December 12, 2017


40 years on: The Bayh-Dole Act and University Innovation

by Celeste Ferguson

December 12, 1980. It was a Friday afternoon, and the 96th Congress was meeting. Jimmy Carter had lost to Ronald Regan in the previous month, making this a lame-duck session. Still, an important act was being passed. One that would have a tremendous effect on university innovations and become the catalyst to stimulate the entire U.S. economy.

The Patent and Trademark Law Amendments Act, better known as the Bayh-Dole Act, allowed universities to lay claim to all new ideas made in labs and research centers backed by federal funding—taxpayers’ money. This virtually unknown act would not only fuel Duke innovations, but end up playing a crucial role in changing the U.S. economic system from a manufacturing base to one where innovation led the way.

The idea was simple and straightforward. Create a single set of rules for all federal funding agencies to grant ownership of inventions to the universities and researchers that created them. With schools and researchers given the freedom to negotiate their license terms, more ideas would start to migrate from the lab to the market and in turn, provide economic growth.

The Stifling of Innovation

In the 1960s and ‘70s, Japan was leading the way for innovation. Honda, Sony, and Seiko were transforming entire industries, while Japanese steel was giving Pittsburgh’s steel mills a run for their money.

Back home, the government was stifling innovation by claiming ownership of university-generated ideas and patents. At the time, over 60% of all academic research was funded by government agencies, such as the National Institutes of Health and the National Science Foundation.

With the government owning any innovations made from this research, it was extremely difficult for private sector investors to capitalize and bring to market any novel ideas. A potential investor would have to go through expensive and tedious negotiations, even before risking more capital towards an unseasoned idea.

“The problem was that whenever federal dollars went into research—as almost all of our universities were getting federal grants to do research—and any ideas that were developed from those dollars, those grants, the patents that were secured were owned by the government, and no private individual or company could get access to them,” said Senator Bayh in a 2010 interview.

For Duke and other university innovators, this became known as the period of “contaminated” research. A time when an innovator’s hard work sat useless in the Patent and Trademark Office.

A Call to Senator Bayh for Help

Robin Rasor and Sen. Bayh
Robin Rasor, Executive Director for the Office of Licensing & Ventures with Sen. Bayh at the 30th Anniversary of the Bayh-Dole Act.

In the summer of 1978, Ralph Davis was head of Purdue’s technology transfer office. Tired of watching novel ideas taken away by federal agencies only to gather dust in the patent office, he met with Senator Bayh to voice his concerns. One of the Senator’s staffers, Joe Allen, did a bit of digging and found that billions of taxpayers’ dollars had resulted in 28,000 ideas. However, only 5% of these innovations were being licensed to industry—hardly a return on investment for the taxpayers.

“We were heading into a very contentious election year with partisanship running high. But one thing we could all agree on was that this was a colossal waste at a time when our economy was in a tailspin. We found that Sen. Dole shared our concerns so we formed a bipartisan team which soon attracted support from all sides of the aisle,” Joe Allen recalled.

Davis and Allen brought two others into the conversation: Howard Bremer, charged with patent research and development for the University of Wisconsin and Norman Latker, a patent attorney at the NIH. The unique perspective of each of these individuals was crucial in drafting legislation that would take university innovations to the marketplace.

Transforming Society Through Tech Transfer

innovation economy infographicThe 1980s saw a significant shift in fortunes for the U.S. Japan began slowing down, and Europe started paying attention to the sudden influx of innovation coming out of America. Duke and other universities became incubators for discoveries in tech and medicine. Entrepreneurial professors began forming their own companies, creating jobs and contributing to a thriving U.S. economy.

From 1996 to 2016, over 12,000 companies have been spun out by academic institutions supporting 4.3 million jobs. $1.3 trillion has been pumped into the economy as over 200 new FDA approved vaccines and drugs were discovered. †

Driving Duke’s Innovations

Founded in 1986, Duke’s Office of Translation and Commercialization (OTC) is made up of specialists in research review, licensing, business development, and legal matters who are experienced in transferring technologies to the marketplace.

Duke is recognized as one of the premier research institutions in the world. With over 300 inventions, 85 issued patents, and 11 new start-ups in FY16 alone, we’re turning our world-class research into innovations for the benefit of society.

“This is such an exciting time to be at Duke. From the interdisciplinary work of our Institutions to student collaborations and clinical research, we are thinking creatively about the world’s most intractable problems and actively finding solutions to solve them,” President Price said at OTC’s Invented at Duke Celebration.

Since 1988, Duke has spun out over 200 companies. From robotic arms that sense motion down to the microsecond, to the first human-derived antibody to target cancer, to developing seamless global connectivity across land, sea, and air, Duke is creating some of the world’s most innovative companies.

Have You Got an Idea?

Alexander Graham Bell was famously given a year’s paid leave of absence from Boston University to work on a little theory of his concerning sound waves and electricity. The ramifications of this great idea are entrenched in society today.

Coming up with a great idea might transform our lives or might just make a small, but significant change. Either way, thanks to the Bayh-Dole Act, your idea is yours to develop. So, don’t hesitate–Come tell us about it; we can help

† This information was compiled from Association of University Technology Managers (AUTM) and the Biotechnology Innovation Organization (BIO): The Economic Contribution of University/Nonprofit Inventions in the United States: 1996-2015 and AUTM U.S. Licensing Activity Survey FY2016.

*Main photo of Sen. Bayh and Joe Allen at December 12, 1980 hearing, courtesy of Joe Allen.