Government Funding Spurs Private Innovation
November 3, 2003

By Margot Carmichael Lester

In the fourth of a series of articles on technology transfer, Larta VOX examines government-supported technology transfer. Watch for next week's issue leading up to our Project T2 technology transfer conference November 13th.

Did you know that 80 percent of the country's basic scientific research - the foundation for gee-whiz biotechnology and medical device development - is performed in federally funded labs? The federal government pours $23 billion into federal labs like the National Institutes of Health and National Institutes of Environmental Health Sciences. Washington funnels another $18 billion to university research facilities.

"A major driver of the U.S. economy is government funding," says Joe Allen, president of the Robert C. Byrd National Technology Transfer Center.

Allen should know. A twenty-year veteran of national efforts to put federally developed cutting-edge technology in the hands of U.S. industry, Allen came to NTTC in 1992 from the U.S. Department of Commerce, where he served as the director of the Office of Technology Commercialization. He was instrumental in the passage of major commercialization laws, including the Bayh-Dole Act of 1980, the Federal Technology Transfer Act and the 1989 National Technology Transfer Competitiveness Act, allowing U.S. industry to perform joint research and development with federal laboratories.
For instance, NTTC established the Environmental Technologies Program last spring. A partnership with the EPA, ETP allows U.S. private industry to access more than $500 million in annual Environmental Protection Agency research via its Web site (www.nttc.edu/etprogram). Small and large companies can now identify EPA research, technologies and capabilities possessing market, license or collaborative development potential.

The Bayh-Dole Act

Paving the way for the commercialization of federal research was the Bayh-Dole Act (P.L. 96-517, Patent and Trademark Act Amendments of 1980), co-sponsored by Senators Birch Bayh of Indiana and Robert Dole of Kansas.

"In the 1970s, U.S. clocks were cleaned economically," Allen says. "We were losing our manufacturing base and we were losing ground on enabling technologies of the future."

Yet government-funded labs were working on solid research projects that could help the country win back its competitive edge.

Enter Bayh-Dole. Passed in 1980, the act established a uniform patent policy among federal agencies, allowing small businesses and non-profit organizations (like universities) to retain the rights to inventions and discoveries made in federally funded research programs.

Key provisions of the Bayh-Dole Act include:

· Universities may partner with private enterprise to promote the utilization of inventions created with federal funding.

· Universities retain the rights to patented technologies and give licensing preference to small businesses to spur local economic development and further innovation.

· The government retains a non-exclusive license to practice the patent throughout the world -meaning it can use the technology for free, forever.

"In the end, universities get research money and income, professors benefit monetarily from their work and industry benefits from the technology, "Allen said.

Today, economists estimate that 30 percent of the value of NASDAQ stems from university based, federally funded research, which might never have been commercialized had it not been for Bayh-Dole.

Good Business Sense

Federally funded research makes good business sense, Allen says. "Long-term research is expensive and takes years," he explains. "If you're driven by quarterly reports to stockholders you're not going to have that kind of time and money."

To keep the bottom line healthy, companies hollowed out their research and development efforts. "They got rid of everything that didn't have an immediate pay-off to ensure their year-to-year survival."

Federal labs picked up the slack. "Someone needs to work on cutting-edge, high-risk research that companies can't afford to do," Allen says.

The most promising research coming out of those labs can then be licensed to companies for commercialization. Both information technology and biotechnology projects make it to the market, but Allen says there are more opportunities for life sciences.

"The biotech industry is more patient," he explains. "They spend 10 to 15 years to develop a new drug, so the nature of their companies requires long-term research. They need the pipeline filled."

Human Genome Project

As an example, Allen offers the Human Genome Project, which began in 1990 as a joint venture between the U.S. Department of Energy and the National Institutes of Health. The project was designed to:

· Identify all genes in human DNA
· Determine the sequences of the 3 billion chemical base pairs forming human DNA
· Create a database
· Improve data analysis
· Transfer related technologies to the private sector

Completed in early 2003, data from the HGP will be used to:

· Develop targeted diagnostics and prognostics, drugs, and other therapies
· Breed healthier, hardier and more nutritious crops and livestock
· Create cleaner and more efficient production of chemicals, pulp and paper, textiles, fuels, metals and minerals
· Produce biodegradable items, new energy sources, diagnostics, and more effective, less hazardous cleanup of toxic-waste sites
· Undertake evolutionary and human anthropological studies
· Detect and determine resistance to biological warfare agents

"If the government didn't do this project, no one would have," Allen says. "No company would have the muscle or the money. Yet it has tremendous implications for health."

Collaborative Research

While many good things come from government-private partnerships, some people bristle at the thought of corporations influencing federal research agendas. This is particularly so for the development of major medical drugs and treatments.

Allen dismisses the worries. First, he contends, federally funded researchers aren't in it for the money. "They have a passion for advancing science," he says. "If not, they would be working for Bristol Myers. They like basic science, but can get frustrated if there's no practical application."

Second, when a commercial application is found, the NTTC reviews every deal for conflicts of interest so it can avoid potential problems. For this reason, "It takes government longer to finalize a deal than industry would like," he says. Beyond that, there are public comment periods for each proposed transaction, further lessening the opportunity for impropriety.

"When people make money," Allen says, "people ask questions. That's only fair." But, he asserts, they should not believe that corporate money steers federal research. "We are not their servants," he declares. "Federal and university labs are not tainted by industry."

Spotlight on The National Technology Transfer Center

The National Technology Transfer Center (NTTC) is a full-service technology-management center that helps organizations identify commercially promising discoveries, market them to American industry, and build partnerships turning inventions into products. Congress established the NTTC in 1989. With continued support from Sen. Robert C. Byrd, D.-W.Va., and Congressman Alan B. Mollohan, D.-W.Va., the NTTC is a recognized national asset located on the campus of Wheeling Jesuit University.

Guided by a mission to aid economic development through matching federally funded research with U.S. private industry, the NTTC offers a complete line of products and services enabling American businesses to find technologies, facilities and world-class researchers within the federal labs and universities needed to remain on the cutting edge of innovation.

NTTC clients include NASA, the Environmental Protection Agency (EPA), the Department of Veterans Affairs (VA), the Department of Homeland Security, the Missile Defense Agency, the Small Business Administration (SBA) and the Department of Commerce (DOC). For more information on the NTTC, call (800) 678-NTTC (6882) or visit www.nttc.edu.

A Vital Partnership

The private-public research alliance is a major reason why U.S. industry has regained its historic leadership in the highly competitive world marketplace of high technology. The Internet, biomedicine, laptop computers, supermarket barcode scanners, and life saving drugs are just some of the everyday products that had their origins in federal laboratories or universities. Yet without industry developers, such ideas would remain on the shelves. The United States is unique in having such a rich treasure trove of publicly funded research together with an entrepreneurial economy.

Read Money Talks, Education Walks? from the October 27, 2003 issue of Larta VOX.
Read The Promise of Technology Transfer from the October 20, 2003 issue of Larta VOX.
Read Tech Transfer Q&A with Brian Atwood from the October 13, 2003 issue of Larta VOX.
Read Making Knowledge Accessible to All from the September 8, 2003 issue of Larta VOX.
Read The Commercialization of Higher Education from the September 1, 2003 issue of Larta VOX.
Read Technology Treasure If You Know Where to Dig from the August 4th issue of Larta VOX.
Go to the Technology Transfer section of Larta's Research Archive

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