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Considerations with Bayh Dole Act and impact on joint Canada-United States research and development projects

Disclaimer: The information provided in this factsheet is meant as an educational resource only and should not be construed as legal advice.

  1. Bayh Dole Act, or the Patent and Trademark Law Amendment Act, is bipartisan United States (US) legislation enacted in 1980. The name of the Act comes from the two Senators who introduced and sponsored the bill- Birch Bayh (D- IN) and Bob Dole (R-KS).
  2. Bayh-Dole legislates inventions generated wholly or in-part from federally funded research.
  3. Prior to Bayh-Dole, government agencies assumed ownership of inventions made or reduced to practice using federal funding. This led to the government owning tens of thousands of patents but that resulted in little commercialization. Bayh-Dole provides a uniform policy across all federal agencies.
  4. Bayh-Dole intended to stimulate US innovation, giving small businesses and non-profit organizations such as universities and research labs control over the IP in order to market the inventions / make into commercial product(s).
  5. Bayh-Dole is credited with helping develop hundreds of new drugs and thousands of start-up companies that contribute hundreds of billions in economic value.
  6. The funding recipient may elect not to retain title (protect, seek ownership) of subject inventions. If the sponsoring government agency also declines to elect title, the ownership of the inventions falls back to the original inventors.
  7. Funding recipients must follow certain guidelines to stay compliant with Bayh-Dole. Most of these are strict timelines for reporting to the government around items such as inventions created or reduced to practice, electing title, abandoning prosecution/protection.
  8. Patent applications for inventions from federally funded research must include the government contract number and government agency that may have rights.
  9. The sponsoring government agency must be given a non-exclusive, non-transferable license.
  10. Any invention that will be used or sold in the US must also have reasonable efforts made to substantially manufacture in the US as well. Steps can be taken to waive such measures, and Bayh-Dole inventions can be licensed to be manufactured/sold in foreign markets such as Canada.
  11. Federal funding agreements with non-profits must include a standard patent rights clause. This clause must be included in any related subcontracts.
  12. Failure to comply with any of the Bayh-Dole requirements (e.g. failure to disclose) gives the government agency right to take title from the contractor. In such cases, the contractor loses ALL rights to the IP, even the right to practice.
  13. Government also has "March-In Rights" which effectively transfers authority of the asset's activity to the government. These rights only apply in certain situations and have never been exercised by the government. March-In rights are not used to control prices.
  14. March-In rights may be triggered if a contractor/recipient fails to apply the invention within a reasonable time, if the nation's health or safety are at stake, or if the resulting product is not primarily manufactured in the US. In these cases, the government would grant a license to a third party who is trusted to complete the needed action.

    Example 1: In the context of a national emergency, if a patent existed under Bayh-Dole that included key components that could help the Government deal  with the emergency, but the patent owner had neither the inclination, connections or funding to manufacture in the US in a reasonable timeframe, the government agency at stake could have licensed the patent to a local manufacturer to accelerate the timeline getting the technology available for production.

Key considerations for Canadian companies:

Additional information:

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