The Bayh-Dole Act- How it revolutionized US University inventions

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The Bayh-Dole Act or Patent and Trademark Law Amendments Act, proposed by two visionary senators: Birch Bayh and Bob Dole, was adopted in December 1980, leading to the establishment of intellectual property (IP) rights arising from federally funded research. It was one of the most challenging legislations in United States. However, the seed for the protection of intellectual property rights was planted as early as 1945 by Vannevar Bush’s excellent report entitled “Science-The Endless Frontier”. This report encouraged the then United States’ President Franklin D. Roosevelt, to create a system to support scientific research “essential to national security, health, jobs, and a higher standard of living”. This subsequently led to the development of National Science Foundation (NSF) and National Institute of Health (NIH), the two most prominent funding agencies in the US that revolutionized the science and technology, post-World War II.

The Result

Prior to its implementation, the inventions, if they resulted from the funds given by the federal funding agencies and grant systems, was wholly owned by the federal government. The Bayh-Dole Act, as a result, transferred the ownership to the respective universities, non-profit organizations and small businesses. This provided enormous incentives to the universities to market their products, and encouraged the industries to invest in high-risk ventures coming out of university system. The act not only encouraged university-based inventions by providing a part of the earned royalty to the inventors, but also helped schools to generate funds for its research and development (R&D) activities.

After the Bayh-Dole Act

Soon after the Act, US universities started to establish major offices namely the Tech Transfer Offices (TTO). The primary role of these offices was to manage and aid commercialization of the inventions and its associated intellectual property, thus acting as a liaison between the industry and the academia.

The fact that a part of the royalty earned would go back to the inventors and their laboratories, started a renewed interest in R&D and in protecting inventions which were emerging from the labs.

As a comparison, prior to the implementation of the Act, there were roughly 200 inventions per year coming out of US universities. This number now runs to about 2000 per year. Also, some of the significant developments in the present day Biotechnology and Pharma industries were a direct consequence of this Act which we shall address in detail in the future series. A good measure of how the Bayh-Dole Act catalyzed the economic development would be to analyze the revenue generated by TTOs, which in 2013, in the US alone was around 5.8 billion dollars. In addition, the TTOs have also been instrumental in revolutionizing the start-up scenario in the US. Future series will address how the Bayh-Dole Act via TTOs promoted the start-up revolution.

March-In Rights

Even though the Act encourages innovation by giving ownership rights to the universities, this ownership is subject to government’s right to the usage of the technology. By enforcing “march-in rights”, the government can force the university to license the technology to a third party if it feels that such an act would be beneficial to the public, particularly in public health related inventions.

Conclusion

This significant paradigm shift in the transfer of technology and intellectual property rights has been made possible because of two visionaries: Birch Bayh and Bob Dole. A single Act altered, bolstered and catapulted the United States into an indisputable leader in science and technology, the fruits of which are being reaped far beyond its boundary.

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Ananda Ghosh

Edited by: Sitharam Ramaswami (https://www.linkedin.com/in/sitharam-ramaswami-ram-a0ab0660)

References

  1. https://www.nsf.gov/od/lpa/nsf50/vbush1945.htm
  2. Willardsen al. Technology Transfer and Entrepreneurship, 1, 132-137 (2014)
  3. A guide to Royalty rates in pharmaceutical licensing deals (2006)

This article is the first of the series of articles on Technology Transfer and Economic and Scientific Development in the US.

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