Taking Back Innovation: Threading the Needle on Ownership and Control of Federally Funded Inventions

Abstract

For centuries, the Takings Clause of the Fifth Amendment of the United States Constitution has been considered primarily in relation to encroachment on more traditional real-property rights. Nevertheless, a substantial and growing portion of personal and commercial assets are actually comprised of rights in intellectual property. It is therefore essential to now consider the implications of the Takings Clause in the context of twenty-first century innovation and technology.

Innovation is an ever-increasing portion of domestic and international assets, contributing an estimated $7.8 trillion to the United States Gross Domestic Product. Accordingly, it is of course also crucial to determine and clarify rights regarding the ownership and control of inventions. Of particular interest in this regard is the key subset of inventions created with use of federal funds—often at universities. Such inventions encompass all range of innovation from biopharmaceuticals to artificial intelligence, and beyond. Under the terms of the governing congressional statute, the Bayh-Dole Act, universities and other government contractors may assert rights to “subject inventions” created with the use of the over one hundred billion dollars they receive annually in federal research funds. Yet caveats abound, with the federal government reserving certain rights to the subject inventions, including an automatic “grant-back” license to practice, along with the very dreaded—and controversial—”march-in” provision.

Both the grant-back license and the march-in provisions of the Bayh-Dole Act remain largely unexplored in U.S. court and administrative proceedings. Nor has either been widely studied in legal scholarship. Given the far-reaching implications of the grant-back as a possible basis for a “fair use” argument in patent law—and of the march-in provision potentially characterized as a Fifth Amendment taking—it is likely that more cases will arise on this important issue that lies at the intersection of contract and property doctrine. Analyzing and summarizing the few cases to date, along with the statutory and regulatory framework—this Article provides a public policy roadmap both for the administrative agencies and universities governed by the terms of the Bayh-Dole Act, as well as for courts interpreting its provisions—with proposals for threading the needle on ownership and control of inventions.