Reconsidering the Bayh-Dole Act and the Current University Invention Ownership Model

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Citation: Martin Kenney, Donald Patton (2009) Reconsidering the Bayh-Dole Act and the Current University Invention Ownership Model. Research Policy (RSS)
DOI (original publisher): 10.1016/j.respol.2009.07.007
Semantic Scholar (metadata): 10.1016/j.respol.2009.07.007
Sci-Hub (fulltext): 10.1016/j.respol.2009.07.007
Internet Archive Scholar (search for fulltext): Reconsidering the Bayh-Dole Act and the Current University Invention Ownership Model
Wikidata (metadata): Q20902229
Download: http://brie.berkeley.edu/publications/wp182.pdf
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Summary

Published version at http://hcd.ucdavis.edu/faculty/webpages/kenney/articles_files/09%20research%20policy.pdf probably has edits, but is also in hard-to-read 2-column format.'

The U.S. Bayh-Dole Act of 1980 gave federal contractors (mainly universities) ownership of inventions made by their researchers with federal funding. Other nations are adopting this model. It arose out of a belief that federally held patents were under-exploited and universities would be self-interested to see that inventions were commercialized, boosting the economy overall. Lobbying in favor by universities was fueled by promise of biotechnology riches.

The most studied university patent is Cohen-Boyer (1980) which produced $255m for Stanford and the University of California but it is misunderstood that if it had been in the public domain the technology would have remained unused. This is contradicted by its use by labs and firms from its discovery (1973) and the rapid adoption of contemporaneous and similarly important technology (monoclonal antibodies) which had been placed in the public domain.

Contemporary (2008) examples show that the objective of university Technology Licensing Offices (TLOs) is revenue not transfer, including by taxing research uses.

TLOs are attractive to administrators because they can be operated with restricted funds but their revenues are unrestricted.

TLOs are an agent of the university, not the inventor, as some previous analysis has claimed. To elicit cooperation, licensing revenues are shared with the inventor/their department. Because there are transaction costs between the TLO and inventor initial allocation to the TLO matters and is likely to be suboptimal given the inventor has better info about potential licensees, including their own startups. TLOs are embedded in university bureaucratic politics and either through incompetence, shortermism, or focus on obvious large revenue potential patents hinder both licensing and social benefit.

University inventors have a great deal of independence and are difficult to monitor relative to corporate research employees. There is a large "grey market" for university inventors, realized through mechanisms such as setting up a firm or having a relationship with a firm before patentability, and realizing patent at firm. Another strategy is the publish the invention, impairing patentability, but giving option to exploit the now "open source" technology.

Some have suggested a transformation of the university to suit the needs of the TLO model. Quote:

They would raise a minor appendage of the university and an insignificant source of funds to a central goal of the university – and this without any evidence that such a radical change in policy would contribute either socially desirable effects or generate greater economic activity. This structure is a recipe for transforming first-tier research universities into a hybrid of corporate contractor and small firm incubator.

Authors propose two alternatives.

Inventor ownership

This would force TLOs to become service oriented or close down (inventors would be free to choose non-university entities), and would allow researchers in fields where it makes sense to place inventions in public domain without TLO interference. The university could still receive a percentage of licensing revenues generated by university inventor patents. Various pre-TLO examples are discussed, including Stanford, Wisconsin, Cambridge, and continental Europe and Japan: technology transfer happens in all of these, TLO should not be understood as cause of entrepreneurial ecosystem that some have and some lack.

Weaker ownership

University inventions could be placed in the public domain, or licensed only on a non-exclusive basis. An "open source model" would remove tax on adoption thus go further in realizing social value and technology transfer, and mitigate concerns about influence of commercialization on university mission and faculty behavior. Greatest concern whether drugs would be developed, but even in that field there are alternatives.

Theoretical and Practical Relevance

The TLO arrangement has developed a "facticity and aura of normalness that discourages critical evaluation"; most research on university spin-offs relies on TLO-provided data; TLOs are incented to act like patent trolls; there is a triumphalism in the university ownership model that has policymakers worldwide subscribing to a "cargo cult" belief that mimicking this model will create "new Silicon Valleys" but given theoretical problems and lack of evidence " this paper should be taken as an invitation to a debate about how to ensure the greatest social good is derived from the knowledge and inventions created in universities."