The Bayh–Dole Act or Patent and Trademark Law Amendments Act (Pub. L. 96-517, December 12, 1980) is United States legislation dealing with inventions arising from federal government-funded research. Sponsored by two senators, Birch Bayh of Indiana and Bob Dole of Kansas, the Act was adopted in 1980, is codified at 94 Stat. 3015, and in 35 U.S.C. § 200–212, and is implemented by 37 C.F.R. 401 for federal funding agreements with contractors and 37 C.F.R 404 for licensing of inventions owned by the federal government.
A key change made by Bayh–Dole was in the procedures by which federal contractors that acquired ownership of inventions made with federal funding could retain that ownership. Before the Bayh–Dole Act, the Federal Procurement Regulation required the use of a patent rights clause that in some cases required federal contractors or their inventors to assign inventions made under contract to the federal government unless the funding agency determined that the public interest was better served by allowing the contractor or inventor to retain principal or exclusive rights. The National Institutes of Health, National Science Foundation, and the Department of Commerce had implemented programs that permitted non-profit organizations to retain rights to inventions upon notice without requesting an agency determination. By contrast, Bayh–Dole uniformly permits non-profit organizations and small business firm contractors to retain ownership of inventions made under contract and which they have acquired, provided that each invention is timely disclosed and the contractor elects to retain ownership in that invention. 
A second key change with Bayh-Dole was to authorize federal agencies to grant exclusive licenses to inventions owned by the federal government.
Source: Bayh–Dole Act – Wikipedia