Patent rights under federal contracts, explained

An invention made under a federal research or development contract can belong to the contractor, if the contractor discloses it and elects title on time under the contract's patent rights clause. The rule comes from chapter 18 of Title 35 of the U.S. Code, sections 200 to 212, which the 2024 edition notes is popularly known as the Bayh-Dole Act. Public Law 96-517 enacted it on December 12, 1980. In exchange for title, the Government keeps a license to practice the invention and a right to march in. Defense contracts carry the rule through Federal Acquisition Regulation (FAR) clause 52.227-11 or Defense Federal Acquisition Regulation Supplement (DFARS) clause 252.227-7038.

What the statute does

Section 200 states the aims, among them using the patent system to promote use of inventions from federally supported research and development, securing enough rights for the Government's needs, and protecting the public against nonuse or unreasonable use of inventions.

Section 202(a) lets a nonprofit organization or small business firm elect to retain title to a subject invention within a reasonable time after disclosure. A funding agreement may provide otherwise in listed cases, such as a contractor subject to the control of a foreign government. Section 202(c) then requires each funding agreement to include:

• Disclosure of each subject invention within a reasonable time after contractor patent personnel learn of it.
• A written election to retain title within two years after disclosure.
• A patent application filed before the one-year statutory period under section 102(b) ends.
• A Government license in every invention the contractor elects to keep.
• Agency rights to periodic reports on utilization, treated as privileged and confidential.

The statute names small businesses and nonprofits. The codified FAR at 27.302 says each contractor may generally elect to retain title after disclosure, citing section 202, a Presidential Memorandum of February 18, 1983, and Executive Order 12591 of April 10, 1987.

Two clauses, different deadlines

Under class deviation 2026-O0036, effective February 1, 2026, DFARS 227.303 directs the Department of Defense (DoD) clause, 252.227-7038, in place of 52.227-11 for experimental, developmental, or research work when the contractor is not a small business concern or nonprofit organization and no alternative patent rights clause is used.

Step	FAR 52.227-11 (May 2014)	DFARS 252.227-7038 (JUN 2012)
Disclose to the contracting officer	Within 2 months after the inventor's written disclosure to contractor patent personnel	The same, or 6 months after the contractor first becomes aware, if earlier
Elect title	Within 2 years of disclosure	At disclosure or within 8 months
File a first application	Within 1 year after election	Within 1 year after election
Convert a provisional	Within 10 months	Within 10 months

Under both, a publication, sale, or public use that starts the one-year United States period lets the agency shorten the election deadline to a date no more than 60 days before that period ends. Extensions may be requested. A contractor that misses the disclosure or election deadline must assign title on written request, if the agency asks within 60 days after learning of it.

For contracts with 52.227-11, the deviation's 227.303(1) adds DFARS 252.227-7039: interim invention reports every 12 months, or a longer period the contracting officer sets, and a final report within 3 months after the work ends. DD Form 882 may be used.

The Government license and march-in

When the contractor keeps title, 52.227-11(d)(2) gives the Government a nonexclusive, nontransferable, irrevocable, paid-up license to practice the invention, or have it practiced on its behalf, throughout the world. Paragraph (e)(4) requires a United States nonprovisional application to state that the invention was made with Government support under the named contract. Under paragraph (g), an exclusive United States licensee must agree that products will be manufactured substantially in the United States, unless the agency waives it.

Section 203(a) lets the funding agency require a license to a responsible applicant on reasonable terms, or grant one itself if the contractor refuses. The agency must determine that action is necessary for one of four reasons:

1. The contractor has not taken, or is not expected to take, effective steps toward practical application.
2. Health or safety needs are not reasonably satisfied.
3. Requirements for public use specified by Federal regulations are not reasonably satisfied.
4. The domestic manufacturing agreement required by section 204 was not obtained or waived, or a licensee breached it.

Under section 203(b), an affected party may petition the Court of Federal Claims within 60 days, and determinations on grounds 1 and 3 are held in abeyance until appeals are exhausted. A February 2024 Congressional Research Service (CRS) report states that in the 40 years since enactment no federal agency had exercised march-in rights.

Patent rights are not data rights

The patent clauses cover subject inventions, meaning inventions conceived or first actually reduced to practice in performing the contract, and give the Government a license to practice them. The data rights clauses cover technical data, which the DFARS defines as recorded information of a scientific or technical nature, and computer software. Data rights categories instead set what the Government may do with the data, such as use, release, or disclose it. A patent right depends on timely disclosure and election. A data right depends on who funded development and on markings; the deviation clause for noncommercial data presumes unmarked deliveries carry unlimited rights. One contract can carry both: the invention is disclosed under the patent clause, and the drawings that describe it are delivered under a data rights clause.

What to check

• Is the contractor a small business or nonprofit under 52.227-11, or another contractor under 252.227-7038?
• Was each invention disclosed to the contracting officer within the clause's deadline?
• Was title elected in time, and did a publication or public use shorten the election period?
• Does the patent application state the Government support and name the contract?
• Are the interim and final invention reports filed on time?
• Does a march-in claim name one of the four grounds in 35 U.S.C. 203(a)?

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Sources

1. 135 U.S.C. 200, Policy and objective (United States Code, 2024 Edition) · U.S. Government Publishing Office
2. 235 U.S.C. 202, Disposition of rights (United States Code, 2024 Edition) · U.S. Government Publishing Office
3. 335 U.S.C. 203, March-in rights (United States Code, 2024 Edition) · U.S. Government Publishing Office
4. 452.227-11 Patent Rights - Ownership by the Contractor (May 2014) · Acquisition.gov (Federal Acquisition Regulation)
5. 5Subpart 27.3 - Patent Rights under Government Contracts · Acquisition.gov (Federal Acquisition Regulation, codified text)
6. 6252.227-7038 Patent Rights - Ownership by the Contractor (Large Business) (JUN 2012) · Acquisition.gov (Defense Federal Acquisition Regulation Supplement)
7. 7Class Deviation 2026-O0036, Revolutionary FAR Overhaul Part 27, DFARS Part 227 · Defense Pricing, Contracting, and Acquisition Policy (signed January 21, 2026)
8. 8March-In Rights Under the Bayh-Dole Act: Draft Guidance (IF12582) · Congressional Research Service, February 1, 2024

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