Bayh-Dole Legislation: Key Policy Provisions

This legislation adopted a universal policy throughout the federal government of “title in the contractor” for determining who has the rights to patents, subject to certain exemptions, so that contractors, whether they be non-profits (such as universities), or small businesses, have the right to retain title to inventions financed by the federal government in whole or in part. This change was designed to make it easier for universities to engage in technology transfer. No longer would they have to comply with each agency’s different rules, nor be subject to shifts in agency patent policy. Second, the bill granted federal contractors the authority to grant exclusive patent licenses. The legislation made explicit that universities were expected to file patent applications on inventions that they owned, and that they were to accord small businesses preference in granting licenses (in part by limiting the time frame for awarding exclusive licenses to large businesses). This emphasis on small businesses deflected criticism that the legislation provided a “give away” of taxpayer financed intellectual property to established corporations that neither needed nor deserved such subsidies. Subsequent changes enacted in 1983, 1984 and 1987, extended these benefits to all businesses. For products that were to be sold in the U.S., preference in awarding licenses was to go to U.S. manufacturers. The federal government retained a non-exclusive right to use the patent throughout the world. Importantly, the legislation allowed the government to retain “march-in rights” to the inventions that it financed — essentially allowing a federal agency to pull title back to a patent and grant a license to a responsible new applicant, if the current licensee failed to make the product available to the public on reasonable terms; or if action was necessary to alleviate health or safety needs not reasonably satisfied by the current licensee.