Questions and Answers on Implementation
of the NIH Procedures for Handling Non-Election
of Title to Patentable Biological Materials
Issued in the NIH Guide August 30, 1996
National Institutes of Health
This notice is in response to frequently asked
questions concerning the new procedure for handling
non-election of title for patentable biological
materials made with National Institutes of Health
(NIH) funding that appeared in the May 17, 1996
NIH Guide. It is intended to help clarify the
expectations of the NIH and what grantee/contractor
organizations need to do to meet these expectations.
1) Which biological materials are subject to
Only biological materials that meet
the definition of "Subject Inventions"
as included in the regulations implementing the
Bayh-Dole Act need to be reported. That definition
is as follows:
"any invention or discovery
which is or may be patentable or otherwise protectable
under Title 35 of the United States Code, or
any novel variety of plant which is or may be
protectable under the Plant Variety Protection
Act (7 U.S.C. 2321 et seq.)...conceived or first
actually reduced to practice in the performance
of work under any contract, grant, or cooperative
agreement [with NIH]."
It is expected that grantee institutions will
follow the same decision-making process for
determining whether a disclosure of a biological
material qualifies as a "subject invention"
as they follow for disclosures of other types
of inventions or discoveries. In other words,
if the institution determines that the biological
material would normally not be reported to NIH
as a "subject invention," it would
not be covered by these Procedures. In such
cases institutions should document these decisions
in their files.
2) What does NIH mean by the requirement to
"address continuing availability of the material
to the nonprofit research community" when
granting an exclusive license for internal use
by a for-profit entity?
Perhaps the simplest way to meet NIH's
expectations regarding "continuing availability"
is to reserve the right, as part of the exclusive
license agreement, for the licensor (the grantee
institution) to make the materials available for
non-commercial research purposes to nonprofit
organizations. Of course, the licensor/grantee
institution would need to arrange with the originating
laboratory to provide the materials to appropriate
researchers at nonprofit organizations so long
as supplies of the material are available or can
be reasonably produced. Consistent with the Public
Health Service policy relating to the distribution
of unique research resources, these materials
should be provided either without cost or at cost.
Clearly this obligation cannot extend forever,
but should continue for a reasonable period while
the materials are useful to the research of other
If the grantee institution expects to have
difficulty with the preservation of a supply
of the material, it might require the licensee
to provide a sample of the material to the licensor
institution in the event the institution's supply
is depleted and cannot be easily replicated.
In that way the grantee institution could continue
to provide the material to researchers at nonprofit
organizations. Another alternative would be
to require the licensee to provide the materials
to a reasonable number of appropriate researchers
at nonprofit organizations -- perhaps under
material transfer agreements between the licensee
and the recipient organization.
3) When does an exclusive license need to "provide
for conversion to nonexclusive status or termination
of the licensee's rights upon failure to comply
with the terms addressing continuing availability?"
If the licensor (grantee institution)
has retained the right to make the materials available
to other nonprofit organizations, such a provision
is generally unnecessary. However, if the only
source for the materials is via the licensee (i.e.,
if the licensee is responsible for providing the
materials to other researchers), then such a clause
would be required.
4) What is meant by the requirement to provide
for "independent maintenance of the material?"
NIH is concerned that if the sole source
of the materials is an exclusive licensee and
that licensee fails to meet its obligations as
to availability, then the materials may become
totally unavailable to the research community.
Thus, the grantee institution should make efforts
to obtain the commitment of the originating laboratory
to maintain the materials for a reasonable period.
Clearly such a commitment cannot be unlimited
since that laboratory might close, the supply
of material could be accidentally destroyed or
could be depleted and recreating the material
(due to cost or manpower constraints) may not
Depositing the material at a national repository
would also meet the requirement. However, it
is recognized that there is a cost involved
and that an exclusive licensee would undoubtedly
require that the licensor insure that access
to samples from the repository be limited to
researchers at nonprofit institutions conducting
5) Will the government pay the costs of supplying
material to government researchers? What happens
if there are no further supplies?
If there are costs involved in preparing
the materials and/or in shipping and handling,
the university and NIH need to reach an agreement
regarding them. NIH expects that grantee institutions
and the originating laboratories will make reasonable
and good faith efforts to supply requested materials
to government researchers. Nonetheless, NIH recognizes
that occasionally supplies may cease to be available.
6) What happens if NIH utilizes its right "to
distribute the material" because of the failure
of the grantee institution to follow these procedures?
Since NIH's concern is that the materials
are available to the nonprofit research community,
it would restrict its distribution to that community.
An easy way to ensure that NIH retains its right,
would be for the university to include in its
license agreement a provision that the license
is subject to these NIH procedures.
7) Does the grantee institution still need to
sign an agreement with NIH for each unpatented
biological material it reports to NIH?
No. Grantee organizations are no longer required
to sign a terms and conditions agreement for
each patentable biological material they wish
to commercially license, but not patent. For
those reporting electronically, NIH only requires
that you report your decision in EDISON under
"Institution Invention Status" within
"New Inventions" in the main menu.
Others who are reporting with paper should submit
a letter informing NIH of the decision to license
commercially, but not patent. A confirmatory
license to the government must be sent to NIH
whether you report in writing or electronically.