The Law That Lets Universities Own Federally Funded Inventions—and What They Do With Them
Federal agencies fund billions of dollars in research every year. Some of that research produces inventions. Under a 1980 law called the Bayh-Dole Act, the universities, small businesses, and nonprofits that receive this federal funding can keep ownership of the resulting inventions—provided they meet certain reporting requirements. The theory is straightforward: give researchers and institutions a financial stake in commercializing their discoveries, and more federally funded innovation will reach the public as useful products.
An April 2026 GAO report (GAO-26-107971) examines how this system is actually functioning, covering approximately 50,000 invention disclosures reported to 30 federal agencies between fiscal year 2020 and fiscal year 2024.
The headline finding is that the system mostly works as designed. Funding recipients elected to retain ownership of about 56 percent of disclosed inventions over the five-year period, and another 18 percent remained under evaluation—meaning the decision to pursue or decline ownership hadn’t been finalized yet. Only about 21 percent of disclosed inventions were actively declined. The most common reason for declining: the invention had low commercial potential, meaning the institution couldn’t realistically find a commercial partner to license and bring it to market.
Small for-profit companies had the lowest nonelection rate of any funding recipient category, at just 8 percent. The logic is direct—small technology companies exist to commercialize, so they retain title to almost everything they develop. Large for-profit organizations had the highest nonelection rate at 28 percent, followed by nonprofits at 23 percent. Larger institutions, with more resources and in-house IP expertise, tend to be more selective about which inventions are worth the cost and effort of pursuing patent protection.
The administrative side of the system is less tidy. Funding recipients must disclose inventions to their funding agency within two months of the inventor reporting it internally, decide whether to retain title within two years, file a patent application within a year of electing title, and report annually on commercialization progress. Each of these steps has its own timeline, extension request process, and agency-specific requirements—and agencies vary considerably in how consistently they enforce and respond to all of it.
To streamline the process, a July 2023 executive order directed nine major federal agencies—including DOD, DOE, HHS, NSF, and NASA—to transition to a unified web-based reporting system called iEdison by the end of 2025. iEdison, managed by NIST, is intended to be the single platform through which funding recipients report invention disclosures, patent filings, and annual commercialization updates across participating agencies. As of the report’s completion in April 2026, that transition was still in process for the largest agencies, with DOD working toward department-wide adoption and NASA having completed its transition in September 2025.
The full report is available at gao.gov under report number GAO-26-107971.