Successful US innovation ecosystem is under threat

Innovation ecosystems are complex entities, feeding from multiple sources and providing sustenance to multiple stakeholders. Academic research has been a vital contributor to the growth and transformation of the US from agrarian economy in the 19th century to the technological powerhouse of the 21st. Now that system is under threat.

In 1860, Abraham Lincoln, himself a patent holder, acknowledged the value of patents, saying they “added the fuel of interest to the fire of genius in the discovery and production of new and useful things”.

Two years after making that speech, Lincoln signed the Morrill Act into law, codifying the role and expectations of US universities in applying scientific and engineering approaches to the challenge of building a new nation.

US research universities continue to play a central role in creating a better future. They do this not only by educating almost 600,000 graduate students in science and engineering every year, but by performing more than 15 per cent of US research and development in 2011 and, according to 2012 National Science Foundation data, accounting for 53 per cent of national basic research: creating technologies, products and services, medicines, diagnostics, and giving rise to new industries.

Some 120 years after Lincoln’s “fuel of interest” speech, the Bayh-Dole Act codified the roles and expectations of US universities in translating basic research into economic output.

Widely mimicked by other nations, it formalised how universities manage their inventions, so there is a clear path from basic discovery to commercial implementation.

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Obtaining a robust patent is a crucial part of that process of technology transfer. Without strong intellectual property (IP) protection, most inventions will never see the light of day. Why is that? The answer is simple: the costs of developing most of them into a marketable product are significant. Without proper patent protection, no one will invest in the mere promise of an invention.

Yet we now find ourselves confronted by attempts to change the US patent system in ways that would probably eviscerate the very activities that have made the US so successful.

In an attempt to combat the abuse of the US patent system by a small number of patent trolls, lawmakers in Washington DC have introduced legislation that threatens the existence of the productive innovation ecosystem that has supported the introduction of new products and services since the advent of Bayh-Dole.

Abusive litigation practices should be punished — and preferably, stopped — but not at the expense of the US patent system and the established value chain from basic discovery research in universities to translation and commercialisation by small businesses.

In 2013 alone, US institutions accounted for more than 24,000 inventions

The success of Bayh-Dole in providing a path from bench to marketplace is documented by several groups, among them the Association of University Technology Managers (AUTM), a US-based, international organisation of technology transfer practitioners.

It has carried out a survey of members every year since 1991. The findings are compelling.

In 2013 alone, the AUTM reported that US institutions accounted for more than 24,000 inventions that resulted from $65bn in research funding — with almost $40bn coming from US federal sources.

The pursuit of IP protection, such as copyrights, trademarks and patents, follows a similar pattern. In 2013, there were about 15,000 patent applications by participating universities.

The AUTM data show that close to 10,000 patented products are currently marketed that originated in academic research laboratories.

A recent study commissioned by the Biotechnology Industry Organisation further documents the impact of academic technology transfer on the US economy. “The Economic Contribution of University/Nonprofit Inventions in the United States: 1996-2013” estimates that during this period, academic-industry patent licensing bolstered gross industry output by up to $1.18tn, GDP by up to $518bn, and supported up to 3.82m jobs.

Small businesses rely on robust patent protection as leverage to secure the financing needed to expand their operations and, in turn, they rely on universities as their source of licensed IP. If small businesses and universities are excluded from participating in the patent system, the consequences for growth and innovation are bleak.

David Winwood is chief business development officer at Pennington Biomedical Research Center in Louisiana and president-elect of the Association of University Technology Managers