Government Grants and Patent Rights: SBIR, STTR, and Your IP
Sep 6, 2023
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This podcast episode explores the use of government grants and the regulations surrounding inventions generated under these grants. It discusses the types of small business research grants available and the implications for patent licensing and ownership. The episode also highlights the Prevail Act, a patent reform legislation aimed at improving the Patent Trial and Appeal Board. Additionally, it delves into the challenges faced by inventors who receive federal funding and attempt to avoid government ownership of their inventions. The chapter concludes by exploring the benefits and challenges of government grants as a source of non-deluding capital for startups.
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Quick takeaways
The Bayh-Dole Act regulates inventions generated under government grants and can have implications for patent licensing and ownership when using federal dollars.
Grant recipients must comply with disclosure and reporting requirements, make a written election to retain title, and acknowledge government support in patent applications.
Government grants like SBIR and STTR provide funding opportunities for startups but come with specific restrictions and ownership provisions that must be carefully navigated.
Deep dives
Overview of the Bayh-Dole Act and Government Grants
The podcast episode discusses the Bayh-Dole Act, which regulates inventions generated under government grants. It explores the various types of small business research grants and the implications of using federal dollars for patent licensing and ownership. It highlights the potential risks and strings attached to government grants, such as the government's royalty-free license to practice an invention worldwide. The importance of disclosure and reporting requirements for grant recipients is emphasized, along with the provision of margin rights for the government. The discussion also touches on the Prevail Act, a patent reform legislation that aims to address issues with the Patent Trial and Appeal Board.
Key Definitions and Concepts
The podcast explains important definitions and concepts related to government grants and the Bayh-Dole Act. It clarifies the distinction between enablement and reduction to practice in patent law, emphasizing the requirement of describing the invention in sufficient detail to allow it to be practiced by someone skilled in the field. The distinction between predictable and unpredictable art is explored, highlighting the varying levels of disclosure needed for different technologies. The concept of margin rights, which allow the government to demand the licensing or assignment of an invention, is also discussed.
Implications for Inventors and Recommendations
The episode provides insights into the implications of government grants for inventors. It emphasizes the importance of timely disclosure of inventions to the federal agency and the need to make a written election to retain title within two years. The duty to file a patent application and the requirement to include a statement acknowledging government support in patent applications are highlighted. The podcast also addresses the low likelihood of the government exercising margin rights and provides recommendations for grant recipients to effectively manage their intellectual property rights.
Government Grants and Intellectual Property
Government grants, such as the Small Business Technology Transfer Grant (STTR) and Small Business Innovation Research Grant (SBIR), play a significant role in funding early-stage capital for life science startups. These grants require recipients to obtain patent protection for their inventions, and funds can be used for patent prosecution costs, including practitioner and USPTO fees. However, foreign-related costs and licensing fees are generally not allowable. Additionally, these grants provide provisions for protecting data developed under the grant, which can be kept secret under a non-disclosure obligation. Recipients must report subject inventions, mark their data, and be aware of US manufacturing requirements and restrictions in granting exclusive licenses to others.
Considerations and Risks of Government Grants
While government grants offer non-deluding capital and funding opportunities, businesses need to carefully consider certain risks and obligations. Grant recipients must navigate the specific requirements and limitations for each grant type, such as SBIR and STTR. It's crucial to understand the ownership and rights provisions under these grants, including the government's non-exclusive license to patented inventions and the potential impact on commercialization efforts. Recipients must also be aware of the restrictions on subcontracted work, where subcontractors may retain ownership of subject inventions. Moreover, diligent record-keeping, reporting, and adherence to statutory bars are essential to maintaining control and ownership of inventions funded by government grants.
In this month's episode, we’re talking about the use of government grants and the strings that can come attached to your IP! We’re exploring the various types of small business research grants, how the Bayh-Dole Act regulates inventions generated under government grants, licensing and ownership implications for your patent when using federal dollars, and the sticky webs that you may find yourself in if you are not carefully tracking IP and adhering to the numerous provisions and timelines.
Dr. Ashley Sloat, President and Director of Patent Strategy here at Aurora, leads the discussion along with our all-star patent panel, exploring:
⦿ How the Bye-Dole Act of 1980 regulates inventions under government grants ⦿ As a small business, what types of grants are available to you and whether or not they can cover IP-related costs ⦿ The rights of the federal government to your Invention when you use grant money ⦿ Implications for using subcontractors to perform the work under the grant ⦿ And of course, some of the biggest gotcha’s and practical tips for avoiding them
Ashley is also joined today by our always exceptional group of IP experts including:
This month's Mossoff Minute, featuring Professor Adam Mossoff, looks at the introduction of a very important piece of patent reform legislation called the PREVAIL Act.