Government-Funded Inventions And iEdison

Key Takeaway

Inventions conceived or reduced to practice during the performance of work funded by the U.S. federal government are subject to various obligations under the Bayh-Dole Act. Fulfilling these obligations is important to maintaining ownership of such inventions and complying with the terms of government contracts.

Introduction

The Bayh-Dole Act (35 U.S.C. §§ 200–212) and its implementing regulations (37 C.F.R. Part 401) allow contractors — including grant recipients — to retain title to inventions developed with federal funding, but only if they comply with a series of disclosure, election, filing, and reporting obligations.  

The key obligations are summarized below. Understanding the scope of the government rights and proactively complying with reporting obligations may be particularly important as access to funding decreases, political scrutiny on grant recipients increases, and other government priorities shift.

Is my invention government-funded?

An invention is subject to the Bayh-Dole Act if it is “conceived or first actually reduced to practice in the performance of work under a funding agreement” with a federal agency.¹ The “or” in that definition is worth noting, as it allows the language to capture an invention that was conceived before the grant but first actually reduced to practice under the funding agreement.² 

Such inventions are subject to the various requirements discussed below. But, not every invention by a company receiving government funding falls in the definition. Companies with access to other sources of funds can (and should) strategically invest in R&D in a manner that allows them to build key intellectual property independent of government rights, before leveraging government funding for other purposes.

When should I disclose to the funding agency?

Government contractors are required to disclose each subject invention to their funding agency within two months after the inventor discloses the invention in writing to the contractor’s personnel responsible for patent matters.³ Given that timeline, the reporting will often be required before the company decides whether to file a patent application on the subject invention. 

How do I disclose to the funding agency?

Invention disclosure is typically done through iEdison, an interagency online reporting system managed by NIST, by submitting a written description of the invention, the applicable grant number, the inventor names, and information about any publication, on-sale activity, or public use of the invention.⁴

Organizations new to iEdison can register for an account through the NIST iEdison website.

What patent deadlines apply based on disclosure to the funding agency?

First, the contractor must elect (typically, in iEdison) whether to retain title to the invention within two years of disclosing it to the agency.⁵ However, if a publication, public use, sale, or other event has triggered the one-year statutory period for filing a U.S. patent application, the agency may shorten the election deadline to no more than 60 days before the end of that statutory period.⁶

Second, the contractor must file an initial patent application within one year after electing to retain title, or prior to the end of any statutory bar period, whichever comes first.⁷ If a provisional application is filed as the initial application, a non-provisional application must be filed within 10 months of the provisional filing date, rather than the typical 12 months for a valid patent priority claim.⁸

Extensions of time for disclosure, election, and filing may be granted at the discretion of the agency and can be requested through iEdison.

Are there requirements on what should be included in the patent application?

Yes. Under 35 U.S.C. § 202(c)(6) and as set forth in MPEP § 310, the specification of any U.S. patent application — and any patent issuing thereon — covering a subject invention must include the following statement:

“This invention was made with government support under [identify the contract] awarded by [identify the Federal agency]. The government has certain rights in the invention.”⁹

If an omission of this statement is discovered after filing, it should be promptly added through an amendment or certificate of correction.  

What rights does the government get in subject inventions?

If the contractor retains title to a subject invention, the federal government receives a nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced the subject invention throughout the world for or on behalf of the United States.¹⁰ 

This license is automatic under the terms of the standard Bayh-Dole clause included in government funding agreements, and the contractor is required to sign and deliver a confirmatory license to the agency for each patent family (which can be generated and uploaded via iEdison).

For many technologies, the government has no reason to use its license rights, given little incentive for the government to compete in commercial markets. In other scenarios — for example, where the government is the major customer of a patented product — the government’s licenses rights may materially impact the value of a patent for a subject invention, as the patent cannot be used to stop the government from engaging a third party to produce the patented product. 

Are there ongoing requirements to update the government on patent status and use of the invention?

Yes, several ongoing obligations apply even after the initial disclosure, election, and patent filing:

• The contractor is typically required to notify the funding agency of any decision to abandon a patent or patent application, not less than 60 days before the expiration of the applicable response period, to allow the government to request title and pursue the patent application or maintenance itself if it chooses.¹¹ 
• Funding agencies may also request annual reports on the utilization of the subject invention, collecting data about commercialization status and activities.¹²
• Subject inventions also carry a domestic manufacturing requirement. Products embodying the subject invention or produced through the use of the subject invention must be manufactured substantially in the United States, with narrow exceptions.¹³ 

A company’s contracts with the U.S. federal government should be read carefully for these and other requirements.

Can I use my grant funding to pay for a patent filing?

Some types of grants will allow for patent costs to be covered by grant funding, but different funding sources will vary on this point.

Government-funded innovation brings valuable opportunity, but also compliance obligations that should not be overlooked. When iEdison reporting gaps emerge, prompt remediation may be critical to protecting patent rights. More on that next time.

Footnotes

Footnotes

1. 35 USC 201(e)

2. See https://www.nist.gov/tpo/policy-coordination/bayh-dole-act/2018-faqs

3. 37 CFR 401.14

4. See https://www.nist.gov/iedison/iedison-organization-user-guide/invention-reports/

5. 37 CFR 401.14

6. Id.

7. Id.

8. Id.

9. Id.

10. 35 U.S.C. 202(c).

11. 37 CFR 401.14(f).

12. 37 CFR 401.14(h).

13. 37 CFR 401.14(i).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.