Joint Letter to Department
of Commerce on VA IP Issues
February 15, 2001
Mr. John Raubitschek
Patent Counsel for Technology
Office of Chief Counsel
Department of Commerce
14th Street and Constitution Avenue, N.W.
Room H-4613
Washington, D.C. 20230
Dear Mr. Raubitschek:
We are writing to you on behalf of the Council of Governmental
Relations (COGR), a nonprofit organization representing 143
of the most research-intensive universities in the United
States, and the Association of American Medical Colleges (AAMC),
a nonprofit organization representing all 125 accredited medical
schools in the United States, 420 major teaching hospitals,
and 92 biomedical professional societies, to acquaint you
with two issues between these organizations and the Department
of Veterans Affairs (VA). The gravity of these two issues
leads the organizations to seek advice and guidance from the
Department and to ask you to consider appropriate intervention
by Commerce.
The issues that we are bringing to your attention involve
the very important question of ownership of inventions that
are developed by employees of universities and medical schools
in the course of federally funded research programs in two
different situations where there is a VA connection.
In view of your expertise and your previous involvement in
this matter, we address this letter to your attention. Since
our concern relates to a major issue of policy, we respectfully
send a copy of this letter to the Secretary, as well as to
staff of the National Institutes of Health, a leading sponsor
of research at our institutions.
I. Federally-funded Programs Involving Collaboration with
the VA
The first situation we would like to discuss involves the
case where a university or medical school receives a federal
grant, contract or other funding instrument and where a portion
of the work is carried out using VA facilities or in collaboration
with VA employees.
It is clearly established that universities and medical schools
receiving federal funding have the statutory right to elect
title to inventions conceived or first actually reduced to
practice in the performance of work under the federal program
(35 U.S.C. 202). In spite of the clear rights of the universities
and medical schools to elect title, the VA has issued an increasing
number of invention ownership determinations during the past
year, claiming government ownership through the VA to inventions
made by university employees working under a university or
medical school administered federal program. These determinations
have been made when the university employee uses VA facilities,
collaborates with VA employees and/or has a dual appointment
both within the university and within the VA. When the issue
of university ownership under 35 U.S.C. 200 et. Seq. (Bayh-Dole)
has been raised with the VA, the VA’s response has been to
regard Bayh-Dole as not applicable to the VA.
In response to university concerns over inventions caught
between Bayh-Dole and the VA’s regulations covering VA ownership
rights on behalf of the government, the VA has encouraged
affected universities and medical schools to enter into agreements
developed by the VA called "Cooperative Technology Administration
Agreements". These agreements, which address issues such
as which party will file patent applications, how patenting
will be paid for, how licensing will be handled and how licensing
revenues will be allocated, have been signed by a handful
of institutions. However, because they are based on the premise
of co-ownership which is often not justified by the facts
surrounding the collaboration (as discussed below) and because
the agreements are subject to termination or expiration making
long-term licensing risky, the great majority of universities
and medical schools having VA affiliations have been reluctant
to sign them, leaving ownership of inventions unclear and
unresolved.
In the absence of such agreements, the VA’s predetermination
of entire ownership rights accruing to the government casts
doubts on the ownership rights of the universities and creates
a cloud on the ensuing patent title. This doubt has made it
impossible to license these patents with any of the assurances
necessary to encourage private commercial development. Consequently,
opportunities for timely and effective transfer of these inventions
to the public benefit are lost.
We are also concerned that several VA affiliated institutions
have received notices from the VA that either they must sign
the VA Agreement or the VA will initiate action to have patents
applied for and issued in the name of the university invalidated
on the basis of a unilateral assertion by the VA that it owns
or co-owns the invention.
II. Inventions Claimed by the VA as Made by VA "Employees"
The claims of the VA to ownership or partial ownership of
inventions made by VA employees raises the second issue that
we would like to discuss in this letter. In arguing for VA
ownership of inventions, the VA is using a definition of "employee"
that it has written into its Handbook. The VA uses this definition
as justification for claiming VA ownership to any invention
made by a VA "employee" defined in the Handbook
(at Sec. 1200.18) as including individuals who have a "without
compensation appointment" and those who are "part-time
consultants" to the VA. The basic definition of "employee"
as used by the VA is derived from Executive Order 10096, and
the universities and medical schools well understand that
the purpose of the Executive Order is to provide for a uniform
patent policy with respect to rights in inventions made by
Government employees. However, the concern of the universities
is that the VA has used its power granted under the Executive
Order to frame a definition of "employee" that is
based not on traditional employment, but rather on an administrative
appointment process that it has developed and implemented
primarily to permit an individual to access its facilities
to participate in the oversight or conduct of VA programs.
The VA’s application of its ownership rights to inventions
made by university employees who are VA "employees"
without compensation (WOC) or who are part time consultants
to the VA without regard to the factors surrounding the place,
time, employment status or funding of an invention, but based
solely on an administrative appointment, would appear to violate
the fundamental premise of the Executive Order (determination
of ownership of inventions made within the scope of government
employment) and is, we believe, in direct conflict with the
rights under Bayh-Dole of the universities and medical schools
that are the primary employers of these individuals.
To put the issue more succinctly, what has evolved are situations
where the VA is claiming an ownership interest in inventions
made by university and medical school faculty and staff who
incidentally have VA appointments, but who were not acting
in any capacity covered by that appointment when the invention
was made.
The universities and medical schools do not object to ownership
claims made by the VA where inventions are made jointly with
"true" VA employees or solely by individuals who
are acting within the scope of their VA appointment, or where
VA facilities or VA funds are used in making the invention.
In those situations, the institutions will acknowledge the
legitimacy of co-ownership. In the case of an individual who
invents apparently within the scope of his or her VA appointment
and not in his or her capacity as a university employee, the
universities recognize that a determination of ownership rights
should be made in accordance with the Executive Order.
III. Requested Action
This letter submits two requests for follow-up by the Department
of Commerce.
The issues raised under Section I above require a determination
as to an appropriate allocation of ownership rights of inventions
when both 35 U.S.C. 300 et seq. and the VA’s rules apply.
This would occur when an invention is developed during a program
funded by the Federal government wherein 35 U.S.C. 200 et
seq. applies and, due to a connection with the VA on account
of co-inventorship, utilization of VA facilities, or utilization
of VA funding, the VA’s rules would also apply. The universities
do not believe the current Cooperative Technology Administration
Agreements proposed by the VA fairly or reasonably express
the ownership rights of the parties (indeed, the agreements
are silent on this matter), and we are in a quandary as to
how to reconcile the inconsistencies between Bayh-Dole and
the VA rules. Other agencies have authority to transfer title
to the universities in such situations, with the transfer
subject to certain reach-back rights and subject to an appropriate
sharing of royalty revenues. We suggest that the VA might
do the same. Alternatively, many of the existing conflicts
would be resolved by a fair and reasonable agreement between
the parties identifying patenting and licensing responsibilities
and revenue sharing based on joint ownership and recognition
of the universities’ obligations to their funding agencies
under Bayh-Dole. We believe that providing assistance in resolving
the issues presented under Section 1 is appropriate for Commerce
in its role as lead agency for oversight and implementation
of Bayh-Dole and in furtherance of the federal interest in
promoting the licensing and utilization of government-owned
inventions in a uniform manner. (35 U.S.C. 200-212 at 207
and 37 C.F.R. part 501).
We believe it is also appropriate for Commerce, pursuant
to the transfer of the major functions of the Government Patents
Board and the Chairman to Commerce under Executive Order 10930,
to review the actions of the VA in applying its internal definition
of employee including individuals holding appointments
without compensation and part-time consultants to claim title
to inventions made by university and medical school employees
outside of the context of their appointment or association
with the VA. We know of no other agency that employs a definition
of employee that encompasses individuals who have administrative
appointments or are otherwise uncompensated by the Government,
or who are part-time consultants but are primarily employed
elsewhere, and uses that definition as the prevailing authority
for determining and asserting ownership of inventions on behalf
of the Government.
COGR and the AAMC would be happy to provide further information
to Commerce on these issues and proposals for resolution,
and to participate in further discussions. We believe that
the long-standing beneficial affiliations and collaborations
between the academic teaching and research communities and
the VA are being jeopardized by the conflicting view of ownership
rights and the administrative and threatened legal actions
of the VA. We sincerely regret this situation and urge Commerce
to assist in finding a resolution.
Sincerely yours,
Katharina Phillips
President
Council on Governmental Relations |
Jordan J. Cohen, M.D.
President
Association of American
Medical Colleges |
cc: The Hon. Donald L. Evans, Secretary of Commerce
Dr. Mindy Aisen, Department of Veterans Administration
Dr. Wendy Baldwin, National Institutes of Health
Dr. John R. Feussner, Department of Veterans Administration
Dr. Maria Freire, National Institutes of Health
|
