R&D Expenditures in the US
According to the National Science Foundation,
"Overall R&D performed in the United States in 2009 totaled an estimated $400 billion (current dollars) — somewhat below the $403 billion level in 2008, but well above the $377 billion in 2007. Adjusted for inflation, the 2009 estimate represents a $6 billion or 1.7% decline from 2008. Business R&D funding accounted for $291 billion and $259 billion of the total in 2008 and 2009 respectively. U.S. R&D is dominated by development activities, largely performed by the business sector. The business sector also performs the majority of applied research, but most basic research is conducted at universities and colleges and funded by the federal government. The federal government is the second-largest funder of U.S. R&D, providing an estimated $124 billion, or 31% of the U.S. total in 2009."
Where Do Government Funded Patents Come From?
Government funded research comes from corporations, universities, research institutes, small businesses, and federal contractors. The Government enters into different types of contracts when it funds R&D including procurement contracts, research grant agreements, and cooperative agreements for performance of experimental, developmental or research work funded in part or in whole by the federal government.
The US Government retains rights in inventions that result from federally funded research and development. This is reflected in the "Government Interest Statement" that appear in US patents and patent applications.
Who Owns the Inventions?
Prior to 1980, inventions created as a result of federally funded research contracts became the Government's property. Congress passed the Bayh-Dole Act of 1980 (The University and Small Business Patent Procedures Act of 1980) which allowed the recipients of federal research grants to patent their inventions and to retain the title to those inventions. Bayh-Dole states that contractors may "elect to retain title to any "subject invention" defining a subject invention as any invention of the contractor conceived or first actually reduced to practice in the performance of work under a federal contract." Prior to Bayh-Dole each federal agency had its own patent licensing agreements and practices. There was a lack of uniform government patent policy which Congress felt directly impacted US competitiveness as it related to innovations. Instead of the US government taking title to the invention, the contractor would retain the title but give the government certain rights. This was an incentive to commercialize the inventions created as a result of federally funded research.
The Government Interest Statement
When a research organization retains US domestic patent rights, the research organization is under an obligation to include a statement at the beginning of the application and any patents issued as a result of that patent application that informs the reader that the government has certain rights in the invention. The statement usually appears in either the "Government License Rights" section that follows the second paragraph of the specification or it should appear as the first paragraph of the specification (MPEP 310). The statement is:
"This invention was made with government support under (Contract #) awarded by (the Federal agency). The Government has certain rights in the invention."
What Rights Does The Government Retain?
The government retains several rights to the patented invention.
Right To A Paid Up License
These rights include a nonexclusive, nontransferable, irrevocable, paid- up license to practice or to have practiced the invention for or on behalf of the U.S. throughout the world. Basically this means that the government can use the invention without paying royalties or license fees. This is easier said than done in many cases since much of the patented technology resides within a more complex product rather than existing as a stand-alone technology that can be used by itself. Either way, the government retains the rights to the invention and is granted a paid up license.
March In Rights
If the patent holding organization is not diligently proceeding to commercialization, the government has march-in rights and can force the organization to license the patents upon reasonable terms to the government or other organizations. Basically this means that if a research and development organization isn't commercializing the technology in a patent and another organization decides it wants to use the technology, the government can make the patent assignee license the technology under terms that it deems to be fair and reasonable.
Rights to Patent Applications
The government has the right to file patent applications anywhere the assignee does not file and has the right to acquire any U.S. or foreign patent or application which the organization elects to abandon. So if the assignee decides they aren't interested in filing in Europe the federal government can do so. If there are other applications related to the technology, the government can take them over if the assignee chooses to abandon them.
The Ability to Make Additions to the Licensing Agreement
The government may also, under certain circumstances, require the licensing of background patents upon reasonable terms. In certain instances, the government may require the organization to include "buy American" clauses in any license agreement that is part of the goverment's exercise of "certain rights" to the patented invention.
Non-Profits Can Not Assign Their Patents To Others
Finally, if the organization is a nonprofit entity (most universities and post-doc research institutions are non-profit entities), the government can prevent the assignment of the patents, limit the term of any exclusive license and limit the use of royalties obtained from licenses. This means that university and post doc research organizations that are granted patents as a result of federally funded research can only license the patented inventions they can't sell (transfer the title to) the rights to the invention.
Sometimes The Government Retains the Rights To the Invention
The Department of Defense, the Department of Energy and NASA have statutory prohibitions against private business organizations obtaining title to inventions developed with federal funds. This is why you will see patents assigned to the Secretary of the Navy, or the Secretary of the Department of Energy or NASA.