Bayh-Dole Act restructured how small businesses, universities commercialize new technologies

December 14, 2010

Joseph Hornett
David Johnson

It is not an exaggeration to say that the Bayh-Dole Act of 1980 restructured the way small businesses, universities and nonprofits develop and commercialize new technologies from federally funded university research.

The act permits universities, nonprofits and small businesses to retain the right to inventions developed through federally funded research. In other words, it allows universities to move discoveries to the public and become part of the nation's "innovation ecosystem."

Co-authored by Sens. Birch Bayh of Indiana and Robert Dole of Kansas, December 12 marked the 30th anniversary of the passage of this important legislation.

Indiana has benefitted greatly because of its forward-thinking senator, even though back in 1980, company formation from university research was almost nonexistent. However, that  foresight now helps dozens of startups each year, particularly within the state's life sciences sector.

According to Bayh, it was a call from Ralph Davis of Purdue University's first patent office that started his momentum to author the bill. Davis explained to Bayh that "Purdue had several promising government funded inventions taken away under existing federal patent policies … and making the [technologies] widely available through non-exclusive licenses doomed technology development."

It was a call to action for Bayh and, thus, began his support to introduce legislation that would fundamentally change the way universities, nonprofits and small business commercialize their intellectual property.

Data support this consensus: More than 7,000 new companies have been created from university-based discoveries, according to the Association of University Technology Managers. These companies represent 5,000 new products, 153 new drugs and vaccines and about 280,000 new jobs. Their impact on the U.S. gross domestic product is nearly $190 billion. And Indiana has had its fair share and continues to contribute to these numbers through our growing cadre of companies borne from translational research.

Purdue University, Indiana University, the University of Notre Dame, Rose-Hulman Institute of Technology and many other institutions in the state have dedicated entities to move discoveries from the laboratory to the marketplace - and in the case of health-care discoveries, to the patient.

For example, in the past seven years the Purdue Research Park has expanded its West Lafayette location to sites in Indianapolis, Merrillville and New Albany. The park, which is managed by the Purdue Research Foundation, now has 200 companies that employ 4,000 people at an annual average pay of $54,000. That is about 54 percent higher than the average annual pay in the state.

More than 65 Purdue University faculty and staff are actively involved in startups based on their discoveries and affiliated with the Purdue Research Park. Other faculty and staff assist with research and development for companies throughout Indiana.

Many of the startups based on university technologies are bringing additional federal dollars in the forms of Small Business Innovation Research and the Therapeutic Discovery Project Credit (TDPC). While Endocyte Inc., SonarMed Inc., Kylin Therapeutics Inc., and Biosciences Vaccines Inc., are just four examples of startups that have successful track records of bringing dollars back to the state, more than $10 million came to Indiana's entrepreneurial companies in October as a result of the TDPC.

The Bayh-Dole Act was a seed that planted the entrepreneurial spirit in our university researchers and continues to bear fruit today.  At a time of mounting market pressures and increased challenges to innovation, far-sighted policy makers should consider building further on Bayh-Dole's worthy legacy.

Joseph Hornett is senior vice president, treasurer and COO of the Purdue Research Foundation

David Johnson is president and CEO of BioCrossroads

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