For many years, we’ve discussed how the Bayh-Dole Act, which created incentives for universities to patent the (often federally-funded) research results of professors, has been a dismal failure.
The failure is based on the same faulty reason for why people think that patent system itself increases innovation — even in the face of an awful lot of evidence to the contrary. The mistake is in thinking that the key incentives for research is to extract the greatest dollar value in return, and that the key to commercialization is licensing. Neither is true. In academic settings, research is driven by a variety of factors, many of which have little relation to commercial incentives. Second, the key to commercialization tends to be market need, not licensing opportunity.
But, because of this, tons of universities thought they were going to be rich and set up “tech transfer” offices to help license this new found wealth of patents. Reality hasn’t been kind. With a small number of exceptions (the big famous universities like Stanford and MIT), nearly every one of these tech transfer offices have lost money for the universities that set them up. In part, this is often because tech transfer offices like to overvalue the patent, and completely undervalue the actual execution necessary. But, more importantly, the research that comes out in this manner often just doesn’t have that much commercial potential — and a big reason for that may actually be the patents themselves.
By locking up the technology with patents, it’s decreased incentives for sharing ideas, which is where real growth and real innovation comes from. The end result is — entirely contrary to the predictions of Bayh-Dole supporters — that the law has decreased the output of researchers and decreased the value of that output. In other words, it’s done the exact opposite of what it’s promised — and yet we still don’t hear any talk of repealing such a dangerous law.
There’s now some new research on trying to patent and commercialize university research, this time coming out of Canada, and it, too, has found that there’s very little evidence of benefit from patenting and trying to license university research. Effectively, it found that the costs and benefits almost even out.