Executive Summary

On August 8, 2025, the U.S. Department of Commerce notified Harvard University (Harvard) that it has initiated a comprehensive review of Harvard’s federally funded research programs to assure compliance with the Bayh-Dole Act¹ (Bayh-Dole). For patents subject to Bayh-Dole, a breach of compliance may allow the U.S. government to take title to such patents, or initiate a proceeding that would grant compulsory third-party licensees to such patents (“march-in”). While the Department of Commerce’s actions are currently limited to Harvard, licensees or those having title to patents subject to Bayh-Dole should proactively review Bayh-Dole compliance across patent portfolios to mitigate risks.

Background

Bayh-Dole was enacted to provide incentives to promote commercialization of federally funded inventions. Pursuant to Bayh-Dole, recipients of federal research funding (contractors) can retain rights to inventions conceived or first actually reduced to practice under a federal funding agreement; however, the U.S. government retains certain rights and imposes certain obligations. One such right is the authority to march-in if specific conditions are met, one of which may be noncompliance with certain provisions of Bayh-Dole. With march-in authority, the federal funding agency can require a contractor, assignee, or an exclusive licensee of the corresponding patent to grant a license to that patent in any field of use to a third party, or the agency may itself grant such a license. For more background information on Bayh-Dole and related requirements, please refer to the “Draft Guidance Puts March-In Authority Pursuant to Bayh-Dole in the News Once Again” Wilson Sonsini Alert of December 22, 2023² and “Basics of the Bayh-Dole Act: FAQs” Wilson Sonsini Alert of July 6, 2020.

Regarding the Department of Commerce’s notification, on August 8, 2025, the Department of Commerce issued a public letter to Harvard, announcing an immediate comprehensive review of Harvard’s federally funded research programs to assure compliance with Bayh-Dole.³ The Department of Commerce’s letter outlines concerns over possible noncompliance with three key Bayh-Dole requirements:

1. Timely disclosure of invention and election of title;⁴
2. Preference for U.S. industry—substantial manufacturing of the invention in the U.S. by an exclusive licensee;⁵ and
3. Practical application of the invention.⁶

The Department of Commerce has required that Harvard provide a comprehensive list of all patents it has received stemming from federally funded research grants, and provide information sufficient to prove its compliance with Bayh-Dole by September 5, 2025.

Implications, Compliance Risks, and March-In Criteria

While the march-in process is historically a rarely used enforcement tool, the Department of Commerce’s action may signal a stricter Bayh-Dole enforcement regime going forward, especially where the current administration is trying to achieve a specific policy objective, such as U.S. manufacturing. In view of the potential consequences of noncompliance with Bayh-Dole, implementation of procedures to ensure Bayh-Dole compliance to mitigate such risks are paramount.

The federal funding agency may march-in, i.e., compel licensing of an invention subject to Bayh-Dole to a third party on reasonable terms, if at least the following conditions are met:

• March-in is necessary to:⁷
  • achieve practical application of the invention;
  • address/alleviate health or safety needs;
  • meet federal public-use regulations; or
  • meet U.S. manufacturing requirements; and
• the action of march-in aligns with the policy and objectives of Bayh-Dole, which include promoting collaboration between commercial concerns and nonprofit organizations.⁸

In addition, the federal funding agency may request conveyance of title to an invention subject to Bayh-Dole if an institution fails to:⁹

• disclose the invention to the federal agency within two months of the inventor’s disclosure to the institution;
• elect to retain title within two years of disclosing to the federal agency (or at least 60 days before a statutory bar date);
• file a patent application on the invention within one year of electing title or before receipt of a written request for conveyance of title, or
• maintain prosecution of the patent application.

In response to a march-in determination, the affected entity or exclusive licensee may oppose the agency’s decision, which includes a written submission, fact-finding, and ultimately, judicial review.¹⁰ Until exhaustion of the appeal process, the march-in process must be held in abeyance.¹¹

Conclusion

The Department of Commerce’s action is a reminder for entities receiving federal funding and/or holding patents arising from such funding to review and ensure compliance with contractional obligations associated with federal funding, including those of Bayh-Dole—for example, ensuring timely disclosures, election of title, and compliance with manufacturing requirements. Companies considering a license to patents arising from federal funding should request a Bayh-Dole audit from the licensor to identify any noncompliance risks. Exclusive licensees of such patents should ensure that they satisfy the substantial U.S. manufacturing commitments, or secure the necessary waiver. Where noncompliance is identified, entities should take the necessary steps to remedy such noncompliance. However, given the strict requirements of Bayh-Dole, it is not certain that retroactive compliance is sufficient to mitigate risk.

In addition to compliance with Bayh-Dole, entities who receive federal funding should review their funding agreement to determine whether the agreement provides for additional obligations on behalf of the contractor, and/or additional government rights associated with receipt of government funds.

While this action by the Department of Commerce could set a precedent for similar reviews across different industries, an important reminder is that implementation of the march-in procedure is rare, and very few, if any, marketed products are reliant solely on federally funded inventions. In addition, entities that may be targeted for march-in have due process procedures available via appeal. As such, it is unlikely that initiation of the march-in procedure will have a profound commercial effect. Nonetheless, entities should proactively review their compliance to protect both their intellectual property rights and future funding. Notably, maintaining a balanced portfolio of both federally funded and privately developed innovations can help reduce exposure to march-in risks and potential government title claims.

We will continue to monitor developments and provide updates concerning the Bayh-Dole and the life sciences industry. For questions regarding patent strategies, please contact any member of Wilson Sonsini’s Patents and Innovations practice.

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[1] 35 U.S.C. § 200-2012.

[2] This alert describes the current requirements for implementing march-in, as well as a proposed framework for evaluating whether those requirements have been met. Such proposed framework has not been implemented as of August 2025.

[3] Howard Lutnick (@howardlutnick), Taxpayers deserve the benefit of the bargain. If Harvard won’t honor the Bayh-Dole Act, then we will find someone who will., X (Aug. 8, 2025, 4:53 p.m.), https://x.com/howardlutnick/status/1953967726135063023.

[4] 35 U.S.C. § 202(c)(1) and 37 C.F.R. § 401.14(d)(1)(i).

[5] 35 U.S.C. § 204 and 37 C.F.R. § 401.14(i).

[6] 35 U.S.C. § 203(a)(1) and 37 C.F.R. § 401.14(j)(1).

[7] 35 U.S.C. § 203 and 37 C.F.R. § 401.14(j).

[8] 35 U.S.C. § 200 and 37 C.F.R. § 401.6(a)(6).

[9] 35 U.S.C. § 202(c)(1)-(c)(3) and 37 C.F.R. § 401.14(d)(1).

[10] 37 C.F.R. 401.11.

[11] 37 C.F.R. § 401.6(c) and 35 U.S.C. § 203(b).