Intellectual PropertyAnd Data Rights Issues

Domestic & GlobalPerspectives

Bayh-Dole act -- rights in data

Henry N. WixonChief Counsel

National Institute of Standards and Technology

The bayh-dole act

“It is the policy and objective of the Congress to use the patent system to promote the utilization of inventions arising from federally-supported research or development; . . . to promote collaboration between commercial concerns and nonprofit organizations, including universities; . . . to promote the commercialization and public availability of inventions made in the United States by United States industry and labor; [and] to ensure that the Government obtains sufficient rights in federally-supported inventions to meet the needs of the Government and protect the public against nonuse or unreasonable use of inventions . . . .”

35 USC § 200

Bayh-Dole Highlights• A “Contractor” (nonprofit organization (such as a university) or a small

business) has the right to elect (within a reasonable time) to retain title to any “subject invention” made under federally funded R&D (e.g., grants, contracts, cooperative agreements).

• Under “exceptional circumstances when it is determined by the agency that restriction or elimination of the right to retain title to any subject invention will better promote the policy and objectives of this chapter” an agency may limit the presumption that ownership will vest in the Contractor.

• A Contractor may assign or obtain rights in joint inventions made with federal employees.

• An inventor may obtain ownership rights from the Contractor or from a federal agency.

• The Contractor must commit to commercialization within a predetermined, agreed upon, time frame.

Bayh-Dole Highlights• The government retains “a nonexclusive, nontransferable, irrevocable, paid-

up license to practice or have practiced for or on behalf of the United States any subject invention throughout the world . . . .”

• The government also retains “march-in rights,” which allow the federal agency to require the Contractor (whether it owns the title or has an exclusive license) to “grant a nonexclusive, partially exclusive, or exclusive license in any field of use to a responsible applicant or applicants . . . .” (with compensation) or to grant such a license itself under certain circumstances.

• To trigger march-in rights, the agency must determine that the Contractor has not made efforts to commercialize within an agreed upon time frame, or that march-in “is necessary to alleviate health or safety needs which are not reasonably satisfied by the contractor . . . .”

• To date, no agency has ever exercised march-in rights.

Bayh-Dole Highlights• A Contractor must report an invention to the funding

agency within 2 months from the date it is reported to the Contractor by the inventor (previous requirement was 6 months from conception or actual reduction to practice).

• A Contractor must make an election of rights within 2 years from the date it is reported to the agency (may request additional time).

• A Contractor must file a patent application within 1 year of making an election.

• The patent application must include a government rights statement.

The Rules – 37 CFR § 401

• The Code of Federal Regulations (CFR) sets out the rules that implement the Bayh-Dole Act, and when one talks about how Bayh-Dole “works” in practice, one is typically referring to the CFR.

• Section 401.3 requires that certain “standard” patent rights clauses be included in each funding agreement to a non-profit or small business, but allows the use of alternate provisions under certain circumstances.

Standard Patent Rights Clauses• § 401.14 sets these out:

Allocation of Principal Rights

• “The Contractor may retain the entire right, title, and interest throughout the world to each subject invention subject to the provisions of this clause and 35 U.S.C. 203. With respect to any subject invention in which the Contractor retains title, the Federal government shall have a nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States the subject invention throughout the world.”

37 CFR §401.14(b)

Standard Patent Rights ClausesInvention Disclosure, Election of Title and Filing of Patent

Application by Contractor

• “The contractor will disclose each subject invention to the Federal Agency within two months after the inventor discloses it in writing to contractor personnel responsible for patent matters. The disclosure to the agency shall be in the form of a written report and shall identify the contract under which the invention was made and the inventor(s). It shall be sufficiently complete in technical detail to convey a clear understanding to the extent known at the time of the disclosure, of the nature, purpose, operation, and the physical, chemical, biological or electrical characteristics of the invention. The disclosure shall also identify any publication, on sale or public use of the invention and whether a manuscript describing the invention has been submitted for publication and, if so, whether it has been accepted for publication at the time of disclosure. In addition, after disclosure to the agency, the Contractor will promptly notify the agency of the acceptance of any manuscript describing the invention for publication or of any on sale or public use planned by the contractor.”

37 CFR §401.14(c)(1)

Standard Patent Rights ClausesContractor Action to Protect the Government's Interest

• “The contractor agrees to require, by written agreement, its employees, other than clerical and nontechnical employees, to disclose promptly in writing to personnel identified as responsible for the administration of patent matters and in a format suggested by the contractor each subject invention made under contract in order that the contractor can comply with the disclosure provisions of paragraph (c), above, and to execute all papers necessary to file patent applications on subject inventions and to establish the government's rights in the subject inventions. This disclosure format should require, as a minimum, the information required by (c)(1), above. The contractor shall instruct such employees through employee agreements or other suitable educational programs on the importance of reporting inventions in sufficient time to permit the filing of patent applications prior to U.S. or foreign statutory bars.”

37 CFR §401.14(f)(2)

Standard Patent Rights ClausesReporting on Utilization of Subject Inventions

• “The Contractor agrees to submit on request periodic reports no more frequently than annually on the utilization of a subject invention or on efforts at obtaining such utilization that are being made by the contractor or its licensees or assignees. Such reports shall include information regarding the status of development, date of first commerical [sic] sale or use, gross royalties received by the contractor, and such other data and information as the agency may reasonably specify. The contractor also agrees to provide additional reports as may be requested by the agency in connection with any march-in proceeding undertaken by the agency in accordance with paragraph (j) of this clause. As required by 35 U.S.C. 202(c)(5), the agency agrees it will not disclose such information to persons outside the government without permission of the contractor.”

37 CFR §401.14(h)

Standard Patent Rights Clauses

Preference for United States Industry

• “Notwithstanding any other provision of this clause, the contractor agrees that neither it nor any assignee will grant to any person the exclusive right to use or sell any subject inventions in the United States unless such person agrees that any products embodying the subject invention or produced through the use of the subject invention will be manufactured substantially in the United States. However, in individual cases, the requirement for such an agreement may be waived by the Federal agency upon a showing by the contractor or its assignee that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to potential licensees that would be likely to manufacture substantially in the United States or that under the circumstances domestic manufacture is not commerically [sic] feasible.”

37 CFR §401.14(i)

Bayh-Dole Summed Up• The Bayh-Dole Act underpins a grantee’s ability to

commercialize inventions made with federal funding.

• Bayh-Dole creates a presumption of ownership by the federally funded non-profit or small business, and of a non-exclusive right of the government to practice.

• A number of clocks start ticking for the grantee - including the obligation to disclose inventions, elect to retain title, file an application, and report on commercialization progress – failure to satisfy these can result in loss of rights.

• The over-arching objective is to achieve practical application of government funded research for the benefit of the public.

Rights in data• FAR Subpart 27.4 - Rights in Data and

Copyrights • Contract Clauses

– Rights in Data - General (52.227-14)– Rights in Data - Special Works (52.227-17)– Rights in Data - SBIR Program (52.227-20)

• Agency-specific FAR Supplements

Rights in Data General Clause -Contractor’s Right to Assert

Copyright• Contractors may assert copyright without prior

approval of the Contracting Officer– In scientific and technical articles

• based on or containing data first produced in performance of the contract, and

• published in academic, technical or professional journals, symposia proceedings or the like

• Government rights arise upon creation of articles– Contractor may assign copyright to publisher when

published in academic, technical or professional journal

– Assignment subject to Government’s prior rights

Rights in Data General Clause -Contractor’s Right to Assert

Copyright• Prior written permission of Contracting

Officer is required to assert copyright – In all other data first produced in the

performance of the contract• data means recorded information, regardless of

form or the media on which it may be recorded• includes information of a scientific or technical

nature

Rights in Data General Clause - Government’s Unlimited Rights

• Unless contractor asserts claim to copyright, Government has unlimited rights– In all data first produced in the

performance of a contract, and– In all data delivered under a contract

• unless provided otherwise in the contract (e.g., limited rights data)

Rights in Data General Clause - Government’s Unlimited Rights

• Government’s unlimited rights include– Right to use, disclose, reproduce, prepare

derivative works, distribute copies to the public, and perform and display publicly, in any manner and for any purpose, and to have or permit others to do so

– Examples of permissible use• may provide data to another contractor • may distribute data to the general public• may post data to a public web site

Rights in Data General Clause - Government’s Right in Contractor

Copyrighted Work• When copyright asserted

– Contractor must place copyright notice and acknowledgment of government sponsorship (w/ contract number) on the data

• when delivered to the Government,• when published, and• when deposited for registration with Copyright Office

– Government agrees not to remove contractor’s copyright notice

• Copyright notice should be included on all Government reproductions of data

– If no copyright notice is placed on the work• Government obtains unlimited rights

– Otherwise, Government obtains a license to the work

Rights in Data General Clause - Government’s Right in Contractor

Copyrighted Work• “Government Purpose License,” provides right to

– Reproduce, prepare derivative works, distribute copies to the public, and perform and display publicly, by or on behalf of the Government

– Examples of permissible use under Government Purpose License

• use the work within the Government without restriction• release the work outside the Government for

governmental purposes, e.g., for performance of a government contract

• authorize persons to whom release has been made to exercise license rights on behalf of the government

Rights in Data - Special Works

• FAR allows agencies, via Agency FAR Supplement, to– Place limitations or restrictions on the

contractor's right to use, release, reproduce, distribute, or publish data first produced under the contract

– Including a requirement to assign copyright to the Government

Rights in Data - SBIR Program

• SBIR contractors may assert copyright without prior approval of the Contracting Officer – unless there is specific contract language to the contrary

• If claim to copyright is made– Government gets same license as it receives under the FAR

general data rights clause• Additional restrictions on Government use of “SBIR

Data” may apply where– SBIR data is:

• data first produced in performance of an SBIR contract,• not generally known,• not already available to the Government, and• not made available to others without an obligation of confidentiality

Rights in Data - SBIR Program

• When SBIR Data are delivered to the Government with “SBIR Rights Notice” provided in the clause– Government may use SBIR data for government

purposes only– Cannot disclose the data outside the Government for

a specified period of time (usually 4 years)• restriction intended to provide incentives for development or

commercialization of technology by the private partner

• If not marked with “SBIR Rights Notice” – No additional restrictions on Government’s use

NIST’s MEP program

MEP System Budget$128 Million Federal Budget with Cost Share Requirements for Centers

Global Competitiveness Program was created by the 1988 Omnibus Trade And Competitive Act

Emphasis on PerformanceProgram and center performance based upon impact of center services on client firm

Program Started in 1988At least one center in all 50 states by 1996

National NetworkSystem of Centers serving Manufacturers in each State.

Partnership ModelFederal, Stateand Industry

National MEP Network

Center Structure Diversity

www.nist.gov/mep mfg@nist.gov (301)975-5020

Partnerships

• Single location• Principal organization with independent partner

organizations• Central office with regional offices• Headquarters operation with multiple field offices

Utilizes existing local resources to provide manufacturing extension services relies heavily on partnerships

Public & Private SectorStaff are employees of the Center and its partners – not the Federal Government

GeographyUrban and Rural Areas. Centers are never more than 2 hours away from a manufacturer.

Organization TypeNonprofitUniversityState Government

Organizational Structure

What MEP Does Work with small and medium size manufacturers to help them create and retain jobs, increase profits and save time and money

Focus on meeting manufacturer’s short term needs, but in context of overall company strategy.

Reach over 30,000 manufacturing firms and complete over 10,000 projects per year.

Provides companies with a consistent set of services including:

QualitySystems

Supply Chain Development

WorkforceDevelopment

Innovation and Growth

Lean Process Sustainabilit

y

MEP supports technology acceleration by Connecting and Assisting

• Building manufacturing capability

• Technical/engineering support

• Partnering with manufacturers

• Market intelligence

• Supply chain management

• Quality control and management

• Manufacturing processes

28

THANK YOU!Henry N. Wixon

Chief Counsel

National Institute of Standards and TechnologyGaithersburg, MarylandHenry.Wixon@nist.gov

301-975-2803www.nist.gov