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Your View: Biden administration proposal would rob Pennsylvanians of new products

Colorado University post-doctoral researcher, Na Li, right, and graduate student Anya Grafov set up laser equipment at the school's Joint Institute for Laboratory Astrophysics Kapteyn-Murnane magnetics lab. (Andy Cross/The Denver Post)
Colorado University post-doctoral researcher, Na Li, right, and graduate student Anya Grafov set up laser equipment at the school’s Joint Institute for Laboratory Astrophysics Kapteyn-Murnane magnetics lab. (Andy Cross/The Denver Post)
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By Lou Berneman

Pennsylvania has long been a hub of scientific and medical advancement. Our extensive network of research universities plays a critical role. Artificial lungs, nanoparticles that clean the environment, and the mRNA technology underlying the first COVID-19 vaccines are just some of the breakthroughs that our state’s devoted researchers have discovered and entrepreneurs have developed.

I served as Penn’s director of technology transfer for a decade, and I am concerned that similar breakthroughs may not be achievable in the future.

Government officials are trying to twist a decades-old law that has allowed entrepreneurs to turn thousands of promising university discoveries into products and services that change the way we all live, work and play. Unless cooler heads prevail, consumers in Pennsylvania and across America will lose out on inventions ranging from medicines to renewable energy technologies.

Lou Berneman is founding partner emeritus of Osage University Partners in Bala Cynwyd, Montgomery County. He previously served as managing director of the Center for Technology Transfer at the University of Pennsylvania. (Contributed photo)
Lou Berneman

The law in question is the Bayh-Dole Act of 1980 — landmark legislation crafted by visionary lawmakers Senators Birch Bayh, D-Ind., and Bob Dole, R-Kan. — who understood not only the enormous potential of American brainpower in our research institutions and private sector, but also how government policy was thwarting the commercialization of discoveries.

Before Bayh-Dole, Washington owned the patents — and controlled the licensing — of discoveries made with federal funding at American universities. Government bureaucrats had little incentive to find private-sector companies capable of turning researchers’ good ideas into tangible products.

The government licensed only about 5% of federally funded discoveries. Indeed, 95% of government-controlled inventions were never licensed and provided no benefits to the taxpayers who funded them.

The Bayh-Dole Act granted universities the right to own, patent and license discoveries made with federal funding. By doing so, the law incentivized universities to invest in costly patent applications and seek out companies and entrepreneurs to develop and commercialize their discoveries.

Since 1980, patenting and licensing of academic inventions has fueled economic growth, rewarded productive scientists and engineers, generated royalty income, and promoted public good. Because the law allows universities to grant exclusive licenses, entrepreneurs working to commercialize promising discoveries can attract venture capital. Thanks to this ingenious system, consumers have seen a surge in new products and services ranging from Honeycrisp apples to the Google search engine.

The Bayh-Dole Act did, however, reserve for the government certain “march-in” powers — the authority of agencies to relicense patents under certain limited circumstances. For instance, if a patent owner or licensee was failing to reasonably seek development of an invention, the government could march in and relicense it to a company that would fulfill those obligations.

March-in rights serve as a guardrail to prevent companies from simply sitting on patented discoveries. March-in was never meant to be used as a tool to cap the prices of products. Indeed, Bayh and Dole said so explicitly: “The ability of the government to revoke a license granted under the act,” they argued in a letter to The Washington Post 22 years after the act’s passage, “is not contingent on the pricing of a resulting product … from government-funded research.”

Government bureaucrats now disagree with the law’s authors. Administration officials want to allow federal agencies to void licensing agreements if bureaucrats deem already-developed and commercialized products — including, for example, medicines, 3D printing technologies and advanced water filtration systems — to be unreasonably priced.

The government could then relicense those patents to favored companies, which could reap substantial profits by creating and selling copycat products without having to spend millions or billions of dollars on their own research and development.

Using march-in to cap prices would undermine universities’ licensing efforts and stifle entrepreneurs’ interest in commercializing embryonic discoveries. Companies would — quite reasonably — conclude that if their patent rights were not secure, it would not make sense to invest resources necessary to bring new products to market. As a result, researchers’ hard work would never make it out of the lab.

The government’s march-in proposal flies in the face of four decades of precedent. The Bush, Obama, Trump and Biden administrations all rejected attempts to use march-in as a de facto price control method — both because the Bayh-Dole Act doesn’t allow this abuse, and because they knew that investors and companies would be reluctant to fund research and development if the government could arbitrarily void patent licensing agreements.

In fact, President Joe Biden himself has long been a champion of Bayh-Dole. As a senator, he was a member of the bipartisan majority that voted to enact Bayh-Dole in 1980. And, in 2000, he opposed attempts to twist Bayh-Dole’s meaning to enact price controls.

Now, Biden has a new responsibility — to rein in the government officials who seek to upend this historic law. If he doesn’t, the innovation pipeline is likely to dry up. And Pennsylvanians will be robbed of countless products that could improve, or even save, their lives.

Lou Berneman is founding partner emeritus of Osage University Partners in Bala Cynwyd, Montgomery County. He previously served as managing director of the Center for Technology Transfer at the University of Pennsylvania.

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