The Bayh-Dole Act was enacted in 1980, in part, to address the low utilization rate of federal patents. At the time the bill was considered, 26 different federal agency policies existed regarding the use of results from federally funded research. Prior to Bayh-Dole’s enactment, agencies frequently retained title to inventions made with federal support whether the research was performed in federal laboratories, in universities, or by individual companies. Licenses to use and further commercialize the patents on federally funded inventions were then negotiated with firms typically on a non-exclusive basis or, more rarely, for the exclusive use by one manufacturer. The Bayh-Dole Act established a governmentwide policy that gave contractors the opportunity to retain ownership of federally funded inventions. In addition, it was designed to use the patent system to promote the utilization of inventions arising from federally supported research or development and to encourage maximum participation of small business firms in federally supported research and development efforts, among other things. Many experts continue to believe that certainty in the ownership of patents and exclusivity in the right to develop the related technology are important for both large and small firms. In exchange for the right to retain ownership of federally sponsored inventions under the Bayh-Dole Act, contractors must agree to certain reporting requirements. More specifically, contractors agree to notify the funding agency within 2 months after the contractor learns that an invention has been created and to notify the funding agency within 2 years after this notification of the contractor’s decision to retain title to the invention. In addition, contractors agree to apply for a patent on the invention typically within 1 year of the election of title, attempt to commercialize the invention, and to provide additional reports. These additional reports, if requested by the agency, can provide such information as utilization of the invention and patent-related information such as the filing date, patent application number and title, and patent number and issue date for the invention in any country in which the contractor has applied for a patent. Failure by the contractor to disclose the invention, elect title to it, or file a patent application within the times specified, or failure to follow through with the patent application process, allows the relevant federal agency to obtain ownership of the invention. The Bayh-Dole Act also reserved certain rights for the government to protect the public’s interests. Specifically, the government retains “a nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States any subject invention throughout the world,” also known as a nonexclusive royalty- free license. In addition, the act provides the government march-in authority. Under this authority, the federal agency that funded the development of an invention has the right to require the contractor or exclusive licensee to grant a license in any field of use to a responsible applicant upon terms that are reasonable under the circumstances, if the agency determines that: the contractor has not made, and is not expected to make, efforts to commercialize the invention within an agreed upon time frame; public health or safety needs are not reasonably satisfied by the contractor the use of the invention is required by the federal government and the contractor or licensee cannot meet the government’s requirements; or the owner of an exclusive license is not ensuring that the invention is “manufactured substantially” in the United States and has not obtained the necessary waivers to do so. Implementation of the Bayh-Dole Act is decentralized across the federal government. Each federal agency that enters into funding agreements subject to the Bayh-Dole Act is responsible for administering the act’s requirements. However, the act directs the Department of Commerce to develop regulations to implement the provisions contained in the act, including procedures for agencies to follow regarding the exercise of the march-in authority. The regulations Commerce issued in 1987 also allow agencies to develop supplemental procedures regarding their march-in authority. Although Commerce does not maintain any overall Bayh-Dole databases, other agencies rely on Commerce as a coordinator and consultant for Bayh-Dole related issues. The regulations established by Commerce detail the procedures an agency must follow when it receives information that it believes might warrant the exercise of march-in rights. Specifically, the agency must notify the contractor, in writing, that it has information it believes might warrant the exercise of its march-in authority. As part of this notification, the agency is to provide the contractor 30 days to respond informally, either verbally or in writing, with relevant information. Once the agency has received the contractor’s response, it may initiate the march-in procedures within 60 days through written notice to the contractor and its assignee or exclusive licensee, as appropriate and if known to the agency. The notice must include the reasons for the proposed march-in and the specific uses of the invention for which the agency may require licensing. Within 30 days after receiving written notice of the proposed march-in proceeding, the contractor may submit information opposing the proposed march-in to the agency in person, in writing, or through a representative. If the agency determines that the contractor’s information raises a dispute over the facts of the case, it must undertake a fact-finding process that gives the contractor the opportunity to appear with counsel, submit documents, present witnesses, and question individuals presented by the agency. The results of the fact-finding process and a recommendation are presented to the head of the agency (or his or her designee) as well as to the contractor. Both the agency and the contractor have 30 days to submit written arguments to the head of the agency or designee. In addition, the contractor may request to present oral arguments. Within 90 days after the completion of the fact-finding or oral arguments, whichever is later, the agency must provide a written decision regarding whether march-in rights will be exercised. Any decision unfavorable to the contractor will be held in abeyance pending the exhaustion of the contractor’s administrative and judicial appeals. At any point, the agency may terminate the fact-finding process if it decides not to exercise its march-in authority. The time from when an agency announces a funding opportunity to the time a viable commercial product reaches the marketplace may take many years and substantial financial investment. During the period of agency funding, which may last 8 to 10 years for drugs and biologics, the agency’s program, procurement, and/or grants office monitors the progress of the research and maintains contact with the contractor. In fiscal year 2007 federal agencies devoted $116 billion to conduct research on various topics related to their respective missions. Pharmaceutical-related inventions, which may arise from research sponsored by NIH, may require an additional 10 to 15 years after the invention is made to obtain the federal approvals necessary to reach the market. According to industry officials, pharmaceutical-related inventions may require an investment of between $800 million and $1.3 billion to conduct the safety and other studies required for approval. Additional time may be required to obtain a patent on the invention and to develop a market ready process or product. More specifically, the U.S. Patent and Trademark Office issues a patent in 32 months, on average, but the time ranges from 28 months for inventions in the fields of semiconductors and electrical items to almost 44 months for computer software and communications inventions. Once a patent is granted, the patent owner has, in most instances, a period of 20 years from the date the application was filed during which time the patent owner has the right to exclude others from making, using, or selling the patented invention. Officials at DOD, DOE, NASA, and NIH rely on Commerce regulations for the Bayh-Dole Act and on their agencies’ interpretations of the act to determine whether to exercise their march-in authority. These officials told us that the administrative processes developed by Commerce for agencies to use when considering whether marching-in may be warranted are detailed and time-consuming, and may make it difficult to initiate a march-in proceeding. However, some officials also acknowledged that because the regulations are detailed, they ensure that appropriate and fair processes are followed during march-in proceedings. One official noted that there is no way to pre-empt the process and retain the necessary legal protections for all of the participants in the process. According to this official, the regulations, while detailed and time-consuming, allow everyone to be heard during the process. For example, during the fact- finding procedure the contractor has the opportunity to appear with counsel, submit documentary evidence, present witnesses, and cross- examine witnesses who the agency presents. Moreover, both the contractor and agency staff have an opportunity to rebut an agency’s decision and contractors may appeal adverse decisions to the federal courts, which delays action on the agency’s decision until the appeals process is concluded. However, according to agency officials we spoke with, the agencies have chosen not to develop agency-specific guidance for a variety of reasons. First, none of the agency officials we spoke with believe that the regulations developed by Commerce are onerous enough to warrant the development of agency-specific guidance. Second, both agency and technology transfer officials told us that agency-specific guidance would, in essence, pre-define how the federal government would exercise its march-in authority and reduce the flexibility agencies have to examine the specific circumstances of each individual case. Third, federal officials—as well as officials from organizations that represent technology transfer offices in colleges and universities—told us that creating an array of agency-specific regulations could hinder the transfer of research results to the market by increasing the regulatory burden on contractors. For example, one technology transfer official said that many universities receive funding concurrently from more than one federal agency. In such cases, these contractors could be required to follow a different set of regulations from each of their agency partners. As a result, these officials believe that Commerce should remain in charge of developing march-in regulations, rather than have individual agencies issue their own policies and procedures.