Life Sciences Advisory Bulletin
Recipients of Federal Grants and Contracts Must
Comply with Invention Reporting Requirements or Risk Forfeiting
their Patents
By Jane
E.R. Potter, Ph.D.
[December 2004]
The U.S. Court of Appeals for the Federal Circuit has rendered
a decision that highlights how important it is for recipients of
federal grants and contracts to properly notify the appropriate
funding agency of inventions developed pursuant to the contract
or grant. The decision, Campbell Plastics Engineering &
Mfg., Inc., v. Les Brownlee, (C.A.F.C. Slip.. Op. 03-1515,
Nov. 10, 2004) relates to a contract between a private company (Campbell)
and the U.S. Army. Campbell entered into the contract for the purpose
of developing components of a protective mask. The contract required
that Campbell disclose any inventions to the government within a
certain time period, and specified the procedure for disclosure.
Although the facts showed that Campbell had provided reports to
the government from time to time, the formal notice requirements
and procedures were not followed. As a result, the Army exercised
its contractual right to take title to the patent once the patent
issued.
In reaching its decision, the Court first reviewed the history
of the Bayh-Dole Act, 35 U.S.C. §§ 200-212. The general
purpose of the Act is to allow non-profit organizations and small
businesses to retain title to an invention developed pursuant to
the government contract. The contractor is required to disclose
each such invention to the federal agency within a prescribed time,
and the Federal Government has the right to take title to an invention
not disclosed to it within the time period.
The Campbell decision involves an interpretation of contract
language in the context of a Small Business Act program. However,
the Court looked to the original intent of the Bayh-Dole Act for
reaching a decision. Thus, the decision is a timely reminder to
non-profit organizations and small businesses obtaining funding
through grants and/or contracts with a governmental agency. This
includes grants administered by the National Institutes of Health
(NIH). The NIH website provides general details and guidance on
the reporting requirements, but grant and contract recipients should
be familiar with the reporting requirements for their program and
agency. Furthermore, any patent application filed or patent issued
to an award or grant recipient must contain a statement indicating
that the government has rights in the invention. An example of such
language is provided on the NIH website as follows:
"This invention was made with government support under (grant/contract
number) awarded by (institute, agency). The Government has certain
rights in the invention."
The Government’s rights are further protected by a requirement
that the grant or award recipient notify the Government if it decides
not to pursue prosecution of the application, pay maintenance fees,
or take other action that would cause the patent or patent application
to be abandoned. This provides the Government with an opportunity
to pursue the patent application, or keep the issued patent in force,
before any rights are lost.
For further information, please contact:
This Life Sciences Advisory Bulletin is a publication of the Life
Sciences Group of Davis Wright Tremaine LLP. Our purpose in publishing
this Advisory Bulletin is to inform our clients and friends of developments
in life sciences law. It is not intended, nor should it be used,
as a substitute for specific legal advice as legal counsel may be
given only in response to inquiries regarding particular situations.
Copyright © 2004, Davis
Wright Tremaine LLP.
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