Differences between the march-in, royalty free right, and government use options

I wanted to post a brief note about three separate mechanism to overcome patent monopolies in current US law. All are useful, in the right context, and all have some limits.

1. The Bayh-Dole March-In rights under 35 U.S.C. 203, as defined by 35 U.S.C. 201(f).

This only applies when there is federal funding of the invention. The positive aspect of a march-in request is that anyone can ask for such a license, so long as they can meet the standards for granting a march-in request. Normally, the federal funder has to decide if they want to grant it. The grounds are somewhat restrictive, there are appeals, and the licensee has to pay royalties for the use.

2. The Bayh-Dole royalty free rights under 35 U.S.C. 202(c)(4) and 35 U.S.C. 209(d)(1) are also limited to cases where there was federal funding of the invention. The royalty free rights are worldwide, they do not require a finding of any abuse, and there is not a special administrative appeal of the right to use it, like there is for march-in rights [35 USC 203(b)]. Use of the patent must be “for or on behalf of the United States.” Obviously, no compensation is required.

3. 28 U.S.C. 1498(a) is for non-voluntary use of any patent, regardless of who funded the invention, when the patent is “used or manufactured by or for the United States.” The statute requires “the recovery of his reasonable and entire compensation for such use,” and this has been an issue when it was proposed for CIPRO patents in 2001 and Sofosbuvir patents in 2015, since the parameters of such compensation were unknown. Senator Sanders proposed a fix for this for the Department of Veterans Affairs (https://www.youtube.com/watch?v=xAY4Ua7B2mQ).

There are also cases where one could combine 1498 with 35 U.S.C. 202(c)(4) or 35 U.S.C. 209(d)(1). This has the advantage of having someone other than the funder decide on the non-voluntary use, and in some cases, a private firm may be able to force the issue, under procedures for procurement — an issue addressed by Alfred Engelberg and Aaron Kesselheim in an opinion article in Nature titled: “Use the Bayh-Dole Act to lower drug prices for government healthcare programs,” Nature Medicine 22, 576 (2016), discussed here: http://www.keionline.org/node/2591.

There are other legal mechanisms to break patent monopolies in the United States, including limitations on remedies for infringement in the Biologics Price Competition and Innovation Act (“BPCIA”), compulsory licenses that can be issued as a remedy for infringement in a proceeding for an injunction on an infringed patents, and the state sovereign immunity defense available to state governments.

In recent years, the most common use of US compulsory licenses on medical technologies have been the several for medical devices and diagnostics, during court proceedings on injunctions.