Introduction

Many if not all are likely aware that colleges and universities provide some of the most cutting-edge research in the country. What few people know is that it was not always this way. In fact, universities had difficulties with retaining ownership of inventions developed with federal research funding until passage of the Bayh-Dole Act (“Bayh-Dole”) in 1980. 

However, this path, and the positive benefits derived therefrom, may be coming to an end. Here, I discuss the history of the previous process and how it was changed by Bayh-Dole, the current threats to the Bayh-Dole pathway, and what may happen next.

Pre-1980 History

Before passage of the Bayh–Dole Act in 1980 (35 U.S.C. §§ 200-212), federally funded university inventions were handled under a very different and often inefficient system under which the U.S. government had accumulated 28,000 patents, but fewer than 5% of those patents were commercially licensed. The core features of that pre-1980 process can be summarized as follows:

  • There was no uniform patent policy governing all agencies that funded research.
  • The default rule was that the federal government usually owned the inventions made with federal funding, with patents arising from federally funded research usually being assigned to the U.S. government.
  • The general policy was that the government would retain title to the inventions and would only grant non-exclusive licenses thereto.
  • In practice, this meant universities and researchers generally did not control or benefit from the patents.

This resulted in a patchwork system that was confusing and inconsistent. Under this old system, universities receiving federal research funding faced uncertainty about whether they would keep rights to any invention developed therefrom.

Because the government typically owned patents derived from federally funded research, universities had little motivation or capability to license or commercialize their new inventions. By 1980, the U.S. government held an estimated 28,000 patents, with only about 5% being licensed for commercial use. Accordingly, at the time, a large number of these patents remained undeveloped for commercial purposes, resulting in many patents being unused in what was sometimes referred to as a “federal patent graveyard.” 

Clearly, something needed to change. Thus, the Bayh-Dole Act.

Passage of the Bayh-Dole Act in 1980

These low commercialization rates and unused patents provided the main justification for the Bayh–Dole Act. The 1980 law flipped the presumption of ownership, granting universities, research institutions, small businesses, and the like the right to retain title to inventions developed using federal funding. This change gave universities and small businesses control, aiming to move inventions from the lab to the marketplace.

Bayh-Dole and its promulgating regulations (37 C.F.R. Part 401) have served to greatly enhance commercialization of federally funded research being done in, e.g., universities. The grant of ownership provides a powerful incentive, as it allows universities to secure exclusive patent rights and license the technology to private companies. Bayh-Dole has had the desired effect, increasing overall technology licensing and commercial development coming out of universities, accelerating the path from basic research to commercial products. 

Bayh-Dole has provided a largely stable framework and has precluded the use of more drastic enforcement mechanisms, such as title reversion and march-in authority.

Bayh-Dole Requirements

Of course, Bayh-Dole does impose certain requirements and conditions to be met. These include:

  • Prompt disclosure of the invention to the funding federal agency, i.e., with 2 months.
  • The university must elect to retain title to the invention within 2 years of disclosure.
  • Resultant patent filings must be made within 1-year of the election.
  • Any products embodying the subject invention and intended for the U.S. market must be substantially manufactured in the U.S.
  • The U.S. government retains a non-exclusive, non-transferable, irrevocable, paid-up license to practice the subject invention.
  • The U.S. government further reserves rights to any relevant agreements and patent applications.
  • Licensing revenue must be shared with the inventors.
  • Licensing preferences should be given to U.S. small businesses.
  • The U.S. government also retains march-in rights, allowing the funding agency to require the patent holder to grant licenses to third parties in certain specific conditions, such as a failure to meet public health or safety needs. This right has never been formally invoked to date.

Title loss from procedural noncompliance has occurred at least one: Campbell Plastics Eng’r., Inc. v. Brownlee, 389 F.3d 1243 (Fed. Cir. 2004), providing that “sound policy is promoted by the rule of strict compliance with the method of disclosure demanded by the contract.”

These conditions to date have not been overly onerous, as Bayh-Dole to date has been very successful in promoting commercialization of university inventions. Bayh-Dole has been so successful that the Bayh-Dole Coalition has estimated from 1996-2020, the innovation system created by Bayh-Dole bolstered U.S. economic output by up to $1.9 trillion, supported 6.5 million jobs, and helped lead to more than 19,000 start-up companies, https://bayhdolecoalition.org/ 

Accordingly, Bayh-Dole has been a historically successful piece of legislation. The questions now is, may that be about to change?

Threats to the Bayh-Dole Framework

The stability provided by Bayh-Dole may now be coming to an end. Under the current administration, three overlapping pressures have converged to potentially threaten the to-date successful Bayh-Dole framework:

  • Title Loss Risk from Procedural Noncompliance. Under the current administration, repercussions for perceived “waste, fraud, and abuse” have been growing, meaning we are currently in an intensifying enforcement environment. Simultaneously, the Bayh-Dole disclosure and election deadlines are strict, with a U.S. Government Accountability Office (GAO) report from April 12, 2026, confirming persistent reporting friction across the contractor community. This is creating possible compliance risk in numerous patent portfolios.
  • The Renewed March-In Debate. No agency has ever exercised march-in rights since Bayh-Dole’s inception. However, the U.S. Department of Commerce’s National Institute of Standards and Technology (NIST) released for public comment its Draft Interagency Guidance Framework for Considering the Exercise of March-In Rights on December 7, 2023, which proposed price as a permissible trigger for march-in rights. This proposal drew 51,000+ comments and bipartisan opposition. Further, the GAO released a follow-up report February 18, 2026, questioning whether activating march-in rights would meaningfully lower drug prices, the stated goal. There have been many proposed pieces of legislation, petitions to Congress, and the like both in support of and against the increased availability of march-in rights. The story here does not appear to be over.
  • March-In as Political Leverage. In what could be the first of many such incidents, in August 2025, the U.S. Commerce Department announced a “comprehensive review” of Harvard University’s Bayh-Dole compliance. Depending on the results of the review, this could represent a potential threat to Harvard University’s patent portfolio ownership, with title reversion and march-in as possible remedies under consideration. This is the first (and likely not the last) time march-in rights have been threatened as institutional coercion and, with Harvard’s patent portfolio worth multiple hundreds of millions of dollars, this would represent a significant and severe penalty.

Substantive Takeaways

Despite the overwhelming success of Bayh-Dole, the risk to the Bayh-Dole framework has never been greater. Technology Transfer Offices, start-ups, and companies licensing IP rights from these entities must start planning now to not be caught flat-footed by any operational or enforcement changes that may occur.

Let me know how I can help you mitigate against such possible risks.