By Teri Willey
Universities may look like quiet enclaves of students and stately buildings, but their labs are some of the most productive engines of innovation in the country. The discoveries made there ripple far beyond campus — improving medical care, advancing national security, and launching entire industries.
That pathway from lab to marketplace exists because of an effective law: the Bayh-Dole Act.
Co-sponsored by former Indiana senator Birch Bayh and Robert Dole of Kansas, the law gives universities the ability — and aligns their interests with potential private sector partners — to protect and license inventions made with federal research funding. The results are all around us. Google’s search algorithm, key cryptocurrency technologies, and several breakthrough cancer medicines all trace back to federally-funded research.
I’ve spent my career in technology transfer — the system universities use to turn federally-funded research into real-world products.
This is why I was disappointed to hear Commerce Secretary Howard Lutnick declare that taxpayers receive “zero” return from federally-funded research and that Washington should therefore seize half of university royalties. The claim is simply wrong, and the proposal built on it would harm researchers, startups, and patients while not benefiting the public.
Federal research funding was never designed to operate like a venture fund whose investors expect a direct profit. Its purpose is to train scientists and advance national priorities — from public health to cybersecurity — creating the foundation necessary for an innovation-based economy.
And the public does receive a return. Federally-funded academic research has generated roughly one trillion dollars in economic activity, over six million jobs, and 19,000 startups in the past 30 years.
This is what taxpayer return looks like: federally-supported research, university stewardship, private-sector investment, and lifesaving products that create jobs.
Royalty revenue is a crucial link in that pipeline. Royalties mean that there is a successful product addressing an unmet need, and employees producing that product have jobs and pay taxes. By law, universities must reinvest royalties into research in support of further innovation. Much of that work — running labs, supporting graduate students — happens years before a product reaches the market, and depends on those funds.
Furthermore, the work of managing intellectual property, finding commercialization partners, completing transactions, and maintaining partnerships over the years to make an innovation available to the public, is not funded by the government. Royalties developed over these long-term efforts offset the costs of these mission-critical programs, many of which may operate at a loss.
Before the product reaches the market, licensing triggers substantial pre-market investment and early-stage job creation. Once a product does reach the public, the payoff to taxpayers multiplies. If the federal government seizes university royalties, those dollars — and the R&D, startups, and jobs they support — will be pulled out of the state, a negative impact for critical innovation-based economic development.
Lawmakers must urge the White House to reject Lutnick’s proposal and reaffirm the bipartisan principles that have guided America’s innovation economy for four decades: fund research, let universities steward their discoveries, and protect the partnership that has delivered so much to the nation.
Teri Willey, a past president of AUTM and former managing director of IU Ventures, is the managing director and officer for Pathway to Cures.