Bayh-Dole Can Bring Money for Research and Education

There is a movement out there among scientists who would like to see patents lifted, and have everything freely available. Let’s think about that for a minute. Would that really be a good idea? There is an article in the February 2 edition of the University of California at Los Angeles Daily Bruin, titled, “Inventions provide money, jobs for UC.”

Excellent point — if there is intellectual property, there must be money involved and it must from somewhere and go somewhere, but where does it come from and where does it go?
According to the Bruin, in 2007 the UC system earned an income of $116.9 million dollars from royalties for licensing patents, UCLA received around $12 million. Now while that is only a small fraction of the $900 million a year that UCLA receives in the form of research funding, according to the Bruin,

“The money is still significant because it is not designated for a specific purpose, unlike most sources of university funding.”

“(The school) may use it wherever they have a piercing research need,” said Kathryn Atchison, vice provost of intellectual property and industry relations and vice chancellor for research at the Office of Intellectual Property and Industry Sponsored Research.

“The royalty income that UCLA receives is only a small portion of the total amount and is obtained after the money has been divided according to several formulas, Weinstein [Earl Weinstein, assistant director of business development and licensing at the Office of Intellectual Property and Industry Sponsored Research] said.

After an invention has been created, the inventor files a patent, Weinstein said, before meeting with venture capitalists and entrepreneurs to “find the best home for the technology,” which sometimes involves licensing the patent.

Weinstein also said the most important criteria in selecting the best company to take the invention to the market is that the company be able to develop the technology quickly and really make an effort to put it in the market.

Another factor that contributes to the selection of a corporation for the product is the Bayh-Dole Act, which tends to favor smaller entities, Weinstein said.

A federal act established in 1980 by Sens. Birch Bayh (D-Ind.) and Bob Dole (R-Kan.), the Bayh-Dole Act also “allows a federally funded university to retain rights to intellectual property,” said William Tucker, executive director of the Technology Transfer and Research Administration at the University of California Office of the President.

Tucker said previously the federal government would retain the intellectual property rights, decreasing incentives for continued research and development.”

But regardless of the existence of a federal act, there are several nuances which govern how the royalty money is divided, such as the year in which the inventor joined the university, Tucker said.

For example, Tucker said, if the inventor joined the university in the last five years, the net royalty income would be divided by giving 15 percent to the department chair for future research development, 35 percent for the inventors on the patent and about 12.5 percent for the general University of California fund.

The remainder of the money goes to the dean of the school where the invention was created for the purposes of the “teaching and research mission,“ Atchison said.

The Bruin goes on to say that licensing of technology also creates local jobs which can employ faculty and students. In summary, the licensing of intellectual property, well it’s what makes research go ‘round. Assuming you agree that “inventions provide money and jobs” and make research go ‘round, wouldn’t it follow that universities make every effort to bolster tech transfer offices?

One Response

  1. There is a need for an agency to translate federally funded ideas into products–National Product Development. At the present time there is no support mechanism for researchers to get consistent reliable help on business and product development. Such an agency would ultimately provide products based on true need, not what the market is willing to pay. The NIH should stick with the mission of advancing knowledge (not translation of ideas into products).

    Instead there is a process where the OTMs act as gate keeper (unclear how they are objectively monitored) placing requirements that guarantee that only medium or large pharmaceutical companies can take advantage of new technologies. My assessment is that OTMs can be more of a barrier than a catalyst to small business development.

    Researchers do expect that the patents will provide an income through a percentage from the royalties that a university would receive. I would assume based on such a promise of a reward that researchers would not want to abolish patents.

    Patents have inherent problems. In the US patents pose many problems in terms of interpretation of property, length of time and issue fees (barrier to market), first claim to the original idea, degree of enforcement.

    Researchers, OTMs, investors, believe that patents are good for them. The investigators may be better off without patents (back end deals with product development, milestones). The bottom line for me is that if we eliminate patents we are still looking at trade secrets. Also only about 1% of the ideas actually make it through the process from the lab to the market.

    The most controversial aspect of the topic is the conflict of interests faced at NIH, OTM, concerning who is allowed to develop a technology. Outside the US the challenge is with the decision on the benefit of compulsory licensing (TRIPS)–the TRIPS language is under review in the house and the senate.

    If I had the power to make a change I would invest in a NDP (see above). In terms of patents, if I could take on action, I would shorten the USPO response down to 4-6 mo (would require improved staffing and amending the Patent Act).

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