January 31, 2018

Tyson Benson Discusses the Risks of Ignoring Bayh-Dole Compliance in New Article

Metro Detroit patent attorney Tyson Benson spoke with Tech Transfer Tactics, the monthly newsletter arm of Tech Transfer Central, on the topic of Bayh-Dole compliance for universities and labs receiving funding from the Federal Government.

One of the more visible aspects of Bayh-Dole compliance requires that recipients include a “government clause” disclosing federal funding in issued patents.  In exchange for funding, typically in the form of grants, Bayh-Dole essentially allows the university or institution to own the patent, although the government receives the rights to use or license the patented invention.  The government then takes a back seat and, historically, does not interfere.

Benson, who is a frequent speaker on the topic of Bayh-Dole compliance, notes that following the list of requirements is certainly in the best interests of the university.  In addition to creating their own internal audit system for managing paperwork and deadlines, institutions should be careful to include all of the necessary support clauses, government clauses and reporting standards in their disclosures.  Institutions should also take advantage of the iEdison system or other reporting systems put in place by funding agencies.  Consequences for non-compliance include allowing the Federal Government to take action and claim title to the patents.

In a recent matter involving Cold Spring Harbor Laboratory, for example, a third party group called for the National Institute of Health to exercise its right to take back the title of the patent in question due to Cold Spring’s alleged failure to disclose the subject inventions.

Known as “march-in rights,” this controversial aspect of the Bayh-Dole Act is most frequently aimed at companies in the pharma business, as their pricing structure can make them targets of public animosity.  Calls like these have become more common in recent years as healthcare concerns have grown. Once asserted, funding agencies will take back control of certain patents and grant licenses for other agencies or businesses to sell or use the patented invention.

While it is a considerable risk for patent owners, the government has never taken back a patent from a university.  Benson notes that four criteria must be met before the government will “march-in” and re-assert control.

Benson nevertheless urges compliance rather than complacency.  With a new director of the United States Patent and Trademark Office expected to be named soon, a new era for compliance and the Bayh-Dole Act itself could be right around the corner.

“Just because they haven’t used their march-in rights before does not mean it will never happen,” says Benson. “It’s better to be vigilant than to become the case that proves the point.”

Read full article.