A long, Hard Journey: From Bayh-Dole to the Federal Technology Transfer Act

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A Long, Hard Journey: From Bayh-Dole to the Federal Technology Transfer Act
A constant series of Congressional actions between 1980 and 2000 directly link the evolution of federal patent policies from universities straight to the federal laboratory system. Congress consciously modeled federal laboratory policies on the 1980 Bayh-Dole Act.1 Senator Dole even tried expanding Bayh-Dole to cover the federal laboratory system in 1984.
That this did not happen and there are now separate statutes for universities and most federal laboratories was an accident of political history. Because this history is largely lost, many practitioners see the university technology transfer system and the federal laboratory system as similar but unrelated.
This article demonstrates that the Federal Technology Transfer2 Act truly is the son of Bayh-Dole in the fullest sense.
It also demonstrates that a key driver in the development and implementation of a comprehensive patent policy was the existence of an effective Executive branch oversight office. That this oversight function is now absent raises serious questions about the future of the U.S. technology transfer system that has done so much to restore American competitiveness by linking the best research minds in universities, federal laboratories and industry.
Prior to 1980, management of federally funded inventions was covered under a mish mash of conflicting statutes, agency policies and presidential directives. Normally the federal government took ownership of inventions created under its funding, making them available to all non-exclusively. Because creators and potential developers of these inventions lacked the authorities and incentives of patent ownership, most such discoveries languished on the shelves of government agencies. This lack of return on taxpayer investment, coupled with a serious decline in U.S. competitiveness led Senators Bayh (D-IN) and Dole (R-KS) to introduce legislation in 1978 to begin the overhaul of federal patent policies.
Hearings on the bill revealed that at least 20 different patent policies existed across the government, with some federal agencies having conflicting policies in various programs. Normally universities and contractors whose inventions were taken by their funding agencies could petition to have patent ownership rights restored to them. Such actions frequently took between 18 to 24 months to process. This did not imply that the result was necessarily favorable to the inventor. Obviously, such uncertain ownership coupled with serious delays in decision making made commercialization difficult.
A very successful administrative policy of the National Institutes of Health granting patent rights to universities with technology transfer offices was terminated by the Carter Administration. NIH planned to revert back to the federal ownership model then prevalent.
This action led several universities to approach Senators Bayh and Dole separately asking them for a legislative solution establishing for the first time a uniform patent policy to encourage the commercialization of billions of dollars of federally funded R&D.
The result was the introduction of the University and Small Business Patent Procedures Act seeking to “cut through this sea of red-tape” in the words of Senator Bayh. Because the unusual partnership of a liberal Democrat and a conservative Republican addressing what was becoming a pressing competitiveness issue made such a strong political impression, the bill was quickly nicknamed “Bayh-Dole.”
While the initial debate on the Bayh-Dole bill focused on patent ownership by universities and small businesses, Congress was also developing a framework for more effective management of federally-funded R&D in general. The key principles were the decentralized management of inventions by their creators, rewards for public sector inventors along with funding more research in their facilities and the utilization of the incentives of the patent system to encourage industry to assume the risks of subsequent commercial development.
Because of the unique role that universities and small businesses have in fostering innovation, the Bayh-Dole legislation focused on this element. However, it also provided authority for licensing all government owned inventions. The fact that the government rarely found licensees for more than 28,000 patents “gathering dust on the shelves” was a rallying cry for Bayh-Dole supporters.
Many of these inventions came from federal laboratories either operated by the government or its contractors. To address this problem, Sections 207- 210 of the bill authorized the federal agencies to apply for patents and license them non-exclusively or exclusively as necessary for commercial development. These provisions were the genesis for the subsequent overhaul of patent policies for the federal laboratory system.
During the Senate Judiciary Committee’s deliberations, the legislation’s scope began to broaden in other ways as well. Early on Sen. Howard Metzenbaum (D-OH) asked Senator Bayh to expand coverage of the bill to nonprofit research organizations like the Battelle Memorial Institute. Senator Bayh was happy to make this change as it comported with the intent of the bill and Senator Metzenbaum was thought to be one of the most likely opponents of changing the old patent policies of putting inventions freely into the public domain. Subsequently, Sen. Metzenbaum joined as a co-sponsor of the bill.
Large companies were also closely following the Senate Judiciary Committee debate. Because many big defense contractors were allowed to own resulting inventions under Department of Defense (DOD) administrative polices, General Electric (G.E.) requested that Senator Bayh insert a provision stating that passage of Bayh-Dole was not intended to undercut DOD practices. If such language was accepted, G.E. pledged that it would not block passage of Bayh-Dole even though competing legislation by the Carter Administration and Senator Stevenson (D-IL) was pending focusing on big business while also providing coverage to universities.
Given such an offer from G.E., Senator Bayh inserted the following provision into the bill:

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