Authored by:
Jason Claes
Assistant Director - SRS Accounting
University of Cincinnati
Email:jason.claes@uc.edu
The Bayh-Dole Act (Patent and Trademark Law Amendments Act of 1980) changed the way government-funded patents are handled. For the first time, universities, small businesses and non-profit institutions could pursue ownership of an invention. This legislation gave rise to formal intellectual property (IP) and licensing offices in colleges and universities, whose primary function is the commercialization of novel devices and/or techniques developed by researchers within the institution. Bayh-Dole opened up a new revenue stream for the affected institutions.
When IP is developed under federal grants, the federal government typically “retains rights” to the use of that property. Under general principles, the government has the right to use the intellectual property on its own behalf and to authorize others to use the IP when performing on behalf of the government (i.e., contractors).
The legislation contributed favorably to both institutions and the economy in general. Since 1980, 5,171 new companies have been formed that were based on licensing of an invention from an academic institution. From 1998 to 2005 a total of 3,641 new products were developed and launched for commercial sale based on academic technology transfer. Before the Bayh-Dole Act, the U.S. government had accumulated approximately 28,000 patents but fewer than 5% were commercially licensed.
In a 1999 survey, the Association of University Technology Managers reported that the commercialization of academic research resulted in more than $40 billion in economic activities that supported more than 270,000 jobs. For many U.S. universities, though the credit for the invention is acknowledged, financial returns may be somewhat modest, given that between 1999-2003 revenues for the University of California system wide net institutional licensing was only $16 million per year. To many of us, $16 million per year seems like a very positive number; however, given that the UC system has 190,000 faculty and staff among its 10 campuses with an economic impact of $46.3 billion contributed to the California economy, perhaps the number could be greater.
Patrick Gallagher, Director National Institute of Standards and Technology, has stated that government agencies should not impede on the free market when it comes to IP. Even though the taxpayers have essentially funded research in the development of marketable intellectual property, it is also the same taxpayers whom will ultimately decide if the property is viable to accept in their daily lives through the free market (and once again, pay taxes when purchasing the products of those inventions).
Academic institution can move forward to further develop IP for consumer acceptance since the federal government does not have the man power nor the resources to bring a product to market. The payback that the government receives in allowing academic institutions to retain rights and further the development of products is that once the IP has been developed for consumer or general use, tax dollars are imposed, which is a form of payback to the Federal Government for the use of the Intellectual Property.
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