Why Universities and Companies Give Up Ownership of Federally Funded Inventions
When a university or company invents something using federal research funding, the Bayh-Dole Act gives them the right to keep it. So why do about one in five choose not to?
GAO’s April 2026 technology transfer report (GAO-26-107971) provides the most detailed public accounting of this question to date, drawing on five years of invention disclosure data from 30 federal agencies covering fiscal years 2020 through 2024. The data reveals a practical picture of how institutions make IP decisions—one that has more to do with commercial realism than with any failure of the incentive structure.
Low Commercial Potential: The Dominant Factor
By a wide margin, the most common reason funding recipients declined ownership rights was low commercial potential—cited for 72 percent of nonelected inventions. In plain terms: the institution judged that the invention wouldn’t find a licensee willing to commercialize it, so retaining title served no useful purpose. University representatives interviewed for the report were direct about this calculus. The decision to elect title depends heavily on whether a viable commercial partner exists. Without one, pursuing patent protection means absorbing thousands of dollars in costs with no realistic path to return.
This is not a dysfunction in the system—it is the system working correctly. Not every invention produced by federally funded research is commercially viable, and institutions shouldn’t be expected to sink patent costs into inventions that won’t benefit the public through commercialization. The 21 percent nonelection rate largely reflects sound IP portfolio management rather than neglect.
Institutions that need more time to evaluate commercial potential can request title election extensions—essentially asking the funding agency for additional time before making the final call. These extensions are approved at agency discretion but granted at high rates: 91 percent of title election extension requests were approved across the agencies in the review. They give institutions the runway to identify a potential licensee before committing to a patent, which can shift the outcome from nonelection to election if the right commercial partner emerges.
Non-Patentability: The Second Most Common Reason
About 10 percent of declined inventions were let go because the institution determined they weren’t patentable—most commonly because the invention wasn’t novel (7 percent of all nonelections). Assessing patentability before electing title is standard practice at sophisticated technology transfer offices. In some cases, particularly in software development, institutions also concluded that copyright or trade secret protection was more appropriate than a patent, and declined title accordingly.
Budget Constraints and Immature Markets
Budget limitations accounted for roughly 1 percent of nonelections, and immature markets for less than 1 percent. These numbers are small but reflect real constraints, particularly for smaller institutions. Patent prosecution for a single invention can cost thousands of dollars—and substantially more for international filings—and institutions with limited technology transfer resources have to weigh those costs against the probability of commercial return.
The “Other” Category and Open Source
About 14 percent of nonelections were categorized as “other,” using iEdison’s open text field when none of the standard options adequately captured the reason. Examples shared by NIST include cases where institutions couldn’t reach inventors to complete the process, and cases where software was to be released as open source—making patent protection actively counterproductive to the institution’s intent.
Variation by Institution Type
The differences by recipient type are striking. Small for-profit companies declined title at a rate of only 8 percent—less than half the rate of any other category. Large for-profits had the highest nonelection rate at 28 percent, followed by nonprofits at 23 percent and state government organizations at 20 percent. The co-founder of one small company told GAO that its entire business strategy is built around patenting and licensing federally funded inventions, making title election the default in virtually every case. Larger institutions, by contrast, often have the analytical capacity to make more discriminating judgments about which inventions warrant the investment—and the willingness to walk away from those that don’t.