AUTM Speaks Out in Defense of Inclusive Innovation
Reiterating the importance of a diverse and inclusive innovation ecosystem, AUTM has issued multiple public statements in the last two months urging that policies related to intellectual property and technology-focused research consider the needs of academic institutions and small businesses.
Advocacy efforts like these help to make legislators and the public aware of how specific policies could—perhaps unintentionally—negatively impact technology-based innovation, research and commercialization. In some cases, AUTM’s advocacy has contributed to high-profile outcomes like the recent decision by the National Institutes of Health to not invoke Bayh-Dole march-in rights to reduce the price of a prostate cancer drug.
In late February, AUTM responded to a request for comments on US Patent and Trademark Office initiatives intended to promote generic and biosimilar competition in the prescription pharmaceuticals market. AUTM’s statement argued against the initiatives, noting that they would likely weaken patent rights—and discourage innovation—by requiring more paperwork and associated costs that could not easily be absorbed by universities.
“The proposed initiatives will have, at best, zero measurable positive impact on the strength of US patent rights,” the comment stated.
AUTM urged the USPTO to consider other avenues for promoting competition that would not weaken patent rights. These include reforms to better enable patent holders to protect against infringement and to clarify the basis for subject matter eligibility challenges—both of which would address issues currently discouraging university innovation.
On March 14, AUTM co-signed a letter urging Congress to defer the implementation of a new tax law that would penalize small businesses, in particular those receiving federal funding through the Small Business Innovation Research and Small Business Technology Transfer (SBIR/STTR) programs.
Under the 2017 Tax Cuts and Jobs Act, Internal Revenue Code section 174 was modified starting with the 2022 tax year to require companies to pay taxes on funds used to support their research expenditures. In its first year, this law would allow businesses to deduct only 10% of those research expenditures—so for a typical Phase I SBIR/STTR grant of $250,000, a company would pay taxes on $225,000 in “income” even if it had not yet commercialized any technologies.
“Implementation of Internal Revenue Code section 174 will have a crippling effect on the [approximately] 1,000 startups created each year via non-profit US research organizations advancing early-stage innovations into the products, services, and jobs of tomorrow,” said AUTM CEO Steve Susalka. “An analysis conducted by a state land-grant R1 public university found that section 174 would bankrupt almost every one of their 10 SBIR startup companies. In fact, section 174 would have a deleterious effect on SBIR/STTR startup companies across the nation, deforming the SBIR/STTR mission and undercutting its impact.”
Most recently, on March 29, AUTM wrote a letter urging the US Senate Appropriations Subcommittee on Commerce, Justice, Science, and Related Agencies to fully fund the National Science Foundation’s (NSF) Accelerating Research Translation (ART) initiative as part of the FY2024 funding appropriations.
The ART program launched in February with the announcement of a $60 million funding opportunity for expanding research translation capacity at academic research institutions. The program is specifically focused on bringing new institutions into the innovation ecosystem by funding those that have strong research programs but need assistance in transitioning that research to benefit society.
But after the 12% budget increase authorized by Congress for FY2023 fell short of the 19% requested by President Biden, some reports indicate concern that the FY2024 budget for NSF’s Directorate for Technology, Innovation and Partnerships—which administers the ART program—will not be consistent with funding targets outlined in the CHIPS and Science Act. AUTM’s letter explains why fully funding the NSF’s technology transfer programs is critical.
“Thanks to technology transfer, data shows, the American economy has reaped over $1.3 trillion in economic growth—millions of jobs—thousands of patents and hundreds of new drugs and therapeutics,” the letter stated. “The ART and related programs at NSF are designed to expand the ability of universities big and small to help increase this benefit to society.”