Thursday 13 December 2012

Bayh-Dole and AUTM's 2011 Licensing Activity Survey

The IP Finance weblog welcomes this guest post from Mike Mireles on the latest quantification of the effect of that classic piece of U.S. legislation, the Bayh-Dole Act.  This post concludes with three questions on which readers' responses are sought.  Please feel free to post your comments below or to email them to us. 

Bayh-Dole and AUTM's 2011 Licensing Activity Survey
There are various ways to aid the development of intellectual property. One way to do so is government funding. However, there is always the question of who owns the intellectual property developed from that funding—some choices are the government, the public, or the recipient of the funding. The Bayh-Dole Act specifies who owns most government-funded patentable invention in the United States—usually the recipient of the funding such as a university subject to conditions. And, the Bayh-Dole Act's simple change in ownership from the government to the grant recipient has been lauded as brilliant because it has arguably led to an increase in patenting, licensing and other related economic activities in the United States.  Indeed, numerous countries have attempted to replicate the Bayh-Dole Act’s purported success by enacting similar legislation. 

Every year the staunch supporter of the Bayh-Dole Act, the Association of University Technology Managers (AUTM), releases an annual licensing survey that sets forth the impact of recent university licensing in the United States—some of which is presumably the result of the Bayh-Dole Act. A description of the most recent survey released December 10, 2012 provides that:
  • 591 new commercial products were introduced
  • 4,899 licenses were executed
  • 1,152 options were executed
  • 416 executed licenses contained equity
  • 38,600 was the total number of active licenses and options
  • 670 new companies were formed, 487 of which had their primary place of business in the licensing institution’s home state
  • 3,927 startup companies were still operating as of the end of Financial Year 2011
The Press Release for the 2011 Survey also notes that: 
In the case of product sales, 58 institutions (31 percent of the 186 respondents) reported that 2,821 of their licenses paid $662 million in running royalties based on $37 billion in product sales, implying an average royalty rate of 1.8 percent. Only 65 of these licenses yielded more than $1 million in royalty income.
Total income for all U.S. institutions from running royalties was $1.5 billion, so if it were assumed that all licenses generating running royalties resulted in the same 1.8 percent average royalty rates, total product sales by all licensees of U.S. institutions would have been approximately $80 billion.
The press release also states that the release of the survey coincides with the 32nd anniversary of the Bayh-Dole Act.  The numbers are impressive, but there are always the questions: would this activity have occurred without the Bayh-Dole Act, can the Bayh-Dole Act be modified to better achieve its purpose, and what are the costs of the Act?

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