Government Interests

The considerations described in the previous section may be complicated even further when support for the research that leads to the development of the intellectual property is provided by a public source. This is a particular concern for nanotechnology, with a variety of governments currently providing funding mechanisms to support nanotechnology research. There are differing views regarding ownership of intellectual property, particularly patents, when it results from funds provided by the public through their governments.

One line of thought is that a government that supports research resulting in a patent should retain ownership of the patent, thereby allowing it to be placed in the public domain. There is a good deal of common-sense appeal to this view. Patents are effective mechanisms for concentrating market power. Permitting corporations to acquire ownership of them from research funded by the public looks to many like a giveaway of a public benefit to a private interest. Consumers who pay taxes to support the research then end up having to pay monopoly-level prices for the fruits of that research.

The opposing line of thought focuses on the real need for incentives in attracting qualified firms to perform research for the government. In many instances, particularly in an area expected to have significant commercial application like nanotechnology, there is a combination of private and public funding sources available. If governments insist on retaining ownership of patents from the research they fund, they will lose in the competition for the best researchers. Instead, the government will find itself perpetually in the position of having access only to second-rate research performed by those who lost the competition for private funding sources.

For decades, the first view was the predominant one in the United States. But in 1980, the United States passed the Bayh-Dole Act,56 which attempted a compromise between these positions. The basic thrust of the Bayh-Dole Act is that recipients of federal funding may be able to retain ownership of inventions that result from that funding in exchange for commercializing the inventions. There are a number of peripheral responsibilities that the owner must undertake as part of the commercialization: it must file for patent protection must be active in promoting the invention, and must give preference to U.S. industry in small business as part of its commercialization efforts.

The government does retain certain significant interests. The owner of the invention is required to disclose the invention to the particular funding agency and is significantly constrained in its ability to assign rights to the technology. Any royalties that are generated must be shared with the inventor, and excess income must be used for education and research purposes. Perhaps most important is the fact that the U.S. government must be granted a license to the technology (a "nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced on its behalf throughout the world").

By vesting ownership of the technology in the organization that actually developed it, most of the concerns about there being insufficient incentives to compete for the best scientists and engineers are addressed. And by ensuring that the government retains a license, most of the concerns about the public giving up all interest in the research it funds are addressed.

It is worth noting that the Bayh-Dole Act does include provisions for rather draconian action by the government in the form of "march-in rights." These permit the government to intercede and force the owner of the patent to grant a license to other parties (or to grant the license itself if the owner refuses). This power arises only when the owner has been failing in its duties of commercializing the invention or where there are certain health or safety needs. In actual practice, the government has never exercised march-in rights in the entire quarter-century period that the Bayh-Dole Act has been in force. Indeed, there have only been a handful of requests for it to do so, and they have so far all been denied.

The prevailing view is that the compromise that the Bayh-Dole Act represents has been tremendously effective. Before its passage, the U.S. government had only been granted 30,000 patents, with only some 5 percent of them having been commercially licensed. What the Bayh-Dole Act accomplished was to include a variety of recipients of federal funding, most notably universities, in the activities of commercializing technology. "Technology-transfer" departments of universities have since grown considerably in importance since passage of the Bayh-Dole Act. They provide a mechanism by which the universities can generate licensing revenue from research, while at the same time assisting the development of new start-up businesses that are important to a national economy. In 1980, universities were filing patent applications at

| Invention Disclosures Received | New U.S. Patent Applications Filed

| Invention Disclosures Received | New U.S. Patent Applications Filed

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