IP Due Diligence in Government-Funded Industries

Short summary

Under the Bayh-Dole Act, the U.S. government receives perpetual, royalty-free rights to use any patented technology developed with government funding. Due diligence must assess IP value impact by mapping funding sources to patents, verifying compliance marking, and evaluating government customer concentration. Risk mitigation depends on long-term supply contracts, specialized capabilities, and clear boundaries between government-funded and private IP.

• •Government funding creates perpetual, royalty-free license rights via Bayh-Dole Act, including rights to authorize third parties
• •Due diligence must verify marking compliance, map funding sources to patent portfolios, and assess government customer dependency
• •Materiality decreases with long-term contracts, specialized manufacturing capabilities, and clear IP/funding segregation practices

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