The Trump administration is intensifying its scrutiny of university patents developed with federal funding, signaling a potential shift in how federal funds are managed. During a Cabinet meeting, Commerce Secretary Howard Lutnick expressed a desire for the government to receive royalties from university patents, stating, “We are going to make a deal with them all.” This comes after the federal government allocated approximately $60 billion for research and development to universities in 2023.
Lutnick’s remarks highlight a growing concern about the return on investment for taxpayer dollars spent on academic research. He argued that if the federal government provides funding, it is reasonable for taxpayers to expect a share of the revenue generated from patented technologies. In a letter sent earlier this month to Harvard University, Lutnick demanded compliance with the Bayh-Dole Act, which permits universities to patent inventions developed with federal funds. The letter set a deadline of September 5, 2023, for Harvard to prove adherence to the act’s requirements.
The Bayh-Dole Act, enacted to encourage the commercialization of inventions from federally funded research, has significantly influenced university patenting practices. Prior to its passage, the government owned nearly all inventions resulting from such research, leading to only a small fraction being licensed. According to Joe Allen, executive director of the Bayh-Dole Coalition, the act has resulted in a tenfold increase in university patents and the creation of over 2,200 companies focused on technology transfer.
Despite its successes, concerns have been raised about the implications of the government’s renewed interest in patent royalties. Stephen Ezell, vice president for global innovation policy at the Information Technology and Innovation Foundation (ITIF), warned that exercising march-in rights under the Bayh-Dole Act could undermine its original intent. He noted that if companies perceive high risks associated with licensing university technologies, they may withdraw from collaborative efforts altogether.
Critics argue that the federal government already benefits financially from university innovations through corporate taxes, income taxes from employees, and sales taxes from consumers. From 1996 to 2020, U.S. universities generated approximately $1.9 trillion in gross industrial output thanks to technology transfers facilitated by the Bayh-Dole Act.
Universities typically charge modest royalties for licensing their inventions, often around 2 percent for life sciences. The royalties are restricted to specific uses, such as funding research and rewarding inventors, rather than for administrative expenses or luxury purchases. Allen pointed out that the act has not increased bureaucracy or costs for taxpayers over its 45-year history.
The Trump administration’s approach raises questions about the future of university funding and the potential for increased governmental oversight. Lutnick’s comments have already begun to create unease within academic institutions, with Allen describing the situation as undermining confidence in the existing system.
The implications extend beyond patent royalties, as the administration has previously leveraged federal funding to influence changes in university admissions and hiring practices at prestigious institutions like Columbia University and Harvard. This raises concerns regarding the balance between government support for higher education and the political strings that accompany such funding.
As the Trump administration seeks to tighten its grip on university patent revenues, the long-term effects on academic research and innovation remain uncertain. The Bayh-Dole Act’s legacy of fostering collaboration between academia and industry is now at risk of being overshadowed by political motivations and regulatory overreach.
