The Legislation That Changed America, Bayh-Dole Act (part 1)

As nations try to emerge from the most devastating global recession since the Second World War, policymakers, business communities, academia, and governments will be looking at ways to accelerate growth and competitiveness. Many at the right will continue their propositions that governments should be left out of business, while those at the left will emphasize that governments must play central roles in shaping commerce and industry.

The reality is that governments do matter and a single legislation could have impacts that can redesign a nation’s economic destiny. Globalization makes it so important that nations must compete not just on technologies, but on policies upon which those technologies are developed and commercialized.

This makes it possible that two universities in two separate nations can develop similar technologies with one creating Fortune 500 companies within a decade and another having the idea locked up in a cabinet. In other words, the policies or legislations made by congress or parliament on what happens to inventions supported by government funds matter.

In 1980, a United States legislation dealing with intellectual property emanating from federal government-funded research was implemented. The legislature called Bayh-Dole Act (after two Senators Birch Bayh of Indiana and Bob Dole of Kansas that sponsored it) or University and Small Business Patent Procedures Act gave US universities, small businesses and non-profits intellectual property rights and control of their inventions, even though they were funded by government.

Through this Act, universities, small businesses or non-profit organizations could pursue ownership of inventions in preference to the government.

What this means is that instead of sending the patents or inventions to the government agencies like National Science Foundation (NSF) or National Institute of Health for them to file away in their office cabinets, this Act empowers the inventing entity to pursue commercialization of the idea. Simply, the U.S government elects to fund an idea and allows the fund recipient to profit from any invention that comes from that idea.

This Act provides clarity on many issues that could derail the process of taking ideas to market, especially when those ideas were funded by US federal government. For professors, it provides incentives to pursue research both for discovery and for profit since they also could profit from their inventions. Just as their students could discover and commercialize, the university dons can also do the same.

It has been a new era as the number of Technology Transfer offices in the US universities has increased many folds. As schools file more patents, they continually look for opportunities for venture funds to commercialize or simply license their patents to other institutions. These days, schools quote the number of start-ups they have incubated as a metric to their competitiveness. They will tell you the stories of their students who graduated and founded firms and use that as selling points in their brochures. This is business right in the four walls of the universities.

initially published here.

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