On December 7, 2023, the Department of Commerce’s National Institute of Standards and Technology (NIST) released a request for information (RFI) (link) regarding the “Draft Interagency Guidance Framework for Considering the Exercise of March-In Rights”. The information received in response to the RFI will be used to develop the final framework. NIST will hold an informational webinar (link) on December 13, 2023. 

The stated objectives of the draft framework are to:  

Provide clear guidance to an agency on the prerequisites for exercising march-in, and, if those prerequisites are met, on facts to be gathered by the agency and factors to consider in determining whether to march-in.  
Ensure that decisions to exercise march-in support the policy and objectives of Bayh-Dole. 
Encourage the consistent and predictable application of the Bayh-Dole Act’s march-in authority. 
Balance the need to incentivize industry investment in the development and commercialization of subject inventions with the need to promote public utilization of subject inventions. 

Today’s release follows the Department of Health and Human Services and the Department of Commerce announcement (link) on March 21, 2023, that the Interagency Working Group for Bayh-Dole would develop a framework to implement the march-in provision as part of a “whole-of-government” approach regarding march-in authority.  

Comments on the draft framework are due February 6, 2024. Please reach out to your ADVI account manager for more information.

Background 

March-in rights, established under the Bayh-Dole Act, allow the government to take title to patents on inventions created with federal funding.  The government can only exercise march-in rights in four specific circumstances:  

Action is necessary because the contractor or assignee has not taken, or is not expected to take within a reasonable time, effective steps to achieve practical application of the subject invention in such field of use; 
Action is necessary to alleviate health or safety needs which are not reasonably satisfied by the contractor, assignee, or their licensees; 
Action is necessary to meet requirements for public use specified by Federal regulations and such requirements are not reasonably satisfied by the contractor, assignee, or licensees; or
Action is necessary because the agreement required by 35 U.S.C. Section 204 has not been obtained or waived or because a licensee of the exclusive right to use or sell any subject invention in the U.S. is in breach of its agreement obtained pursuant to section 204. Note: This criterion requires that exclusive licenses to use or sell in the U.S. include an agreement that products be manufactured substantially in the U.S (may be waived in certain circumstances).  

To date, the federal government has yet to exercise march-in rights.  

However, march-in rights have previously been threatened against:
Gilead’s Veklury(remdesivir)  
AbbVie’s Norvir (ritonavir)   
Viatris/Pfizer’s Xalatan (latanoprost)   
Sanofi Genzyme’s Fabrazyme (agalsidase beta)  
Novartis’s Gleevec (imatinib mesylate)  
Astellas/Pfizer’s Xtandi (enzalutamide)
Xtandi has been targeted several times between 2019-2022  

March-In Rights Framework  

While the decision to exercise march-in rights lies with the head of the relevant agency, NIST states that the framework is intended to describe the “facts the agency may seek and the considerations that the agency may use in making these decisions”.  

The framework seeks to help agencies answer three questions. 

Whether Bayh-Dole applies to the invention(s) at issue 

Agencies must first determine if the product in question is a “subject intervention,” meaning it was developed with federal funding. NIST provides several guiding questions for agencies to make this determination, including:
If the invention(s) was reported to the government as a subject invention(s):
What subject invention(s) and patent application(s)/patent(s) are relevant.
If the invention(s) is an unreported subject invention:
Is there evidence the invention(s) was developed with federal funding (e.g., is there acknowledgement of federal funding in patent application(s)/patent(s) or publication(s)).
NIST notes that when evaluating march-in eligibility, agencies must also determine the contractors and licensee(s) that have rights to the subject invention and are involved in activities like R&D, manufacturing, marking, and commercialization.  

Whether any of the statutory criteria (see above) for exercising march-in apply 

NIST provides a detailed list of questions to help agencies determine if any of the statutory criteria apply, including:
Criterion 1
What steps the contractor has taken to develop and commercialize the subject invention and obstacles they may face (e.g., legal, financial).  
If commercialized, whether the product is accessible to consumers at the current price. 
Criterion 2
What health or safety need is not reasonably being satisfied and how march-in rights could address this need.
Note: NIST includes a drug specific example “If the contractor manufactures one dosage of a drug but a new use is identified that requires a much lower or higher dosage.” 
If the contractor or the licensee is exploiting a health or safety need to set a product price that is extreme and unjustified.  
Criterion 3
Whether any Federal regulations relate to the use of products commercialized from the subject invention and if contractor(s)/licensee(s) have taken reasonable steps to meet these requirements (e.g., use in a specific population). 
Criterion 4
If section 204 applies, where the products(s) are being manufactured and if a waiver is required/has been granted. 

Whether the exercise of march-in rights would support the policy and objectives of Bayh-Dole 

NIST notes that Bayh-Dole’s policies and objectives reflect two main policy goals: promoting the development of new products in the U.S. and their availability to end-users or consumers in the U.S. NIST provides a list of questions that aim to determine if a march-in decision would align with these goals, including:
Whether an alternative approach could be pursued instead of or parallel with any march-in proceedings.  
What impact march-in proceedings would have on innovation and future federal-private partnership. 

Scenarios and Examples 

This RFI provides hypothetical scenarios where march-in could emerge, and how an agency might apply this framework in assessing march-in. These scenarios assume:  

The agency establishes or has established that Bayh-Dole applies to the subject invention(s).  
Only Bayh-Dole subject inventions are needed to successfully manufacture the product (i.e., no additional intellectual property licensing would be needed).
Although the agency considers the relevant factors and answers relevant questions within the framework, only one criterion and certain illustrative facts and circumstances may be addressed in the discussion of each scenario.

Of the 8 provided scenarios, 3 relate to drug development:  

Scenario 1: A biotech company was granted an exclusive license to a government-funded, pre-clinical-trial psoriasis patent owned by a government-funded university. The company has also separately developed another psoriasis treatment and that second treatment—which recently received FDA approval and stopped all work on the patented compound that was invented by the government-funded university. A second company has approached both parties for a license to the university-owned patent, but its request was denied, so the second company has asked the government funding agency to march-in and require the university to grant it a license to the university patent.
NIST states that, if there is a valid reason why this licensee stopped work, then march-in seems unlikely to advance the goals of Bayh-Dole. However, NIST notes that if this is a case of a licensee “impermissibly shelving” a subject invention to preserve the competing product’s market position, use of march-in could deter similar actions by others in the future.
Scenario 4: A small pharmaceutical startup that has received “extensive” government funding developed a monoclonal antibody, for which it holds all of the patents, that is currently the only treatment for a rare disease. The manufacturing plant is affected by severe flooding that will take months to repair, so a rare disease patient group asked the government to march-in and issue licenses to all the patents necessary to make and use the antibody.
NIST states that lengthy timelines (due to, e.g., term of patents, time required for approvals, etc.) could weigh against march-in and towards more expeditious solutions. If all the patents involved in making this treatment are subject inventions, that could weigh in favor of march-in as it is less likely other intellectual property would stand in the way of other manufacturers. Finally, NIST notes that the manufacturing problems in this scenario seem largely outside of the contractor’s control, suggesting march-in would be unlikely to resolve non-use or unreasonable use of subject inventions in the future, although it could deter future federal-private partnerships.
Scenario 8: A government-funded university executed an exclusive license for a new compound, which was government-funded in its initial stages, demonstrated effective in Phase III clinical trials for treating Alzheimer’s disease with a large Swiss pharmaceutical company. The exclusive licensee has begun manufacturing limited quantities of the active pharmaceutical ingredient of the compound at its existing facilities in Switzerland prior to FDA approval. The head of the funding agency has asked about possible use of march-in rights.
NIST states that if the contractor and current licensee agree to a U.S. manufacturer or manufacturing facilities, this would weigh against exercising march-in. If they refused, that could weigh in favor of march-in. NIST notes that if the agency finds that the contractor offered this technology for license under similar terms to U.S. manufacturers, but none were interested, then the agency may consider granting a domestic manufacturing waiver and decide not to march-in. If the contractor refused to apply for a waiver, that could weigh in favor of march-in.  

Request for Information (RFI) 

NIST specifically seeks comment on the following questions:  

After reading through the framework and example scenarios, if needed, how could the guidance about when an agency might want to exercise march-in and the factors that an agency might consider be made clearer? 
 The framework contains many terms which have specific meanings under Bayh Dole or in technology development and commercialization. Are the definitions provided at the beginning of the framework easy to understand? Do they aid in your ability to interpret the framework?  
How could the framework be improved to be easier to follow and comprehend? 
Does this framework sufficiently address concerns about public utilization of products developed from subject inventions, taking into account the fact that encouraging development and commercialization is a central objective of the Bayh-Dole Act?  
The framework is not meant to apply to just one type of technology or product or to subject inventions at a specific stage of development. Does the framework ask questions and capture scenarios applicable across all technology sectors and different stages of development? How could any gaps in technology sectors or stages of development be better addressed? 

ADVI will continue monitoring developments and the next steps. This is a delayed release. ADVI Instant content is distributed in real-time for retainer clients. Get in touch to learn more about how we can support your commercialization, market access, and policy needs.