What government contractors need to know about the revised disclosure requirements (and patent filing deadlines) for federally-funded inventions

The Bayh-Dole Act and federal regulations implementing the Act permit government contractors to retain ownership of inventions developed with federal government funding. However, to retain ownership the contractor must take certain actions within certain deadlines. If the contractor misses these deadlines, the government agency can take title to the invention.

These deadlines are about to become even more important when a regulatory change takes effect on May 14, 2018. Significant deadlines to keep in mind include:

1.  Disclose the invention to the government agency within two months of discovery, and elect title within two years of the disclosure.

The first required action is disclosure of the invention to the contracting agency. The Bayh-Dole Act (at 35 U.S.C.  § 202(c)(1)) requires any contractor who receives government funding to “disclose each subject invention to the Federal agency within a reasonable time after it becomes known to contractor personnel responsible for administration of patent matters.” Regulations implementing the Act state that the “reasonable time” is “two months after the inventor discloses it in writing to contractor personnel responsible for patent matters.” 37 C.F.R. § 401.14(c)(1).

The second required action is that if the contractor wants to retain ownership of the invention, the contractor must elect to retain title within two years of the disclosure. 37 C.F.R. § 401.14(c)(2).

If the contractor fails to make the required disclosure to the Federal agency within two months, or if the contractor fails to elect to retain title within two years, the Federal agency may take ownership to the invention.

Currently, a time limit also applies to the Federal agency’s right to take title to the invention. However, that is about to change.

Until May 13, 2018, federal regulations stated that “the agency may only request title within 60 days after learning of the failure of the contractor to disclose or elect within the specified times.” 37 C.F.R. § 401.14(d)(1). This means that when a contractor misses the deadlines, the contractor could resolve the issue and retain ownership) by making the disclosure and waiting until the agency’s 60-day option expired.

Starting May 14, 2018, the 60-day time limit on the agency’s option is removed. This means that if a contractor misses the deadlines listed above, the agency may choose to acquire title to the invention from the contractor at any time.

While Federal government agencies very rarely exercise this right, the elimination of the 60-day period could create a cloud over ownership of any invention that is not properly disclosed or elected within the required time periods.

With the change soon to take effect, government contractors who may have inadvertently missed the deadlines should make a corrective disclosure as soon as possible. In addition, government contractors should ensure that their patent administration personnel are aware of the two-month disclosure and two-year election periods, and that they diligently adhere to those periods for new inventions going forward.

2. Convert provisional applications within 10 months, rather than the usual 12.

The rule changes add a requirement that if the contractor files a provisional application for the invention, the contractor must file a formal application within 10 months of filing the provisional. 37 C.F.R. § 401.14(c)(3).

Contractors may request up to a one-year extension of this time period, which can be useful if the invention is not yet developed enough to support a nonprovisional patent application. However, the Federal agency will have 60 days to decide whether to grant or deny the request. This means that a contractor must either convert a provisional within 10 months or request an extension within no more than 8 months from the provisional’s filing date. If the contractor does not meet this deadline, the Federal agency may elect title and complete the filing before the 12-month life of the provisional application expires.

Although not affected by the change, contractors also should keep in mind that if they elect title to an invention, they must file an initial patent application within one year of electing title.

3.  File foreign applications within 10 months of the priority date.

A carryover from the previous rule is that if the contractor wants to file patent applications outside of the U.S., the contractor must do so within 10 months of the first filed patent application (unless international filing was prohibited by secrecy order). 37 C.F.R. § 401.14(c)(3). The Federal agency may file foreign applications in any country where the contractor does not do so within this time period.

4. Notify the federal agency at least 60 days prior to abandoning any patent or patent application.

If the contractor decides to abandon any patent or patent application (such as by stopping prosecution or not paying a maintenance fee), the contractor must notify the Federal agency before doing so. The new rule increases the notification period to 60 days before the due date for the response or fee.

[Special thanks to my colleagues Jeff Schwartz and Flynn Barrison for the information that led to this post.]

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