Don’t Let Washington Bureaucrats Undermine Innovation

As Intellectual Property (IP) Month comes to a close, it is important to recognize the crucial role patents and innovation play in driving the American economy forward. From life-saving pharmaceuticals to cutting-edge healthcare technology, IP developed in America’s universities and small businesses is crucial to improving the lives of consumers nationwide and around the world. However, IP Month should also serve as a reminder about what can happen when policymakers get it wrong and undermine these foundational rights.

Patents have long been the backbone of America’s innovation system. They create strong incentives to invent and improve, particularly in fields like medicine, where the risks are high and the timelines are long. Drug development is one of the most research-intensive industries in the United States. The introduction of a single new medicine to the market can take up to ten years and cost around $2 billion. The researchers and scientists behind these breakthroughs rely on patent protections to ensure they can recoup their enormous investments. Without the security of patents, competitors could quickly copy their products without bearing the same costs or risks, making it nearly impossible to sustain the pipeline of innovation.

Not long ago, when researchers made groundbreaking discoveries with the help of federal funding, the government took control and ownership of any resulting patents. However, since the federal government often had little incentive to follow through on these discoveries, most of them gathered dust. According to a former White House official, there was a time when the government held tens of thousands of unused patients, including many with promising medical technologies that could have greatly benefited patients but never made it to market. This was a huge waste of talent and taxpayer dollars, stifling the hard work of America’s innovators.

This trajectory changed in 1980 with the implementation of the Bayh-Dole Act, which gave universities, nonprofit research institutions, and small businesses the ability to patent and license inventions based on federally-funded research. By prioritizing the importance of patents, the Bayh-Dole Act ensured that groundbreaking research and development and the resulting new discoveries could move beyond the lab and actually become new medicines and technologies.

Unfortunately, a new idea being considered by Department of Commerce officials threatens to unwind the progress set by the Bayh-Dole Act and stifle American innovation. In this new proposal, the federal government is considering taking a significant share of profits from patents developed at universities with federal support. While pitched as a way to ensure taxpayers “get their share,” this approach risks doing the opposite: chilling innovation, diminishing the return on investment from taxpayer-funded research, and weakening America’s competitive edge.

Small biotech firms and startups often license university patents to accelerate the timeline for bringing new products to market. If the federal government steps in and collects a hefty cut, these companies will have less capital to hire, grow, and reinvest in research and development. By chilling investment, the country would effectively cede the future to foreign competitors like China, which is already advancing in other areas of pharmaceutical innovation.

The United States is a global leader in innovation because it promulgates policies that encourage continued research and reward risk-taking. If the Bayh-Dole framework is undermined as a means to collect more revenue for the federal government in the short term, there is a very real risk of slamming the brakes on the very engine that has powered decades of American innovation, weakening the economy in the long term.

IP Month should remind policymakers why strengthening the country’s innovation ecosystem is paramount to America’s success. To do so, policymakers should reject harmful ideas like the government siphoning patent revenue away from innovators and instead focus on protecting IP. America needs to embrace the patent protections that have allowed it to be the world’s innovation powerhouse.