Patent Pitfalls: Part 2

patent ownership pitfalls part 2JDA’s and Government Rights

Joint Development Agreements

Another potential patent pitfall scenario is joint development agreements. You encounter these arrangements when the technology being scouted was borne out of more than one entity. In short, these documents control intellectual property rights when two or more entities are involved in developing new technology. If the technology being scouted was borne out of these arrangements, the agreement needs to be reviewed to determine rights to the intellectual property. Even more importantly, if there is no such agreement, this can create a cloud over who controls the intellectual property.

Third Party Rights

Another complexity when scouting technology from small start-ups is potential third party rights. Commonly, the folks putting in the sweat equity at these start-ups have a day job. They may be employed by a technology firm in the same space, or perhaps they are university students. In each of these circumstances, the potential rights of the employer and the university to the technology must be determined before any acquisition. This can be an intensive fact-finding inquiry into the conception and development of the technology, and is also governed by the state law of the local jurisdiction, not federal law, which is typical for patent issues.

When the technology being considered for acquisition is borne out of a government contractor or a
government funded project, there are special considerations that need to be dealt with before any
transaction.

Bayh-Dole Act

Any technology transfer with a government contractor or government sponsored entity will involve the Bayh- Dole Act. The namesakes for this action are Senator Bob Dole, who you might remember ran for president in the 90s, and Senator Bayh. Interesting factoid, Senator Bayh is the only non-founding father to author multiple constitutional amendments (POTUS succession and voting age lowered to 18).
For some background, the traditional rule for intellectual property produced from contractor work on behalf of the federal government was the government owned the technology. In the 1970s, due to the troubled economy in the US, there was thought that government owned technology was not being properly commercially developed, and that the private sector would be more successful in developing the technology.

The Bayh-Dole Act was passed in 1980 to change the default ownership for government contractor developed inventions, and to incentivize licensing and commercial development of these inventions. In short, the act provided that the University, small business, or non-profit institution can elect to pursue ownership of an invention in preference to the government. Later on, this option was also extended to large entity private firms via a presidential executive order.

Now, the Bayh-Dole Act was great for entities using government funds to develop new technology, but it does include some new obligations on the recipient of the funds. In particular, these entities are obligated to disclose new inventions to the government in a timely manner. Within a set time period, the entity must elect whether it wishes to retain ownership of the technology. Also, the federal government receives a permanent license to the technology.

Earlier this year, some minor updates were recently enacted to the Bayh-Dole Act. Some of these updates were housekeeping in nature, such as the codification of the large entity application. The prior deadline for the government to revoke title of the invention was eliminated. The sponsored entity was also tasked with additional notification duties with regards to patent pursuits, and assignment documents are now a requirement for the entity.

Government Rights

Again, when considering technologies intertwined with the Bayh-Dole Act, you need to recognize there are permanent government rights in play. Firstly, the government has that permanent license to use the
technology. Secondly, if the government or a third party petitioner do not think you are properly
commercializing the invention, march-in rights can be awarded, in other words: additional licensees.

Lastly, some technology may be owned partially or totally by the federal government. This can be an
advantageous arrangement when technology is partially owned by the federal government. As we mentioned before, each owner can grant full licenses to the underlying technology, and you may find that the government may be more willing to grant a license than the private co-owner.
Nevertheless, even when the government totally owns the technology, these technologies are not inaccessible for commercial development. The funding agency may grant licenses for the patented technology, and each agency has a license application process. Granted licenses are published in the federal register. So, when considering government technology for transfer, a review of the federal register is recommended. If there are existing licenses, they will be published. Moreover, there is a comment period for members of the public to provide comments, which must be considered before the granting of the license.

In summary, when scouting new technology, it is helpful to review the existing status of potential stakeholders in the underlying technology. Positively, in many cases, this can be accomplished with publicly available databases.

If your have any questions about intellectual property matters, please reach out to our IP firm High Tech Group of Allen Dyer.

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Article by Jack Abid

Jack G. Abid is a shareholder and practices in patent prosecution group at Allen, Dyer, Doppelt, & Gilchrist, PA. Jack received a BS in physics from Jacksonville University and a BS in electrical engineering from Georgia Tech (i.e., making him a “helluva engineer”). Jack received his law degree from the University of Florida. His patent prosecution experience includes electrical and electronic equipment, telecommunications equipment and cables, laser and optical devices, semiconductor devices, semiconductor processing, mechanical devices, medical devices and software. While attending the University of Florida, Levin College of Law, Jack served as Editor-in-Chief, Research Editor and Web Editor of the Florida Journal of International Law. He was also a member of the Journal of Technology Law and Policy. He has secured hundreds of patents for his clients over 12 years of experience, and advised clients of all sizes on intellectual property.

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