The Economist called it "possibly the most inspired piece of legislation to be enacted in America over the past half-century." That was in 2002, referring to a law passed in 1980 that has been widely credited with boosting American competitiveness, stimulating the economy and bringing thousands of new technologies to the market.
P.L. 96-517, Amendments to the Patent and Trademark Act of 1980 -- or, as most prefer to call it, the Bayh-Dole Act -- set the rules for how nonprofit institutions, universities included, have retained title to inventions resulting from federally funded research, filed patents and sold licensing rights to small businesses and corporations for over 25 years. The law replaced a patchwork of patent rules and dealt with concerns about declining productivity and innovation at the nation's laboratories and research institutions.
How publicly funded research will be brought to market for the next quarter-decade was the topic of a House of Representatives hearing on Tuesday, with panelists representing research institutions, universities and high-tech industries. None of them disputed the impact of the law, and in fact no one giving testimony seemed to like the idea of changing the legislation (or passing more of it). But they didn't say it was perfect.
What they did offer was a portrait of how "technology transfer" -- the process of shuttling new innovations from the research lab to the market place -- is different today than it was when Bayh-Dole was originally passed, and how corporations and universities can work together to bridge their "cultural differences" and confront the changes on their own.
Before the law was originally passed, the economy was in a slump and "foreign competition" was more likely to refer to Germany and Japan than China and India, as it tends to today. Inflation was high and so was unemployment, amid growing concerns about American competitiveness abroad. There's still plenty of that talk today, but now it's against the backdrop of the "globalization of research," as some of the participants called it, in a much more high-tech research environment.
So in the present context, a law that was passed under different economic circumstances could in some cases be affecting technology transfer in ways that were not intended. One of the panelists, Mark A. Lemley, a law professor at Stanford University, said that "it seems clear that the act has achieved its goal of encouraging university inventors to patent those inventions and to license those patents to private companies that can make use of them."
"On the negative side," he added, "universities have too often looked to the short-run bottom line in setting their licensing priorities, granting exclusive rights to breakthrough technologies to businesses that may not be best suited to exploit them for the benefit of society as a whole," causing interference in the IT sector in particular, he added.
Wayne Johnson, Hewlett-Packard's vice president for university relations worldwide, offered up one reason for the problem: There is too much of a focus on "home-run patents," despite the fact that most successful IT products are a combination of hundreds of technologies. They "rarely exist and do not drive innovation in the IT industry," he said.
One of the main themes that emerged from the hearing, called "Bayh-Dole -- The Next 25 Years" and held by the House Science and Technology Subcommittee on Technology and Innovation, revolved around the more collaborative nature of technology transfer today, as opposed to an emphasis on big patents that rake in big bucks with one home run.
"We would not want to see anything changed about Bayh-Dole," said Robert M. Berdahl, president of the Association of American Universities, who was in the audience for part of the session. "At the same time, we want to do whatever we can do as an association … about changing the structure of the technology transfer office and looking at collaboration in a much broader fashion than simply what the university itself can derive from it in terms of revenue. I think that effort is something that has to be taken on university by university, and that we can encourage. But that doesn’t call for any kind of legislative action."
Susan B. Butts, the senior director of external science and technology programs at the Dow Chemical Co., said she also sees a potential for more collaboration between universities and industry, especially since private funding for research and development has increased over the years to about double the amount of federal funding today. But, she said, a primary obstacle to more partnerships is the potential for disputes over intellectual property.
At the heart of the choice faced by universities is whether they should opt for as many patent royalties as possible, or get in on the ground floor with partners from various industries. (Lemley said one IT official had referred to universities as "crack addicts," hooked on royalties.) Butts argued that licensing revenues are not growing quickly enough to fill the "funding gap," a reality that would necessitate more private partnerships.
American universities, she said, "in stark contrast with most foreign universities, have become substantially less attractive as research partners for companies. As U.S. universities increasingly focus on controlling intellectual property and maximizing their revenues from licensing inventions, they have become more like competitors than partners to companies that sponsor research with their faculty and students."
The result, she said, is that many companies choose instead to work with a foreign university where there will be less negotiations and more of a willingness to be flexible with intellectual property. The panelists suggested that, since collaborations between private industry and universities didn't have to involve federal funding, the solution could come from a change of attitude rather than a legal shift.
"They’re two different cultures, and sometimes they work well together and other times not," Berdahl said.