Evidencing such commercialization activities to convince NIST that a contractor’s Bayh-Dole requirements have been in compliance is a significant undertaking. 

There has been much concern and discussion about Commerce Secretary Howard Lutnick’s recent letter to Harvard University indicating the U.S. government’s exercise of its “march-in rights” for government-funded research resulting in IP owned by Harvard under the Bayh-Dole Act. Owners and licensees of university government-funded inventions should monitor whether the government makes additional requests for Bayh-Dole compliance audits and exercises of its march in rights. [1]

Secretary Lutnick’s letter to Harvard expressed two areas of contention with Harvard University. First, the Commerce Department indicated it would review Harvard’s compliance with the Bayh-Dole Act’s requirement. Second, the Commerce Department indicated it would formally begin the process of exercising it’s never-before-exercised march-in rights to Harvard’s patents.

Under the Bayh-Dole Act, recipients of U.S. government research contracts can own any IP resulting from that research, but there are some out-licensing restrictions on that IP, including a requirement to achieve practical application of the subject invention, domestic manufacture, small-entity out-license preference and what may be viewed as requirement to report all commercialization activities at a very granular level, including the filing of patent applications.[2] The issue Secretary Lutnick presents to the Harvard technology transfer office employees is whether Harvard properly reported (by filing in iEdison) all required commercialization activities and complied with the domestic manufacture requirements.[3] Evidencing such commercialization activities to convince NIST that a contractor’s Bayh-Dole requirements have been in compliance is a significant undertaking. 

The criteria for the government to assert its march-in rights in patents developed under these arrangements, are set forth in the Bayh-Dole statute as follows:[4]

1. Action is necessary because the contractor or assignee has not taken, or is not expected to take within a reasonable time, effective steps to achieve practical application of the subject invention in such field of use;
2. Action is necessary to alleviate health or safety needs which are not reasonably satisfied by the contractor, assignee or their licensees;
3. Action is necessary to meet requirements for public use specified by federal regulations and such requirements are not reasonably satisfied by the contractor, assignee or licensees; or
4. Action is necessary because the agreement required by Section 204 has not been obtained or waived or because a licensee of the exclusive right to use or sell any subject invention in the United States is in breach of its agreement obtained pursuant to Section 204.

While there is some concern that Harvard is being uniquely targeted by this administration, it should be noted that the previous administration enacted procedures to allow for subsequent audits such as the one requested by Secretary Lutnick following annual iEdison reports. Therefore, other grant recipients such as research universities and institutions are potentially subject to similar compliance audits. Technology transfer office licensors and licensees therefrom should be mindful of the Bayh-Dole compliance requirements and ensure all commercialization activities are evidenced and reported to the U.S. government.

For More Information

If you have any questions about this Alert, please contact Vicki G. Norton, Ph.D., Ryan C. Smith, Ph.D., any of the attorneys in our Intellectual Property Practice Group or the attorney in the firm with whom you are regularly in contact. 

Notes

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.