Univ. of S. Fla. Bd. of Trs. v. United States

Authored by: Jeremy J. Gustrowsky

A recent Federal Circuit decision highlights how the Bayh-Dole Act can give the federal government broad rights to use patented inventions developed with federal funding—even when the funding comes through a subcontract. The University of South Florida (USF) owned now-expired U.S. Patent No. 5,898,094, which covered genetically engineered mice used in Alzheimer’s research. USF sued the U.S. government, claiming that a government-authorized lab was infringing its patent by making and using these mice.

The government defended itself by pointing to the Bayh-Dole Act, which allows federal agencies to retain a license to use inventions that were conceived or first actually reduced to practice with federal funding. In this case, the research that led to the patented mice was funded by a National Institutes of Health (NIH) grant, which was awarded to the Mayo Clinic. Mayo, in turn, subcontracted with USF to perform part of the research. Even though the formal subcontract was signed months after the key research was performed, USF eventually received NIH funds for that work.

USF argued that because the subcontract wasn’t in place at the time the invention was “actually reduced to practice,” the government shouldn’t have a license. The court disagreed, holding that the timing of the formal contract didn’t matter—what mattered was that USF ultimately accepted federal funds for the research under a subcontract that covered the work. The court emphasized that this is a common scenario in academic research, where formal agreements often lag behind the actual scientific work, but the intent and funding are clear.

This decision is a reminder for universities and other research institutions: if you accept federal funding for research, even retroactively through a subcontract, the government may have a broad license to use resulting inventions. Careful attention to funding sources and contract timing is crucial for anyone hoping to retain exclusive patent rights in federally funded research.