The Bayh-Dole Act was a landmark piece of reform legislation passed by Congress in 1980 that overhauled patent and trademark rights in the US. Key to its legacy and its impact on American universities is that, since the bill made it easy to retain ownership of technology developed with federal funding.
The bill made it possible for universities to transfer their technology to second and third parties at market value. Even now, universities still have a way to go in fully monetizing their IP portfolios but are looking to changes made in 2018 to aid in this objective.
Here are some ways that both the original and 2018 versions of the Bayh-Dole Act impact economic incentives and innovation at universities and related organizations.
Bayh-Dole’s Initial Impact
Historically it was difficult for universities to patent results of both basic and applied research funded by federal grants, resulting in intellectual property eventually owned and unused by the federal government.
The Act put the university at the center of innovation, incentivizing not only development of new industries but the attraction of top global talent and US ownership of the manufacturing process. The result is a cycle of innovation where talent, equipment, and institutional know-how center on research schools.
With the federal government no longer retaining automatic ownership, universities supply industries with certainty that at nearly any given time they can access a wealth of patented technology when the economic timing is best.
Current Patent Economics
Over the last 40 years, Bayh-Dole has changed the culture and focus of universities, who now see themselves as the administrative and commercial center of American industries’ research and development.
Emerging monetization models such as licensing, royalties, and corporate partnerships impact the utilization of IP over time. Third-party industries such as law firms who act as patent aggregators and enforcement asserters have created an ecosystem that facilitates the commercialization of IP.
Basic vs Applied Research
The incentives generated by this ecosystem have had a tremendous impact on approaches to innovation at the universities and economy-wide. Once bastions of what is called “basic research,” universities are now more concerned with “applied” or market-ready inventions which are increasingly times called upon by business to align with ongoing development.
The federal government, through nationally-funded organizations like the National Institutes of Health, now performs the bulk of basic research that still acts as a downstream pipeline for later applied development by both business and universities.
2018 Changes
May 2018 changes to the Bayh-Dole Act impacted universities as well as non-profits and other recipients of federal funding. These changes:
- Eliminate the 60-day rule allowing the federal government to seek ownership of a patent. Sometimes called “march-in” provisions.
- Now require universities and other contractors to notify the federal government of their intent to cease patent prosecution 60 days from doing so, rather than the 30 days set forth in the original bill.
- Require notifying the government 60 days prior to the conversion of a 12 month provisional patent application to a non-provisional patent.
The revisions also aim to simplify regulations around licensing for federal laboratory collaborators and to clarify the role of provisional patents. It also sought to further define what is a “Determination of Exceptional Circumstances,” or, in other words, when it’s appropriate for the government to enact “march-in” provisions and assume ownership of a patent for the purposes of facilitating its societal benefit.