NIH GUIDE, Volume 25, Number 29, August 30, 1996


P.T. 34


  Grants Administration/Policy+ 


National Institutes of Health


A.  Purpose:


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 NIH Guide, Vol. 25, No. 16, May 17,

1996.  It is intended to help clarify the expectations of the NIH and

what grantee/contractor organizations need to do to meet these



B.  Q&As


1) Which biological materials are subject to these Procedures?


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



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 scholars.


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



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 be feasible.


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 noncommercial



5) Will the government pay the costs of supplying material to

government researchers?  What happens if there are no further



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.




For additional information on this notice, contact:


Ms. Sue Ohata

Division of Extramural Inventions and Technology Resources

National Institutes of Health

6701 Rockledge Drive, MSC 7750

Bethesda, MD  20892-7750

Telephone:  (301) 435-1986

FAX:  (301) 480-0272

Email:  Sue_Ohata@nih-gov



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