Potential Shift in Federal Enforcement of the Bayh-Dole Act: What Federal Contractors Should Know

This article was developed by Patrick M. Torre of Stites & Harbison law firm, who's also a member of the Kentucky Bar Association (KBA) Intellectual Property (IP) Section's PPR committee.

The Bayh-Dole Act quietly shapes much of the technology, medicine and innovation we rely on today. Passed in 1980, the law allows universities, small businesses and nonprofit research institutions to own and patent inventions developed with federal research funding, rather than having the government automatically claim ownership. This seemingly technical shift transformed the innovation landscape. By letting institutions patent and license their discoveries, Bayh-Dole helped fuel more than $1 trillion in economic activity, created thousands of startup companies and supported millions of jobs over the past four decades.

Recently, however, the federal government has taken a series of steps that could signal a shift in how the Act is interpreted and enforced, raising concerns among researchers, universities and industry stakeholders.

---

What the Bayh-Dole Act Requires

Under the Act, federal contractors - organizations receiving federal research funding:

• May elect to retain ownership of innovations developed under federally funded research programs

• Are encouraged to collaborate with commercial entities to promote the utilization of federally funded inventions

• Are expected to file patent applications on inventions they elect to own; and

• Are expected to give licensing preference to small businesses

  
  

Although contractors may retain title, the U.S. government maintains certain rights, including a nonexclusive license to practice any patents arising from federally funded research, worldwide. The government also retains a rarely used authority known as march-in rights, which allow it to require a contractor to license an invention to others in specific circumstances, including when:

1. The contractor or assignee has not taken, or is not expected to take within a reasonable time, effective steps to achieve practical application of the invention

2. Action is necessary to alleviate unmet health or safety needs not reasonably satisfied by the contractor, assignee, or their licensees

3. Action is needed to meet requirements for public use established by federal regulations; or

4. Action is necessary due to a failure to comply with domestic manufacturing requirements under 35 U.S.C. § 204

   
   

Regulations implementing the Act appear in 37 C.F.R. parts 401 and 404. The procedure for exercising march-in rights is outlined in 37 C.F.R. § 401.6, which directs agencies to initiate a march-in proceeding when they “receive information that [they believe] might warrant” doing so. Agencies must notify the contractor and may conduct informal consultations before initiating a formal proceeding.

Importantly, no agency has ever exercised march-in rights in the Act’s 45-year history.

Recent Federal Actions Signal Possible Changes

In late 2024 and 2025, federal agencies took several actions that may indicate a more assertive approach to Bayh-Dole enforcement.

New Licensing Mandates

In early 2025, the Biden administration implemented an “affordability” mandate for licenses involving patents owned by the National Institutes of Health (NIH). The Trump administration formally adopted this mandate on October 1, 2025. Notably, the policy draws on a 2018 National Institute of Standards and Technology (NIST) publication issued under the prior Trump administration.

Because the mandate introduces price-related conditions for licensing drug patents, critics argue that it may conflict with Bayh-Dole’s commercialization objectives. The Act’s drafter previously stated that pricing concerns fall outside the “health or safety needs” that could justify a march-in investigation.

Compliance Scrutiny

In August 2025, the Department of Commerce sent a public letter to Harvard University identifying potential noncompliance issues, including delayed invention disclosures, concerns about domestic manufacturing obligations and questions about whether Harvard had taken adequate steps toward achieving practical application of federally funded inventions.

Growing Stakeholder Concerns

These developments have raised broader concerns that Bayh-Dole enforcement could become unpredictable or politically driven, potentially discouraging investment and slowing the innovation the Act was designed to promote.

What Federal Contractors Should Keep in Mind

As enforcement activity increases, federal contractors should pay close attention to Bayh-Dole’s reporting and compliance requirements, including:

• Implementing written agreements with researchers requiring disclosure and assignment of federally funded inventions to the Federal contractor

• Disclosing each new federally funded invention to the funding agency within 60 days after the inventor discloses it in writing to the federal contractor

• Electing whether to retain title within two years of disclosure to the agency (or at least 60 days before expiration of the one-year U.S. patent bar)

• Filing an initial patent application (provisional or utility) within one year of electing to retain title or before expiration of any statutory period for U.S. patent protection

• Including a specifically worded notification of government support and government rights in the patent application

• Submitting periodic reports regarding utilization of the invention (no more than annually)

• Complying with domestic manufacturing requirements for exclusive licensees, absent a waiver

• Giving licensing preference to small businesses (fewer than 500 employees) capable of achieving practical application