New Biden Admin Proposal Legitimzes Foreign IP Theft
By John Fraser
America's position as a global tech leader is under attack from within.
President Biden just announced the government can claim patent rights on federally-funded, private-sector inventions it deems unreasonably priced. As justification, he cites a 43-year-old law called the Bayh-Dole Act, which played a key role in establishing the United States as the world's most innovative nation.
But the plan violates both the letter and the spirit of the Bayh-Dole legislation, which was never intended to serve as a mechanism for government price controls according to Senators Bayh and Dole. Even worse, President Biden's plan would legitimize foreign businesses and governments that want to steal American inventions. If the U.S. government can't be bothered to protect U.S. patents, why should anyone else respect them?
The law gives academic institutions ownership over discoveries their researchers have made with the help of federal dollars. Universities license those discoveries to both small and large private companies with the resources to turn them into products.
Before 1980, the patent rights to nearly all discoveries made with federal aid belonged to the government -- which mostly just sat on them. When Bayh-Dole passed, federal agencies held some 28,000 patents, of which fewer than 1,400 had been licensed for further development. None of the licenses were for new drugs.
After 1980, commercialization skyrocketed. Today, innovation spurred by Bayh-Dole supports millions of jobs and thousands of startups. Between 1996 and 2020 it contributed over $1 trillion to U.S. gross domestic product.
Due to unique circumstances that existed in 1980, Bayh-Dole allows the government to "march in" and relicense patents to third parties in certain well-defined, narrow circumstances. But Sens. Bayh and Dole themselves affirmed that price did not count as a trigger for march-in.
The Biden administration's plan would send a chilling effect through our most innovative sectors. Startups and investors would balk at partnering with universities, knowing that the government could swoop in and claim patent rights for any product that benefited from federal research dollars at some point in its development.
President Biden seems not to have considered that weakening our intellectual property system in this way could encourage foreign adversaries to scoop up American inventions for their own gain. China already steals some $600 billion worth of intellectual property and technology from the United States each year, according to a report from a 2023 bipartisan House select committee.
The impact would go beyond massive economic losses for the United States. Much foreign IP theft occurs in critical research areas like semiconductors and artificial intelligence. In the wrong hands, like those of the Chinese military, these technologies constitute a national security threat.
Biden has pitched the march-in proposal as a way to lower drug costs. A similar approach to controlling prices was already tried around 35 years ago -- with disastrous results. Public-private cooperation plummeted. After several years, the Director of the National Institutes of Health scrapped the program and collaborations increased once again.
Bayh-Dole made the United States the most inventive country on the planet and can help maintain our technological dominance in the future. But using the law to undermine patent rights would be counterproductive. Biden's proposal can't become official policy until after a public comment period that ends in February. In the meantime, let's hope the administration scraps the idea. The future of American innovation and prosperity does indeed hang in the balance.
John Fraser, a past president of AUTM and former executive director of Commercialization at Florida State University, is president of Burnside Development, a consulting company.
