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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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