WASHINGTON – Today, Congressman Vern Buchanan, Vice Chairman of the House Ways and Means Committee and Chairman of the Health Subcommittee led a bicameral letter urging the Biden administration to immediately withdraw guidance that would weaken American innovation and harm entrepreneurs and start-ups working to bring new products and inventions to the American economy. Senators Marsha Blackburn (R-TN), Thom Tillis (R-NC) and Congressman Adrian Smith (R-NE) joined in sending the letter.
For the first time since enactment of the Bayh-Dole Act in 1980, the Biden administration is attempting to reinterpret the law and utilize so-called “march-in rights” which would allow the federal government to step in and force a patent holder to share the intellectual property of their invention if they do not agree with the price of a product.
The new Biden proposal would overturn decades of precedent under both Republican and Democratic administrations and significantly undermine the Bayh-Dole Act, which is internationally recognized as one of the most innovative pieces of legislation ever passed.
A bipartisan group of former federal government officials, including Obama administration representatives, recently sent a letter to President Biden expressing concerns with the draft framework.
“I am deeply concerned about the unintended consequences the Biden administration’s new proposal would have on startups and innovative new products in this country,” said Congressman Buchanan. “As a businessman and entrepreneur myself for many years before coming to Congress, I know firsthand the stifling effect and disincentive this would have American innovators if they knew the heavy hand of the federal government could come in and seize their intellectual property at a moment’s notice.
The draft framework will make the United States less competitive, less attractive to investment and less conducive to promoting scientific progress.
“The Bayh-Dole Act has been a cornerstone of American innovation, and the Biden administration’s proposal undermines U.S. competitiveness and America's technology leadership,” said Senator Blackburn. “The administration must withdraw this proposal to ensure the U.S. can continue fostering groundbreaking research and development through public-private collaboration, a proven model that has served our nation well.”
“The Bayh-Dole Act was a major step forward and has been an unquestionable success,” said Senator Tillis. “’March-in’ was never intended to serve as a mechanism for regulating the pricing of any products, and this has been stated by the very authors of the bill. The Draft Framework is a mistake – it will make the U.S. less competitive, less attractive to investment, and less conducive to promoting scientific progress.”
“American innovation has changed the course of history for the better in countless ways. Unfortunately, the Commerce Department’s proposed guidance threatens to undermine stability for our leading researchers and developers," said Congressman Smith. "Instead of damaging our competitiveness in the global marketplace, we should be doing everything we can to protect intellectual property rights and incentivize productivity.”
“The proposed framework is the most serious threat to the landmark law which helped revive American competitiveness since its enactment in 1980,” said Joe Allen, Exec Director of the Bayh-Dole Coalition. “It represents an attempt to fundamentally alter the meaning of the Bayh-Dole Act without the consent of Congress, and must be rejected.”
In addition to being the Vice Chairman and most senior Republican on the powerful U.S. House Ways and Means Committee, Buchanan is also the Chairman of the Health Subcommittee, which has broad jurisdiction over traditional Medicare, the Medicare prescription drug benefit program, and Medicare Advantage.
You can read the full letter HERE or below:
May 29, 2024
The Honorable Laurie Locascio
Director of NIST and the Undersecretary of Commerce for Standards and Technology
U.S. Department of Commerce
Dear Dr. Locascio:
We write to express profound concern with the Draft Interagency Guidance Framework for Considering the Exercise of March-in Rights (“Draft Framework”) given the risk it poses to U.S. competitiveness and America’s global leadership in technological innovation. The proposal would enable the use of march-in as a misguided tactic to control the prices of a broad range of products derived from government funded research, and it would defeat the purpose of the authorizing statute, which was to promote the transfer of technology from the lab to the market.
Aside from the Draft Framework’s radical departure from agency precedent under both Republican and Democratic presidents, upending the marketplace for federally supported inventions will send the U.S. back to a time when private enterprise refused to license government-funded research for practical application, leaving valuable research undeveloped, while nonetheless divulging it for other countries and foreign enterprise to develop. In response, Congress enacted the Patent and Trademark Law Amendments Act of 1980, or the Bayh-Dole Act as it is commonly referred to today, with the goal to promote U.S. competitiveness by encouraging the domestic development and commercialization of products derived from government funded research. Now the agency seeks to reinterpret provisions of the law in the Draft Framework undermining the central goal of the Bayh-Dole Act of keeping government-funded inventions from languishing. This radical departure from longstanding precedent would put our nation’s leadership in technological innovation at risk.
The Bayh-Dole Act is widely recognized for its role in bolstering American innovation.[1] Previously, Congress sought to ramp up federal funding for scientific research to facilitate space exploration and promote national security during the Cold War. But at the time, the commercial benefit of the discoveries funded by the American government had no real practical benefits for the American taxpayer. The government retained ownership of the underlying intellectual property rights and all too often failed to license those rights for commercial development. Prior to the 1980 Bayh-Dole Act, the government licensed only 5% of its patents to the private sector.[2]
While the benefits of billions of dollars in taxpayer-funded discoveries went unused domestically, intense competition to U.S. leadership in technology innovation emerged elsewhere. Congress responded by passing Bayh-Dole, a system that permits universities, non-profits, and businesses to own patents forged from research supported by the U.S. government. The Bayh-Dole Act enabled these entities to license and commercialize their inventions, and in turn incentivized further private investment into federally supported research to transform those discoveries into useful products to benefit the greater public good.
The Bayh-Dole Act has been an unmitigated success. As a result of the innovation engine it created, from 1996 to 2020, the Bayh-Dole system in academic research generated $1.9 trillion in U.S. gross industrial output, contributed $1 trillion to the nation’s gross domestic product, supported 6.5 million jobs, helped to form 17,000 startups, and created nearly half-a-billion individual inventions.[3] In fact, U.S. university patents exploded after Bayh-Dole, increasing from 390 patents in 1980 to 3,088 in 2009, to 6,680 in 2015.[4] The growth in public and private sector collaboration that followed also allowed many universities and other institutions to set up or expand robust systems of technology transfer to facilitate the commercialization of products from federally funded research, which, in turn, produces revenue for our universities that funds further research.
The Bayh-Dole Act’s reliable allocation of ownership of intellectual property rights plays a critical role in attracting private investment. It becomes untenably risky to invest in the development of basic research if the government could later arbitrarily rescind the underlying license agreement, thereby eliminating the prospect of a return on investment. Because the Bayh-Dole Act further requires universities and other non-profits to reinvest Bayh-Dole patent revenues back into scientific research and education,[5] the Draft Framework would disrupt the virtuous cycle of recapturing funds to support additional scientific research and discovery in the U.S.
The system Bayh-Dole created, now emulated by countries around the world, is a system that has served our nation and economy well.[6] Yet, when our nation’s global leadership is under significant threat, the Draft Framework would contravene decades of America's efforts to promote public-private collaboration, and foster the development of new, innovative products. In line with our domestic policy, the World Intellectual Property Organization (WIPO) has extolled the importance of replicating the Bayh-Dole system by helping member states establish technology and innovation support centers to promote the commercialization of state-sponsored research.[7] The Draft Framework would retreat from years of publicly supported research to bolster global competitiveness at a time when our country needs it the most.
As we face unprecedented challenges from foreign adversaries and competitors, many of whom have emulated the Bayh-Dole regime, we cannot afford to reverse course and abandon Bayh-Dole as proposed by the Draft Framework. The Draft Framework will make the U.S. less competitive, less attractive to investment, and less conducive to promoting scientific progress. As Undersecretary and the Director of NIST, you have the power to prevent that by withdrawing the Draft Framework, and we urge you to do so. Instead, we encourage you to look for opportunities to further leverage the Bayh-Dole model of public-private partnerships to promote more research and investment in the United States.
Sincerely,
