The U.S. Department of Commerce’s National Institute of Standards and Technology (NIST) has released for public comment its Draft Interagency Guidance Framework for Considering the Exercise of March-In Rights1. The draft guidance provides a systematic approach for federal agencies to consider the exercise of march-in rights, i.e., a right of the government to require “the contractor, an assignee or exclusive licensee of a subject invention to grant a nonexclusive, partially exclusive, or exclusive license in any field of use to a responsible applicant or applicants, upon terms that are reasonable under the circumstance”2. These rights, established under the Bayh-Dole Act, allow federal agencies to intervene in specific circumstances3 such as inaction on the part of the contractor to practically apply the invention for public use; unmet needs to adequately meet the requirements for public use; issues pertaining to national health and safety; and breach of requirements.
One notable aspect of the draft framework is its emphasis on policy considerations, including the issue of pricing. The guidance4 encourages agencies to evaluate the impact on the broader research and development (R&D) ecosystem, emphasizing the need to strike a balance between incentivizing innovation and ensuring the resulting innovations serve the American public.
The framework guides agencies in assessing three central questions: 1) whether Bayh-Dole applies to the invention(s); 2) whether any of the statutory criteria for exercising march-in applies under the circumstances; and 3) whether the application of march-in rights would support the policy and intentions of Bayh-Dole. Additionally, the guidance provides eight hypothetical scenarios in which march-in may happen, offering practical insights into how agencies might navigate the decision-making process.
STAKEHOLDER INPUT AND COMMENT PERIOD
The draft guidance, published on December 8, 2023, is open for public comment5 until 5 pm Eastern time on February 6, 2024, after which NIST will review and release all submitted comments and finalize the guidance. The comment period provides an opportunity for interested parties to contribute valuable insights and shape the final framework. To date, the NIST has received around 25,0006 comments on the draft framework. The collaborative and consensus-based approach taken by NIST underscores the importance of stakeholder input in achieving a balanced and effective decision-making process.
IMPLICATIONS ON INTELLECTUAL PROPERTY STRATEGY
It is important for any company using, or planning to use, federal funding for R&D to stay informed about the evolving regulatory landscape. The draft guidance on march-in rights introduces a layer of complexity to patent licensing considerations, requiring corporate legal teams to assess the potential impact on their intellectual property strategies. Additionally, the emphasis on pricing considerations may prompt corporations to review their pricing models in light of potential government intervention.
The ramifications of the march-in rights framework extend beyond compliance, and will influence corporate strategies and approaches to federally funded R&D. By participating in the dialogue, all concerned parties can contribute to the development of a framework that strikes the right balance between encouraging innovation and safeguarding public interests.
This IP Advisory was prepared by Lando & Anastasi, LLP. The information provided in this Advisory does not, and is not intended to, constitute legal advice; instead, all information, content, and materials are for general informational purposes only. Readers should contact an attorney to obtain legal advice with respect to any particular legal matter.
© 2024 Lando & Anastasi, LLP
3 35 U.S.C. § 203(a) https://www.govinfo.gov/content/pkg/USCODE-2022-title35/html/USCODE-2022-title35-partII-chap18-sec203.htm