On April 13, 2018, the National Institute of Standards and Technology (“NIST”) issued a final rule revising the Bayh-Dole Act, 37 CFR 401, to update certain sections to conform with changes to patent laws, the implementation of Executive Order (E.O.) 12591, make technical corrections, clarify the role of funding agencies in the Bayh-Dole process, clarify the role of provisional patent application filing, and other administrative changes.

The Bayh-Dole Act was enacted in 1980 to permit small businesses and non-profits retain title of any invention conceived or reduced to practice using government funding, “subject inventions.” This applied to procurement contracts, cooperative agreements, and grants. E.O. 12591, issued in 1987, extended the Bayh-Dole Act to large businesses. In addition, in 2013, pursuant to the America Invents Act, the U.S. changed from “first to invent” (“FTI”) system to “first-inventor-to-file” (“FITF”) system for patent applications filed on or after March 16, 2013. The final rule implements all of these changes, which goes into effect on May 14, 2018 for any new funding contract, cooperative agreement or grant. The rule is prospective only, even if the government and the other party agrees to revise a current funding vehicle to add the revise clause.

Key changes:

• The scope of the regulation and the definition of contractor are revised to make it clear that the regulation applies to all businesses, regardless of size.
• Expands the definition of “initial patent application” to include provisional patent applications and the first international application filed under the Patent Cooperation Treaty.
• Adds a definition of “statutory period,” to be one year before the “effective filing date of the invention during which exceptions to prior art exist per 35 U.S.C. 102(b) as amended.”
• Adds another exception to having the contractor retain ownership of the subject invention if the contract is for services and the contractor is not a nonprofit organization and does not promote the commercialization and public availability of subject inventions.
• Expands the direction regarding the use of the clause at §401.14 for Department of Energy contracts.
• Adds alternate language to the §401.14 clause regarding the allocation of rights if the contractor performs services at a government owned and operated laboratory or government owned and contractor operated laboratory and the contractor is directed to perform the effort described in a Cooperative Research and Development Agreement (“CRADA”). In that scenario, the contractor may have to negotiate with the CRADA collaborating party for rights.
• Revises §401.5 “Modification and tailoring of clauses” to provide additional guidance regarding how §401.14 may be modified to fit certain differing circumstances in accordance with an agency’s regulation or the Federal Acquisition Regulation (“FAR”).
• 401.7 is revised to make it easier for small businesses to address issues with nonprofit organizations and their obligations regarding small businesses to submit such issues to the funding agencies versus the Secretary.
• 401.10 is expanded to provide additional guidance on what happens if a government employee is a co-inventor with a contractor and the government assigns ownership to the contractor. It also provides guidance for the situation where the contractor has not elected to take title.
• 401.13 revisions relate to the release of information related to subject inventions. Most importantly, it removes the time frame for protection in the earlier version, 18 months, and instead simply relies upon the statute 35 U.S.C. 205.
• The changes to the Regulation also includes a recognition of the greater scope of the clause at §401.14, by renaming it “Standard patent rights clause.” 401.14 also incorporates the other relevant provisions discussed above and provides revised timelines for filings, extensions, failure to file, etc. The clause at §401.14 is a required flowdown to lower tier contractors.

For more information, contact MWL Counsel Jody Reed.