The Bayh–Dole Act or Patent and Trademark Law Amendments Act (Pub. L. 96-517, December 12, 1980) is United States legislation permitting ownership by contractors of inventions arising from federal government-funded research. Sponsored by senators, Birch Bayh of Indiana and Bob Dole of Kansas, the Act was adopted in 1980, is codified at 94 Stat. 3015, and in 35 U.S.C. § 200–212, and is implemented by 37 C.F.R. 401 for federal funding agreements with contractors and 37 C.F.R 404 for licensing of inventions owned by the federal government.
A key change made by Bayh–Dole was in the procedures by which federal contractors that acquired ownership of inventions made with federal funding could retain that ownership. Before the Bayh–Dole Act, the Federal Procurement Regulation required the use of a patent rights clause that in some cases required federal contractors or their inventors to assign inventions made under contract to the federal government unless the funding agency determined that the public interest was better served by allowing the contractor or inventor to retain principal or exclusive rights. The National Institutes of Health, National Science Foundation, and the Department of Commerce had implemented programs that permitted non-profit organizations to retain rights to inventions upon notice without requesting an agency determination. By contrast, Bayh–Dole uniformly permits non-profit organizations and small business firm contractors to retain ownership of inventions made under contract and which they have acquired, provided that each invention is timely disclosed and the contractor elects to retain ownership in that invention.
A second key change with Bayh–Dole was to authorize federal agencies to grant exclusive licenses to inventions owned by the federal government.
History
The Bayh–Dole Act grew out of the Congress's efforts to respond to the economic malaise of the 1970s. One of Congress's efforts was focused on how best to manage inventions that were created with the more than $75 billion a year invested in government-sponsored R&D. Three philosophies were debated: "a Hamiltonian belief that the solution lay with a strong central government, which should take charge and actively manage these resources"; "a Jeffersonian belief that the solution lay with the individual and that the best thing government could do to provide incentives for success was to get out of the way of these individuals"; and a belief that "held that government could only hurt and that it should make sure that everyone benefited financially from government's efforts".
Prior to the enactment of Bayh–Dole, the U.S. government had accumulated 28,000 patents, but fewer than 5% of those patents were commercially licensed.
These patents had accumulated because after World War II, the government under President Harry S. Truman decided to continue and even ramp up its spending on research and development, on the basis of Vannevar Bush's famous report entitled, "Science The Endless Frontier", which stated: "Scientific progress is one essential key to our security as a nation, to our better health, to more jobs, to a higher standard of living, and to our cultural progress." However, the government did not have a unified patent policy governing all the agencies that funded research, and the general policy was that government would retain title to inventions and would license them only nonexclusively. A report by the Government Accountability Office found that "Those seeking to use government-owned technology found a maze of rules and regulations set out by the agencies in question because there was no uniform federal policy on patents for government-sponsored inventions or on the transfer of technology from the government to the private sector."
In 1968, the Department of Health, Education, and Welfare (HEW) introduced a uniform "Institutional Patent Agreement" to allow grantee nonprofit institutions to obtain assignment of patentable inventions made with federal funding for which the institution had decided to seek patents. By 1978, over seventy universities and research organizations had negotiated an IPA with HEW or with the National Science Foundation. In the 1970s, faculty at Purdue University in Indiana had made important discoveries under grants from the Department of Energy, which did not issue Institutional Patent Agreements. Officials at the university complained to their senator, Birch Bayh, whose staff investigated. At the same time, Senator Robert Dole was made aware of similar issues, and the two senators agreed to collaborate on a bill, along the lines of the "Jeffersonian belief" described above.