Bayh-Dole Act Background
By Stephen P. Rothman

The Bayh-Dole Act is a federal law enacted in 1980. Before its passage, there was a widespread perception that too little federally funded research was being commercialized. Patent policies varied among different federal agencies, and commercial enterprises generally did not receive exclusive rights to government-owned patents. A prospective corporate licensee of a federally funded invention was faced with the unappealing prospect of high-risk, long-term investment in the transition from laboratory bench to market, after which other companies that did not undertake the same process would be able to step up and receive competing licenses. The principal purpose of the Bayh-Dole Act was to promote the utilization of inventions arising from federally supported research, by giving incentive to private enterprises to commercialize those inventions.¹ This includes the possibility of exclusive licenses.

Under the Bayh-Dole Act, a university can elect to patent and own an invention growing out of government funded research.² The university can grant licenses, either non-exclusive or exclusive, covering the invention. The company receiving the license, and its investors, then have an incentive to invest in development of products based on the invention, with an expectation of a secure intellectual property position. The company receiving such a license may be either an established company or a startup venture formed to exploit the technology.

Endnotes

¹ The Bayh-Dole patent and trademark amendments of 1980, Public Law 96-517, are codified in Title 35, Part II, Chapter 18 ("Patent Rights In Inventions Made With Federal Assistance") of the United States Code, 35 U.S.C. 200 - 212. Regulations implementing Bayh-Dole for are found in various places, including 37 CFR 401 (Commerce Department), 10 CFR 784 (Department of Energy), 45 CFR 650 and 48 CFR 2527 (National Science Foundation).

² The Bayh-Dole Act as originally adopted by Congress allowed only non-profit organizations, such as universities and research institutes, and small businesses, to elect to take title to federally funded inventions. On February 18, 1983, a Presidential Memorandum on "Government Patent Policy" extended the policy to any business, regardless of size. This has remained the policy since that time.

Reprinted with permission of the author.

Stephen P. Rothman
Thelen Reid Brown Raysman & Steiner LLP
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E-Mail: srothman@thelen.com