A Market Test for Bayh-Dole Patents

Abstract

The Bayh-Dole Act, which allows patenting of federally funded research, has been praised for driving growth but also criticized for creating unnecessary deadweight loss and con­tributing to a patent "anticommons." Much of the controversy stems from Bayh-Dole's differing effects on different inventions. The dominant Justification for Bayh-Dole patents is commercialization theory: the idea that exclusive rights are necessary to bring inventions to market. This theory is con­vincing for inventions like pharmaceuticals with high regula­tory barriers and low imitation costs, but not when exclusivity is unnecessary for commercialization, such as for Stanford's widely licensed patents on early recombinant DNA technology. The problem is that for many government-funded inventions it is difficult to determine whether exclusive patent grants are necessary to incentivize commercialization.