40 Years on, Bayh-Dole is Stronger than EverJuly 29, 2019

The Bayh-Dole Act was passed in 1980 and is arguably one of the most successful pieces of bipartisan legislation ever passed. The first line of the Act says, “It is the policy and objective of the Congress to use the patent system to promote the utilization of inventions arising from federally supported research or development….”

Since its passage in 1980, the number of granted patents receiving government funding has increased rapidly. The number of granted patents that relied on federal research increased from about 12% in 1980 to about 28% in 2017 (after hitting a high of 30% in 2011). However, as supported by the newest National Science Board (NSB) report, the business sector is neither publishing nor investing much in basic research.

In 2015, the last year the NSB compiled research and development (R&D) spending in the United States, the business sector contributed about 67% of total spending. However, the business sector only contributed about 27% of basic research spending. In comparison, the federal government contributed about 44% of basic research spending. Higher education was the main recipient of this funding, receiving nearly half of all contributions from all sectors, while businesses only received about a quarter. Although, the business sector contributed about 82% of all funding for development, and received nearly 90% of all development funding.

This is how the Bayh-Dole Act was intended for use. By allowing the public sector to assume the risk of basic research and keep ownership of their inventions, it allows the business sector to use the positive externalities generated from this research and the certainty of ownership to lower their risk and invest more in developing more products for consumers. The fact that nearly a third of all issued patents now cite to support by federal funding is a testament of how well the public and private sectors can function together when legislation properly aligns incentives.

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