The Law That Launched a Thousand (More Like 6,500) Companies
The most important piece of American legislation you never heard of was signed into law 30 years ago this month, and according to one of its sponsors, it came within 20 minutes of never happening.
The law is the University and Small Business Patent Procedures Act, enacted in December 1980. Former Senator Birch Bayh of Indiana, who introduced the bill with his colleague Robert Dole of Kansas, talked about the bill at an meeting on December 1 in Washington, D.C. commemorating the 30th anniversary of its passage.
The bill, commonly known as the Bayh-Dole Act, gave universities (also not-for-profits and small businesses) ownership of the innovations coming out of federally-funded research on their sites. The bill also encourages research institutions to patent the inventions they create, license the findings to companies — particularly small businesses — to create goods and services for market, and share the royalties with the inventors.
Collecting dust rather than dollars
Before the bill, the U.S. government owned the intellectual property rights to the research. While it may seem logical to give the government ownership of the findings from the research it funds, nothing was happening to convert those findings into marketable goods and services. And that included development of new drugs and medical devices from biomedical research conducted by university faculty. The wealth of potential innovations, and the economic wealth they can produce, were just gathering dust.
Since becoming law, the Bayh-Dole Act has successfully connected the brainpower in American universities to the entrepreneurial and industrial engines in the American economy. According to the Association of University Technology Managers (AUTM), the people on campuses responsible for commercializing research, the bill helped create some 5,000 new products, included 154 drugs approved by the FDA. AUTM estimates Bayh-Dole has pumped $187 billion into the U.S. economy, creating some 279,000 new jobs and 6,500 new companies.
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