Key Takeaway: The value of intellectual property developed using government funds depends upon compliance with disclosure and licensing rules.
Public investment is critical to the development and commercialization of energy technologies. For example, the federal government recently announced plans to provide $135 million for fusion technologies, $1.9 billion for power-grid upgrades including advanced transmission technologies, and $500 million to support coal power and infrastructure. States also invest in energy technologies. For example, California supports research and development of energy technologies to advance the state’s transition to clean energy.
In exchange for federal money, businesses typically grant a fully paid-up nontransferable and nonexclusive license to the United States for any invention the business develops using the funds. Businesses also must agree not to grant an exclusive license to anyone who will not prefer the United States for the manufacture or use of the invention. The federal government requires businesses to disclose any invention arising from the government-funded work within a reasonable time and to include a statement of government support in patent applications. States may also retain rights to intellectual property developed using state funds and, in some funding programs, may retain the right to grant perpetual royalty-free licenses to utilities.
Recipients of federal funds who fail to comply with the rules risk losing intellectual property rights. Federal regulations grant the government a discretionary right to void the title to a patent in response to certain rule violations.
Although the federal government rarely exercises its “march-in rights,” the government could change course. In December 2023, the government proposed the price of a patented product as a factor in determining when to exercise such rights. In August of 2025, the Department of Commerce notified Harvard University that it would review Harvard’s compliance and begin the process of exercising the government’s rights over Harvard’s patents.
When the government exercises its right to void title to a patent, the adversely affected patent owner’s recourse is limited by an administrative appeals procedure set by the funding agency. While the patent owner can appeal the funding agency’s decision in federal court, a high barrier stands in the way of success, because courts must treat the agency’s findings of facts as final, unless they are fraudulent, arbitrary, capricious, grossly erroneous, or not supported by substantial evidence.
Thus, businesses that supplement their energy research and development budgets with government funds must factor the need to comply with government rules into their business plans. Companies seeking to license or acquire energy technologies should ensure that the rightsholder complied with the conditions attached to any government funding used to develop the technology.
[1] See Cent. Admixture Pharm. Servs. v. Adv. Cardiac Sols., P.C., 482 F.3d 1347, 1352–53 (Fed. Cir. 2007) (“Critically, Campbell Plastics holds that a Bayh-Dole violation grants the government discretionary authority to take title. . . . Nothing in the statute, regulations, or our caselaw indicates that title is automatically forfeited. The government must take an affirmative action to establish its title and invoke forfeiture.”); Campbell Plastics Eng’g & Mfg. v. Brownlee, 389 F.3d 1243, 1250 (Fed. Cir. 2004) (affirming the Armed Services Board of Contract Appeals’ decision to take title to an invention after a contractor failed to comply with an invention-disclosure provision in the contract).
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