THIRD CIRCUIT USES PROCEDURAL GROUNDS i JOURNAL OF LEGAL TECHNOLOGY RISK MANAGEMENT 1. THIRD CIRCUIT USES PROCEDURAL GROUNDS TO REJECT FCC’S WEAKENING OF MEDIA CROSS-OWNERSHIP RULES FOR A SECOND TIME IN PROMETHEUS RADIO PROJECT V. FCC 2. WHEN PARALLEL TRACKS CROSS: APPLICATION OF THE NEW INSIDER TRADING REGULATIONS UNDER DODD-FRANK DERAILS 3. ELECTRONIC DISCOVERY AND THE CONSTITUTION: INACCESSIBLE JUSTICE 4. RENEWING THE BAYH-DOLE ACT AS A DEFAULT RULE IN THE WAKE OF STANFORD V. ROCHE Volume 6 | Summer 2012 | Issue 1 (c) 2006-2012 Journal of Legal Technology Risk Management. All Rights Reserved. ISSN 1932-5584 (Print) | ISSN 1932-5592 (Online) | ISSN 1932-5606 (CD-ROM) www.ltrm.org II J. OF LEGAL TECH. AND RISK MGMT [Vol. 6 Editor-in-Chief Daniel B. Garrie, Esq. (USA) Guest Editor Kelly Merkel, Esq. (USA) Publications Editor Candice M. Lang, Esq. (USA) Executive Editors Matthew Armstrong, Esq. (USA) Dr. Sylvia Mercado Kierkegaard (Denmark) Scientific Council Stephanie A. “Tess” Blair, Esq. (USA) Hon. Amir Ali Majid (UK) Hon. Maureen Duffy-Lewis (USA) Micah Lemonik (USA) Andres Guadamuz (UK ) Carlos Rohrmann, Esq. (Brazil) Camille Andrews, Esq. (USA) Gary T. Marx (USA) William Burdett (USA) Eric A. Capriloi (France) Donald P. Harris (USA) Hon. Justice Ivor Archie (Trinidad & Tobago) ii Members Janet Coppins (USA) Eleni Kosta (Belgium) Dr. Paolo Balboni (Italy) Salvatore Scibetta, Esq. (USA) Ygal Saadoun (France/Egypt) Steve Williams, Esq. (USA) Rebecca Wong (United Kingdom) iii IV J. OF LEGAL TECH. AND RISK MGMT [Vol. 6 FOREWORD In this edition, we explore seemingly disparate realms of regulation and legislation and discover shared nuances in growing concern for current legal framework in all facets of legal practice and scholarship. This edition prompts timely discussion of constitutional tenets and how malleable our Constitution may be in view of lightning-quick technological advances. This edition also pauses to consider different concepts of ownership and how linguistic alterations continually affect such concepts. In preparing this edition of the Journal of Legal Technology Risk Management, I have been humbled by the thoughtful scholarship and writing that has consistently appeared in my in-box. At the Journal, we always welcome a broad spectrum of authors and do not discriminate on topic choice. As a result, we have been rewarded with premium submissions from students, professors, practicing lawyers, business people and others who simply have an interest in how law and technology impact our daily lives. I thank the Authors of the articles appearing in this edition - Michael Dingerdissen, Gregory Melus, Parker iv Tresemer and Jennifer M. Smith – for elevating the discussion. I also thank every author and scholar who contributed submissions to our publication. We hope you continue your introspection and we hope you continue to share your insights with us moving forward. As Fred Shero, the great Flyers coach, said, “Win together today and we walk together forever.” I thank the entire team who put so much time into creating this edition of the Journal: our Scientific Council and Editorial Board members who graciously gave of their time; Daniel Garrie, our Editor-in-Chief and Candice Lang, who pulled everything together seamlessly. We have created something memorable. Kelly Merkel 26 June 2012 v 2012] RENEWING BAYH-DOLE 173 RENEWING THE BAYH-DOLE ACT AS A DEFAULT RULE IN THE WAKE OF STANFORD V. ROCHE Parker Tresemer I. INTRODUCTION For thirty years the Bayh-Dole Act has stimulated American innovation by guaranteeing ownership of federally funded technologies to the small businesses and universities best suited to develop them. The Supreme Court’s holding in Stanford v. Roche, however, undermines the Bayh- Dole Act’s framework and threatens to stall its continued beneficial application. In the wake of World War II and the resulting spike in American production, United States policymakers looked to universities and domestic industry to maintain the country’s status as the international leader in innovation and production.1 However, by the 1970s, the United States had begun to fall behind international competition, largely because of the federal government’s policy of retaining the patents on all federally funded technologies.2 Before the 1980s, the government was unwilling to cede patent 1 Ashley J. Stevens, The Enactment of Bayh-Dole, 29 J. TECH. TRANSFER 93, 93 (2004); Steve L. Bertha, Intellectual Property Activities in U.S. Research Universities, 36 IDEA 513, 514 (1996). 2 Stevens, supra note 1, at 93. 174 J. OF LEGAL TECH. AND RISK MGMT [Vol. 6 rights on federally funded inventions to private industry, yet it lacked the resources to successfully commercialize those inventions.3 Without exclusive patent rights to government-funded technologies, private companies were simply unwilling to make the substantial investment required to commercialize early-stage technologies.4 While some government lawmakers believed only the federal government could properly manage federally funded technologies,5 Senators Bob Dole (R., KS) and Birch Bayh (D., IN) believed that by retaining sole rights to federally funded inventions, the government was destroying any incentive for researchers and private industry to commercialize such technologies.6 Instead, Senators Bayh and Dole sought to spark development of commercial products by putting both their faith and their patents in the hands of private industry.7 3 95 CONG. REC. S15,034 (daily ed. Sept. 13, 1978) (statement of Sen. Birch Bayh). 4 95 CONG. REC. S15,030 (daily ed. Sept. 13, 1978) (statement of Sen. Robert Dole); Joseph P. Allen, A Long, Hard Journey: From Bayh-Dole to the Federal Technology Transfer Act, TOMORROW’S TECH. TRANSFER, Winter 2009, at 21, 21; Bertha, supra note 1, at 525-26; Kesan, supra note 4, at 2175. 5 Stevens, supra note 1, at 94. 6 See generally 95 CONG. REC. S15,034 (daily ed. Sept. 13, 1978) (statement of Sen. Robert Dole). 7 See generally id.; 96 CONG. REC. S4,124 (daily ed. Apr. 23, 1980) (statement of Sen. Robert Dole); Stevens, supra note 1, at 94. 174 2012] RENEWING BAYH-DOLE 175 In 1980, Congress enacted the Bayh-Dole Act to do just that.8 Simply put, the Bayh-Dole Act was intended to create a three-tiered, hierarchical system distributing intellectual property rights in federally funded inventions.9 First, the Act was intended to grant federally funded small businesses and nonprofit organizations (“federal contractors” or “contractors”) exclusive patent rights to inventions developed by their employees using federal funds.10 In return for granting contractors these exclusive rights, federally funded nonprofits were required to share royalties with their employee-inventors.11 Second, Bayh-Dole was to give the federal government the opportunity to acquire full title to federally funded inventions only if the federally funded contractor first elected not to 8 See generally 35 U.S.C. §§ 200-211 (1980). 9 See 35 U.S.C. § 202 (1980) (describing contractor’s property rights and employee-inventors’ financial rights to federally funded inventions); 35 U.S.C. § 203 (1980) (describing the government’s “march-in rights” to contractor owned inventions); Fenn v. Yale Univ., 393 F. Supp. 2d 133, 137 (2004). 10 35 U.S.C. § 202(a) (1980) (“Each nonprofit organization or small business firm may, within a reasonable time after disclosure as required by paragraph (c)(1) of this section, elect to retain title to ay subject invention . .”); 35 U.S.C. § 201(e) (1980) (“The term 'subject invention' means any invention of the contractor conceived or first actually reduced to practice in the performance of work under a funding agreement.”). 11 35 U.S.C. § 202(c)(7)(C) (1980) (“[A] requirement that the contractor share royalties with the inventor.”). 175 176 J. OF LEGAL TECH. AND RISK MGMT [Vol. 6 retain title.12 Third, the Act’s drafters intended for employee-inventors to receive title to federally funded inventions, including their own inventions, only if both their employer-contractor and the federal government elected not to retain title to the inventions.13 Although granting inventions to federally funded employers instead of the actual employee- inventors may offend our basic understanding of property and patent rights,14 the Bayh-Dole Act’s legislative history makes it very clear that this is precisely what Congress intended.15 Congress intended to unequivocally subordinate inventors’ rights to both the contractor’s and the federal government’s rights.16 Congress did so, however, for a particular purpose.17 Congress enacted Bayh- 12 35 U.S.C. § 202(c)(2) & (3) (1980). 13 35 U.S.C. § 202(d) (1980) (“If a contractor does not elect to retain title to a subject invention in cases subject to this section, the federal agency may consider and after consultation with the contractor requests for retention of rights by the inventor subject to the provisions of this Act and regulations promulgated hereunder.”). 14 This was, in fact, the principal reason why the Supreme Court in Stanford v. Roche held that the Bayh-Dole Act did not automatically divest inventors of the rights to their federally funded inventions. See Bd. of Trs. of the Leland Stanford Junior Univ. v. Roche Molecular Sys., 131 S.Ct. 2188, 2198 (2011) discussed infra at Part V. 15 See infra Part III. 16 See infra Part VI.A. 17 Bd. of Trs. of the Leland Stanford Junior Univ. v. Roche Molecular Sys., 131 S.Ct. 2188, 2201 (2011) (Breyer, J., 176 2012] RENEWING BAYH-DOLE 177 Dole to incentivize private industry to commercialize