Technology Transfer and the Public Good

Abstract

Something is rotten in university patent policy. Universities and patents are both supposed to promote the public good. But sometimes, patents may encourage universities to pursue goals inconsistent with the public good.

In 1980, the Bayh-Dole Act amended the Patent Act to allow universities to patent inventions and discoveries funded by federal grants. In response, universities began creating “technology transfer” offices in order to help researchers file patent applications and license university patents. Some university technology transfer offices are successful, generating substantial revenue for the university. But most are not and operate at a loss.

Even more troubling, university patents and technology transfer offices may be economically inefficient. In theory, universities should patent inventions and discoveries only when it is socially beneficial, and should fund socially valuable research, irrespective of its likelihood of generating patentable inventions and discoveries. But currently, universities have an incentive to patent all of the patentable research they generate, even if doing so reduces the public benefit generated by that research. They also have an incentive to patent inventions and discoveries that have no commercial value, because the patent may still have litigation value. And they may even have an incentive to invest more heavily in research that is likely to generate patentable inventions and discoveries than research that is not, irrespective of the social value of the research.

While universities should resist those incentives, the evidence suggests that many cannot. Maybe the government can help? Obviously, it could largely eliminate the incentive for universities to patent research by repealing Bayh-Dole and making most university research unpatentable. But sometimes, university patents may be justified. If a university generates a commercially valuable invention or discovery, why shouldn’t it be able to claim some of the value of that invention or discovery from the private companies that ultimately commercialize it? After all, universities can use that additional revenue to fund more research and benefit the public in other ways.

However, the government could make university patents more efficient by clarifying the standards for patentability and reducing the bias in favor of patentable research. While universities are hardly alone in filing some weak patent applications, reducing uncertainty about patentability would enable them to streamline their patenting efforts. In addition, the government could increase the efficiency of university patents by instructing public grantmakers to prioritize funding research that is unlikely to produce patentable inventions or discoveries. And universities could better align their patent policies with their public purpose and mitigate risk by pooling their patents and sharing the profits.

Keywords: patent, technology transfer, public good, charity law, bayh-dole, patent act