The Legislation That Changed America, Bayh-Dole Act (part 2)

Interesting, schools do not just teach business regulation and competitiveness anymore, they experience them because they are getting products to the market, though indirectly. There are many start-ups which have become pipelines for the big MNCS to buyout. Before the Act, some of the ideas that enabled the start-ups might have been overlooked by MNCs. But as the former show promise and profitability, they could be bought over and that mission of making society better is given a bigger scale.

For me, Bayh-Dole Act is the most important business legislature of the last century in the United States. And this is American Congress at its very best moment. It delivered through legislature and transformed the pace of innovation by providing a fluidic system that enhances U.S competitiveness.

The outcome of the Act has spread around the world because of the number of technologies which have been commercialized and subsequently penetrated across the globe. The discovery of the search engine that powers Google was done in Stanford University. When Mr. Page and Mr. Brin decided to pursue commercialization of this algorithm and created Google, they must have been grateful for the federal funds that partly funded their discovery.

In a recent trip to Africa, I noticed that many universities now have Technology Transfer offices or what they call Consults. Good idea, but I must say that the structure where those offices operate is entirely different from what Bayh-Dole Act gave the American schools. The Act is helping American taxpayers to reap the benefits of funding the academic institutions through innovative products in the market. In Africa, you rarely see government in the mix of research and the whole constructs of technology transfer office seems superfluous since no research takes place.

It is one of those things that happen when African professors visit American universities for two weeks and afterwards go home trying to recreate the American educational system. Unfortunately, the root cause analysis is not thought through to appreciate the fundamental evolution of what goes in the US system. Yes, you have technology transfer offices, but the school has no electricity to run a lab.

Back to the Act, notice that many US universities are very competitive. While some could argue over the benefit of that since universities should traditionally share freely, the pursuit of commercialization and the rewards that come with it help to make research relevant to the needs of the society. And this new focus has created a platform where collaboration with industry has reached an all-time level.

Possibly, without this legislature, the idea that powers Google might still be filed out someone in the NSF cabinet. And the world will miss the dynamism, positive disruption, jobs, success-domino and information access that arrival of Google gave the world. When they introduced 1GB gmail, Yahoo was forced to upgrade its users from 4MB to 1GB and later, limitless storage.

It is not just Google, there are many small companies in pharmaceutical, semiconductor, and IT industries which exist today because the Act made it so easy that individuals and entities can hold rights in preference to government and in the process increase the chance of getting innovative products to the market.

The lesson here is that congress and parliament can change the future of any nation when good policies are made.

I understand that this Act might have reduced the free flow of information and ideas across the academia because everyone wants to guard its ideas for profit; but we have to live with the reality that there is nothing that does not have a potential drawback. Yes, some of our professors are now visiting venture capitalists more often. But at the end, it provides a perspective that makes education relevant and useful. And I think American students are better off when their professors are not decoupled from the industry.

Also, early patenting of ideas or processes without pursuing immediate commercialization could decelerate the pace of their improvements from other partners. In other words, when schools patent their ideas, they could possibly be closing the channel of progressive advancement on those ideas. From professors to graduate students, few will be interested to work on ideas which have been patented.

But the reality is that over the last five hundred years, intellectual property rights (IPR) have proven to be the difference between the old world and the new one and this Act cannot be an exception. A world of IPR is a world of innovation and though Bayh-Dole can have some drawbacks, it is to me the greatest business legislation in the last hundred years.