By Louis Berneman
Pennsylvania researchers are spearheading some of the world’s most promising medical and other technological advances.
University of Pennsylvania scientists helped develop a personalized cancer immunotherapy that programs a patient’s own immune cells to kill tumors, while other UPenn researchers made the groundbreaking mRNA discoveries behind the Covid-19 vaccines. University of Pittsburgh scientists recently pioneered better ways to diagnose breast cancer and Alzheimer’s. Carnegie Mellon engineers, meanwhile, made breakthroughs on autonomous driving technology that have since been further developed by Ford and Volkswagen, and their computer science graduates are among the most highly sought after new hires.
But now, the Commerce Department is floating a proposal that would impede the commercialization of university researchers’ most compelling discoveries from ever reaching American patients and consumers.
The proposal would fundamentally upend the Bayh-Dole Act, the bipartisan law that Congress passed in 1980 to allow universities to own, patent, and license discoveries made with even a small amount of federal research funding.
Once the Bayh-Dole Act shifted control of the licensing process to universities, everything changed. For the first time, research institutions had an incentive to set up “tech transfer” offices (TTOs) — like the one I directed at the University of Pennsylvania for a decade — and seek out companies and entrepreneurs interested in licensing university discoveries, developing them, and bringing them to market.
Under the system that Bayh-Dole created, universities receive royalties from licensing these patents, while companies get access to cutting-edge lab breakthroughs that help them attract investment and grow. And consumers and patients get life-changing new technologies and medicines.
Unfortunately, the Commerce Department could soon bring this progress to a halt. Officials are proposing a 50% tax on universities’ licensing royalties from patents the government helps fund.
Most university TTOs operate at a financial loss, or just barely break even. But the tech transfer function is still invaluable in that it helps retain, reward, and recruit faculty and launch new startups, which helps foster local economic development. If the federal government imposes a massive new tax on the few patented discoveries that generate royalties, it’ll compel many schools to downsize or even close their TTOs, concluding that the expense simply can no longer be afforded. Most importantly, shutting down TTOs could result in many forward-thinking, creative researchers to abandon their academic careers for more lucrative jobs in industry.
And without those TTOs, licensing activity — and technological progress — will slow significantly.
In short, the proposed tax would functionally return us to the pre-Bayh-Dole era, when groundbreaking discoveries rarely made it out of university labs.
Pennsylvanians deserve to benefit from the lifesaving medical innovations and other discoveries our universities are producing — but that access depends on protecting our robust tech-transfer system. It’s a system that has functioned beautifully for decades and made the U.S. a global leader in innovation. Now is not the time to kill the goose that has been laying golden eggs.
Louis Berneman is the founding partner of Osage University Partners and the former managing director of the Center for Innovation at the University of Pennsylvania. This piece was originally published by PennLive.
