XVII. Authority of General Counsel

Despite the TT Act of 1986 [Appendix A], which was a large step toward decentralizing the entire TT process, there remain two important areas where General Counsel (GC) has the final word, with possible important consequences on the resulting situation.

One area is in the Cooperative R&D Agreements [Appendix E] which are negotiated locally between the particular Medical Center and the company. According to VHS&RA Manual M-3, Part I, the draft agreement shall contain a clause providing a 30-day period for the Office of General Counsel to disapprove or require the modification of the agreement. In other words, the agreement cannot be signed by the Medical Center Director until the agreement is approved by GC (see Appendix G). Furthermore, since the law makes no provision for what happens if GC exceeds the limit of 30 days, it usually does. (Actual turnaround time, excluding local administrative delays, usually runs more like 3 months.) On the other hand, GC has been generally cooperative and helpful in getting the agreements completed and approved. Sometimes, GC has actually called me on the phone to discuss the agreement and parts of it that they either question or disagree with. On other occasions, they have contacted the attorney for the company involved. This is extremely helpful, and a good reason to include in the cover letter with the proposed agreement your work phone number, perhaps along with the phone number of a key company representative, and the suggestion that either of you be called with any questions.

The second area of importance in TT is the action that GC must take upon receipt of a Report of Invention from one of the Medical Centers. With regard to such Reports, the GC has the responsibility (and the authority) to decide whether the subject invention belongs to the Federal Government or to the employee/inventor(s). It cannot belong partly to each. However, even if the rights to the invention are awarded to the individual inventor(s), the government still retains a royalty-free, paid-up license to practice or have practiced the invention throughout the world for government purposes. To my knowledge, this clause has not been a deterrent to transferring a product to the private sector, since the government does not compete with private industry in the commercial market.

It is important to note that, until very recently, the GC has routinely awarded the rights to the inventor(s). I believe that this practice is related to the facts that (1) the VA has traditionally been a service-oriented organization dedicated to good medical care for our veterans (as opposed to developing rehabilitation devices); and (2) there are to my knowledge no patent attorneys currently on staff at GC.

More recently, in my role as Chief of the Technology Transfer Section at the RR&D Center here, I have occasionally written a cover letter pointing out the advantages of having the government retain the rights to the invention, and GC has generally gone along with our recommendation. (I also included a letter of concurrence from the inventor.) The main advantage, of course, is that we can then bring to bear all of the authority granted to us by the TT Act, and can also take advantage of our working agreement with either Research Corporation Technologies or Technology Targeting, Inc. for handling patenting and licensing (see Appendix C). But once the government releases the rights to the inventor, it becomes private property, and the question of a conflict of interest arises if the work continues in the Federal Laboratory.

The rule we have established here within the RR&D Center is that, once the rights to an invention have been released to the inventor, then he/she can no longer work on that project as part of his/her job for the government! That can mean that all development work stops right there, which could kill the project, depending on its stage of development at the time. On the other hand, it is my view that it is in the best interest of both the government and the Center that the invention should be commercialized so that it becomes available to the veterans who need it, since the government has already paid for the development. Further, I see no conflict of interest if the people working to transfer the device have nothing to gain personally from it. Therefore, I conclude that, although the inventor cannot work on the project, there is no reason that the TT group or any of its members cannot work to transfer it, so long as they themselves (or their friends or relatives) gain nothing personally from the transfer.

Regarding the filing of a Patent Disclosure, and the question of who should file, a recent case came up within the Center in which a volunteer, working for the Human-Machine Interface group on a Hand Exerciser, came up with a new design (and a working prototype) involving several of his own patentable ideas. He was about to file a Disclosure, when I learned of his status and called our patent attorney TT specialist on our TT Advisory Board. My question to him was: Is this person required to file a disclosure? The answer was that, unless he is an official employee (with or without pay) as recorded in the file of Personnel Office, then he/she does NOT file a disclosure, since the government has no rights to the invention. In other words, there is a clear distinction between a volunteer and an employee without compensation (WOC). If the Section Chief (or the Director) wants to insure government rights at the outset, then he/she must put this person on as an employee or as a consultant, complete with Federal Employment Application. Otherwise, the government has rights only if the inventor voluntarily signs an assignment to the government or some equivalent agreement. GC, however, did not initially agree with this position and insisted that we file a Disclosure of Invention. It was still pending action after more than ten months of correspondence. This situation could have been avoided had we originally established a WOC employment status for all unpaid Center staff who might later be inventors. This is a reasonable precaution in a research setting, and in retrospect would have saved at least six months of valuable time.

The above situation is an example of what happens when you are trying to do TT from within the VA and, somewhere along the line, you run into a roadblock in the form of a bureaucrat who either wants to make your situation into a Federal case or simply does not know how (or want) to deal with an unusual situation. That is, when your situation is not covered by some specific government regulation, and therefore requires some thought (possibly even a decision), many government employees would rather simply bury it. When you run into such a person who can literally block any further progress on the project (it only takes one), I believe that you have four choices: (1) try another approach, if there is one; (2) try to talk with the person and come to an accommodation; (3) go around the person who is stopping you; or (4) drop the project and forget it. In the case cited above, I had already tried both (1) and (2) by suggesting an assignment of rights to the VA. This was rejected out of hand, without any real discussion. I also tried (3) by simply calling his boss, who refused to take my call. Another approach, which I have not tried, is to have a member of our TT Advisory Board write to his/her Congressman and ask that he/she look into it, since this situation effectively prevents the distribution of our product to the veterans who need it. (This option is not appropriate for an employee.) Such an action would most likely result in the Congressman writing directly to the Secretary of the Department of Veterans Affairs, who would then quickly pass it on down the line to the appropriate boss for action.

The reasons for considering such a drastic action in this case are that: (1) I have had on my desk for some months now a proposed agreement from a private company under which the company would pursue commercialization of the product and would pay all patent expenses in exchange for a percentage of future royalties; and (2) neither our Center nor the inventor can legally enter such an agreement without a clear determination of ownership. Fortunately, just prior to my instituting this action, I received a phone call form the person at GC who had been holding our request, to inform me that GC had decided to award all rights to the inventor. Actually, the official letter received from GC some days later stated that GC really had no authority to make a determination of rights in this case. That is precisely what we had stated in our original letter nearly one year ago!

It is very important that rules passed down by General Counsel (or any other Federal authority) be carefully and precisely interpreted before deciding what one can and cannot do to promote TT. For example, because I had just received a grant from our internal nonprofit corporation to study patentability and marketability of specific products, I wrote to GC for an opinion on whether I could legally employ local patent attorneys for a determination of patentability and possibly for filing a patent application. The response was an emphatic NO, claiming that this was the responsibility of GC. After reading the response letter several times, rereading the role of GC in acting on patent disclosures, and discussing it with the attorney on my Advisory Board, it became apparent that (1) we do not agree that GC has that responsibility, since they have no registered patent attorneys and are directed only to determine rights to the invention (Appendix K), and (2) there is no reason that we could not ask a local patent attorney to do some pro bono work (i.e., without compensation) for a worthy cause. We are currently pursuing that possibility. Further, there appears to be no reason that we cannot make use of one of the many patent search database services for a modest fee to investigate patentability (see Appendix C). Note, however, that such searches are necessarily somewhat limited in scope, so in the case of a possible big winner, one is well-advised to seek legal counsel from a qualified patent attorney if possible. (See Section IX.)