Among the many incentives used by the federal government “To promote the Progress of Science and useful Arts,” are: (1) providing direct funding to researchers; and (2) through the Bayh-Dole Act, 35 U.S.C. § 200 et seq., allowing researchers at small businesses and nonprofit organizations to apply for and to receive patent rights arising out of inventions that are developed with this funding. Thus, recipients of federal grants can reap the benefits of a limited property right against the public, even though the public, through its tax dollars, funds the development of the inventions that give rise to those rights.
When an inventor receives federal funding, in order to avail himself of potential patent rights, he must agree to abide by a number of strict requirements. These requirements are designed to protect the public’s investment in the research. Unfortunately, historically, recipients have not fulfilled their obligations, and the funding agencies have not mandated compliance. GAO/RCED-99-242, Reporting Requirements for Federally Sponsored Inventions Need Revision (Aug 1999).
However, a recent action by the U.S. Army, which was affirmed by the Court of Appeals for the Federal Circuit, may signal an increased concern of funding agencies to force recipients to honor those obligations. In Campbell Plastics v. Brownlee, 389 F.3d 1243 (Fed. Cir. 2004), the Court of Appeals for the Federal Circuit held that failure of a recipient of federal funds to meet certain requirements of its funding agreement can cause the recipient to lose its patent rights even absent any particularized harm to either the funding agency or the public.