On December 8, 2023, the National Institute of Standards and Technology (NIST) published a draft guidance document regarding the government’s exercise of “march-in” rights under the Bayh-Dole Act. The following Q&A, in connection with our previously published Client Alert, illuminates the details of the Proposed Framework.
Q: If my company takes SBIR/STTR funding from a federal agency, does the Bayh-Dole Act apply?
A: Yes. A company that receives Small Business Innovation Research (SBIR) or Small Business Technology Transfer (STTR) funding is considered a “contractor” under the Bayh-Dole Act. As such, inventions conceived of or first actually reduced to practice using SBIR or STTR funds will be subject to the Bayh-Dole Act. This applies even if the funds are used only to develop confirmatory data for an invention conceived of without the use of SBIR or STTR funds.
Q: Does the exercise of march-in rights mean the funding agency has taken ownership of a subject invention?
A: No. March-in rights enable the funding agency to require the contractor to grant a license to a responsible applicant or applicants, upon terms that are reasonable under the circumstances. If the contractor refuses to do so, the funding agency may grant the license itself.
Q: Under what circumstances can a funding agency exercise march-in rights?
A: A funding agency can exercise march-in rights if the agency determines that action is necessary:
(a) Because the contractor 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;
(b) To alleviate health or safety needs that are not reasonably satisfied by the contractor;
(c) To meet requirements for public use specified by federal regulations, and such requirements are not reasonably satisfied by the contractor; or
(d) Because the “manufactured substantially in the United States” requirement has been breached by an exclusive licensee.
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