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Get ready for extra compliance burden under revised Bayh-Dole rules


By Jesse Schwartz
Published: May 16th, 2018

The anticipated revisions in Bayh-Dole regulations, published in the Federal Register on April 13, will no doubt have a significant impact on TTO activities. And while one crystal ball may be more or less clearer than the next, TTO leaders agree they will significantly increase the amount of time needed to assure full compliance — and thus the amount of resources required to do that.

In fact, the Massachusetts Institute of Technology was so clearly anticipating that possibility that they put in for — and received — approval for an additional compliance staff member prior to the final rule’s implementation. “I managed to get an extra member of staff in next year’s budget in anticipation of the changes and I am glad I did, because I think it’s going to have huge impact on our processes,” says Lesley Millar-Nicholson, CLP, MIT’s Technology Licensing Office director.

Leigh Edwards, Patent Compliance Administrator at MIT, described the ruling as “reaffirming” that planning while noting that the compliance department needed more people at any rate. “Now our compliance team will be three,” she reports.

The University of Minnesota’s TTO is also expecting a heavier compliance burden, says Jay W. Schrankler, associate vice president in the Office for Technology Commercialization. “Bayh-Dole is an unfunded mandate. If it’s unfunded and you just add more overhead it doesn’t make life easier,” Schrankler comments. Prior to the new rules, he has been dedicating at least one full-time person to compliance, and “I’ve now taken on a 50% contractor, partially due to this change,” he adds.

Any changes requiring additional staff will be more onerous for smaller universities, notes Dan Sharp, associate vice president for research and director of the Office of Technology Commercialization at the University of Texas-Austin. “At UT Austin we have a very robust legal department — a paralegal, one lawyer, the director of IP is a lawyer, and a full-time person in charge of compliance,” he shares. “I suppose if you did not already have that position, you’d have to create it, and theoretically if you do not comply with these requirements, through no fault of your own you’d potentially put some research findings at risk.”

While certainly in agreement that the new regulations will require a greater amount of time and resources, not everyone agrees on which of the provisions was most significant. For example, Edwards says the “60-day abandonment notice” is the most significant of the changes for MIT, and “will be huge for our office and our office practice.” Edwards is referring to Section 401.14(f)(3), which states: “For each subject invention, the contractor will no less than 60 days prior to the expiration of the statutory deadline, notify the Federal agency of any decision: Not to continue the prosecution of a non-provisional application; not to pay a maintenance, annuity or renewal fee . . .”

“Prior to these updates in Bayh-Dole it was 30 days; that gave us another month’s grace and did not say if you could weigh the case with annuity fees,” notes Edwards. “Before, we did not know if maintenance fees or annuity fees or renewal fees would be included — now it’s clear the decision we make has to come before that.”

She adds that MIT now has a committee just to talk about the case abandonment process. “It will involve law firms we work with and licensing staff,” she notes. “It’s not just for compliance; it’s to figure out how we as an office, with our law firms, can be sure we know when these maintenance and annuity fees come up, and if the case is federally sponsored we may have to give notification 90 days prior to that date so we will have time internally prior to the statutory deadline.”

Sharp, who was previously expecting the notification requirement to be extended to 120 days, was nonetheless still displeased with the ruling. “I have a hard time seeing the benefit,” he says.

For Sharp, however, Section 401.14(c)(3) is even more onerous than the abandonment notification rule change. It states, “. . . If the contractor files a provisional application, it shall file a non-provisional application within 10 months of the filing of a provisional application. . . .”

Although a one-year extension is available, the rule change “does not make a lick of sense,” he claims. “You can get an extension if you need it, but why it make more difficult than patent law? I have to question who thought this was a good idea — and why?”

A detailed article on the Bayh-Doles changes and their impact on university TTOs appears in the May issue of Technology Transfer Tactics. To subscribe and get the full article, along with nearly 11 years of archived best practices and success strategies for tech transfer offices, CLICK HERE.

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