U.S. Department of Commerce Secretary Harold Lutnick announced plans that could significantly alter the ownership and commercialization of inventions arising from federally funded university research.
Secretary Lutnick stated that he believed the Government should recover 50 percent of any revenue derived from a patent resulting from government funded research by a university, and that he intends to implement a “master plan” to accomplish this goal. If carried out, Secretary Lutnick’s master plan would reverse a law enacted in 1980, commonly known as the Bayh-Dole Act, which was enacted after prior government ownership of federally funded inventions failed to produce meaningful commercialization. Bayh-Dole allows funding recipients to retain title to their inventions and imposes strict requirements for the Government’s assertion of rights to ownership of the patented technology through “march-in rights.” In over 40 years since its enactment, no federal agency has ever exercised march-in rights, and the few petitions to federal agencies requesting the exercise of those rights have been rejected.
Letter to Harvard University Serves as a Harbinger of the Future
A new regime may be coming. On August 8, 2025, Secretary Lutnick sent a letter to Harvard University instituting a procedure to obtain rights to both Harvard’s issued patents and its patentable inventions. The letter threatened employing “march-in rights” under the Bayh-Dole Act to obtain licenses, and even title, to all of Harvard’s patents and patentable inventions resulting from government funded research. Mr. Lutnick’s actions and subsequent public statements portend government efforts to change or disregard Bayh-Dole’s restriction on government ownership.
What Are March-In Rights?
The Bayh Dole Act permits universities and non-profit organizations to retain title to the patent rights to their inventions, provided that they notify the funding agency of the invention, make a written election to retain title to the invention, and file patent applications to protect the technology. The institution can then use the technology itself or license it to a third party.
The Act gives the funding agency “march-in rights” to that technology; that is, rights to grant patent licenses to third parties, if the agency determines that any one of four conditions apply:
- The institution or its assignee has not taken or is not expected to take, within a reasonable time, effective steps to achieve practical application of the subject invention;
- The action is necessary to alleviate health or safety needs;
- The action is necessary to meet the requirements of public use; or
- The institution did not comply with the preference for domestic manufacturing of the invention.
March-In-Rights Procedure Explained
An agency may initiate march-in-rights “when it receives information that may warrant doing so.” However, before initiating march in proceedings, the agency must notify the organization in writing that the agency is considering doing so and attempt to resolve the issues informally. If that fails, the formal march-in rights notice from the agency must recite its factual basis for initiating the proceeding and the field of use of the proposed license. This was not the procedure followed by Secretary Lutnick in his letter to Harvard.
The Administration’s Action Against Harvard Signals Broader Efforts to Come
The Secretary’s letter to Harvard indicated that the Commerce Department was initiating a “comprehensive review of compliance with [Harvard’s] obligations” under Bayh-Dole while simultaneously starting the march-in rights proceeding based on Harvard’s failure to comply with two of the four prerequisite conditions -- practical application and domestic manufacturing -- as well as Harvard’s failure to give timely disclosure and election of title. Despite the stated conclusion that Harvard has failed to comply with Bayh-Dole, the letter paradoxically also seeks information from Harvard to prove its compliance.
Since the letter was sent, there has been no public disclosure of the status of the demand and the Government’s march-in threat. However, the letter should not be dismissed as an isolated Harvard specific action. In an interview in September, Secretary Lutnick stated that he intended to start with a few select universities and then require universities generally to give the government 50% of their “benefit” (revenue) from commercialization of the patented technology. He considered these funds to offer a solution for the country’s deficit and Social Security’s lack of adequate funding.
Bayh-Dole Compliance Checklist for Universities Facing Increased Government Scrutiny
As the letter to Harvard indicates, a targeted university may be subject to a virtually impossible timeline to prove its compliance with Bayh-Dole’s requirements.
How can a university best prepare to respond to a similar letter?
- Review your records and procedures to ensure that you are strictly complying with Bayh-Dole/s requirements.
- Verify that you have a completed invention disclosure, have properly disclosed the invention and made a timely election of title to the invention, filed a patent application and are actively prosecuting the application. Have the necessary complete records to document these actions.
- If you determine that Bayh Dole does not apply to the invention, be prepared to provide supporting documentation.
- Demonstrate how you have diligently worked to achieve practical application of the invention, namely, that it is available to the public upon “reasonable terms,” including documented steps toward domestic manufacture, or obtaining a waiver of the domestic manufacture requirement.
- Make sure all licensing agreements and internal procedures meet the compliance requirements with Bayh-Dole.
Finally, carefully monitor actions taken by the Commerce Department against universities. An audit request can happen at any time, so a proactive audit may uncover and address any possible issues before the U.S. Government comes knocking.
For more detailed information on how a university’s tech transfer department can determine whether an invention resulting from federally funded research is a “subject invention” to which Bayh-Dole applies, see our previous publication authored by Rachel Chen on Bayh-Dole Act Compliance: When Is an Invention a “Subject Invention”?
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