Condition government funding wouldn’t solve – multiple reasons

[Brenda M. "Preserving the Fruits of Labor: Impediments to University Inventor Mobility," Tennessee Law Review 89, no. 1 (Fall 2021): 1-66 heinonline gdi-tm]

Conditions on Governmental Incentives are a Promising Alternative

Another prom1smg option would be placing conditions on government incentive structures to encourage universities to support departing inventor involvement in development. Examples of government incentive structures include grants, tax credits, or deductions. Gi:ants provide financial support for research and development in academic institutions. 407 The two main research and development disbursements in the Tax Code include a "credit for increasing research activities" as well as a deduction for research and experimental expenditures.408 .

Requiring compliance with conditions on incentives could encourage universities to allow inventors to use innovation-essential components even after they depart. For instance, government agencies could require universities to agree to adhere to reasonable licensing policies that allow for continued inventor use in project proposals or as a condition of obtaining funding or tax incentives, absent a showing of extraordinary circumstances. 409 Government agencies have evaluated project proposals in light of similar considerations, requesting applicants describe how a "transfer of knowledge" will occur and whether a project has "the potential to benefit society." .410 They have alsb placed siniilar conditions on obtaining funding, such as requiring conflict of interest policies.411 Alternatively, agencies could allocate funding to encourage continuing involvement by academic inventors, regardless of whether they have left the grant recipient.412

To incentivize academic institutions to allow departing inventors access to innovation-essential components, a government grant or tax incentive would have to be sufficient to overcome market-based incentives and required conditions would need to be complied with and enforced. Compliance could be problematic. As an example, consider the NIH's issuance of non-binding best practices stating that recipients of grants related to certain types of technology should only be exclusively licensed if necessary to commercialize an invention.413 Although a laudable goal, these discretionary guidelines tend not to be complied with by grant recipients.414 Governmental actors may be subject to political pressures and inefficient management in allocating funding, requiring compliance, and enforcing conditions, although some of these risks could be minimized with clear guidelines and effective oversight. 415 • Further, instituting and enforcing governmental incentives can be costly. 416 If the social benefits of ensuring tacit knowledge transfer are sufficiently important government objectives, however, providing incentives may be a worthwhile mechanism for encouraging universities to work with departing inventors. In addition, placing conditions on grants and tax incentives for university inventor involvement may be unnecessary, as not all inventions require the transfer of tacit knowledge for successful development and not all tacit knowledge transfer requires formal mechanisms.417 However, the importance of tacit knowledge transfer is much more likely to be relevant fortechnology that draws upon the nascent research typical of university-based inventions, as opposed to inventions in general. 418 Overall, even though placing conditions on governmental incentives is a worthwhile alternative to consider, compliance and enforcement may be difficult to achieve.