Commerce Secretary ready to push update to tech transfer laws to ensure greater commercialization

Commerce Secretary Wilbur Ross, speaking at ‘Unleashing American Innovation Symposium’, sponsored by the National Institute of Standards and Technology.

“Patent protections and the reliability of our intellectual property as a property right in the United States was a key part of the strength of the American innovation system,” said Walter Copan, Under Secretary of Commerce and Director of the National Institute of Standards and Technology yesterday morning as he opened the Unleashing American Innovation Symposium, in Washington, DC. “This is still true today and today we find ourselves at another turning point.”

The well attended program sponsored by NIST is a part of the Lab to Market initiative, which Congress funded to increase the economic impact of federally-funded research by accelerating transfer of new technologies from federal laboratories to the commercial marketplace. Indeed, the theme of the day was increasing the return on investment associated with federal investment in research and development. More specifically, there was much discussion about how successful universities have been at licensing university developed technologies thanks to the Bayh-Dole Act and how updated legislation is necessary in order to remove barriers that make the same successes difficult, if not impossible, for federal laboratories.

Calling it a “top priority for the Administration,” Commerce Secretary Wilbur Ross, who also spoke at the event, explained that the question that needs to be answers is “how best to maximize the impact of our $150 billion annual federal investment in research and development.” During his remarks Ross wholeheartedly supported university research and technology transfer, explaining that the return on research dollars spent is 10 times greater with respect to university technologies than for technologies coming from federal labs.

Over the last several weeks those in the industry supportive of strong patent rights have been treated to speeches from USPTO Director Andrei Iancu saying all the right things about the patent system. but it is hard to imagine anything more significant than Secretary Ross simply showing up at an event like this.

Ross sang the praises of university technology transfer, speaking at an event where there was heavy representation from those who believe in the power of a strong patent system. Indeed, it seems safe to actually speak of strong patent rights, licensing and the great economic promise of technology transfer in the open, in public, and without fear of retribution. The tone in Washington, DC is decidedly different these past several months, particularly the past several weeks. It feels as if something big is about to happen, there is optimism, and the Trump Administration does not seem to be playing down hopes. If anything, they are raising the bar high.

Witness this excerpt from Secretary Ross’ remarks:

Universities seem to be doing far better than the federal labs and can teach us a thing or two.  And we hope they actually will during the course of today’s sessions. Recent studies have shown that federally funded university research is about 5 times more likely to result in a licensed patent technology. And about seven times more likely to result in an active patent license. Universities received $1.78 billion in licensing revenue from their innovations in 2014.  In comparison, the total amount of royalties received from licensing government inventions was only $194 million in 2014.  The latest year for which data are available. In that year universities receive $66 ½ billion for R & D while federal labs received $42 Billion.

Now if you do the math, universities received just over 50% of the R&D funding, but license nearly 10 times the value of technology.  One would imagine that the gap has widened even further, as university activity has exploded.  Generating $2.96 billion in licensing income from their inventions in 2016.

Now obviously, R&D in a given year, is not what has resulted in royalty income in that year because of leads and lags.  But the pattern has persisted long enough, and the math is so lopsided that it seems to me that there is a message in it.

A lopsided message that has persisted long enough? That sounds like a man ready to move. Someone who has made up his mind and is ready to act. And if we know anything about Ross we know he is not afraid to take action. We also know that his relationship with President Trump goes back decades, and is very close. This almost certainly gives Secretary Ross all the authority he could need to do whatever he thinks is appropriate.

What will Ross do? Well, Secretary Ross gave an unequivocal endorsement of Bayh-Dole specifically, and more generally saying laws need to be updated to address business and technology realities of today, and to enable more companies to license federally funded technologies and take advantage of federally funded research in order to launch high-tech start-ups, create jobs, and grow the economy.

“Our practices, policies, regulations, and laws all need to be updated to assure that technology transfer commercialization in the large-scale production and manufacture of innovative technologies occurs within the US,” Ross said. “We must address growing trade imbalances by producing in America the innovative products that the rest of the world needs to buy.”

Ross is not new to this issue. He is well known to have long held these feelings. If he sees innovation and the licensing of patent rights as the key to realizing his vision to address trade imbalances, the patent system could snap back rather more quickly than anyone might have otherwise predicted. At least if the Executive Branch has anything to say about it.

Secretary Ross seems ready, willing, interested and more importantly empowered by the White House and President to double down on the great successes of university technology transfer in order to advance President Trump’s goals of expanding the economy and creating jobs. In other words, at a time when many nay-sayers are campaigning to roll back the clock and prevent the licensing of university technologies that are created as the result of federal funding, the Trump Administration seems to be laying the foundation to build upon the great successes of Bayh-Dole and the university technology transfer industry that it created.