GAITHERSBURG, Md - The U.S. Department of Commerce, through the National Institute of Standards and Technology (NIST), has released a draft of the "Interagency Guidance Framework for Considering the Exercise of March-In Rights" for public comment. This tool aims to assist agencies in evaluating when it might be appropriate to request a license for a patent developed with federal funds.
The guidance, currently available on the Federal Register, seeks to provide clarity on when and if a federal agency should exercise these rights, including factors such as pricing. However, it's crucial to note that this decision falls within the broader framework of laws like the 1980 Bayh-Dole Act, allowing recipients of federal funds to retain rights to inventions developed with such funding.
U.S. Secretary of Commerce, Gina Raimondo, emphasizes the significance of this law in fostering U.S. innovation and commercialization of inventions arising from federal research and development. The draft guide, open for public comments, provides an opportunity for stakeholders to contribute, aiming to bring clarity to march-in rights and maintain a balance between encouraging innovation by companies and ensuring those innovations serve the American people.
This draft aligns with ongoing regulatory updates, such as the final rule published by NIST in line with President Biden's Executive Order on Promoting Competition in the American Economy. This rule does not adopt a previously proposed change that would have prohibited the use of march-in rights based solely on pricing.
Secretary of the Department of Health and Human Services (HHS), Xavier Becerra, underscores how "march-in" authority is a powerful tool to ensure a fair return on public investments in research and development. The call for comments provides an opportunity to better understand how these authorities can influence pricing and promote fair access to medications.
The draft guide encourages agencies to consider both the practical and potential impact on the broader research and development ecosystem. It includes hypothetical scenarios to illustrate how an agency might apply the framework in its decision-making process.
The 60-day comment period will close on February 6, 2024, after which NIST will review and publicly release all received comments before finalizing the guidance. NIST will host an informational webinar on December 13, 2023, to explain the framework and the type of feedback sought.
Despite being primarily a non-regulatory agency, NIST, under the delegated authority of the Secretary of Commerce, can issue implementing regulations under the Bayh-Dole Act that apply to all federal agencies. NIST also plays a role in technology transfer, serving over 300 U.S. federal laboratories.
The March-In Rights
The "March-In Rights" are a set of rights granted to the U.S. government under the Bayh-Dole Act of 1980, a law regulating the commercialization of inventions resulting from federally funded research. These rights allow the government to intervene and request a license for the use of a patent developed with public funds in certain circumstances.
According to 35 U.S.C. 203, the government has the power to exercise March-In Rights in three main situations:
- Accessibility of the Invention: If the funding recipient does not make the invention available to the public or inadequately commercializes it within a reasonable period.
- Public Health and National Security: If the use or commercialization of the invention does not meet the needs of public health or national security.
- Inadequate Exploitation: If the funding recipient cannot effectively exploit the invention, allowing third parties to do so.
In essence, these rights provide a tool for the government to ensure that inventions developed with public funds are effectively utilized for the benefit of society. The goal is to strike a balance between incentivizing innovation by companies and ensuring these innovations are made available to the public adequately.
The recent draft of the "Interagency Guidance for Considering the Exercise of March-In Rights" by the National Institute of Standards and Technology (NIST) provides guidelines to federal agencies on when it might be appropriate to request a license based on these rights. This guide aims to bring greater clarity and consistency to the decision-making process regarding the exercise of March-In Rights.
The Bayh-Dole Act
The Bayh-Dole Act, formally known as "The University and Small Business Patent Procedures Act of 1980," is a U.S. federal law regulating the ownership, management, and transfer of inventions developed with federal funding. The law was enacted to encourage the commercialization of innovations derived from government-funded research.
Here are some key points of the Bayh-Dole Act:
- Beneficiary's Right to Ownership: The law allows academic institutions, small businesses, and other organizations receiving federal research funding to retain ownership of inventions developed with such funds.
- Technology Transfer: The Bayh-Dole Act promotes the transfer of technology from the academic and research context to the private sector. Organizations can grant licenses or transfer ownership of inventions to private companies for further development and commercialization of new technologies.
- Innovation Incentive: The law aims to stimulate innovation by allowing organizations to profit from inventions resulting from government funding. This should encourage greater collaboration between the academic sector and industry.
- March-In Rights: Despite the beneficiary's right to retain ownership of inventions, the government retains some intervention rights known as "March-In Rights." These rights allow the government to request a patent license in certain circumstances, such as the lack of adequate exploitation of the invention or the need to safeguard public health and national security.
- Equity and Transparency: The Bayh-Dole Act seeks to ensure fairness and transparency in the commercialization process of inventions. Organizations must inform the government of inventions developed with federal funding and must strive to commercialize them effectively.
The Bayh-Dole Act has been considered a success in promoting collaboration between the academic sector and industry, facilitating the transfer of scientific and technological knowledge from government-funded research to the commercial sector.
Technical Glossary:
- March-In Rights: Rights allowing a federal agency to request a license for a patent developed with public funds in certain circumstances.
- Bayh-Dole Act: Law allowing recipients of federal funds to retain rights to inventions developed with such funds.
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