Bayh-Dole Act and difference between March-In Rights and the world wide royalty free rights in patents
When the United States federal government funds research that results in patents, it obtains rights, either directly or through contracts, to the patents. These rights are retained even when the patents are licensed to a third party, for example, to develop a commercial product like a drug or a vaccine. The rights include (1) a royalty free right in the patents "though out the world" to be practiced "for or on behalf of the United States," and (2) march-in rights in the patent.
The statute that requires the government to retain the royalty free right is 35 USC 202(c)(4):
United States Code, 2011 Edition
Title 35 - PATENTS
PART II - PATENTABILITY OF INVENTIONS AND GRANT OF PATENTS
CHAPTER 18 - PATENT RIGHTS IN INVENTIONS MADE WITH FEDERAL ASSISTANCE
Sec. 202 - Disposition of rights
(c) (4) . . . With respect to any invention in which the contractor elects rights, the Federal agency shall have a nonexclusive, nontransferrable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States any subject invention throughout the world . . .
The statutes that define the march-in rights are the march-in statute 35 USC 203, as further informed by the statute on policy and objective 35 USC 200 and the definition of practical application in 35 USC 201(f).
The march-in right is available as a remedy to address an abuse of the patent rights.
Both the royalty free right and the march-in right are important. The royalty free right has several advantages, including (1) there is no requirement to establish an abuse by the patent holder, and (2) there is no requirement to pay royalties to the patent holder.