Broad Bayh-Dole March-In Licensing Rights Affirmed in Alzheimer’s Mouse Patent Dispute

by Dennis Crouch

The Federal Circuit recently upheld the US government’s royalty-free license rights over an Alzheimer’s disease research patent under the Bayh-Dole Act. University of South Florida Board of Trustees v. United States, 22-2248 (Fed. Cir. February 9, 2024). The decision confirms the broad scope of the government’s licensing rights under the Act — namely that it can include work that predates the funding agreement. It also comes at a salient time, as the Biden Administration weighs the idea of more aggressively exercising “march-in rights” under the Act to promote affordability of taxpayer-funded inventions. Read the Decision.

The dispute centered on U.S. Patent No. 5,898,094, which covers transgenic mice expressing mutated genes linked to Alzheimer’s. Scientists at the University of South Florida (USF) and Mayo Clinic developed the mice with partial funding from a National Institutes of Health grant. USF sued the government for infringement after a government contractor used the patented mice without authorization.

In its defense, the government argued the work that led to reducing the patented invention to practice occurred “under” its grant funding agreement with Mayo Clinic. The Bayh-Dole Act gives federal funding agencies certain rights over federally-sponsored inventions, including “a nonexclusive, nontransferrable, irrevocable, paid-up license” under 35 USC §202(c)(4).

With respect to any invention in which the contractor elects rights, the Federal agency shall have a nonexclusive, nontransferrable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States any subject invention throughout the world [with some further caveats].

35 USC §202(c)(4). The Court of Federal Claims agreed with the government’s interpretation and entered judgment of noninfringement.

On appeal, USF argued the statute requires the funding agreement predate the inventive work. It claimed the subcontract between Mayo and USF was not executed until months after the critical experiments. However, the Federal Circuit affirmed based on the breadth of the statutory language. It held that a subsequent agreement  can cover prior work, if payment for the prior work is within the grant’s scope. Since USF eventually accepted grant funds for the experiments under its subcontract with Mayo, §202(c)(4) applied.

[A necessary premise of USF’s argument] is that any “funding agreement” adequate to trigger § 202(c)(4) must be in place at the time of the relevant work (here, a first actual reduction to practice in April 1997), so that the November 1997 subcontract (whose execution and effective date were later than April 1997) does not suffice to trigger § 202(c)(4).

The court rejects this premise, finding the statutory language does not impose strict timing requirements for funding agreements to establish government license rights:

The Act says that “funding agreement” includes “any . . . subcontract of any type” for the performance of work under a funding agreement. § 201(b). That breadth-indicating language supports inclusion within the provision of a subcontract that provides for, among other things, payment for work already performed before the subcontract is executed or its “effective date.

The court later reaffirms this conclusion. “We reject this suggested temporal limitation on the scope of the relevant Bayh-Dole Act language.”

This conclusion is strongly bolstered by the record in this case, which suggests that what occurred here is not an uncommon fact pattern in government funding of research conducted in part by non-grantee members of a consortium called for in a government grant. Specifically, the record makes clear that subcontracts are commonly not executed until sometime after the grant is awarded, yet the grant-covered work proceeds without waiting for the inking of a subcontract.

Id. This decision endorses broad government rights under Bayh-Dole when research funding and contracting arrangements evolve over long timelines. The court refused to impose strict timing requirements not evident from the statutory text. As government witnesses observed, delays in memorializing inter-institutional agreements are commonplace in collaborative grant projects.

The ruling also comes amidst attention on the proper scope of Bayh-Dole march-in rights. USF’s lawsuit invoked the related §1498, where the government assumes liability for third-party patent infringement. Exercising march-in rights under §203 lets the government grant licenses to third parties for health or safety needs, yet this authority has almost never been affirmatively used. The Biden Administration recently sought public input on utilizing march-in rights to promote affordable access to publicly-funded inventions. Among other limitations, commenters noted march-in rights likely do not authorize the government to set product prices.

The case here highlights that the Government has broad power in situations where parties have accepted federal funding. It does not, however, answer when exertion of that power is sound policy.

= = =

I received several emails and comments about this post unfairly treating Section 202 and 203 rights as the same thing.  I agree that I was cavalier in my post by not distinguishing the two. Although both involve actions that the Federal Government can take with regard to federally-funded inventions, Section 202 licenses are regularly relied upon, while Section 203 march-in rights are almost never relied upon (but the Biden admin would like to expand their use.)

Section 202 provides the Federal Government with a nonexclusive, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States any subject invention throughout the world.  Section 203 allows the U.S. government to go further an grant a narrow “reasonable” license to a “responsible applicant” if the patent resulted from federally funded research and certain conditions are met.  The government can only exercise Section 203 march-in rights if it determines that action is necessary because the patent owner has not achieved “practical application” of the invention or because public health/safety needs are not being reasonably satisfied. So there must be a specific triggering condition.  Those limits are not in place for Section 202 license rights.

 

35 thoughts on “Broad Bayh-Dole March-In Licensing Rights Affirmed in Alzheimer’s Mouse Patent Dispute

  1. 9

    I appreciate Dennis’ reporting on this important case, but the title and framing is mistaken in referring to this as a “March-In Licensing Rights” case. I understand mistakenly conflating § 202 and § 203 given the hot policy debates today over the meaning and scope of the march-in powers set forth in § 203, but § 202 does not authorize or address the march-in powers that people have been debating. It is a straightforward authorization of government use of a patent created by an inventor working under a federal contract. This is distinct from the four march-in powers set forth in § 203, and which Dennis is asking about in his follow-on poll in his blog posting. He sort of recognizes this in the last paragraph of the bloc posting, but it’s clear in the statute that there’s a substantive difference between § 202 and § 203 if only because the former doesn’t even use the phrase “march in” since it addresses a situation of a government contractor, but § 203 does use the “march in” because this is a situation in which there’s funding, but not a government contractor status by the inventor, such as in the class NIH grant to a university researcher who is not engaging in R&D for and by the U.S. government.

    1. 9.1

      Excellent points Pr. Mossoff.

      But that won’t fit any of the desired narratives.

  2. 8

    MAGA tears are one of my favorite substances & they were flowing at the end of overtime last night.

    Since everything will be politicized, apparently for the foreseeable, here is a strong essay on Biden’s age, and what it all means.

    link to plus.thebulwark.com

    But how about the age of these claims? Looking at 27 year old contracts… one may need historians as expert witnesses.

    1. 8.1

      SF, a coastal elite v. KC, a solid midwest team…

      Let me guess – you bought that Swiftie nonsense.

    2. 8.2

      ps – that claptrap “strong essay” misses the boat – by a mile.

      That’s 0 for 2.

      Careful with your next swing.

      1. 8.2.1

        Oh Noes I’ve been warned!

        bwwwhahhahahahahah you powerless nothing. Go yell at your kids…wait a minute, I doubt anyone would have mated with you….maybe you have a niece or nephew to b ully?

        You certainly won’t have any direct reports to push around because no org interested in accomplishing something would put you in charge of anything.

        Sad.

        But the essay is good. Even includes a claim chart.

        1. 8.2.1.1

          Somehow, I do not think the Coastal elites would approve of this:

          link to facebook.com?

          As for “been warned,” meh, I consider that friendly notice, and – as always – you are free to do as you want.

          You just happen to want to look really silly.

          O’Tay

    3. 8.3

      [H]ere is a strong essay on Biden’s age, and what it all means.

      One good turn deserves another.

      MAGA tears are one of my favorite substances…

      Strong disagree. The idea that one is made happy by the disappointments and suffering of others is what gave us Trump as president. This is a dangerous and self-destructive idea, best effaced quickly from our mental groundworks.

      1. 8.3.1

        If Krystal – of Krystal and Saagar is pointing out the decrepitude of Biden (hint: it is NOT merely “age”); then I guess the Sprint Left folk around here will now attempt the Overton Window shift and call her “MAGA.”

        link to open.spotify.com

      2. 8.3.2

        I think Biden & his surrogates should have a singular message, repeated endlessly, droned everywhere until election day:

        Trump is old.

        But that would mean Democrats could do politics, and thus they wouldn’t be Democrats.

        1. 8.3.2.1

          What was that?

          Again, the “issue” with Biden is not MERE age. It is the incompetence that HIS age is SHOWING.

          Another update from Krystal: 86% (ABC News poll).

          But the Sprint Left views ANYONE that believes this to be Right Wing.

          It is not that ‘Democrats cannot do politics’ – it is that the Sprint Left cannot do politics.

        2. 8.3.2.2

          And apparently, the Sprint Left cannot “do” engagement on blogs either, as marty – yet again – wishes to relinquish a ‘last word’ (and no doubt will be sullen as once again he is likely FEELING dominated).

          Here’s a hint marty – have a better position, and you won’t find yourself dominated.

    4. 8.4

      The beauty of a river of tears that were shed in belligerent self-pity is that you can float down it forever in a canoe made of paper.

  3. 7

    Do they think that by exercising march-in rights in this case, they’re going to be able to help Joe Biden?

    1. 7.1

      I highly doubt that “helping Joe Biden” is what’s driving this. If “they” really wanted to “help Joe Biden”, wouldn’t “they” formally void all the government’s rights under Bayh-Dole? Then “they” could win a bunch of votes from serious policy-oriented people like you. Right?

      Haha.

    2. 7.2

      Not sure that anything can help that puppet at this stage.

      Are we ready for (interim) President Harris?

      1. 7.2.1

        Oh look, it’s Billy the Fake Centrist popping in again with his reasonable independent thoughts that always seem to follow the same pattern, not unlike a steer following its nose ring.

        1. 7.2.1.1

          By now it is more than abundantly clear — across the entire spectrum — that the ONLY people that are self-deluding as to President Puppet being mentally ‘there’ ARE the One-Bucket of Sprint Left.

          not unlike a steer following its nose ring” – nice – but for you, the better picture is ‘not unlike the lemmings marching over the cliff.’

    3. 7.3

      From the decision:

      In 2015, USF sued the United States in the Court of Federal Claims (Claims Court) under 28 U.S.C. § 1498(a), alleging that the United States was liable for infringement of the ʼ094 patent because, as is undisputed before us, The Jackson Laboratory, with the government’s authorization and consent, had been producing and using mice covered by the patent for the government. As a defense, the government argued that the United States had a license to practice the patent, and have the patent practiced on its behalf, under 35 U.S.C. § 202(c)(4)…

      This suit began in 2015, well before Joseph R. Biden even announced his candidacy. Don Verrilli (Obama’s SG), Noel Francisco (Trump’s SG), and Elizabeth Prelogar (Biden’s SG) all chose to advance this defense. The idea that there is a political motivation operating sub rosa here seems difficult to square with the history of the case.

      1. 7.3.1

        Why hide the 20″1″5 link?

        Why hide the No”e”l link?

        Well, the second is Drum OMB-TDS propaganda, so the answer there is “more of the same.”

        But the first engages on a real issue: calls for “control” that would impinge on other rights – and the necessary realization that digital goods MUST call for different business models.

      2. 7.3.2

        As to actual (non-hidden) content, Greg’s point is a valid one, that the defense raised transcends any “Biden-specific” aim.

        That being said, I AM reminded of Biden-specific points of Equity that Greg and others in Big Pharma HAVE BEEN a bit two-faced about: COVID waiver (and not just patent waiver), and the other March-In aspects ‘FOR EQUITY’ that impinge on the wallets of Bog Pharma [pun intended] in an Oh So Martha Vineyards manner.

  4. 6

    Gee, four hidden links in one day on one thread from Greg.

    Can anyone guess without looking what they may provide?

    (that is, which flavor of Kool-Aid is Greg imbibing today?)

    Marshall, Drum, Yglesias (twice even)…

    Keep swilling that suff and it will rot your brain.

    Oops, much much much too late.

  5. 5

    Glad to see this. Government funded research tools shouldn’t be monopolized by private entities.

  6. 4

    For a very long time, all of the many DOD [defense] contracts also retain full license rights in inventions that were either conceived OR reduced to practice [as here] using government funds, etc.

  7. 3

    If this ruling stands, universities had better take a long, hard look before accepting ANY federal research funding.

    Could the result be fewer new life-saving cures and treatments in the years to come?

    1. 3.1

      I gather that you are not terribly familiar with the financial model of modern research universities. There is not a single research university today that brings in even a tenth as much from IP licensing as it brings in from government grants.

      1. 3.1.1

        That’s right – the vast bulk of the money is front-end grants rather than ex-post licensing or revenue.

  8. 2

    OT: Which universities have the best track record of bringing university research into commercial markets? WARF, MIT, Mizzou, Iowa, others?? What is it about their policies that help bring about that commercialization?

    1. 2.1

      I think you will find that universities with more successful licensing programs have realized there is usually a great deal more required to get commercial products from research than just patent licensing?

    2. 2.2

      The University of Wisconsin’s WARF is head-&-shoulders above any other research university, at least in terms of converting inventions from the faculties’ labs into actual products that people can buy. The drug warfarin is actually named for WARF.

      1. 2.2.1

        Warfarin, of course, more commonly known as rat poison.

      2. 2.2.2

        Thanks, Greg! Any thoughts on what it is about WARF that makes them so successful in doing so? I’m not necessarily thinking about pharmaceuticals. Let’s say nanotechnology, electronics, medical devices. Does WARF educate its faculty better, incentivize them better, provide greater assistance in getting start-ups ramped up, etc.?

        1. 2.2.2.1

          Is it really the case that the Wisconsin Alumni Research Foundation is “head and shoulders above the rest” of the other so-called “research universities” in the country? Im not sure how Greg reached that conclusion or what his metrics are.

          It is true that the W.A.R.F. has been around for quite some time now, doing what it does, so there is a lot of institutional history there.

  9. 1

    It does not, however, answer when exertion of that power is sound policy.

    I chuckled.

    Oh, soooo many ways that could be “applied.”

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