Policy ForumIntellectual Property

University Licensing and the Bayh-Dole Act

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Science  22 Aug 2003:
Vol. 301, Issue 5636, pp. 1052
DOI: 10.1126/science.1087473

The Bayh-Dole Act of 1980 allows universities to patent and exclusively license federally funded inventions [HN1]. With dramatic growth in university licensing, the Act has become controversial and the subject of policy review. For the 84 U.S. institutions responding to the Association of University Technology Managers' (AUTM) 1991 and 2000 surveys [HN2], inventions disclosed increased by 84%, new patent applications by 238%, license agreements by 161%, and royalties by more than 520% (1). Bayh-Dole advocates argue that in its absence many results from federally funded research would remain in the laboratory; critics say exclusive licenses are not needed for technology transfer and universities are chasing profits (2). Amid the rhetoric, what are the issues and evidence [HN3]?

Would technologies be transferred in the absence of Bayh-Dole? Technology can be, and obviously is, transferred to industry without patents or licenses. Historically, publications, meetings, and consulting were the primary ways for industry to learn about academic research, and recent evidence suggests they remain so (35).

If and when exclusive licensing is needed to augment these channels is an important issue. Exclusive licensing may be needed when inventions require further development before use (6). A survey of 62 U.S. universities suggests that much university research fits this profile, with 45% of inventions no more than a “proof of concept” and only 12% “ready for practical use” at the time of license (7, 8). The failure rate for these inventions is high, 46% for all inventions and 72% for those that are only a proof of concept (9). Exclusive patent rights provide an incentive for firms to invest in costly development, but only to the extent that patents are effective in protecting intellectual property (IP), which varies by industry (10, 11).

Many university inventions are research tools, in which case exclusivity may limit use by future researchers. Although Bayh-Dole permits exclusive license, it does not require it, and surveys show many licenses are nonexclusive (AUTM reports half) (2, 12). How often research tools are exclusively licensed is not known, but known examples, such as the OncoMouse [HN4], have exacerbated the controversy. Restricted use of such tools is more detrimental the broader their patent claims (13). Regardless, NIH guidelines for sharing research tools are helpful (14) [HN5].

Are technology transfer offices [HN6] “profit centers”? In the 2000 AUTM survey, 156 U.S. respondents reported $1.24 billion in income from royalties and cashed-in equity net of unreimbursed legal fees (1, 15). This income was about 4.7% of their research expenditure. For every dollar of income, there is about $0.20 in sponsored research tied to a license. The average income per active license is $66,465, but only 43% earned royalties and 0.56% earned more than $1 million in 2000.

Although average income per respondent was about $8 million, 79% earned less than $5 million, and half reported income less than $824,000. On average, technology transfer offices below the median had four employees, which made it likely that many spent more than they received in income. While more offices have become profitable over time and this trend may continue, the current picture suggests that profits are not the sole goal of licensing. Survey research highlights the complexity of university goals, which also include sponsored research and Bayh-Dole's mandate to commercialize federally funded research (8, 16). Further, many in the university community recognize the need to balance IP rights and the public good (17) [HN7].

Does licensing restrict dissemination of academic research? A survey of industry licensing executives shows 27% of their university licenses include clauses that allow deletion of information from papers before submission, and 44% ask for publication delay (3.9 months on average) (18). Life science faculty involved in commercial activity often deny requests by other scientists for research results, although multiple factors are involved (19, 20). This problem is more likely related to research that is company sponsored rather than federally funded, because companies can protect IP with secrecy, whereas Bayh-Dole requires eventual disclosure through patents.

Have financial incentives from licensing diverted faculty from basic to more applied research? Evidence on the direction of faculty research is limited, but suggests that the answer is no. A survey of firms that license from universities indicates that the prime reason for increasing their collaboration with universities was receptivity to licensing rather than a change in faculty research (18). Studies of technology transfer from the University of California, Stanford, and Columbia find little evidence of either changes in research direction or financial return as a major motive for the research (6, 21) [HN8]. Our study of over 3400 faculty at six research universities from 1983 to 1999 suggests that the portion of research that was basic has not changed even though licensing increased by a factor greater than 10 (5).

There is evidence to suggest that university licensing facilitates technology transfer with minimal effects on the research environment, but the issues are complex and there are unknowns. Further study is needed, particularly as to whether faculty involvement in licensing complements or substitutes for open publication. The environment is also evolving. The explosive growth of licensing cannot continue forever—the final equilibrium, however, remains to be seen.

Appendix

General Hypernotes

Dictionaries and Glossaries

The American Heritage Dictionary of the English Language is available from Bartleby.com.

The Real Life Dictionary of the Law is available at law.com.

A legal dictionary and a legal encyclopedia are provided by the Nolo Web site.

A patent terms glossary is provided by PatentCafe.com.

Web Collections, References, and Resource Lists

The WWW Virtual Library—Law is maintained by the Indiana University School of Law.

Law and Politics: Internet Guide provides annotated links to law-related resources on the Internet.

Academic Info provides a law and legal research gateway with a section on intellectual property.

The Google Directory provides links to Internet resources on intellectual property and invention and innovation.

UVentures.com provides links to Internet intellectual property resources.

The Robert C. Byrd National Technology Transfer Center (NTTC) at Wheeling Jesuit University, WV, offers links to Internet resources.

The Association of University Technology Managers (AUTM) is a nonprofit association with membership of more than 3,200 technology managers and business executives who manage intellectual property.

Online Texts and Lecture Notes

The Jerome and Dorothy Lemelson Center for the Study of Invention and Innovation was founded in 1995 at the Smithsonian Institution's National Museum of American History.

An Inventor's Handbook is offered by the Lemelson-MIT Program.

The Technology Transfer Resource Guide is a tutorial provided by the NTTC. A glossary is included.

Cornell Law School's Legal Information Institute provides an introduction to patent law.

The Intellectual Property Law Server provides information about intellectual property law including patent, trademark, and copyright.

General information about patents is provided by the Intellectual Property Law Web Server of Oppedahl & Larson LLP.

The Montana Associated Technology Roundtables make available a collection of news articles related to university technology transfer.

The Center for the Public Domain provides news and other resources related to patents and intellectual property.

D. Popp, Department of Public Administration, Syracuse University, provides lecture notes for a course on the economics of science and technology. Lecture notes on intellectual property protection, patent policy reform/biotechnology, and government policy for diffusion are included.

General Reports and Articles

The 6 March 1998 issue of Science had an Essay on Science and Society by L. Nelson titled “The rise of intellectual property protection in the American university.” The 23 August 2002 issue had a Policy Forum by M. Henry, M. Cho, M. Weaver, and J. Merz titled “DNA patenting and licensing” (12).

AAAS's Science and Intellectual Property in the Public Interest (SIPPI) Web site provides background articles (as links and in PDF format) for a March 2003 meeting on university technology transfer.

The Summer 2000 issue of Issues in Science and Technology had an article by Q. T. Dickinson titled “Reconciling research and the patent system.”

The April 2001 issue of Clinical Cancer Research had an article by R. Kneller titled “Technology transfer: A review for biomedical researchers.”

The John M. Olin Program in Law and Economics at the University of Chicago Law School makes available in PDF format a 1999 working paper by K. Dam titled “Intellectual property and the academic enterprise.”

Patents in the Knowledge-Based Economy is a 2003 report from the Board on Science, Technology, and Economic Policy (STEP) of the National Academies of Science (made available by the National Academies Press).

The Brookings Institution Press makes available the 1998 book Challenges to Research Universities, edited by R. Noll. Included is a chapter titled “Industry and the academy: Uneasy partners in the cause of technological advance.”

Public Investments in University Research: Reaping the Benefits is a 1999 report by the Expert Panel on the Commercialization of University Research established by Canada's Advisory Council on Science and Technology. The 30 April 1999 issue of Science had a News of the Week article about this report by W. Kondro titled “Schools urged to boost technology transfer.”

Numbered Hypernotes

1. The Bayh-Dole Act of 1980. The AAAS R&D Budget and Policy Program makes available a PowerPoint presentation (from the April 2003 Colloquium on Science and Technology Policy) by M. Thursby on the Bayh-Dole Act. The Cornell Research Foundation provides an introduction to technology transfer and the Bayh-Dole Act of 1980. The Library of Congress's Thomas: Legislative Information on the Internet provides a legislative history and summary of Public Law 96-517 (Bayh-Dole Act of 1980). Cornell Law School's Legal Information Institute makes available the text of the section of the U.S. Code of Federal Regulations (CFR) that implements the act. The University of Cincinnati Intellectual Property Office offers a presentation on the Bayh-Dole Act (Public Law 96-517) and a copy of the CFR section, as well as a 1995 NIH article titled “A ‘20-20’ view of invention reporting to the National Institutes of Health.” “The Bayh-Dole Act: A guide to the law and implementing regulations” is a 1999 document prepared by the Council on Governmental Relations that is made available by University of California Office of Technology Transfer. The National Association of State Universities and Land-Grant Colleges makes available an 11 November 2001 presentation by H. Bremer titled “The first two decades of the Bayh-Dole Act as public policy.”

2. AUTM surveys. AUTM issued a 21 May 2003 press release about the AUTM 2001 licensing survey and a summary (in PDF format) of the findings. An executive summary of the “AUTM Licensing Survey, FY 1991-FY 1995” is also provided.

3. Issues in university patenting and licensing. The March 2000 issue of the Atlantic Monthly had an article by E. Press and J. Washburn titled “The kept university” (2). Technology Review makes available a 23 April 2003 essay by A. Stevens titled “In defense of university patent licensing” (free registration required). The 14 February 2003 issue of Science had a Policy Forum by J. Walsh, W. Cohen, and A. Arora titled “Working through the patent problem.” The 6 June 1997 issue had a News & Comment article by J. Cohen titled “Exclusive license rankles genome researchers.” The 1 May 1998 issue had a review by M. Heller and R. Eisenberg titled “Can patents deter innovation? The anticommons in biomedical research.” The 14 October 2002 issue of The Scientist (free registration required) had an article by T. Agres titled “Life science patents enrich academe.” The Winter/Spring 2003 issue (a special issue on the public domain) of Law and Contemporary Problems had an article by A. Rai and R. Eisenberg titled “Bayh-Dole reform and the progress of biomedicine” (13). The September-October 2001 issue of Academe had an article by G. Rhoades titled “Whose property is it? Negotiating with the university,” an article by J. Porter Liebeskind titled “Risky business: Universities and intellectual property,” and an article by J. Croissant titled “Can this campus be bought? Commercial influence in unfamiliar places.” The January 2003 issue (a free sample issue) of the Journal of Technology Transfer had six symposium papers on university technology transfer. The 2003 publication Technology Transfer of Federally Funded R&D: Perspectives from a Forum is made available in PDF format by RAND.

4. The OncoMouse. CBC News offers a presentation on the Harvard OncoMouse. The Jackson Laboratory provides OncoMouse licensing information. The DuPont Technology Bank offers a resource page on the OncoMouse. NIH issued a 19 January 2000 news release titled “NIH and E.I. DuPont sign OncoMouse agreement” and provides a copy of the memorandum of understanding. The 17 May 2002 issue of Science had a News of the Week article by E. Marshall titled “DuPont ups ante on use of Harvard's OncoMouse.” The 27 November 2000 issue of The Scientist had an commentary by L. Deftos titled “Patenting life: The Harvard mouse that has not roared.” Sharing Laboratory Resources: Genetically Altered Mice, a 1994 report available from the National Academies Press, includes a chapter that discusses the Harvard OncoMouse. The Summer 1998 issue of the Indiana Law Journal had an article by C. Walter titled “Beyond the Harvard mouse: Current patent practice and the necessity of clear guidelines in biotechnology patent law.”

5. Sharing research tools. The 24 December 1999 issue of Science had a News of the Week article by E. Marshall titled “New NIH rules promote greater sharing of tools and materials.” The NIH Office of Technology Transfer provides a document titled “Principles and guidelines for sharing of biomedical resources,” as well as other policies and documents. The 2003 National Cancer Policy Board report Large-Scale Biomedical Science: Exploring Strategies for Future Research (14) includes a chapter titled “Intellectual property and access to research tools and data.” The 2003 report Patents in the Knowledge-Based Economy includes a chapter titled “Effects of research tool patents and licensing on biomedical innovation.”

6. University technology transfer offices. AUTM provides links to university technology transfer offices. Ohio State University's Office for Technology Licensing offers a presentation titled “History of technology transfer offices at universities.” The Center for Advanced Study and Research on Intellectual Property (CASRIP) at the University of Washington School of Law makes available in PDF format a symposium paper by R. Eisenberg titled “The university office of technology transfer: A review of the current U.S. system” from a 2000 CASRIP symposium titled “Streamlining international intellectual property.” The International Society for New Institutional Economics makes available in PDF format a 1999 conference paper by B. Sampat and R. Nelson titled “The emergence and standardization of university technology transfer offices: A case study of institutional change.” The University of California Office of Technology Transfer provides background information on patenting and licensing for faculty and industry. The Stanford University Office of Technology Licensing provides information on patents and licensing for inventors and industry. Harvard University's Office for Technology and Trademark Licensing provides information for Harvard inventors and industry, as well as a FAQ about the office. The MIT Technology Licensing Office provides a policy guide and presentations (in PDF format) by the staff.

7. Balancing IP rights and the public good. The 24 January 2003 issue of Science had an editorial by R. Beachy titled “IP policies and serving the public.” The 11 July 2003 issue had a Policy Forum by R. Atkinson et al. titled “Public sector collaboration for agricultural IP management” (17). The AAAS R&D Budget and Policy Program makes available a PowerPoint colloquium presentation by C. Gulbrandsen titled “University ownership of patents: The Bayh-Dole Act and using patents for the public good.”

8. Effect of Bayh-Dole on faculty research. B. Sampat, School of Public Policy, Georgia Institute of Technology, makes available (in PDF format) a preprint of an article by B. Sampat, D. Mowery, and A. Ziedonis titled “Changes in university patent quality after Bayh-Dole: A re-examination,” as well as an article from Management Science by J. Colyvas et al. titled “How do university inventions get into practice?” (6) and an article from Research Policy by D. Mowery et al. titled “The growth of patenting and licensing by U.S. universities: An assessment of the effects of the Bayh-Dole act of 1980” (21).

9. Jerry G. Thursby is in the Department of Economics, Emory University, Atlanta.

10. Marie C. Thursby is at the DuPree College of Management, Georgia Institute of Technology, Atlanta.

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