Bayh-Dole sets up a three key tensions in how licensing money is allocated.
costs vs research (invest or slush?)
inventors vs administration (how much is shared?)
inventors vs other costs (when is it shared?)
Universities mobilize policy to deal with these tensions. These are worth considering.
B-D distinguishes administrative expenses from “remaining income”, which is to be used for “scientific research or education”. The first tension then is between operating your tech transfer program and putting money into research (or education–but who puts B-D licensing income into education?). What does it take to operate a tech transfer program, given that its assets mature over the course of 20 years?
To put the issue bluntly, do you slumlord tech transfer to enhance your research lifestyle? Or do you re-invest in tech transfer and build a robust program, even if doing so doesn’t immediately put more money into the research pocket? This is the problem for administrators in universities, and they usually solve this in favor of research, setting up one of the most effective critiques of tech transfer–and one of the worst reasoned in terms of national policy.
(Note, if the patent licensing program is entirely outside the university, and not controlled by the university, then this tension is very different, because the receiving organization has to make the choice between its costs and declaring a dividend to return to the university for disposition in research and education. But let’s stay on with tech transfer programs within universities.)
If you look at things this way, tech transfer is just another overhead on research funding. That’s wrong headed, but it’s a common view.
Buried within administrative expenses, however, are two other deep tensions that push on the first. In B-D, administrative expenses include sharing licensing income with the inventors. This creates a tension between the inventors’ share and research, on the one hand, and inventors’ share and other costs of technology transfer on the other. Inventors may see tech transfer costs as overhead on their share, and worse, university claims on their share as pure take-away. In this view, all income from a patent license is pure profit, except for the costs of the managing agent, which could be significantly reduced (so the reasoning goes) if the agent were smarter, more efficient, better positioned, and more prestigious.
University inventors are often faculty, so this allocation decision point often pits faculty against administration. The faculty argue that their share should be robust and tend to lay out the issue as another instance of faculty rights, pitting talent and borg, personal craft and corporate thinking. It’s an understandable set of positions. The private inventor up against the organization that serves as host and the interests of all those hosted non-inventors.
Universities typically manage this tension by setting up a “royalty sharing schedule” within their patent policies. The reasoning is to prevent disputes later if anything does get valuable. The downside is that these sharing policies are so massively hugely damaging in so many ways I’ll have to leave a discussion of it for another time.
Again, being coarse, the inventor tension comes down to who should get more, the inventors or the university? There tends to be little discussion of how much funding is needed to advance the national policy goals of B-D, or even what is needed to operate a robust technology transfer (or call it “public innovation”) effort.
It may be that at the heart of why university tech transfer is so uninteresting, how universities have handled these three tensions may make a lot of difference. If so, then the problem is not in the drafting of B-D, but in universities not being up to handle the difficult decisions that transform chasing research funding into a national program of innovation. Few universities have stepped up to that thinking, and the ones that do often start with a focus on regional economic development.
There is more to say on this topic: The variations on how universities handle licensing income. The lack of any real data on the costs of running a robust innovation program. How to position a tech transfer program so it is not overhead on research or a take- away from inventors–but rather the centerpiece of the public reason for funding research? And especially, how to position it so that it is not crassly addicted to “commercialization” as a means for making money, and not just that dabbed over with fluffy language about public benefit when the equation everyone knows is still “when we make money, that is public benefit”?
Beyond these, there is the question of just how universities are using their B-D licensing income, after paying (at least some of the) expenses incidental to managing subject inventions. What could possibly be so much more important in university research and education that it would lead administrators to push back on inventors’ shares and to all but ignore the full costs of participating in building a national innovation system? Something pretty darned important, I would think! So does it bother you how few annual reports there are that identify how a university’s remaining B-D licensing income has been used? It should if you think we could have a way better national approach to research leading to outputs that have societal significance.