Legal Definitions - Bayh–Dole Act

The Bayh–Dole Act is a federal law designed to encourage the commercialization and public availability of inventions developed with U.S. government funding. Before this Act, the government typically owned patents for inventions created using federal grants. The Bayh–Dole Act changed this, allowing universities, small businesses, and non-profit organizations to retain ownership of patents for inventions made during federally funded research programs.

However, this ownership comes with responsibilities and certain rights for the government. Organizations receiving federal funds must promptly disclose any inventions made during the funded project. While they can choose to own the patent and pursue its protection, the government retains specific "march-in rights." These rights allow the government, under particular circumstances (e.g., if the invention isn't being made available to the public, if public health needs aren't being met, or if the patent holder is not making reasonable efforts to commercialize the invention), to require the patent holder to license the invention to other companies or entities. This ensures that taxpayer-funded research ultimately benefits the public.

Here are some examples illustrating the Bayh–Dole Act:

• University Drug Discovery: A major university's medical research lab receives a significant federal grant from the National Institutes of Health (NIH) to study new compounds for treating a rare form of cancer. Through this federally funded research, the lab discovers and synthesizes a novel molecule that shows great promise in preclinical trials.

  How Bayh–Dole applies: Under the Bayh–Dole Act, the university can elect to retain ownership of the patent for this new drug molecule. They can then license this patent to a pharmaceutical company for further development, clinical trials, and eventual commercialization. This allows the university to earn royalties, which can be reinvested into more research, while ensuring the potential drug can reach patients, a process that might not happen if the government automatically owned the patent and lacked the infrastructure for commercial development.

• Small Business Developing Renewable Energy Technology: A small startup company specializing in sustainable technology receives a grant from the Department of Energy to develop a more efficient solar panel design. After several years of research and development, they successfully create and patent a groundbreaking new material that significantly increases solar energy conversion rates.

  How Bayh–Dole applies: The startup, as a small business, can retain ownership of the patent for this new solar panel material. They can then seek investors and manufacturing partners to bring this technology to market. However, if the company fails to make reasonable efforts to commercialize the technology, or if there's a national energy crisis where this technology is critically needed and the company isn't meeting demand, the government could invoke its "march-in rights." This would allow the government to compel the startup to license the technology to other manufacturers to ensure widespread public access and benefit.

• Non-Profit Agricultural Research: A non-profit agricultural research institute receives federal funding from the U.S. Department of Agriculture (USDA) to develop new crop varieties resistant to specific pests common in certain regions. The institute successfully develops a genetically modified corn variety that is highly resistant to a devastating insect, significantly improving crop yields.

  How Bayh–Dole applies: The non-profit institute can patent this new corn variety. They can then license the patent to various seed companies, ensuring that farmers can access and plant the pest-resistant corn. The royalties generated from these licenses can be used by the institute to fund further research into food security and sustainable agriculture, demonstrating how the Act facilitates the dissemination of federally funded innovations for public good while supporting ongoing research.