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What SBIR’s Need to Know About Bayh-Dole Compliance

Bayh-Dole Compliance

With over $2 billion awarded in grants through the SBIR (Small Business Innovation Research) and STTR (Small Business Technology Transfer) programs, the federal government is by far the largest source of early-stage technology funding to small businesses. The goal of these initiatives is to support research into high-risk innovative technologies with the end goal of creating products to move into the marketplace. By definition these SBIR’s/STTR’s spawn a rich source of intellectual property but ignorance of the reporting requirements of the Bayh-Dole Act can put these assets at risk with disastrous consequences for the business.

Bayh-Dole Reporting Requirements

Under the Bayh-Dole Act, inventions that come out of federally funded research at universities, non-profits, and small businesses, are subject to strict reporting requirements. In May of 2018 these regulations have been updated to include changes every SBIR should be aware of. Most federal agencies, including NIH, DOE, NSF and certain branches of the Army and Navy, use the iEdison reporting system to allow funding recipients to report their inventions at key checkpoints along the path to commercialization. When SBIR’s file patent applications they are obligated to disclose that their invention was federally funded and they need to formally elect to retain title to these inventions. If this is not done via iEdison on a timely basis in compliance with Bayh-Dole reporting requirements, the Federal agency has the right to take ownership of the patents at anytime.

Lack of Compliance Puts IP at Risk

Imagine if, down the road, a cutting-edge business is preparing to go public or a pharmaceutical company that has developed a blockbuster drug or therapy under SBIR (take the NIH/Gilead debacle) finds that the federal government is stepping in to take ownership of their patents. This can happen if inventions have not been diligently reported under the requirements of the Bayh-Dole Act. For small businesses that collaborate with universities or other non-profit research institutions on an STTR project it is important to track whether the reporting obligations under Bayh-Dole have been appropriately carried through. Again, lack of attention at the time title was elected for the invention can have dire consequences down the road.

Most SBIR’s are laser-focused on their innovative research and taking the time to understand how to keep up with reporting new disclosures and patents, and utilization can be overwhelming. IP attorneys frequently recommend using a specialized expert such as Borman & Company as an efficient and cost-effective way to establish and maintain Bayh-Dole compliance for their clients' inventions and to keep up with regulatory changes.

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