Under Bayh-Dole, universities and small businesses can keep title to inventions made with federal funds, but must meet strict deadlines and grant the government a license.
For an invention made with federal money, the answer is usually this: the institution owns the invention, the inventor shares in the royalties, and the government keeps a free license. The Bayh-Dole Act lets universities, nonprofits and small businesses keep title to inventions made with federal funds, so long as they follow a set of rules. This article covers US federal law, checked on October 10, 2026.
The statute does not itself hand a university your patent. Ownership still starts with the inventor and moves through contracts. That gap has produced one famous Supreme Court loss and a lot of careful paperwork.
What Bayh-Dole actually does
Before 1980, the government generally held title to inventions its money paid for, and most of them sat unlicensed. Bayh-Dole flipped the default. Under 35 U.S.C. 202, a nonprofit or small business that receives federal research money may elect to keep title to what it calls a “subject invention,” meaning one first conceived or first actually put into practice while doing the funded work, as defined in section 201.
In return, the government gets a nonexclusive, irrevocable, paid-up license to use the invention for or on behalf of the United States anywhere in the world. And the contractor takes on obligations: report the invention, choose whether to keep it, file for a patent, and put the invention to use.
The Act reaches universities, other nonprofits and small businesses. Larger for-profit contractors are treated differently, usually under agency terms in their contracts, so a company working on a federal contract should read its own clause rather than assume.
The deadlines that decide whether the school keeps title
The clock matters more than the theory. The standard patent-rights clause in 37 CFR Part 401 sets the pace:
| Step | Deadline |
|---|---|
| Disclose the invention to the funding agency | Within two months after the inventor tells the institution’s patent staff in writing |
| Elect, in writing, to keep title | Within two years of disclosure (an agency can shorten this if a statutory bar is near) |
| File the first patent application | Within one year of electing title, or sooner if a bar date applies |
| Tell the agency before abandoning protection | At least 60 days before the statutory deadline |
Miss a deadline and the government may take title to the invention, as section 202 provides. Every resulting patent application and patent must also carry a statement that the invention was made with government support and that the government has certain rights in it.
To see how the clock plays out, picture a hypothetical grad student who reports a new sensor design in writing in March. The office has until May to notify the agency. It then has up to two years from that notice to decide whether to keep title, but the one-year bar after any public disclosure can force the patent filing much sooner. A conference poster presented in April, before anyone checked, could start a countdown the office never planned for. This is an illustration, not a case, and real agreements may set shorter periods.
How the inventor fits in
An inventor does not lose ownership by being funded. The relevant case is Stanford v. Roche, decided June 6, 2011, by a 7 to 2 vote. The Supreme Court held that Bayh-Dole does not automatically vest title in a federal contractor and does not let a contractor take title on its own. Inventors begin as owners under long-standing patent law, and an employer gets rights through assignment. You can read the opinion on Justia.
The dispute turned on wording. A Stanford researcher had signed an agreement saying he “agrees to assign” his rights, which the Federal Circuit treated as a promise about the future. Another company’s form said he “does hereby assign,” which the court treated as an immediate transfer. The company with the immediate-transfer language won the race. The Supreme Court did not revisit that contract reading, and two Justices expressed concern about the drafting trap in separate writings.
The lesson has stuck. Universities now use present-tense assignment language, and the Part 401 clause requires contractors to make employees disclose inventions promptly in writing and assign them to the institution.
Where the money goes
The statute puts guardrails on university licensing income. For nonprofits, the agreement must address sharing royalties with the inventor. After expenses, including those inventor payments, the remainder has to go to scientific research or education. Schools must also give a preference to small businesses when licensing, unless an inquiry shows that is not feasible.
Inventor shares are set by each institution’s policy, not by the statute, so the percentages vary. Read your own school’s intellectual property policy; it governs who gets what.
One more rule shapes deals with industry. Under section 204, an exclusive license to use or sell the invention in the United States requires the licensee to agree that products will be made mainly in the United States, unless the funding agency grants a waiver.
March-in rights: the government’s backstop
The government can also force more licensing. Section 203 lets a funding agency require the owner to license an invention to a responsible applicant on reasonable terms, if it finds one of four things. The owner has not taken effective steps toward practical application. Health or safety needs are not reasonably met. Federal regulations require public use that is not met. Or the domestic manufacturing requirement was not followed.
An affected owner can appeal to the US Court of Federal Claims within 60 days of the determination. In practice the power has stayed on the shelf. A Government Accountability Office report published February 18, 2026 states that agencies have never exercised march-in rights; they have received about a dozen requests, mostly about drug prices, and declined them all.
Whether price can justify march-in is unsettled. In December 2023, NIST put out draft guidance that would let agencies weigh price under two of the criteria. GAO reported that, as of December 2025, NIST had no timeline for finalizing it, citing a lack of agreement among agencies.
The 2025 Harvard episode
Bayh-Dole drew headlines in August 2025. On August 8, 2025, the Department of Commerce sent Harvard a letter opening a compliance review, raising concerns about timely disclosure and election, domestic manufacturing by exclusive licensees, and practical application. It asked for a list of federally funded patents by September 5, 2025, according to a Wilson Sonsini client alert. That alert, dated August 14, 2025, described march-in as a possible remedy but not as a completed determination.
I could not find a later official outcome in the sources I opened, so treat the matter as unresolved from this article’s standpoint. The episode matters mainly because it shows the compliance obligations in section 202 are enforceable, not just paperwork.
Myths people repeat about federally funded inventions
| Myth | What the sources show |
|---|---|
| The government owns anything its grant paid for. | Eligible contractors can elect to keep title; the government gets a license, and can take title only if rules are missed. |
| The university automatically owns every invention its professors make. | Stanford v. Roche says rights move by assignment, not by statute alone. |
| Agencies routinely force licenses on patent owners. | GAO reported in February 2026 that agencies have never exercised march-in rights. |
| Bayh-Dole covers every kind of funding. | It applies to federal funding agreements, defined as contracts, grants or cooperative agreements for research the government funds in whole or in part. |
Notice the phrase “in whole or in part” in that last row. A project with a modest federal slice and a large private one can still produce a subject invention, which is why research offices ask about every funding stream, not just the main one. When a company sponsors part of a lab’s work, the sponsor’s expectations about exclusive rights and the federal obligations have to be reconciled in writing. Federal terms do not disappear because a private partner would prefer they did.
A checklist for researchers
- Find out whether any federal money touched the work, including a small piece of a larger project.
- Report the invention to your technology transfer office early, in writing, because the two-month clock runs from that report.
- Sign the institution’s assignment form and read the verb tense.
- Do not publish or present before the office decides on filing.
- Keep your grant numbers handy, since they go into the patent statement.
- Check your institution’s policy for royalty splits and for any outside-company agreements.
Related questions
Does the government own my invention if my lab got a federal grant?
Not usually. The institution can keep title, and the government keeps a license to use it for government purposes. Title can pass to the government if the institution misses the disclosure, election or filing deadlines.
What if a company funds part of the project?
Mixed funding is common, and a federally funded piece can still make the invention a subject invention. The sponsored-research agreement and the federal terms both apply, so ask the research office to review them together.
Can I keep an invention I made on my own time at a university?
It depends on your employment agreement and the institution’s policy, and on whether federal money or university resources were used. Check both before assuming.
This is general information, not legal advice.
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