University research IP protections undermine commercialization regardless of university or inventor ownership – should be public domain

[Christopher J. Jr., et al. "The Hidden Cost of University Patents." Berkeley Business Law Journal, vol. 21, no. 1, 2024, pp. 203-249. HeinOnline -tm]

The current state of university patents-especially with respect to the incentives inherent in the patent regime that privileges university-generated research and patenting-is a quagmire. As we explain in this article, a substantial body of scholarship questions the effectiveness, efficiency, and wisdom of university patents in general and the Bayh-Dole Act in particular.1so It is unclear to what extent patent ownership causes universities to generate more valuable innovation, and there is limited evidence that this goal actually has been fulfilled.1s1 Thus, it is difficult to justify subsidizing university research both directly through grants and indirectly through patents, and there is some evidence that the justifications provided work far better in theory than in practice.

Although more than four decades have passed, it remains disappointing that Congress encouraged universities to claim private ownership of ideas, rather than releasing them to the public domain.1s2 Since the passage of the Bayh-Dole Act, the practical effect of university patents on innovation policy is clear. The Bayh­ Dole Act enabled universities to patent inventions and discoveries produced by academics, rather than releasing them into the public domain.1s3 While the Bayh­ Dole Act was intended to encourage the commercialization of academic innovation, it may have had the opposite effect. It incentivized academics to patent their inventions and discoveries, and incentivized universities to enforce those patents. As a consequence, academics delayed disclosing their research results until they could patent any inventions and discoveries, and universities used those patents to prevent commercialization without a license. Inevitably, research results were often disclosed later, or not at all, and became more expensive to commercialize.

In addition, university patents may have reduced the commercialization of innovation rather than increasing it.154 Like any other form of intellectual property, patents impose transaction costs.155 Sometimes, these costs are justified, such as when they encourage more innovation. But universities are charitable organizations and are in the business of funding innovation. They do not need a patent incentive. As charitable organizations dedicated to education and the advancement of knowledge, universities should make the innovations they produce available to everyone-and perhaps for free. That's their charitable purpose.

At best, the Bayh-Dole Act was an effort to reduce government spending on universities by using the patent system to provide indirect funding. But it is easy to imagine worse intentions, especially given the results. As it stands, universities receive billions of dollars in federal research grants.156 The Bayh-Dole Act gives them an incentive to patent anything they can and to sell those patents to the highest bidder, whether or not the buyer has any interest in commercializing the innovation.157 The apparent result of the Bayh-Dole Act was predictable, and Congress should have predicted it.15s