Bayh-Dole Patent and Trademark Amendments Act of 1980

Citation: Bayh-Dole Act, P.L. 96-517, codified at 35 U.S.C. §§200-12.

The Bayh-Dole Act establishes a presumption that ownership of all patent rights in government-funded research will vest in any contractor who is a nonprofit research institution or small business.94 A 1987 presidential memorandum instructed federal agencies to apply some Bayh-Dole rights to all contractors, regardless of their size.95

The purpose of the Act was to encourage companies to undertake the additional efforts necessary to bring government-funded inventions to the marketplace. Experience showed that without title to an invention, firms were less likely to commit resources to commercialize inventions. By providing universities, nonprofit institutions and small businesses with intellectual property rights, Congress intended both to promote collaboration between commercial concerns and nonprofit organizations, as well as to promote the commercialization and public availability of inventions.96

The Act describes in some detail the license given to the federal government on any subject invention made under a government contract. The contractor may elect to retain title to the invention unless the U.S government determines that it is in the nation’s best interest to take title to the invention.97  If the U.S. government makes this determination, the U.S. government must pursue a lengthy process of justifications and approvals before it can take title under the statute. If the contractor is allowed to retain title, the federal government receives “a nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States any subject invention throughout the world.” This license is not negotiable and is the minimum that the government receives under a procurement contract, grant, or cooperative agreement. This minimum license allows the government to use the intellectual property for its own purposes and to give such intellectual property to any other entity, including another commercial entity, to build or to use on the government’s behalf.99 The Bayh-Dole Act also provides for so-called “march-in rights.” The U.S. government can require the contractor to grant reasonable licenses to third parties under a specific set of circumstances. For example, if a patentee fails to take effective steps in a reasonable amount of time to achieve practical application of the invention, or the action is necessary for public health and safety reasons, or is required by public use regulations, the federal government can require a contractor to grant a license or can even grant a license itself.100