Time to Explain the Basics

Joe Allen
Executive Director
Bayh-Dole Coalition
 



Most of us were shocked to hear Secretary of Commerce Howard Lutnick in his recent interview with Axios, where he shared his opinion on government returns on university research funding. When asked who was next on the Administration’s list to pay the federal government, he replied: “I think universities, who are getting all this money. The scientists get the patents, the universities get the patents and the funder of $50 billion, the U.S. government, you know what we get? Zero.”  (https://ipwatchdog.com/2025/09/11/government-cut-university-royalties-threaten-bayh-dole-roi/)

What made his statements particularly concerning is that the Secretary isn’t just any Cabinet Secretary, he’s charged by law with overseeing the Bayh-Dole Act. So, how should our community better explain the value of tech transfer and its impact on the U.S. economy?

Perhaps the best place to start is by explaining the basics.

Secretary Lutnick comes from a very successful global finance firm and he’s viewing government R&D funding from an investor’s viewpoint. That’s where his argument goes off track. The government doesn’t fund academic research for a monetary return. Rather, it supports research for two reasons:

• To advance scientific knowledge, and/or
• To meet government mission needs.

When it awards grants to academic institutions to pursue research, the government receives in return the results it’s paying for. Commercialization of innovations that arise from such research is something else, which  rarely happened prior to the Bayh-Dole Act. That left many promising discoveries withering on the vine.

The Bayh-Dole Act changed that by providing the incentives and authorities for small companies and academic research institutions to identify and develop promising inventions. And it does so without charging the government an additional dime.

The government isn’t paying the costs of university patenting and technology management. That’s why Bayh-Dole allows them to keep resulting royalties, which also must be used to reward inventors and fund more research on campus.

Bayh-Dole’s objective isn’t enriching the government (or universities). It’s to benefit the hard-working American taxpayer so the research and development they fund turns into useful products improving their lives while growing the economy. And for more than 45 years, the Bayh-Dole system has  done that exceedingly well.

We don’t have space to list all of its accomplishments but suffice it to say that before Bayh-Dole, the U.S. was rapidly falling behind its international competitors in cutting edge technologies. Now we lead the world. That’s not by accident. It’s because Bayh-Dole allowed the best minds in our private and public sectors to work together. It also incentivizes entrepreneurs to invest their time and money needed to bring federally funded inventions from the lab into the marketplace.

Finally, even with our green eyeshades on, taking royalties from universities would be a foolish move from the government’s perspective. The thousands of new companies, millions of new jobs, new products, and even new industries created by Bayh-Dole generate many times more tax revenue than the less than $2 billion annually the government would make by seizing 50% of academic patent royalties. Doing so would be like draining half the gas from someone’s car while expecting them to drive just as far. The current virtuous cycle of Bayh-Dole would collapse with dire consequences to the U.S. economy.

One final note. We have another reason to explain the basics of the system. The budget deficit is real, and very painful choices are going to have to be made. If we want the academic R&D system to continue, we need to show that the government—and more importantly the taxpayer—get a very good return  on their investment.

Fortunately, we can and now’s the time to do so.