Potential Changes To Enforcement Under The Bayh-Dole Act

The enactment of the Bayh-Dole Act (P.L. 96-517, Patent and Trademark Act Amendments of 1980) established a uniform patent policy across federal research-funding agencies. This policy allows nonprofit organizations, such as universities that receive federal research funding, to retain title to inventions arising from federally funded research programs. Effectively, the Act decentralized technology management, transferring responsibility for commercialization to universities and other nonprofit institutions. The Act has been credited with significantly boosting U.S. innovation and economic growth, generating an estimated over $1 trillion in revenue, creating thousands of new startup companies, and supporting over four million jobs since its enactment. However, recent governmental actions relating to enforcement of provisions of the Bayh-Dole Act of 1980 have justifiably raised concerns among stakeholders, including universities and research institutions.

Under Bayh-Dole, universities:

• May elect to retain title to innovations developed under federally funded research programs.
• Are encouraged to collaborate with commercial concerns if necessary to promote the utilization of inventions arising from federal funding.
• Are expected to file patent applications on inventions they elect to own.
• Are expected to give licensing preference to small businesses.

The U.S. government retains a non-exclusive license to practice any patents resulting from federally funded research throughout the world. The U.S. government also retains march-in rights, allowing the government to grant a compulsory license on a privately owned patent to third parties in specific circumstances. By statute, march-in rights may apply if:

• Action is necessary because the university or assignee has not taken, or is not expected to take within a reasonable time, effective steps to achieve practical application of the subject invention;
• Action is necessary to alleviate health or safety needs which are not reasonably satisfied by the university, assignee, or their licensees;
• Action is necessary to meet requirements for public use as specified by federal regulations; or
• Action is necessary based on a failure of the university or assignee to comply with the preference for domestic manufacturing of the invention under 35 U.S.C. §204.

Regulations governing implementation of the Act are codified at 37 C.F.R. § parts 401 and 404. Procedures governing exercise of march-in rights are codified at 37 C.F.R. §401.6 directing a federal agency to initiate a march-in proceeding when it "receives information that it believes might warrant" doing so. The agency is required to inform the contractor and may use informal consultations to determine whether a formal march-in proceeding should be initiated.

No federal agency has exercised march-in rights since enactment of the Bayh-Dole Act. However, the U.S. government has taken recent actions signaling a potential change in federal views on march-in rights and enforcement under Bayh-Dole. In particular, in late 2024 and 2025 significant new activity relating to the Act occurred.

The Biden administration implemented an "affordability" mandate in licenses for National Institutes of Health–owned patents in early 2025, which was officially adopted by the Trump administration on October 1, 2025. It is noteworthy that the Biden Administration drew on a 2018 National Institute of Standards and Technology (NIST) publication issued at the direction of the previous Trump administration. This policy, which includes a price control on drug patents, has drawn significant criticism for potentially undermining the Act's goal of commercializing innovation. For example, critics have noted that pricing was specifically called out by the drafters of the Act as not qualifying as a "health or safety need" triggering a march-in rights investigation.

In August of 2025, the U.S. Department of Commerce publicly sent a letter to Harvard University regarding the University's compliance with the Bayh-Dole Act and demanding a comprehensive list of its federally funded patents. The letter outlined concerns relating to failure to comply with requirements for timely disclosure and election of title, failure to comply with the preference for U.S. manufacture, and failure to take effective steps to achieve practical application of subject inventions.

This recent increased focus on considerations of enforcement and the threat of using march-in rights to compel licensing, along with increased focus on U.S. manufacturing requirements, should raise concerns among universities stemming from enforcement based on political whim. In particular, investor uncertainty and slowing of the innovation and technological development that is at the heart of the Act's stated purpose are concerns. In view of the potential ramping-up of Bayh-Dole related enforcement, universities should be especially mindful of the reporting and other compliance requirements imposed by Bayh-Dole, which include in part:

• Implementation of written agreements with federally funded researchers (faculty) requiring disclosure and assignment of federally funded inventions to the federal contractor;
• Disclosure of each new federally funded invention to the funding agency within 60 days after the inventor discloses it in writing to the federal contractor;
• A decision as to whether to retain title to the federally funded invention must be made by the federal contractor within two years after disclosing to the federal agency, which time frame may be shortened to at least 60 days before expiration of the one-year U.S. statutory patent bar;
• An initial patent application (provisional or utility) must be filed within one year from the decision to elect to retain title by the university, or prior to expiration of any statutory period in which valid patent protection can be obtained in the U.S.;
• The specification of the patent application must include a specifically-worded notification of government support of and government rights in the invention;
• The federal contractor must submit periodic reports regarding utilization of the invention (no more than annually);
• Absent a waiver, any company holding an exclusive license to a patent based in part on federally funded research must substantially manufacture the product in the U.S.;
• In marketing the invention, universities must give preference to small (fewer than 500 employees) businesses providing the businesses have the resources and capacity to bring the invention to practical application.

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