcher assigns the rights to someone else.

Exactly what level of compliance is acceptable is a matter of debate and depends on how much risk you’re willing to take. In 2018 the National Institute of Standards and Technology (NIST) issued new regulations (37 CFR Part 401) regarding how the Bayh-Dole Act is implemented, including a new requirement that contractors ensure employees are under a written obligation to assign any subject inventions for the entirety of the funding agreement period.

The updated rule stems from the case In Stanford University v. Roche Molecular Systems, Inc., 563 U.S. 776 (2011), in which the Supreme Court held that rights to subject inventions initially belong to the inventor in the absence of an active assignment – and not merely a promise to assign rights later. NIST reacted to the Stanford case with the new regulation by saying universities must require employees to sign agreements that presently assign their entire title and interest, including any future interests, in any subject inventions to the university.

Most universities have policies outlining the allocation of IP ownership between inventors and the institution and requiring assignment, but they may be insufficient in light of the updated regulations, notes K. Lance Anderson, JD, an attorney with Dickinson Wright in Austin, TX.

“Not having an active assignment policy means you’re exposed,” Anderson says. “Making sure you have compliance by your faculty researchers is another risk point, so the best practice should be to have all related policies and procedures speak to an active form of assignment. That’s the first stage in at least creating the legal obligation of the faculty researcher or inventor.”

While most institutions have likely adjusted their assignment language to match the Stanford v. Roche decision, that doesn’t mean they’re getting full compliance from their researchers, many of whom may balk at signing over their rights. The goal must be 100% compliance, says Jeffrey B. McIntyre, JD, a partner in the litigation and chemical departments with Oblon, McClelland, Maier & Neustadt in Alexandria, VA.

The NIST regulations require that universities have employees under written obligation to assign, typically an easy enough task, but they do not specify how to make them assign or what level of compliance is expected. The real risk from inadequate compliance comes in the form of universities losing out on potentially promising IP, along with any litigation expenses that would accompany a dispute, McIntyre says.

Many universities will fall short of 100% compliance, concedes IP attorney John Yang, JD, a Sacramento, CA-based partner in the law firm LeClairRyan. Realistically, universities can be satisfied with an imperfect compliance rate even though it though it brings unwanted risk, he says. “An acceptable compliance rate would be having at least 90% of the patent assignment paperwork signed, filed and recorded with the United States Patent and Trademark Office,” Yang says.

A detailed article on ensuring assignment compliance appears in the February issue of Technology Transfer Tactics. To subscribe and access the full article, along with the publication’s complete 12-year archive of best practices and success strategies for TTOs, CLICK HERE.

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