Ernst Leads Fight to Stop Feds from “Marching-In” on Small Business Patents
WASHINGTON – The Biden administration is attempting to expand federal agencies’ ability to seize patents that were funded in part by federal funds by developing a new interpretation of “march-in rights” under the Bayh-Dole Act of 1980. U.S. Senator Joni Ernst, Ranking Member of the Senate Small Business Committee, is leading six colleagues in demanding Biden’s Department of Health and Human Services (HHS) and Department of Commerce examine the impact of this effort on small businesses and American innovation.
Under Bayh-Dole, only in narrow circumstances can the federal government march in and force a company to license out a patent. This authority has never been exercised. However, under the proposed Biden guidelines, agencies could seize patents under a broad and ill-defined set of conditions and use these rights as price controls.
The lawmakers wrote, “It is jarring to see the expanded range of possible circumstances in which the Administration seems intent on seizing patents held by small business owners— including those developed within the Small Business Innovation Research and Small Business Technology Transfer (SBIR-STTR) programs. Broad exercise of march-in authority under the Bayh-Dole Act could disincentivize small businesses from competing for federal research and development (R&D) dollars, discourage commercialization, and stifle America’s innovation ecosystem at large.”
“Americans benefit from small businesses across our country devoting immense time and resources, through federal R&D programs like SBIR-STTR, to pursue technological breakthroughs. Yet, the proposed interagency framework on march-in rights envisions federal agencies standing ready to snatch and license out intellectual property developed by small and large businesses alike. In this regard, it jeopardizes a primary incentive for firms to transition scientific developments into commercial products. Exercising march-in authority could punish companies who wish to progress with their invention beyond basic R&D to commercializing their patented technology. Further, without the promise of secure ownership of intellectual property for those who acquire patents through the SBIR-STTR programs, fewer small businesses will be able to help federal agencies innovate to meet our nation’s critical technology goals. Research efforts are likely to fail without the ingenuity and work ethic of the small business community.”
“Finally, the framework may also produce a scenario where businesses take federal R&D grant money and never commercialize products, choosing to rely on the federal government to seize their intellectual property and license it to others to bring goods and services to market. This would keep real, growth-oriented startup companies from accessing SBIR-STTR awards and bankroll companies whose business model is to collect hundreds of SBIR-STTR awards with no desire to graduate from the program… the Biden Administration is making a true mistake if it puts this authority in practice and even expands the scope of allowable justifications as is proposed under the draft framework.”
On behalf of small businesses driving technological advancement across our country, the lawmakers requested clarity on how this proposed framework would impact small businesses and their efforts to pioneer new technologies.
Read the letter here.
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