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The Bayh-Dole Act: Selected Issues in Patent Policy and the Commercialization of Technology

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Publication Date: February 2009

Publisher(s): Library of Congress. Congressional Research Service

Series: RL32076

Topic: Science and technology (Technology and technology policy)

Abstract:

Congressional interest in facilitating U.S. technological innovation led to the passage of P.L. 96-517, Amendments to the Patent and Trademark Act (commonly referred to as the Bayh-Dole Act after its two main sponsors). The act grants patent rights to inventions arising out of government- sponsored research and development (R&D) to certain types of entities with the expressed purpose of encouraging the commercialization of new technologies through cooperative ventures between and among the research community, small business, and industry.

Patents provide an economic incentive for companies to pursue further development and commercialization. Studies have shown that research funding accounts for approximately one-quarter of the costs associated with bringing a new product to market. Patent ownership is seen as a way to encourage the additional, and often substantial investment necessary for generating new goods and services. In an academic setting, the possession of title to inventions is expected to provide motivation for the university to license the technology to the private sector for commercialization in expectation of royalty payments.

The Bayh-Dole Act has been seen as particularly successful in meeting its objectives. However, while the legislation provides a general framework to promote expanded utilization of the results of federally funded research and development, questions are being raised as to the adequacy of current arrangements. Most agree that closer cooperation among industry, government, and academia can augment funding sources (both in the private and public sectors), increase technology transfer, stimulate more innovation (beyond invention), lead to new products and processes, and expand markets. However, others point out that collaboration may provide an increased opportunity for conflict of interest, redirection of research, less openness in sharing of scientific discovery, and a greater emphasis on applied rather than basic research. Additional concerns have been expressed, particularly in relation to the pharmaceutical and biotechnology industries, that the government and the public are not receiving benefits commensurate with the federal contribution to the initial research and development.

Actual experience and cited studies point to the conclusion that companies which do not control the results of their investments either through ownership of patent title, exclusive license, or pricing decisions tend to be less likely to engage in related R&D. The importance of control over intellectual property is reinforced by the positive effect P.L. 96-517 has had on the emergence of new technologies and techniques generated by U.S. companies.

This report will be updated as events warrant.

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