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Last month the U.S. Department of Energy’s Office of Energy Efficiency and Renewable Energy announced millions of dollars of available funding for clean energy development, including grants for biomass to biofuel research, biomass pyrolysis research, hydrogen storage technology and concentrating solar power research.
An important question when the government provides funding for private development is who owns the intellectual property fruits of such research. If an invention is conceived or built as part of federally funded research or development the government probably will have some rights in the patentable technology. The rights enjoyed by the government can range from a non-exclusive license to the innovation to full ownership of the patent rights and depends on the amount of government funding involved and which agency provides the funding.
These issues are governed by the Bayh-Dole Act of 1980, titled “Patent Rights in Inventions Made with Federal Assistance” and the Federal Acquisition Regulation (FAR). The Bayh-Dole Act and the FAR permit a private contractor to retain title to patented or patentable subject matter developed using federal funding so long as the entity, within a specified time period, discloses to the federal agency the existence of the subject invention and makes a written election to retain title. The private entity must also diligently file a patent application on the subject invention. Failure to take any of these steps gives the government the opportunity to obtain title in the subject invention.
FAR also contains three patent clauses that provide the basic building blocks for delineating patent rights in government contracts. FAR 52.227-11 is a short form clause generally applicable to small businesses and non-profits that provides for retention of title by the contractor.  FAR 52.227-12 is a long form clause, generally used by the Department of Defense, that provides for retention of title by the contractor. FAR 52.227-13 is typically used by the Department of Energy and NASA and provides for acquisition of title by the government. The determination of which clause applies depends on both the agency involved and the size and nature of the private entity, including whether it is a large business, small business or non-profit organization. An entity entering into a funding agreement with the federal government should pay close attention to which patent clause is included in the contract.
Even if the contractor complies with the disclosure, election and patent filing requirements to retain title, under any of the patent clauses, the government nevertheless acquires a non-exclusive license to practice the subject invention or have others practice it on behalf of the U.S. That means not only the government, but private entities, even direct competitors of the patent owner, may be able to practice the subject invention. So although federal funding can be important for development of clean technologies, companies looking for federal dollars should weigh the high price of taking advantage of it.
