Yale University: Delayed Invention Disclosure and VA Royalty Sharing

Yale University and a professor agreed to pay $1.5 million to resolve allegations of delayed invention disclosure and failure to share patent royalties with the Department of Veterans Affairs. The inventions came from work the professor did while employed by both institutions. That settlement sits against more than $3 million in royalties the government alleged Yale and the professor received without sharing with the agency. For someone inside research administration, the case connects familiar records: who supported the work, who claimed the invention, who received the royalties and who knew the government was owed money.

The Department of Justice announced the settlement on September 21, 2023. The alleged failure to pass on money owed to the government continued after the inventions were finally disclosed. That is the distinction at the center of the case: telling VA about the patents and paying VA its share were separate obligations.

How the Joint Inventions Produced Royalties

The researcher held part-time positions at Yale and at the Department of Veterans Affairs. His Yale responsibilities included a professorship and the chairmanship of the medical school’s psychiatry department. At the VA Medical Center in West Haven, Connecticut, he was a salaried clinical psychiatrist with research responsibilities.

The institutions had an agreement requiring them to disclose joint inventions to each other promptly and in confidence. As the Justice Department described it, that agreement covered potentially patentable inventions with a co-inventor compensated by VA and a co-inventor appointed at Yale. The Department of Veterans Affairs also required its employees to disclose inventions promptly so the agency could determine whether it had an ownership interest.

Beginning in March 2006, the professor and four co-inventors applied for patents concerning intranasal ketamine for treatment of depression and suicidal ideation. The applications allegedly acknowledged funding from the Department of Veterans Affairs. The U.S. Patent and Trademark Office issued three patents, and the professor assigned his interests in them to Yale.

Yale and the professor began receiving royalties in February 2015. According to the government’s allegations, taxpayer-supported work had produced royalty income while the institution that helped support the work was still waiting for its share.

We see an extraordinary order of priorities in the government’s account: Yale and the professor were receiving royalties before VA got the disclosure it needed to determine its ownership. Income first. Disclosure later.

VA Support on the Applications, Then Removed From the Patents

The government alleged that the original patent applications acknowledged VA support, but that later submissions removed that acknowledgment. Another school, acting as agent for the ketamine patents, allegedly submitted those documents in coordination with Yale and the professor.

The submissions came in September 2017, January 2019 and June 2019. That sequence matters because it crossed the point when the professor finally disclosed the patents to VA. The government’s account involved both an overdue disclosure to the funding institution and changes to what the patent records said about that institution’s support.

According to the Justice Department, a VA employee reminded the professor of his disclosure obligations in December 2017. The professor then submitted the required disclosure. The Department of Veterans Affairs determined that it was entitled to an ownership interest in the patents.

For an insider who knows the funding and patent files, the difference between those documents is concrete. The acknowledgment described support for the invention. The disclosure gave VA the opportunity to determine its ownership. The royalty payments showed who was already benefiting from it. We examine those records together because the government’s allegations concern the relationship among all of them.

Disclosure Did Not Settle the Royalty Bill

The government’s case had two halves: the years before the disclosure, and the years after. Under the False Claims Act, the government alleged that from the first patent application in March 2006 through December 8, 2017, Yale and the professor knowingly and improperly avoided their obligations to disclose the patents and pay VA its royalty share.

December 8 was the disclosure date. The settlement also resolved allegations that from that disclosure through February 3, 2023, Yale and the professor breached their contract and kept royalty money they owed VA.

The disclosure changed what VA knew. It did not, according to the government’s allegations, put the agency’s share of the royalty income into its account.

For a research administrator or finance employee, that makes the payment history after disclosure as relevant as the original patent file.

Future Royalties Had Their Own Agreement

Alongside the settlement, Yale, the professor and VA entered a separate agreement addressing the patents’ future. Under that agreement, Yale and VA agreed to share future royalties associated with the ketamine patents and assign the patents to VA.

The professor also agreed to give up any entitlement, as a VA employee inventor, to share in the settlement paid to VA.

What Research Accounting Can Hide

The Yale allegations put the research relationship, the patent history and the royalty payments in the same case. We work with insiders to connect those records: the joint-invention agreement and appointments, the funding acknowledgments and later patent submissions, the disclosure to VA, and the receipts and payments associated with the patents.

Someone who knows why a funding acknowledgment changed has a different view from someone who knows where the royalties went. Both views bear on the conduct the government described.

Other civilian research-funding cases show the value of reading the scientific and financial files together. In the Scripps Research Institute case, the government alleged that faculty time spent on new grant applications, teaching, committee work and administration was charged to existing federal research projects. The whistleblower’s complaint also described work outside the funded grants that produced a patent application.

The complaint’s account of the effort reports explained how the financial paperwork allegedly obscured the work:

The allegation was about what the reports left indistinguishable. An insider familiar with the actual work could explain the difference the forms concealed.

In a separate case, Columbia University admitted that certain effort reports contained inaccurate information and that one of its public health programs had charged federal grants for work that did not belong to those agreements. Scripps concerned alleged mischarging, Columbia’s admissions concerned inaccurate effort accounting, and Yale concerned alleged disclosure and royalty failures. The recurring question is specific: how did the institution’s account of the research determine who paid or who received money?

You Know How the Invention Became Income

A whistleblower case under the False Claims Act can pay a whistleblower reward of 15% to 30% of what the government recovers.

If you know the research behind a patent or the royalty payments that bypassed a government partner, speak with our whistleblower experts about the unpaid royalties. We build your strongest research whistleblower case with you, bring in government research-funding whistleblower lawyers who understand disclosure and payment obligations, and stay beside you throughout the case.