The Bayh-Dole Act, 35 U.S.C. §§ 200-211, provides the statutory basis and framework for federal technology transfer activities, including the patenting and licensing of federally funded inventions by recipient organizations. The Act permits recipients of federal grants and contracts to elect title to patentable "subject inventions" that arise with the use of federal funds. If recipients elect title, the Act requires them to file patent applications, seek commercialization opportunities, and report back to the funding agency on efforts to obtain utilization of their inventions. The Act also retains for the funding agency certain residual rights in subject inventions.

The Federal Technology Transfer Act of 1986, 15 U.S.C. 1301 et seq., supplements the Bayh-Dole Act with regard to the technology transfer activities of federal laboratories, authorizing, among other things, cooperative research and development agreements (CRADAs), retention of royalties, and royalty-sharing with employee-inventors.

Subject Inventions are defined by the Bayh-Dole Act regulations (37 C.F.R. 401.2(d)) as any invention of a party to a government funding agreement conceived or first actually reduced to practice in the performance of work under the funding agreement.

A patent is a document issued by the Department of Commerce Patent and Trademark Office (PTO) under authority of the United States Constitution and other laws and implementing regulations. A patent contains a narrative description of the subject matter covered by the patent called the specification. It also contains one or more claims that describe the subject matter covered by the patent in highly technical and specific terms, much as the metes and bounds of a survey might exactly describe and identify the land conveyed by a deed. A patent represents the right to exclude others from making, using, or selling the subject matter described by the claims of the patent. Virtually every country in the world provides its government with the right to issue patents in order to allow patent owners to exclude others from using the patented subject matter within its borders. In the United States, only the person or people who invent the subject matter have the right to obtain a patent. However, it is commonplace for employers to require employee-inventors to assign to the employer the right to seek the patent, and therefore the ownership of the patent.

A license is a contract between the owner(s) of the subject matter of the license and one or more parties that seeks the right to make, use, sell, or import the subject mater of the license. Commonly, a license conveys rights to patented subject matter, but it may also convey rights to tangible subject matter that is not unpatented. Licenses are negotiated agreements that become binding contracts when signed by the parties. In the United States, only one owner need to sign a license if the subject matter is patented. Thus, a patented technology co-owned by three parties can be licensed by one of the parties without the other owners' knowledge or consent. This is not so in most European countries, which require that all owners join in any licenses. Although licenses generally address a standard set of legal issues, there is no standard license or license term. The terms negotiated into licenses by the parties are as varied as the circumstances driving the agreement.

Standard issues addressed by negotiated license terms include:

• the general use that may be made of the subject matter (research use, commercialization);

• whether only one party is obtaining rights (exclusive), more than one but still only a few (co-exclusive), or potentially many (non-exclusive);

• the specific type of applications which may be pursued by the party (field of use to develop vaccines, diagnostic products, therapeutic products, human uses, veterinarian uses):

• royalty rates, or how much the user will pay the owner for the rights conveyed by the license (fee upon signing, annual fee, % of net sales, reimbursement of patent costs, costs of enforcing and defending the patent).

A material transfer agreement (MTA) is a negotiated contract between the owner of a tangible material and a party seeking the material and the right to use the material for research purposes. The material may be either patented or unpatented. Material transfer agreements tend to be shorter than license agreements, and they are generally/ considered to be more informal than licenses agreements, although both are enforceable contracts. The purpose of an MTA is to document the transfer and outline the terms of use, including identification of the research project, terms of confidentiality, publication, and liability. As with licenses, there are no standard MTAs, although the academic community and NIH developed an under used model MTA for biological materials called the Uniform Biological Material Transfer Agreement (UBMTA). MTAs do not usually require financial payments at the time of the transfer, but many MTAs allow the provider to either own, or license exclusively, or obtain payments upon the sale of, developments that the recipient makes with the provider's materials. These are loosely called "reach-through" provisions, and are considered by many providers to be desirable because they allow the provider to obtain rights in subject matter that the provider would not otherwise have rights to through its ownership or patent coverage of the material alone. Reach-through provisions are considered undesirable by many recipients because they burden all the developments created after the use of the material, and because they are seen as providing an unfairly high level of compensation to the provider for use of the material.

A sponsored research agreement is a negotiated contract between two or more parties, typically an academic research institution and a private corporation, under which the private corporation provides financial support to the research laboratory in return for an option to license any patentable subject matter that arises out of the research. As with licenses and MTAs, sponsored research agreements contain widely variable provisions because they are negotiated on a case by case basis. Terms may include: delay of or editorial power over, academic publications related to the research; future license terms; ownership of any intellectual property arising out of the research, confidentiality provisions, etc. The research carried out under the sponsored research agreement may be either collaborative, carried out with the corporate partner, or solely conducted by the university.

An NIH grant is government financial support of an academic biomedical research project. Numerous federal laws, regulations, and policies apply to NIH grants and follow the funding into the research project. Among those are laws allowing the grantee to elect title to and own the intellectual property arising out of the grant, and encouraging the grantee to patent and license such intellectual property. NIH grant funds and funds provided by corporations under sponsored research agreements may be co-mingled into the same biomedical research project, as long as the grantee is able to reconcile the requirements of both the sponsored research agreement and the NIH grant requirements. Because certain provisions, including those related to publication and license options, requested by corporate sponsors are considered to be incompatible with NIH grant requirements, the NIH issued a guidebook for grantees called Developing Sponsored Research Agreements: Considerations for Recipients of NIH Grants and Contracts to assist grantees in ensuring that all sources of project funding are compatible.

Unique Research Resources are defined by NIH grants policy as resources developed during the conduct of NIH-funded research which are necessary for further studies. Categories of these resources include: synthetic compounds, organisms, cell lines, viruses, cell products, cloned DNA, DNA sequences, mapping information, crystallographic coordinates, and spectroscopic data.