brian oshaughnessy

100 Misguided Lawmakers Could Undermine American Universities

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By Brian O’Shaughnessy

American universities have long attracted the best and brightest from around the world. They come for the sophisticated research opportunities that prevail in academic labs — funded, in part, by American taxpayer dollars.
But with taxpayer dollars comes political scrutiny. One-hundred members of Congress proposed a reinterpretation of the law that fuels this world-class R&D engine. And their short-term political ploy, if adopted, would undermine U.S. leadership in higher education.
Back in the 1970s, leaders in Congress realized that America’s research apparatus was not achieving all that it could. While federal funds supported groundbreaking research in academic labs across the nation, those funds came with strings attached. Namely, the government retained title to patents if they arose from research funded in any part by taxpayer dollars.

brian oshaughnessy

Brian O’Shaughnessy

And the government did a poor job of finding companies willing to invest in turning that patented basic research into actual, useful products. The feds licensed fewer than 5% of those patents to the private sector.
University and small business leaders proposed a solution to this waste: decentralization. Rather than Washington bureaucrats licensing federally funded inventions, universities and small companies themselves could license patents they developed with government support.
Formalized in a bipartisan 1980 law colloquially known as the Bayh-Dole Act, this arrangement unleashed a frenzy of university research and successful commercialization.
Thanks to the current congressional proposal, however, Bayh-Dole and sponsored research at America’s universities could soon be eviscerated.
Hoping to find a silver bullet to cut drug prices, lawmakers zeroed in on an obscure provision of the Bayh-Dole Act. It allows the government to “march in” and relicense patents derived from federally funded research in a few rare circumstances.
These lawmakers, however, want to twist the original intent of this provision in hopes of marching in on innovative products that, thanks to Bayh-Dole, are already on the market. Essentially, they’re proposing to use march-in rights as de facto price controls.
The authors of the 1980 law definitively stated that Congress never intended to grant such authority to the federal government.
And for good reason. If the private sector believed that the government could rip up carefully negotiated license agreements on a whim, firms would not license university research, nor would they pour hundreds of millions, or even billions, of dollars into sponsoring academic research and then developing that research into useful commercial products.
We’ve already run this experiment. In 1989, the federal government began inserting a “reasonable pricing clause” into patent licenses and cooperative research and development agreements (CRADAs) between federally funded academic institutions and the private sector.
Instead of lowering drug prices, however, this policy repelled private industry from collaborating with academia.
Resurrecting these failed policies would once again deal a blow to America’s research universities. The opportunity to perform research, and collaborate with industry, attracts thousands of bright foreign students to the United States every year. By and large, these students stay in the country and help America maintain a net positive trade imbalance in “intellectual capital.”
Gutting American academic research means that more of those students will take their talent and their tuition dollars to competing markets. That’d be a tragic outcome.
Destroying Bayh-Dole’s virtuous research and development cycle could upend American higher education. That’s an unfathomably high price to pay. Let’s not do it.
Brian O’Shaughnessy is chair of the IP Transactions and Licensing Group of Dinsmore & Shohl, LLP, and a past president of the Licensing Executives Society (USA & Canada), Inc. He also serves as chair of the Bayh-Dole Coalition Board of Directors. This piece originally appeared in RealClearEducation.

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