Bayh-Dole Regulatory Update Offers Clarifications To Federal Grantees And Contractors But Also Raises Specter Of Government Interference With Patent Rights

Effective May 1, 2018, newly issued federal government contracts, grants, and cooperative agreements will be subject to revised regulations implementing the Bayh-Dole Act, the federal statute governing title and license rights for inventions developed with federal funding. The new regulations were issued on April 13, 2018 by the Department of Commerce, National Institute of Standards and Technology (NIST) as a final rule amending 37 C.F.R. part 401. See 83 Fed. Reg. 15954 et seq. Included in the regulations are changes to the standard intellectual property-related contract clauses that must be included in most federal contracts, grants, and cooperative agreements.

Of particular note, under the revised regulations the federal government now has essentially an unlimited amount of time to demand title to grantee and contractor "subject inventions" - those inventions conceived or first actually reduced to practice in the performance of work under a funding agreement - in instances where the contractor did not precisely follow the notice and election procedures. This change reinforces the importance of meeting the deadlines imposed under Bayh-Dole for invention disclosure and election of title. A graphic describing the applicable deadlines is available here.

Below we summarize this change and other significant considerations under the new regulations. While the new rules apply to all federal funding agreements (i.e., grants, contracts, cooperative agreements) executed after May 14, 2018, agencies may, in their discretion, amend current funding agreements to make the new rules applicable prospectively.

Expanded Government Opportunities to Demand Title to Inventions Historically, if a contractor1 failed to disclose a subject invention or to elect title to that invention within the timeframes specified under the Bayh-Dole regulations, the government had sixty days, upon discovery of the error, to object to the procedural error and seek title for itself. In practice, this meant that even where a contractor had mistakenly failed to disclose an invention or to elect title it could rectify the mistake by filing a notice and/or election of title and then waiting sixty days for the government's objection period to expire. This now happens routinely when subsequent licensees of an invention discover that government funding was involved in the development of the product, but that Bayh-Dole procedures were not followed. The most significant revision to the...