The university-industry engine that drives U.S. innovation is under attack: Guest Commentary

Sweeping probes of university patents cut against a 40-year social contract that turns public research into real-world biomedical cures

Three of the four presidents whose faces are carved into Mount Rushmore played a direct role in establishing the institutions that underpin U.S. innovation — the patent system and the nation’s research university model.* By launching a broad, baseless inquiry into Harvard’s patent estate, our current president is not only attacking a leading research university; he is undermining the very purpose of federal R&D and confidence in the patent system at large.

Congressional authority to enact patent laws is boldly stated in the Constitution: Article I, Section 8 authorizes the legislature “to promote the Progress of Science and useful arts by securing … the exclusive Right to ... their Discoveries.” And Congress did just that by proposing, debating and enacting laws designed to stimulate innovation that have driven the development of major industries for over 200 years.

Beginning in 1790, with the first patent issued under President George Washington and Secretary of State Thomas Jefferson, the United States has sought to promote industrial and economic development. President Abraham Lincoln, himself a patent holder, said the patent system “… added the fuel of interest to the fire of genius.”

For much of the last two centuries, the federal government funded research projects that led to patentable inventions, but limited their commercial application by maintaining exclusive control over those patents. The fatal flaw in this approach was that the government was (frankly) awful at turning the insights inherent in a conceptual invention into useful products, as it strictly limited the ability of the private sector to produce and market products.

After decades of debate, in 1980 a bipartisan Congressional majority — in legislation named after its two Senate co-authors (Indiana Democrat Birch Bayh and Kansas Republican Robert Dole) — altered the law to permit patent holders, including federally-funded universities, to license intellectual property rights to start-up companies that were in turn funded by future-oriented, risk-taking venture capital firms.

The rules for this erstwhile bargain were — and remain — straightforward. Recipients of federal research grant funding, including Harvard and hundreds of other universities, can retain and benefit from resulting patent rights provided they make good faith efforts to commercialize the results of their research for the benefit of the public. In doing so, universities typically license these rights to commercial firms. In return, the university receives a licensing fee, royalties or upfront payments**. There are also sensible rules for disclosure and reporting to the relevant federal agency.

This compact between the federal government and research funding recipients has been an unequivocal economic success. Since 1996, the Bayh-Dole coalition calculates that this namesake act has spurred $1.9 trillion in economic growth and created 6.5 million new jobs. The Center for Strategic and International Studies has found that Bayh-Dole also has been critically important in developing technology that enhances U.S. defense and national security interests.

President Donald Trump has demanded that Harvard account for its compliance with Bayh–Dole obligations across 5,800 patents arising from research supported, in whole or in part, with federal funds. The request is not specific to any individual patent, field of research, agency or program, or issuance period.

Taken in context, the inquiry appears retaliatory for the university’s First Amendment–protected speech. Harvard’s recent successes challenging other federal actions, for example, on the grounds that they denied due process or violated the Administrative Procedure Act, underscore the concern.

What is at risk is far more than the rights and privileges of a single university, however prominent and well-endowed it may be. The entire ecosystem of cutting-edge technology is largely derived from the Bayh-Dole framework. Congress authorizes and appropriates money to federal agencies for programs designed to advance the economic and public health interests of the American people. We hope and expect universities will invent new things, patent them, and license them to private sector companies.

Since the 1980s, the U.S. has witnessed an explosion of venture, or risk, capital investment in companies seeking to create viable commercial products based on federally funded discovery research at universities. Companies with household names like Google and Genentech, as well as broadly impactful technological breakthroughs, including cancer immunotherapy, HIV/AIDS treatments and electric vehicle batteries, can all trace their success to the Bayh-Dole bargain.

The Supreme Court has long held that the federal government may not use its power to punish the exercise of Constitutional rights. Since Sweezy v. New Hampshire (1957) and Keyishian v. Board of Regents (1967), universities have been recognized to possess a degree of academic freedom. Freedom from retaliation was protected in Pickering v. Board of Education (1968), Mt. Healthy City School District Board of Education v. Doyle (1977), Heffernan v. City of Paterson (2016), and Nieves v. Bartlett (2019). Here, Harvard appears to face punishment solely on a pretextual or imagined basis for its First Amendment–protected activity, including the right to defend itself in litigation in federal court.

The final safeguard for the U.S. system of innovation and its underlying patents must come from a thoughtful assertion by the other branches of government. Congress should clarify the prerogatives and limits of Bayh-Dole and its oversight, and the federal judiciary should intervene to prevent any attempted overreach. Business leaders, especially those in the life sciences and technology sectors, must recognize that misguided attacks on research universities threaten our innovation infrastructure and raise their voices accordingly.

We urgently need countervailing advocacy to support Harvard and our nation’s other research universities. A failure to enjoin this counterproductive and illegal exercise of presidential power will lead to predictably disastrous effects, undermining intellectual property rights and limiting economic growth.

David Beier is a managing director at Bay City Capital and serves on the board of Infinity Pharmaceuticals and the University of California, San Francisco Benioff Children’s Hospital. He was chief domestic policy adviser to Vice President Al Gore and has been a senior executive with Amgen Inc. and Genentech Inc.

John Osborn is an affiliate professor of law at the University of Washington, Seattle, and a venture partner with the BioVentures Investors medtech fund. He was a senior executive with Cephalon Inc. and US Oncology Inc. and served in the U.S. State Department in the George H.W. Bush administration.
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* Thomas Jefferson founded the University of Virginia. Abraham Lincoln signed legislation that created the land grant college system under the Morrill Act of 1862, whose numbers now include Cornell, Iowa State, the Massachusetts Institute of Technology, Michigan State, Penn State, Ohio State, Purdue, the universities of Minnesota and Wisconsin, Virginia Tech, and scores of others.

** According to the Information Technology Innovation Foundation (ITIF), between 1996 and 2020, 554,000 patents from university collaborations were disclosed, and 141,000 patents were granted, leading to a contribution of $1.9 TRILLION in gross industrial output. On average, three new start-up companies and two new products are launched EVERY DAY as a result of university inventions brought to the market, at least in part, thanks to the Bayh-Dole Act. In the life sciences, 498 companies arose from university-licensed research during the period.
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