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21 April 2015

US patent debate rages on as tech transfer shows its worth

Author: Gregg Bayes-Brown, editor

As the debate around changes to US patent law continues, a new study has underlined a significant contribution from US tech transfer operations to the US economy. Covering contributions between 1996 and 2013, the report estimated that academia-patent licensing raised US gross industry output by $1.18 trillion, added $518bn to gross domestic product, and has supported 3,824,000 jobs.

The study, dubbed Economic Contribution of University/Nonprofit Inventions in the United States 1996-2013, was commissioned by life sciences trade association Biotechnology Industry Organisation (BIO). It supports the results of the latest licensing impact survey by the Association of University Technology Managers, which shows 818 startups foundedon academic patents in 2013, 4,200 spin-outs currently operating, $22.8bn in product sales from commercialised inventions, and 719 new products introduced into the market.

The report comes shortly after a group of 144 universities said proposed changes to the US patent system would hamper tech transfer in the country. In a letter to the US house and senate judiciary committees, the group said legislation drafted to address patent trolling was too broadly drawn and would stand in the way of transferring technology from universities to the private sector.

At the core of the universities’ complaint is the proposal of fee-shifting in the case of patent cases. Similar to the English rule, used in every western country apart from the US, the loser in patent cases would pickup the legal costs of the winner. The group, which include Massachusetts Institute of Technology, Pennsylvania University and Yale, said the fee-shifting would lead to increased financial risk for the university, and would “discourage universities and other patent holders lacking extensive litigation resources from legitimately defending their patents”.

The letter also said that the increased risk would deter potential licensees from coming forward, and would put venture capitalists off investing in university patents, thereby reducing the number of discoveries which reached the market place.

The universities also said the proposed involuntary joinder aspect of the legislation would magnify the damage to tech transfer operations, which the group claim “could force universities and inventors into paying damages for actions of third parties over which they had no control”.

Jim Greenwood, BIO’s CEO, said: “This study provides further evidence that the Bayh-Dole Act, which allows inventions arising from federally-funded research to be patented and licensed by the research institution, has been enormously successful in encouraging industry to partner with academic institutions to turn basic research into new and valuable companies, jobs, and products that are driving America’s innovation economy. As Congress considers changes to our patent system, policymakers should keep in mind the value of commercialised academic research and the good, high-paying jobs it generates throughout the country.

“We cannot take tech transfer, or the US patent system upon which it is based, for granted, particularly in the current economy and in light of the continuing attacks by some on our patent system. Preserving this system is critical to ensuring continued US economic revival and spurring the next wave of American innovation in the life sciences. The ties between biotechnology and academic research have always been critical. Often, biotech companies license technologies from academic or nonprofit research institutions, and the continuation of this relationship – along with a strong, dependable patent system and flexible licensing practices – is essential to maintaining America’s global leadership in biotech innovation.”

Chris Coons, a Democratic senator in the US, has joined the debate on the side of the universities and is attempting to slow the progress of the bill.

The Innovation Act has already approved by the House of Representatives, but is yet to be passed by the US Senate. In a speech, Coons said that he fears that the bill is poorly crafted, and rushed through by members of Congress who may not be fully informed about the debate on patents.

In an interview after the speech, Coons said: “I am hopeful that members of my caucus and the Senate more broadly will take the time to dig into the real issues of patent litigation reform and listen to representatives from the university,venture capital, bio, and pharma communities from their home districts and states. I think it is important for members to understand the potentially far-reaching consequences of passing another round of patent reform, or patent litigation reform, so soon.”

Coons has proposed reforms which could rein in patent trolling which have won support from universities and the life sciences sector. However, technology firms have said it wouldn’t do enough to prevent patent abuse. 

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