When researchers discover a new technology, its potential isn't always obvious. No one knew at first that email would become a vital daily tool for four billion people. Nor did we know that recombinant DNA would lay the groundwork for countless medicines, or that early discoveries in robotics would lead to sophisticated prosthetic limbs. Today, as artificial intelligence goes mainstream, we have no idea of all the possible applications.
Inventors bridge the gap between initial breakthrough and usable product through a process of constant innovation. But this doesn't happen by accident. The United States is one of the most innovative countries in the world thanks to a well-designed system of intellectual property law, which encourages entrepreneurs to keep driving technology to tangibly improve the world around them.
We must continue to uphold and defend the laws that encourage investment in entrepreneurial pursuits and enable America to excel in innovation.
Venture capital is vitally important for helping launch businesses like mine, TeraPore Technologies. To attract investment, companies have to prove their worth and earning potential -- and often the most valuable things a startup owns are secure patents. These ensure that, should a product succeed, the company will have a period of market exclusivity during which to recoup expenditures and turn a profit.
Our current system began with the 1980 Bayh-Dole Act, a bipartisan law that enabled universities to retain patent rights on discoveries that received federal grants. Before Bayh-Dole, the government kept patent rights to any publicly funded breakthroughs. But federal agencies had little incentive to commercialize early-stage research, so they mostly didn't. Out of the 28,000 patents held by the government prior to 1980, less than 5% had been licensed out for further development. Thousands of promising, taxpayer-funded discoveries went to waste.
After the law passed, universities could license their discoveries to private companies. This brought in revenue to the schools and gave businesses a secure base from which to develop products and attract investment. Thanks to this system, more than 141,000 patents have been issued to academic institutions over the last three decades, leading to the formation of more than 18,000 startup companies. Small companies and startups hold 73% of university licenses.
TeraPore wouldn't exist without Bayh-Dole. As a PhD student at Cornell University, I developed a novel membrane that filters out nanoscopic impurities during drug manufacturing, making the process safer and more efficient. Despite the fact up to nine out of ten startups fail, often due to financing challenges, I decided to become an entrepreneur to turn my invention into a product and share it with the world.
After securing a patent-licensing agreement with Cornell, I had to convince venture capitalists to invest in my idea by assuring them that my technology could someday generate a return on their investment. This same process is spurring research and development at tens of thousands of startups nationwide.
Yet some critics continue to push for a misguided interpretation of the Bayh-Dole Act's "march in" clause that allows the government to relicense patents under certain very narrow circumstances. These critics claim that government agencies can cancel patent protections on federally funded inventions whenever they deem the price of the end product "unreasonable."
Proponents of this say it could lower prescription drug costs. Their theory is that the patents the government "marches in" on could be relicensed to other companies, which would then make copycat products for less. But it is unlikely to have that effect. Nearly 98% of drugs aren't even eligible for this new twist on march-in rights, since they don't rely exclusively on federally funded patents.
Moreover, this reinterpretation of Bayh-Dole would apply to all government-funded products, not just drugs. It would stifle investment in every technological sector.
Without the foundation of Bayh-Dole, attracting venture capital would become nearly impossible, as investors would be unwilling to fund ideas based on patents that could be abrogated at any moment. Currently, investors put over $600 billion into startups every year. Without this investment, inventors would have little ability to launch startups, and those in business would have trouble keeping the doors open.
The Bayh-Dole system has fueled innovation for more than forty years, enabling entrepreneurs to build on the work of academic researchers. We don't yet know what today's breakthrough discoveries will bring. But it's safe to say that we'll compromise our technological future if we start hammering away at patent rights.
