The Bayh-Dole Act of 1980: Policy Model for Other Industrial Economies?

1. The Bayh-Dole Act of 1980: Policy Model for Other Industrial Economies? David C. Mowery Haas School of Business U.C. Berkeley & NBER Bhaven N. Sampat University of Michigan

2. The Bayh-Dole Act of 1980 • Passed in 1980 to encourage commercial development of federally funded inventions in university and government labs. The Act enabled these institutions to obtain patents on inventions and to license them to private parties, including exclusive licenses. • Bayh-Dole replaced a complex web of Institutional Patent Agreements (IPAs) between individual federal funding agencies and individual universities. • The Act constituted a Congressional endorsement of university licensing in the face of federal agencies’ concern over exclusive licensing agreements negotiated under IPAs. • Bayh-Dole has been widely cited (Economist, OECD) as an important contributor to US economic growth during the 1990s.

3. International “emulation” of the Bayh-Dole Act. • Discussions or policy changes affecting “technology transfer” activities of national universities have taken place in Japan; Italy; Germany; Denmark; France; Canada, among other nations. • Bayh-Dole widely cited by proponents of such initiatives as a policy model. • Many policy initiatives focus on patenting of university inventions. • Transfer ownership of patent rights from faculty to university (Denmark; Germany). • Transfer ownership of patent rights from university to individual faculty (Italy). • Some initiatives (Sweden, Japan) include authority or in some cases, public financial support for creation of “technology transfer offices.”

4. But several issues have not been addressed • How important has the Bayh-Dole Act been in supporting university-industry collaboration and technology transfer in the United States? • Would growth in these activities have occurred without the Bayh-Dole Act? • Will emulation of the Bayh-Dole Act accelerate collaboration and technology transfer in other nations’ university systems?

5. How do universities influence industrial innovation? • Training and industry employment of scientists and engineers. • Published research. • Faculty consulting. • Conference-based and other informal interactions with industry researchers. • Establishment of new firms by faculty, graduates, and other researchers. • Patents and licenses for university inventions. • Surveys of US industrial R&D managers indicate that (outside of pharmaceuticals), patents are relatively unimportant channels of influence. • But these surveys focus on relatively large firms.

6. US university patenting before & after 1980 • Many US universities were active patenters long before 1980. • Collaborative ties between university, industrial researchers reflected unusual insitutional structure of US higher education. • Slower growth in federal academic R&D support, financial pressure on US universities, and a few universities’ licensing successes contributed to growth in university patenting and licensing during the 1970s: • Biomedical technologies dominate university patenting and licensing before & after 1980. • In contrast to earlier periods, most US universities began direct management of patenting and licensing. • Universities with little or no experience in patenting and licensing during the 1970s entered these activities in the 1980s. • Many accounts attribute 1980s’ growth in university patenting to the Bayh-Dole Act, but the Act may be an effect of increased patenting, rather than a cause.

9. Does increased patenting imperil the academic mission? • Does greater emphasis on one channel of university-industry interaction have a chilling effect on others? • Emphasis on patenting may create frictions, rather than facilitating university-industry research collaboration, particularly in non-biomedical fields. • Will increased “patenting of science” impede research? • Does patenting promote or limit technology exploitation? • Emphasis by many universities on licensing revenues may be unrealistic and impedes other objectives. • University of California systemwide net institutional revenues in 1999-2003 = US$15M/yr., small share of overall research budget of nearly US$3B/yr. • Tradeoffs among objectives (faculty retention, encouragement of regional economic development, technology transfer) are inevitable, but rarely articulated. • Political risks for universities. • Madey v. Duke: Federal court opinion portrays Duke University as a revenue-seeking inventor, denies “experimental use” defense against infringement claims.

10. Conclusion • Bayh-Dole extended, rather than creating a “new era” in US university patenting, licensing, industry collaboration. • Long history of such collaboration reflects structural characteristics of US higher education “system.” • Growth of patenting in the 1980s was rooted in developments during the 1970s. • In important respects, Bayh-Dole was a response to increased university interest in patenting, rather than an “exogenous” causal factor. • Other developments in US IPR policy, as well as growth in biomedical research funding and scientific advances, contributed to the growth of patenting during the 1980s. • Bayh-Dole reduced the ability of public agencies (e.g., NIH) to regulate the terms of university licenses. • The “endogeneity” of Bayh-Dole is not surprising, but this feature of the Act may limit the effects of its emulation by other industrial-economy governments.

11. Conclusion (2) • Much of the increased patenting of the 1980s & 1990s likely would have occurred in the absence of Bayh-Dole. • More than a “Bayh-Dole policy” is needed to stimulate closer interaction between universities and industry. • Structure of public research funding. • Structure of university system. • Importance of institutions external to the university. • The multiplicity of channels through which universities and industry collaborate in research and knowledge exchange means that the importance of patents for university-industry technology & knowledge transfer varies across and within industries. • Neither necessary nor sufficient in some research fields. • Necessary but not sufficient in others.