Amendments To Bayh-Dole Act Regulations Tweak Rights To Inventions Made Using Federal Assistance

The Patent and Trademark Law Amendments Act of 1980, commonly known as the "Bayh-Dole Act," governs the disposition of patent rights developed pursuant to three types of government funding arrangements: procurement contracts, grants, and cooperative agreements.1 The Secretary of Commerce has delegated to the National Institute of Standards and Technology (NIST) the authority to promulgate implementing regulations.2

In late 2016, NIST issued proposed changes to the implementing regulations of Bayh-Dole Act. Following extensive public comment, new regulations went into effect on May 14, 2018. We have set forth below a brief summary of the changes.

The Bayh-Dole Act The Bayh-Dole Act permits a recipient of federal funding to retain ownership of inventions "conceived or first actually reduced to practice" by its personnel in the performance of a government-funded project ("subject inventions"). By its terms, the Bayh-Dole Act applies to a "person, small business firm, or nonprofit organization that is a party to a funding agreement."3 However, it has been extended by Executive Order to apply to large, as well as small businesses.4

As a condition of retaining ownership, the contractor is obliged to comply with certain statutory and regulatory requirements. Among other things, the statute requires that the contractor:

(i) disclose subject inventions to the Government within two months after the inventor discloses it to the contractor's personnel responsible for patent matters;5

(ii) elect to retain title within two years following disclosure of the invention,6 and

(iii) automatically grant to the Government a nonexclusive, irrevocable, paid-up license to use the invention.7

If the contractor fails to comply with these requirements, the Government may restrict or eliminate the contractor's right to retain ownership of the invention—such that the Government obtains title to the invention.8

NIST's Modifications NIST's amendments to Bayh-Dole's implementing regulations make several changes to this well-known regulatory scheme.9 A summary of these amendments follows:

Conform the regulations to Executive Orders 1259 and 12618.

NIST has modified the regulations to clarify that the presumption of the right to retain title, when invoked, applies to large business contractors as well as small businesses and nonprofit organizations.10 The revisions also clarify that the term "contractor" as used in the regulations includes any business firm regardless of size which is party to a funding agreement, and specifically conforms the definition to that provided in the Executive Orders.11 As noted previously, Bayh-Dole has been extended to large entities by Executive Orders, but these modifications conform the regulations to the...