Bayh-Dole Act
Encyclopedia
The Bayh–Dole Act or Patent and Trademark Law Amendments Act is United States
legislation dealing with intellectual property arising from federal government-funded research. Adopted in 1980, Bayh-Dole is codified in -212, and implemented by 37 C.F.R.
401. Among other things, it gave U.S. universities, small businesses and non-profits intellectual property
control of their inventions and other intellectual property that resulted from such funding. The Act, sponsored by two senators
, Birch Bayh
of Indiana
and Bob Dole
of Kansas
, was enacted by the United States Congress
on December 12, 1980.
Perhaps the most important change of Bayh-Dole is that it reversed the presumption of title. Bayh-Dole permits a university, small business, or non-profit institution to elect to pursue ownership of an invention in preference to the government.
s can retain the title in a federally funded "subject invention." In exchange, the organization is required to
in the performance of work under a funding agreement." In Stanford v. Roche, the US Supreme Court made clear that "of the contractor" means "owned by or belonging to the contractor." Thus, subject inventions represent a subset of all inventions that may be made under a federal funding agreement; namely, those for which the contractor has obtained ownership:
"The Bayh-Dole Act does not confer title to federally funded inventions on contractors or authorize contractors to unilaterally take title to those inventions; it simply assures contractors that they may keep title to whatever it is they already have.... Only when an invention belongs to the contractor does the Bayh-Dole Act come into play."
The CFR addresses the relationship between federal funding and other funding that may supplement the federally supported research. If an invention is made outside the research activities of the federally funded research "without interference with or cost to the government-funded project," then the invention is not a subject invention. Similarly, an invention is not a subject invention if it arises in closely related research outside the "planned and committed activities" of the federally funded project, and the closely related research does not "diminish or distract from the performance" of the federally funded project.
Many institutions have assumed that where federal funds have been used anywhere in a lab, a subject invention exists.
After World War II
, the government began spending a great deal of money to support public research in military, defense and medical technologies (through the newly founded National Science Foundation
). However, the government did not have a unified patent policy. At one point, those interested in government intellectual property were faced with dealing with 26 different agency policies.
The government's steps towards unification began in 1963 with Jerome Wiesner
, President John F. Kennedy
's science advisor, and culminated in 1971 under President Richard Nixon
. Nevertheless, all these policies directed title to the agencies and not to the public.
Many non-profit organizations, led by the University of Wisconsin–Madison
, sought even more favorable policies. In 1968 and 1973, the University successfully lobbied for agencies to enter into Institutional Patent Agreements (IPA), which, among other things, allowed universities and non-profits with approved patent policies to retain title to their inventions. Although agreed to by only two agencies, the Health and Human Services (HHS) and National Science Foundation, the IPA laid the groundwork for enacting Bayh-Dole less than 10 years later.
covering the Bayh–Dole Act. However, in February 2011, the Supreme Court heard arguments in Stanford v. Roche on whether a university's right under the Act "can be terminated unilaterally by an individual inventor through a separate agreement".
."
v. G.D. Searle & Co., 358 F.3d 916 (Fed. Cir. 2004), the court rejected a claim that Bayh-Dole altered the grounds for patentability
. The court, quoting an Amicus curiæ, stated
Though this right is, in theory, quite powerful, it has not proven so in terms of its practical application — to date, no federal agency has exercised its march-in rights. Four march-in petitions have been made to the National Institutes of Health
, however, and pharmaceutical companies occasionally instruct their legal departments to evaluate the risk of march-in prior to negotiating contracts for drugs licensed under Bayh-Dole. March-in petitions for inventions funded under the NIH are heard by the NIH Office of Technology Transfer
.
In In Re Petition of CellPro, Inc., CellPro first argued that The Johns Hopkins University and Baxter Healthcare failed to take reasonable steps to commercialize certain patented stem cell
technologies and that Johns Hopkins should be forced to license Cellpro the patent necessary to keep its machine on the market. The NIH denied this claim citing:
The NIH also denied Cellpro's claim that it needed Johns Hopkins's patents to keep its device on the market for health and safety reasons. The NIH also mentioned the adverse effects that a march-in decision would have on federal efforts to encourage firms to commercialize federally funded research.
In In the Case of NORVIR, the NIH received a request from Essential Inventions, supported by the public and members of the United States Congress
, to exercise march-in rights for patents owned by Abbott Labs covering the drug ritonavir, sold under the trade name Norvir, a prescription drug
used in the treatment of AIDS
. Abbott had recently raised the price of Norvir 400% for U.S. customers (but not for consumers in any other country), and had refused to license ritonavir to another company for purposes for providing protease inhibitors coformulated with ritonavir. The NIH denied the petition finding no grounds to exercise its march-in rights. The NIH cited:
In In the Case of Xalatan Pfizer's glaucoma drug was sold in the United States at two to five times the prices in other high income countries. Essential Inventions asked the NIH to adopt a policy of granting march-in licenses to patents when the patent owner charged significantly higher prices in the United States than they did in other high income countries. The NIH held that “the extraordinary remedy of march-in was not an appropriate means for controlling prices.”
In In the Case of Fabrazyme patients with Fabry disease petitioned on August 2, 2010, for march-in rights in response to Genzyme
's inability to manufacture enough Fabrazyme to treat all Fabry patients. In 2009, Genzyme rationed the drug to less than a third of the recommended dose as a result of manufacturing problems and FDA sanctions but did not anticipate being able to meet the market needs until late 2011. The patients had a return of their symptoms and were put at greater risk of morbidity and mortality at the mandatory reduced dosage. The petitioners contend that where a licensee of a public invention has created a drug shortage, the public health requirements of the Bayh-Dole act are not met and other manufacturers should be allowed to enter the market.
On November 3, 2010, the NIH denied the petition for March-in stating that the current FDA drug approval process would take years of clinical testing to bring a biosimilar
of Fabrazyme to market. Because of the long delay in the approval process even if March-in were granted, the NIH contends that the problem would not be solved. In a deviation from prior March-in requests, the NIH also stated that it would continue to monitor the situation and if Genzyme could not meet its production deadlines, or if a third party licensee requested a license, the March-in request would be revisited. NIH additionally required regular updates from Mount Sinai School of Medicine
, the patent holder, which agreed to not seek injunctions for potentially infringing products being sold during the shortage.
Statutes and regulations
Papers
News
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
legislation dealing with intellectual property arising from federal government-funded research. Adopted in 1980, Bayh-Dole is codified in -212, and implemented by 37 C.F.R.
Code of Federal Regulations
The Code of Federal Regulations is the codification of the general and permanent rules and regulations published in the Federal Register by the executive departments and agencies of the Federal Government of the United States.The CFR is published by the Office of the Federal Register, an agency...
401. Among other things, it gave U.S. universities, small businesses and non-profits intellectual property
Intellectual property
Intellectual property is a term referring to a number of distinct types of creations of the mind for which a set of exclusive rights are recognized—and the corresponding fields of law...
control of their inventions and other intellectual property that resulted from such funding. The Act, sponsored by two senators
United States Senate
The United States Senate is the upper house of the bicameral legislature of the United States, and together with the United States House of Representatives comprises the United States Congress. The composition and powers of the Senate are established in Article One of the U.S. Constitution. Each...
, Birch Bayh
Birch Bayh
Birch Evans Bayh II is a former United States Senator from Indiana, having served from 1963 to 1981. He was a candidate for the Democratic nomination for president in the 1976 election, but lost to Jimmy Carter. He is the father of former Indiana Governor and former U.S. Senator Evan Bayh.-Life...
of Indiana
Indiana
Indiana is a US state, admitted to the United States as the 19th on December 11, 1816. It is located in the Midwestern United States and Great Lakes Region. With 6,483,802 residents, the state is ranked 15th in population and 16th in population density. Indiana is ranked 38th in land area and is...
and Bob Dole
Bob Dole
Robert Joseph "Bob" Dole is an American attorney and politician. Dole represented Kansas in the United States Senate from 1969 to 1996, was Gerald Ford's Vice Presidential running mate in the 1976 presidential election, and was Senate Majority Leader from 1985 to 1987 and in 1995 and 1996...
of Kansas
Kansas
Kansas is a US state located in the Midwestern United States. It is named after the Kansas River which flows through it, which in turn was named after the Kansa Native American tribe, which inhabited the area. The tribe's name is often said to mean "people of the wind" or "people of the south...
, was enacted by the United States Congress
United States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....
on December 12, 1980.
Perhaps the most important change of Bayh-Dole is that it reversed the presumption of title. Bayh-Dole permits a university, small business, or non-profit institution to elect to pursue ownership of an invention in preference to the government.
Recipient requirements
Small businesses and non-profit organizationNon-profit organization
Nonprofit organization is neither a legal nor technical definition but generally refers to an organization that uses surplus revenues to achieve its goals, rather than distributing them as profit or dividends...
s can retain the title in a federally funded "subject invention." In exchange, the organization is required to
- Report each disclosed invention to the funding agency
- Elect to retain title in writing within a statutorily prescribed timeframe
- File for patentPatentA patent is a form of intellectual property. It consists of a set of exclusive rights granted by a sovereign state to an inventor or their assignee for a limited period of time in exchange for the public disclosure of an invention....
protection - Grant the federal governmentFederal government of the United StatesThe federal government of the United States is the national government of the constitutional republic of fifty states that is the United States of America. The federal government comprises three distinct branches of government: a legislative, an executive and a judiciary. These branches and...
a non-exclusive, non-transferable, irrevocable, paid-up license to practice or have practiced on its behalf throughout the world - Actively promote and attempt to commercialize the invention
- Not assign the rights to the technology, with a few exceptions
- Share royaltiesRoyaltiesRoyalties are usage-based payments made by one party to another for the right to ongoing use of an asset, sometimes an intellectual property...
with the inventor - Use any remaining income for education and research
- Give preference to U.S. industry and small business
Subject inventions
A subject invention is defined as "any invention of the contractor that is conceived or first actually reduced to practiceReduction to practice
In United States patent law, the reduction to practice is a concept meaning the embodiment of the concept of an invention. The date of this embodiment is critical to the determination of priority between inventors in an interference proceeding....
in the performance of work under a funding agreement." In Stanford v. Roche, the US Supreme Court made clear that "of the contractor" means "owned by or belonging to the contractor." Thus, subject inventions represent a subset of all inventions that may be made under a federal funding agreement; namely, those for which the contractor has obtained ownership:
"The Bayh-Dole Act does not confer title to federally funded inventions on contractors or authorize contractors to unilaterally take title to those inventions; it simply assures contractors that they may keep title to whatever it is they already have.... Only when an invention belongs to the contractor does the Bayh-Dole Act come into play."
The CFR addresses the relationship between federal funding and other funding that may supplement the federally supported research. If an invention is made outside the research activities of the federally funded research "without interference with or cost to the government-funded project," then the invention is not a subject invention. Similarly, an invention is not a subject invention if it arises in closely related research outside the "planned and committed activities" of the federally funded project, and the closely related research does not "diminish or distract from the performance" of the federally funded project.
Many institutions have assumed that where federal funds have been used anywhere in a lab, a subject invention exists.
History
Prior to the enactment of Bayh-Dole, the U.S. government had accumulated 30,000 patents. Only approximately 5% of those patents were commercially licensed.After World War II
World War II
World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...
, the government began spending a great deal of money to support public research in military, defense and medical technologies (through the newly founded National Science Foundation
National Science Foundation
The National Science Foundation is a United States government agency that supports fundamental research and education in all the non-medical fields of science and engineering. Its medical counterpart is the National Institutes of Health...
). However, the government did not have a unified patent policy. At one point, those interested in government intellectual property were faced with dealing with 26 different agency policies.
The government's steps towards unification began in 1963 with Jerome Wiesner
Jerome Wiesner
Jerome Bert Wiesner was an educator, a Science Advisor to U.S. Presidents Eisenhower and Kennedy and Johnson, an advocate for arms control, and a critic of anti-ballistic-missile defense systems...
, President John F. Kennedy
John F. Kennedy
John Fitzgerald "Jack" Kennedy , often referred to by his initials JFK, was the 35th President of the United States, serving from 1961 until his assassination in 1963....
's science advisor, and culminated in 1971 under President Richard Nixon
Richard Nixon
Richard Milhous Nixon was the 37th President of the United States, serving from 1969 to 1974. The only president to resign the office, Nixon had previously served as a US representative and senator from California and as the 36th Vice President of the United States from 1953 to 1961 under...
. Nevertheless, all these policies directed title to the agencies and not to the public.
Many non-profit organizations, led by the University of Wisconsin–Madison
University of Wisconsin–Madison
The University of Wisconsin–Madison is a public research university located in Madison, Wisconsin, United States. Founded in 1848, UW–Madison is the flagship campus of the University of Wisconsin System. It became a land-grant institution in 1866...
, sought even more favorable policies. In 1968 and 1973, the University successfully lobbied for agencies to enter into Institutional Patent Agreements (IPA), which, among other things, allowed universities and non-profits with approved patent policies to retain title to their inventions. Although agreed to by only two agencies, the Health and Human Services (HHS) and National Science Foundation, the IPA laid the groundwork for enacting Bayh-Dole less than 10 years later.
Legal proceedings and case law
There has not yet been a considerable amount of case lawCase law
In law, case law is the set of reported judicial decisions of selected appellate courts and other courts of first instance which make new interpretations of the law and, therefore, can be cited as precedents in a process known as stare decisis...
covering the Bayh–Dole Act. However, in February 2011, the Supreme Court heard arguments in Stanford v. Roche on whether a university's right under the Act "can be terminated unilaterally by an individual inventor through a separate agreement".
Disclosure of subject inventions
Only one case has discussed the implications of disclosing subject inventions. In Campbell Plastics Engineering & Mfg., Inc. v. Les Brownlee, 389 F.3d 1243 (Fed. Cir. 2004), the court held that since the appellant failed to comply with the invention disclosure provisions of a contract, the court upheld the transfer of title to an invention to the U.S. Army. Specifically, the contract required, per Bayh-Dole, that an invention be disclosed to the U.S. Army through a specific form, DD Form 882s. Campbell Plastics never disclosed its subject invention through this form. Campbell Plastics argued instead that it disclosed all parts of its invention over the course of the contract, but simply never used the form. The court did not specifically address the legitimacy of the particular form, but assumed that it was sufficient. Nevertheless, the court found that the "piecemeal submissions [did] not adequately disclose the subject invention under the contract." The result was a forfeiture of the subject invention.Extent of the government's license
In a footnote in the famous experimental use case, Madey v. Duke University, 307 F.3d 1351 (Fed. Cir. 2002), the court mentions Bayh-Dole. There is ultimately very little treatment of the topic. Instead the court quoted the district court as holding that where a subject invention exists and the defendant is a recipient of government funding, "in light of the Bayh-Dole Act... use of the patents that has been authorized by the government does not constitute patent infringementPatent infringement
Patent infringement is the commission of a prohibited act with respect to a patented invention without permission from the patent holder. Permission may typically be granted in the form of a license. The definition of patent infringement may vary by jurisdiction, but it typically includes using or...
."
Bayh-Dole and patentability
In University of RochesterUniversity of Rochester
The University of Rochester is a private, nonsectarian, research university in Rochester, New York, United States. The university grants undergraduate and graduate degrees, including doctoral and professional degrees. The university has six schools and various interdisciplinary programs.The...
v. G.D. Searle & Co., 358 F.3d 916 (Fed. Cir. 2004), the court rejected a claim that Bayh-Dole altered the grounds for patentability
Patentability
Within the context of a national or multilateral body of law, an invention is patentable if it meets the relevant legal conditions to be granted a patent...
. The court, quoting an Amicus curiæ, stated
no connection exists between the Bayh-Dole Act and the legal standards that courts employ to assess patentability. Furthermore, none of the eight policy objectives of the Bayh-Dole Act encourages or condones less stringent application of the patent laws to universities than to other entities.
Petitions for march-in rights
The government's march-in right is one of the most contentious provisions in Bayh-Dole. It allows the funding agency, on its own initiative or at the request of a third party, to effectively ignore the exclusivity of a patent awarded under the act and grant additional licenses to other "reasonable applicants." This right is strictly limited and can only be exercised if the agency determines, following an investigation, that one of four criteria is met. The most important of these is a failure by the contractor to take "effective steps to achieve practical application of the subject invention" or a failure to satisfy "health and safety needs" of consumers.Though this right is, in theory, quite powerful, it has not proven so in terms of its practical application — to date, no federal agency has exercised its march-in rights. Four march-in petitions have been made to the National Institutes of Health
National Institutes of Health
The National Institutes of Health are an agency of the United States Department of Health and Human Services and are the primary agency of the United States government responsible for biomedical and health-related research. Its science and engineering counterpart is the National Science Foundation...
, however, and pharmaceutical companies occasionally instruct their legal departments to evaluate the risk of march-in prior to negotiating contracts for drugs licensed under Bayh-Dole. March-in petitions for inventions funded under the NIH are heard by the NIH Office of Technology Transfer
NIH Office of Technology Transfer
NIH Office of Technology Transfer manages all intramural inventions from the United States National Institutes of Health and Food and Drug Administration as mandated by the Federal Technology Transfer Act and related legislation....
.
In In Re Petition of CellPro, Inc., CellPro first argued that The Johns Hopkins University and Baxter Healthcare failed to take reasonable steps to commercialize certain patented stem cell
Stem cell
This article is about the cell type. For the medical therapy, see Stem Cell TreatmentsStem cells are biological cells found in all multicellular organisms, that can divide and differentiate into diverse specialized cell types and can self-renew to produce more stem cells...
technologies and that Johns Hopkins should be forced to license Cellpro the patent necessary to keep its machine on the market. The NIH denied this claim citing:
- Johns Hopkins's licensing of the subject invention
- Baxter's use, manufacturing, and practice of the subject invention
- Baxter's application to the Food and Drug AdministrationFood and Drug AdministrationThe Food and Drug Administration is an agency of the United States Department of Health and Human Services, one of the United States federal executive departments...
(FDA)
The NIH also denied Cellpro's claim that it needed Johns Hopkins's patents to keep its device on the market for health and safety reasons. The NIH also mentioned the adverse effects that a march-in decision would have on federal efforts to encourage firms to commercialize federally funded research.
In In the Case of NORVIR, the NIH received a request from Essential Inventions, supported by the public and members of the United States Congress
United States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....
, to exercise march-in rights for patents owned by Abbott Labs covering the drug ritonavir, sold under the trade name Norvir, a prescription drug
Prescription drug
A prescription medication is a licensed medicine that is regulated by legislation to require a medical prescription before it can be obtained. The term is used to distinguish it from over-the-counter drugs which can be obtained without a prescription...
used in the treatment of AIDS
AIDS
Acquired immune deficiency syndrome or acquired immunodeficiency syndrome is a disease of the human immune system caused by the human immunodeficiency virus...
. Abbott had recently raised the price of Norvir 400% for U.S. customers (but not for consumers in any other country), and had refused to license ritonavir to another company for purposes for providing protease inhibitors coformulated with ritonavir. The NIH denied the petition finding no grounds to exercise its march-in rights. The NIH cited:
- The availability of Norvir to patients with AIDS
- That there was no evidence that health and safety needs were not adequately met by Abbott, and
- That the NIH should not address the issue of drug pricing, only Congress.
In In the Case of Xalatan Pfizer's glaucoma drug was sold in the United States at two to five times the prices in other high income countries. Essential Inventions asked the NIH to adopt a policy of granting march-in licenses to patents when the patent owner charged significantly higher prices in the United States than they did in other high income countries. The NIH held that “the extraordinary remedy of march-in was not an appropriate means for controlling prices.”
In In the Case of Fabrazyme patients with Fabry disease petitioned on August 2, 2010, for march-in rights in response to Genzyme
Genzyme
Genzyme Corporation is a fully owned subsidiary of Sanofi-Aventis. Before its acquisition, Genzyme was an American biotechnology company based in Cambridge, Massachusetts. In 2010, Genzyme was the world’s third-largest biotechnology company, employing more than 11,000 people around the world...
's inability to manufacture enough Fabrazyme to treat all Fabry patients. In 2009, Genzyme rationed the drug to less than a third of the recommended dose as a result of manufacturing problems and FDA sanctions but did not anticipate being able to meet the market needs until late 2011. The patients had a return of their symptoms and were put at greater risk of morbidity and mortality at the mandatory reduced dosage. The petitioners contend that where a licensee of a public invention has created a drug shortage, the public health requirements of the Bayh-Dole act are not met and other manufacturers should be allowed to enter the market.
On November 3, 2010, the NIH denied the petition for March-in stating that the current FDA drug approval process would take years of clinical testing to bring a biosimilar
Biosimilar
Biosimilars or follow-on biologics are terms used to describe officially-approved subsequent versions of innovator biopharmaceutical products made by a different sponsor following patent and exclusivity expiry on the innovator product. Biosimilars are also referred to as subsequent entry biologics ...
of Fabrazyme to market. Because of the long delay in the approval process even if March-in were granted, the NIH contends that the problem would not be solved. In a deviation from prior March-in requests, the NIH also stated that it would continue to monitor the situation and if Genzyme could not meet its production deadlines, or if a third party licensee requested a license, the March-in request would be revisited. NIH additionally required regular updates from Mount Sinai School of Medicine
Mount Sinai School of Medicine
Mount Sinai School of Medicine is an American medical school in the borough of Manhattan in New York City, currently ranked among the top 20 medical schools in the United States. It was chartered by Mount Sinai Hospital in 1963....
, the patent holder, which agreed to not seek injunctions for potentially infringing products being sold during the shortage.
See also
- Technology transferTechnology transferTechnology Transfer, also called Transfer of Technology and Technology Commercialisation, is the process of skill transferring, knowledge, technologies, methods of manufacturing, samples of manufacturing and facilities among governments or universities and other institutions to ensure that...
- Government-funded research
External links
- Technology Transfer, Agencies' Rights to Federally Sponsored Biomedical Research, GAOGaoGao is a town in eastern Mali on the River Niger lying ESE of Timbuktu. Situated on the left bank of the river at the junction with the Tilemsi valley, it is the capital of the Gao Region and had a population of 86,663 in 2009....
, July 2003. - University Technology Transfer Evolution and Revolution, Howard W. Bremer, 50th Anniversary of the Council on Government Relations.
- IEdison is the federal government's electronic filing system.
Statutes and regulations
- 37 C.F.R. 401 — Rights to inventions made by nonprofit organizations and small business firms under government grants, contracts, and cooperative agreements.
- 35 U.S.C. 200-212 Chapter 18 — Patent Rights in Inventions Made with Federal Assistance
Papers
- "Patent Ownership and Federal Research and Development (R&D): A Discussion on the Bayh-Dole Act and the Stevenson-Wydler Act", United States Congressional Research Service, December 11, 2000
News
- Innovation's golden goose, The EconomistThe EconomistThe Economist is an English-language weekly news and international affairs publication owned by The Economist Newspaper Ltd. and edited in offices in the City of Westminster, London, England. Continuous publication began under founder James Wilson in September 1843...
(2002) - Bayhing for blood or Doling out cash?, The Economist, Dec. 24, 2005
- The Law of Unintended Consequences, Fortune MagazineFortune (magazine)Fortune is a global business magazine published by Time Inc. Founded by Henry Luce in 1930, the publishing business, consisting of Time, Life, Fortune, and Sports Illustrated, grew to become Time Warner. In turn, AOL grew as it acquired Time Warner in 2000 when Time Warner was the world's largest...
- USA Today May 2008 Q&A with Texas Instruments CEO about Bayh-Dole
- Are Bayh-Dole's Best Days Over? Law360 article by Robert Gerstein (March 2011)