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Vest testifies in congress on value of technology transfer law

MIT President Charles M. Vest joined US Sen. Robert Dole (R-KS) and former Sen. Birch Bayh (D-IN) last week in testifying before Congress in favor of the Bayh-Dole Act of 1980, which has helped transfer technology from government-sponsored academic research into hundreds of useful products.

Sen. Dennis DeConcini (D-AZ) chaired the April19 hearing of the Subcommittee on Patents, Copyrights, and Trademarks of the Senate Committee on the Judiciary. Also expressing support for the law was Sen. Edward M. Kennedy (D-MA).

Dr. Vest noted that 50 new companies, which created more than 2,000 jobs, have been started through MIT licenses since MIT reorganized its Technology Licensing Office in 1986. These companies, he said, "have a market capitalization greater than $2.5 billion, yet they were created with cumulative venture investments of less than $100 million. And that is technology transfer!"

Dr. Vest concluded, "Most important, the Bayh-Dole Act has helped us to fulfill our goal of working with industry to develop technology for the public good while still maintaining an academic atmosphere conducive to long-term research, open discussion and publication of our findings, and the best in education."

Below are excerpts from his testimony:

"The Act was intended to promote the commercialization and use by industry of inventions arising from federally sponsored research. One of its key provisions was allowing universities to retain the rights to the intellectual property they developed with federal funds. Prior to 1980, patents resulting from such research were owned by the government, but relatively few were being licensed. (By 1978, the government held 28,000 patents, of which only five percent had been licensed.) In short, the fruits of academic research were not being used by industry.

"In our experience, the Bayh-Dole Act has been remarkably effective in meeting its objectives of encouraging researchers to identify the commercial potential of inventions arising from federally funded research; providing the means and incentives for industry to invest in these early and therefore high-risk inventions; and promoting collaboration between industry and academia-partnerships that have resulted in the creation of new industries, companies and jobs based on these new technologies.

"A recent national survey reported that 2,700 patents were filed by American universities and research institutions in 1992, and over 1,500 licenses were granted.

"Last year, MIT filed over 150 patents on new inventions (and a total of over 250 US patents); we were granted 106 US patents; and we signed over 75 licensing agreements, for almost 100 inventions.

"These activities are guided by the goals of the Bayh-Dole Act to enhance US industry and competitiveness.

"Over 95 percent of our licenses are to US companies. The mandated preference for US industry has not been a handicap in our technology transfer efforts. In fact, it has worked to our advantage. It has increased public support for the technology transfer mission and has helped to concentrate our efforts close to home, thus facilitating interaction between companies and faculty inventors, something that is essential in the development of early stage technology.

"We now have over 350 active license agreements in our portfolio-each one requiring the licensee to invest in the development of the inventions. Our estimate is that for every dollar a company invests in licensing fees to MIT, it invests another 50 to 100 dollars in developing the technology.

"I should note that virtually all university licenses contain diligence requirements that ensure commercial development of the licensed invention, and we take seriously our responsibility to see that our licensees are indeed putting our inventions to good use.

"Another goal of the Bayh-Dole Act was to minimize the cost to the government of administering its technology transfer policies. Over the past decade or so, many universities have helped to achieve this goal by developing a cadre of technology transfer and intellectual property experts who, because they speak the languages of both academia and industry, are very good at facilitating our interactions. These professionals are able to accommodate the needs of industry while helping to preserve the special policies, objectives and long-range view that are characteristic of the academic world. And because of this, they are very skilled at moving inventions from the laboratory to the assembly line.

"The `assembly line' may be one that already exists, or it may (and often does) take the form of new company creation. For example, over 50 new companies have been started through MIT licenses since we reorganized our Technology Licensing Office in 1986.


"The research universities do receive some modest royalty income. Over the past five years, at MIT, net royalty income has averaged less than one-half of one percent of our total budget.

"The primary benefits to the universities, however, take other forms. They foster an entrepreneurial ferment on campus. Faculty consider the practical implications of their research. Students think about starting companies. Alumni and alumnae visit us to look for opportunities to combine their business experience with MIT's technology. Industrial colleagues meet with faculty every day. And venture capitalists see us as a `must stop'.

"Our technology transfer interactions have increased the opportunities for graduate student employment and for faculty consulting in industry.

"Our interactions with industry bring real-world technology and management issues into our research laboratories and into our curricula. They keep us current, grounded and forward-looking. MIT's experience with the Bayh-Dole Act affirms the wisdom of the policy and the need to sustain it," Dr. Vest said.

A version of this article appeared in the April 27, 1994 issue of MIT Tech Talk (Volume 38, Number 30).

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