Last month, the Biden administration released a radical proposal that—if finalized—would decimate American innovation across the most important areas of technology.
The proposal would alter how government agencies interpret the Bayh-Dole Act, a 1980 law spearheaded by Sens. Birch Bayh (D-Ind.) and Bob Dole (R-Kan.) that catalyzed an economic and technological revolution. It did so by giving universities the ability to license their researchers’ inventions and discoveries, even if those researchers had received federal grants. This incentivized universities to partner with private-sector firms willing to invest the capital needed to bring new technologies to market.
Bayh-Dole’s impact on American innovation cannot be overstated.
Larry Page and Sergey Brin cited funding from the National Science Foundation in the patent application for their first search algorithm, which they then licensed from Stanford to launch Google. Our phones and computers are packed with patented technologies that originated in university labs and were backed by federal research grants. Many advances in quantum computing and artificial intelligence inventions are subject to Bayh-Dole. In medicine, patients worldwide owe a debt of gratitude to Bayh-Dole for the once-a-day HIV pill, mRNA vaccines, immunotherapies, and so much more.
The Biden administration effectively now wants to nationalize all these inventions, telling its various agencies to “march in” and take over privately-held patents if bureaucrats at the agency determine a number of ambiguous factors are met, such as if a price is “not reasonable” or if bigger companies could bring the product to market more quickly. This contravenes the plain text of the law and runs counter to the explicit intent of Bayh-Dole’s authors and 43 years of bipartisan consensus on the issue.
The White House claims such action would reduce drug prices. But its proposal extends far beyond drugs, and will stifle investment in climate change, sustainable agriculture, advanced computing, energy, medicines and all other technologies that benefit millions across the globe.
Drugs may be the immediate target, but the framework is technology-agnostic. The administration’s own examples of when march-in might be considered include technologies ranging from water purification to safety communication tools.
The government is thus inviting march-in petitions on every patented technology that benefited from even modest federal grants. The consequences could be catastrophic.
Before Bayh-Dole, government agencies retained the patent rights on inventions backed by their dollars—and rarely granted exclusive licenses. By 1980, the federal government possessed nearly 30,000 patents—and licensed fewer than 5 percent for commercial development.
“Contaminated by government funding” was a common refrain when potential commercial partners took interest in university discoveries, only to back out after learning about the government’s ownership of the underlying IP.
In the late 1970s, Sen. Birch Bayh understood this was impeding American innovation. Without exclusive patent rights, investors were understandably unwilling to shoulder the tremendous cost of trying to bring nascent technologies to the market.
The Bayh-Dole Act changed all that. As The Economist wrote in 2002, “[it] unlocked all the inventions and discoveries that had been made in laboratories throughout the United States with the help of taxpayers’ money … [helping] reverse America’s precipitous slide into industrial irrelevance.”
The law has proven so successful that most developed nations have instituted their own versions.
Anti-patent activists have long taken issue with the Bayh-Dole Act, convinced that reverting to non-exclusive, royalty-free licenses on government-backed inventions would deliver cheaper products without any impact on innovation—despite 43 years of evidence to the contrary.
In particular, activists have argued that the government can march in on high-priced drugs because the developers have failed to satisfy the law’s requirement that “the invention is being utilized and that its benefits are . . . available to the public on reasonable terms.”
This argument relies on a tortured reading of the law. Nowhere does the plain text specify price as a trigger for march-in—and the authors of the law, Sens. Bayh and Dole, stated that “Bayh-Dole did not intend that government set prices on resulting products.” All administrations, of both parties, have refused to march in on any product and for any reason since the law was passed in 1980. Until now.
The White House would like the American public to believe that this framework is about taking on Big Pharma. Don’t be fooled; it takes control of patents owned by universities (and their licensees, mostly start-ups) in virtually all areas of technology. It does the same with any and all IP backed by federal dollars, including those that would take funds under the recent CHIPS Act, meant to increase semiconductor innovation in the United States. What company would take such funds if the government can then appropriate its patents?
The administration’s proposal is legally unsupportable and ill-conceived. Adopting it would destroy investors’ incentives to license federally-funded research—and will thus stifle American innovation.
David Kappos served as the undersecretary of Commerce for intellectual property and director of the United States Patent and Trademark Office from 2009 to 2013 under President Obama. Andrei Iancu served as the undersecretary of Commerce for intellectual property and director of the U.S. Patent and Trademark Office from 2018 to 2021 under President Trump. Both serve as board co-chairs of the Council for Innovation Promotion.