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School Power: The Case for Keeping Innovation in the Hands of Universities

America's university-innovation engine is the envy of the world. Let's not change that.
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There's no shortage of things to worry about as we strive to revive America's innovation engine. Oddly, much time and money is going into pushing a proposal jeopardizing the foundation for our university/industry R&D partnerships. This is one place where we clearly lead the world.

The reason for our success is the Bayh-Dole Act of 1980. The law created no new bureaucracy, and costs taxpayers nothing. It decentralized management of federally funded inventions out of Washington into the hands of universities and small companies creating them. It literally changed the world. A Wall Street Journal article touted Bayh-Dole as one of the "Three Policies That Gave Us the Jobs Economy."

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Like the little engine that could, Bayh-Dole keeps quietly chugging along moving our economy forward. Strangely, the Kauffman Foundation decided it has been running on the wrong track. They urge policymakers in Washington to remove technology management from the universities and place it in the hands of academic inventors. They can present no evidence that this would improve commercialization rates of new technologies while ignoring warnings that it would harm our competitiveness. Tragically, some in Washington seem to be buying their message.

POWER TO THE SCHOOLS

Passed during a contentious election year, Bayh-Dole insures that taxpayers receive the full benefits from the billions of dollars invested in public R&D. Previously the government took inventions away from university and small company contractors making them readily available to all. The system destroyed the incentives of the patent system. The result: 28,000 discoveries gathering dust in Washington, and not a single new drug developed when the government took the patent.

Bayh-Dole reversed this wasteful practice allowing universities and small companies to own and manage their discoveries. More than 6,000 new technology companies have since spun off campus. University patents created more than 5,000 new products, including breakthroughs protecting public health world-wide. Conservative estimates show university patent licensing contributing $457 billion to US gross industry output over twelve years while creating 279,000 good paying jobs.

Nowhere are university-industry partnerships more important than in the life sciences, an area critical to our health-- and our wealth. Developing new drugs can take more than a decade, sometimes costing $4 billion to $11 billion per drug by some estimates. As the cost and delays in approving new drugs increase, profit margins are being squeezed.

Companies are now hollowing out U.S. research staffs, moving operations to India and China. That does not bode well for our life science industry. Its future depends to a large degree on tapping into university research. Under Bayh-Dole at least 153 new drugs, vaccines or medical devices are fighting the scourge of disease.

THE WORLD'S GREATEST

This is hardly the time to throw a monkey wrench into the university technology management system. Yet this is precisely what the Kauffman Foundation proposes.

Under their plan, academic inventors would be in charge of managing federally funded inventions, not the university that receives the grant and pays them (and to which they assign invention rights as part of their employment). Researchers would shop their inventions around looking for licensing agents in other schools. For unexplained reasons this chaotic system is supposed to speed up commercialization. The idea was adopted in the report of President Obama's Jobs Council, and is included in the newly introduced Startup Act in the Senate.

Our current system allowing universities to manage their technologies, while not perfect, is by far the most effective in the world. If imitation is the most sincere form of flattery, we should be very flattered, indeed. Japan, South Korea, China, India, South Africa and others are adopting Bayh-Dole models to better compete with us. The reason is simple: Bayh-Dole works. Empowering the university making the invention with its management allows it to hire experts in assessing, marketing, and managing inventions focused on its core research strengths. What central planner could have imagined that the University of Utah would lead the nation in creating spin-off companies?

Presented by

Sen. Birch Bayh and Joseph P. Allen

Sen. Birch Bayh represented Indiana from 1962 to 1980. Joseph P. Allen is president of Allen and Associates. More

Sen. Birch Bayh is a partner in the Washington office of Venable LLP. He represented the state of Indiana in the Senate from 1962 to 1980 and authored the Bayh-Dole Act of 1980, introducing it with Sen. Robert Dole (R-Kan.). He also authored the 25th and 26th Amendments to the U.S. Constitution (presidential and vice presidential succession, and the 18year-old vote).

Joseph P. Allen is president of Allen and Associates, Bethesda, Ohio. Allen was a professional staff member for Sen. Bayh on the Senate Judiciary Committee and helped move the Bayh-Dole Act through Congress. He later oversaw implementation of the law at the U.S.Department of Commerce

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