The Bayh-Dole Act Survives the Courts, but What's Next?
In his 2011 State of the Union message, President Obama proclaimed that the "first step in winning the future is encouraging American innovation." The Bayh-Dole Act, which I co-sponsored with Senator Robert Dole in 1980, has done just that. I've watched with great interest as the Bayh-Dole Act has established our university technology transfer system as a model for the world by permitting universities, small businesses, and nonprofits to own and manage patentable inventions arising from research conducted in their labs using federal funds.
Studies have estimated as many as 6,000 American companies have arisen from these inventions. Nearly 300,000 new jobs owe their existence to the businesses since 1996 alone. Nearly 5,000 new products, in every major field, have come onto the market as a result of university patent licensing, saving lives and making the world a better place. The Bayh-Dole Act has fostered the innovative spirit that sets America apart. Its enduring value, which has stood for over 30 years without amendment, is found in the statute's ability to accommodate the divergent interests of its beneficiaries, from contractor-institutions and inventors to private businesses.
As a proponent of this legislation, I care deeply about making sure the statute continues to promote American innovation and economic growth. Last winter I submitted an amicus brief to the Supreme Court in the Stanford University v. Roche Molecular Systems case, explaining that as between the federal government, federally-funded research institutions, and individual inventors, the Act was intended to have research institutions commercialize new inventions, rather than relying on the government or individual inventors. The results speak for themselves.
On June 6, the Supreme Court ruled 7-2 in the Stanford case that individual inventors hold rights even to inventions arising from research they conduct on the federal dime. The Court acknowledged that the Bayh-Dole system will work pretty much the way it always has so long as research institutions are careful to obtain effective assignment agreements from their employee-researchers.
But, in view of this ruling, all these parties must now revisit their obligations and practices under the Act. For example, in the Stanford case, a successful collaboration between a university researcher, the university, and a biotechnology company resulted in patents on an HIV diagnostic test, but a dispute arose about the wording of the inventor's assignment agreements. To avoid similar problems, greater diligence is required in drafting the agreements between federal agencies, research institutions, inventors, and companies.
We face a myriad of challenges at present on economic and innovative fronts. To meet those challenges, we need to support the objectives of the Bayh-Dole Act: to bring life-saving medical treatments and cutting-edge inventions to the public by placing them in the hands of the universities and nonprofits most likely to ensure their efficient commercialization and service to the public interest.
Universities and colleges perhaps play the most pivotal role in realizing those objectives, as Congress determined they have the greatest capacity to bring new technologies to the marketplace. These institutions are called on to interact directly with each corresponding player in the Bayh-Dole System to secure federal funding for research, obtain patents on inventions, and grant licenses to businesses that will enable them to develop and commercialize new technologies. As a result of this responsibility, universities have the chance to retain the rights to patentable inventions paid for by federal dollars. Just as Congress recognizes the paramount importance of research institutions in the technology transfer process, higher ed leaders must now recognize their own prominence and commission new efforts to ensure absolute compliance with all of the statute's requirements.
The Bayh-Dole Act remains a vibrant engine of American innovation. For 30 years, it has balanced the interests of federally-funded university researchers and industry, based on what The Economist has dubbed "possibly the most inspired piece of legislation to be enacted in America over the past half-century."
Now, it's time for a new generation to adopt Bayh-Dole as their own and to empower universities, businesses, and nonprofits to continue advancing federally-funded innovations for generations to come.
Birch Bayh, a government affairs partner in Washington with the law firm Venable LLP, co-authored the historic Bayh-Dole legislation as a former U.S. Senator from Indiana.
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