March-In Rights

March-in rights are a government power under 35 U.S.C. § 203 of the Bayh-Dole Act (Patent and Trademark Law Amendments Act of 1980). The Bayh-Dole Act allowed universities, small businesses, and other non-profit contractors to retain ownership of inventions developed with federal funding — a major change from the previous rule under which the government owned such inventions. In exchange for allowing contractors to own federally-funded patents, Congress included march-in rights as a backstop: if the contractor fails to adequately develop and commercialize the patented invention, or if health or safety needs require greater access, the funding agency (NIH, DOE, NSF, etc.) can 'march in' and require the contractor to grant a license to a third party on reasonable terms — or grant the license itself if the contractor refuses. March-in rights can be triggered on four grounds under § 203: (1) failure to take effective steps to achieve practical application within a reasonable time; (2) health or safety needs that are not reasonably satisfied; (3) public-use requirements specified in the funding agreement; or (4) failure to substantially manufacture in the United States.

No — as of the Bayh-Dole Act's 40+ year history, the federal government has never successfully granted march-in rights against a patent holder. Multiple march-in petitions have been filed, primarily with the National Institutes of Health (NIH), and all have been denied. Notable denials: In the 1990s and early 2000s, HIV/AIDS activists petitioned NIH to march in against patents on antiretroviral drugs (including ritonavir) on the grounds that high prices made them inaccessible; NIH denied each petition, concluding that high price alone is not grounds for march-in because § 203 does not authorize march-in solely to control pricing — the contractor must have failed to achieve practical application or health needs must be unmet. Despite this consistent denial history, march-in rights have remained a contentious policy issue, particularly regarding pharmaceutical pricing. In 2023–2024, the Biden Administration considered whether to use march-in rights as a drug pricing tool, ultimately issuing a policy statement indicating that price could be considered in march-in determinations — a significant break from prior agency practice, though no march-in has yet been granted.

This question has been fiercely debated. The traditional government position (maintained through Republican and Democratic administrations until approximately 2023) was that march-in rights cannot be used solely to control the price of a federally-funded invention — the statutory grounds for march-in are failure to achieve practical application, health/safety needs not reasonably satisfied, or other specified grounds, not merely that a product is too expensive. The NIH consistently rejected price-based march-in petitions on the grounds that if a patented drug is actually available on the US market (practical application is achieved), march-in rights are not triggered even if the price is high. In December 2023, the Biden Administration's NIH issued a new policy framework stating that price can be considered in determining whether 'practical application' has been achieved and whether 'health or safety needs' are satisfied, effectively opening the door to price-based march-in. This policy remains highly controversial — opponents argue it exceeds the statutory authority of § 203 and would chill investment in federally-funded research. Whether any administration will actually exercise price-based march-in rights in pharmaceutical cases remains to be seen.

The Bayh-Dole Act (Patent and Trademark Law Amendments Act of 1980) revolutionized the commercialization of federally-funded research. Before Bayh-Dole, inventions resulting from federal funding generally belonged to the government — universities and small businesses could not own or exclusively license them, creating little incentive to patent and commercialize federally-funded discoveries. Bayh-Dole allowed universities, small businesses, and non-profits to elect to retain title to inventions conceived in the performance of work under federal funding agreements, subject to certain requirements: disclose inventions to the funding agency; file patents; report on commercialization; preferentially license to small businesses; manufacture substantially in the US. The practical impact has been enormous: universities now file thousands of patents per year on federally-funded inventions and license them to startups and established companies, spawning entire industries (particularly in biotechnology and pharmaceuticals) that trace their origins to university research. March-in rights are the government's retained backstop to ensure that the public benefit from federally-funded research is actually achieved.

March-in petitions can be filed by any interested party — any member of the public, not just the government. The petition is submitted to the federal funding agency (NIH, DOE, NSF, DARPA, etc.) that provided the funding for the invention. The agency conducts a formal review, provides notice to the patent owner (the contractor), and gives the contractor an opportunity to respond. The process: (1) Any party files a march-in petition with the relevant funding agency; (2) The agency conducts a determination, applying the § 203 statutory standards; (3) The contractor has a right to be heard; (4) If the agency determines march-in is justified, it negotiates a license with the third party on reasonable terms; if the contractor refuses, the agency can grant the license directly; (5) March-in decisions are subject to appeal and judicial review. In practice, the NIH process for evaluating march-in petitions has been elaborate and slow, with extensive written submissions from all parties. The consistent denials of march-in petitions have made the process more of a policy advocacy mechanism than an effective IP enforcement tool.