In this month's episode, we’re talking about the use of government grants and the strings that can come attached to your IP! We’re exploring the various types of small business research grants, how the Bayh-Dole Act regulates inventions generated under government grants, licensing and ownership implications for your patent when using federal dollars, and the sticky webs that you may find yourself in if you are not carefully tracking IP and adhering to the numerous provisions and timelines. Dr. Ashley Sloat, President and Director of Patent Strategy here at Aurora, leads the discussion along with our all-star patent panel, exploring: ⦿ How the Bye-Dole Act of 1980 regulates inventions under government grants ⦿ As a small business, what types of grants are available to you and whether or not they can cover IP-related costs ⦿ The rights of the federal government to your Invention when you use grant money ⦿ Implications for using subcontractors to perform the work under the grant ⦿ And of course, some of the biggest gotcha’s and practical tips for avoiding them Ashley is also joined today by our always exceptional group of IP experts including: ⦿ Kristen Hansen, Patent Strategy Specialist at Aurora ⦿ Dr. David Jackrel, President of Jackrel Consulting ⦿ Ty Davis, Patent Strategy Associate at Aurora ** Mossoff Minute ** This month's Mossoff Minute, featuring Professor Adam Mossoff, looks at the introduction of a very important piece of patent reform legislation called the PREVAIL Act. ** Follow Aurora Patents ** ⦿ Home: https://www.aurorapatents.com/ ⦿ Twitter: https://twitter.com/AuroraPatents ⦿ LinkedIn: https://www.linkedin.com/company/aurora-cg/ ⦿ Facebook: https://www.facebook.com/aurorapatents/ ⦿ Instagram: https://www.instagram.com/aurorapatents/ ⦿ TikTok: https://www.tiktok.com/@aurorapatents ⦿ YouTube: https://www.youtube.com/@aurorapatents/ ⦿ Listen https://www.aurorapatents.com/patently-strategic-podcast.html:

1. Government Grants and
Patent Rights: SBIR, STTR,
and Your IP
ASHLEY SLOAT | July 25, 2023
This presentation is for information purposes only and does not constitute legal advice.

2. Overview
•Bayh-Dole Act of 1980 and its provisions
•Types of grants for companies
•Invention reporting and protection
requirements

3. The Bayh-Dole Act of 1980
Senators Birch
Bayh and Bob Dole
at the U.S. Capitol
on Feb. 21, 1978.
“provides NIH funding recipients incentives to promote the utilization of
inventions conceived or reduced to practice (Subject Invention) in the
performance of federally supported research and development” Bayh-Dole Act

4. Definitions
• Subject Invention. any invention conceived or first actually reduced
to practice in the performance of work under a funding agreement
• Conception. Formation in the mind of inventor of a definite and
permanent idea of complete and operative invention; conception
and means of putting idea into practice
• First Actual Reduction to Practice. Embodiment or a performed
process meets every element of the claimed invention; and the
embodiment or process operated for its intended purpose.

5. In re Eddie L. King
• What constitutes first actual reduction to practice?
• Does the subject invention need to be tested to ensure it
functions for its intended purpose?

6. Ideal Innovations, Inc. v. United States, CFC 2021
• Patent apps filed by Ideal Innovations in 2006
• Ideal Innovations tested the material for impact in 2006 –
alleged “first actual reduction to practice”
• Court indicated this was a test of the armor, not of the invention
• Actual test was needed to determine whether prototype worked for
its intended purpose
• Ideal Innovations signed licensing agreement with U.S. in
2007
Reversed and Remanded

7. Bayh-Dole Provisions
1. Disclose each subject invention to the Federal agency within 2
months
2. Make a written election within two years after disclosure to
the Federal agency or within 60 days of any statutory period
3. Agree to file a patent application prior to any statutory bar
date and corresponding patent applications in U.S. within 1 yr.
and other countries within 10 mo. (both are extendable upon
request)

8. Bayh-Dole Provisions
4. For elected inventions, Federal agency shall have a
nonexclusive, nontransferrable, irrevocable, paid-up license to
practice any subject invention throughout the world
5. Federal agency to require periodic reporting on the
utilization of any subject invention
6. Obligation to include, in patent applications, a statement
specifying that the invention was made with Government
support and that the Government has certain rights in the
invention.

9. Subject Invention Reporting Timeline
Electronic Research Administration Communications Office
Report
Inventions
in iEdison

10. Gov’t Retains March-In Rights
Federal agency can require the contractor to an
assignee or exclusive licensee of a subject invention to
grant a nonexclusive, partially exclusive, or
exclusive license in any field of use to a responsible
applicant or applicants, upon terms that are reasonable
under the circumstances

11. March-In Rights
1. Practical Application. Effective steps were not taken to achieve practical
application of the subject invention in such field of use.
2. Health and Safety. Need to alleviate health or safety needs which are
not currently reasonably satisfied.
3. Public Use. Requirements set by agency are not reasonably satisfied.
4. Breach of Agreement. Licensee of the exclusive right to use or sell any
subject invention in the United States is in breach of its agreement
underBayh-Dole.

12. What types of grants are
applicable for our clients?

13. Small Business Technology Transfer (STTR) &
Small Business Innovation Research (SBIR)
STTR
• Stimulate scientific and
technological innovation
between small business
concerns and research
institutions
• 3 Phase structure
1. Feasibility
2. R&D
3. Commercialization (can’t
use STTR funds)
SBIR
• Stimulate technological
innovation in private sector,
for-profit institutions for ideas
that have potential for
commercialization
• 3 Phase structure
1. Feasibility
2. R&D
3. Commercialization (can’t
use SBIR funds)

14. Do SBIR/STTR Grants Cover IP Costs?
• Technical and Business Assistance (TABA) funds. May be
authorized for patent prosecution costs related to obtaining
U.S. patent protection for Subject Inventions of this award.
• $6,500 in Phase I
• $50,000 in Phase II
• Budget Location. Include patent costs in commercialization
assistance budget (“other direct costs”). Patent costs include
practitioner and USPTO fees.

15. Do SBIR/STTR Grants Cover IP Costs?
• Filings. USPTO related to provisional, PCT, non-provisional,
continuation, and continuation-in-part patent applications.
• Search. Freedom to operate, market analysis, competitor IP
landscape and products, searching costs may be allowable.
• Exclusions.
• Foreign related costs (e.g., foreign attorney, foreign patent office, or
translation fees).
• Licenses not allowable since typically not a required cost in
performance of the award.

16. SBIR/STTR Inventions vs. Data
• Patent it. Idea, concept, design or method visible to the
naked eye.
• Keep it Secret. Recorded or written technical information or
data developed under SBIR funding agreements.
Data/Information can be kept secret under a government’s
nondisclosure obligation. Only applies when it has been
written down. Fixed protection period of 20 years.
• Don’t Include privately funded data.

17. Advice for Gov’t Grant Recipients
• Mark your data. Can be marked in a Final Report.
• Report Subject Inventions. Report all inventions through
iEdison, not just patentable ones
• Track statutory bars. Report to your practitioner and agency
through iEdison.
• Understand U.S. Manufacturing requirements. Consult
agency early with questions.

18. Gov’t Grant Gotchyas
1. If hire subcontractor to perform some of the work,
any subject invention from the subcontractor
cannot be assigned to your company –
subcontractor retains ownership.
2. If subject invention is unelected at 2 years, then
gov’t receives title of invention.
3. No exclusive licenses, unless approved by NIH in
advance and is manufactured substantially in the
United States.