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Incubate Joins Bipartisan Chorus: March-In Proposal Is Bad Policy

Read Incubate's blog on the recently announced March-In proposal.

 

Incubate recently submitted a comment letter intended to educate policymakers about the likely impacts of a White House proposal to revoke exclusive patent licensing agreements between universities and start-ups. Many of the concerns Incubate noted in our comments about the proposal were then reiterated by a bipartisan group of policymakers .


In theory, the new guidance would give the federal government the power to take intellectual property (IP) for consumer products benefitting from publicly-funded research if it doesn’t like the price. Strong and steadfast IP protections were a founding principle of Incubate, so we leapt at the chance to share our views formally.


The White House proposal has no basis in law and ignores over forty years of bipartisan precedent. In addition, it would shift the investment calculus for venture capitalists funding early-stage research and development in high-tech fields. How? By always leaving open the arbitrary possibility that a product’s price might not be “right” for ever-changing politicians.


At issue is a law known as the Bayh-Dole Act. The 1980 statute allowed universities and federally-funded labs to hold patents for any discovery made with the help of federal grant dollars. Universities can then license their patents to private sector partners with the intention of developing the invention into a useful product — a process also known as “commercialization.”


The Bayh-Dole Act has enabled the development of over 200 life-saving drugs and vaccines, as well as countless other products ranging from Honeycrisp apples to high-definition television. Incubate is also a part of the Bayh-Dole Coalition, a broad group leading on these issues.


The law includes a “march-in” provision allowing the government to re-license patents to additional companies if federally-funded research is not being commercialized. March-in authority ensures research benefits consumers whenever possible, and prevents established companies from licensing patents simply to forestall competition from a new product.


But the Biden Administration now says march-in powers can be invoked if federal officials determine the price of a successfully commercialized product is not “reasonable.” The law’s authors never wanted march-in to be used to control prices. Even more importantly, misusing Bayh-Dole in this way would reduce investment in a variety of sectors.


Exclusive patent rights allow firms to recoup the hundreds of millions of dollars — or more — it typically takes to commercialize a new product. IP portfolios are often the first thing venture capitalists look at when deciding whether to invest in a new start-up.


Without reliable patent protections, many VC investors will hesitate to commit their capital to companies licensing university research — even if that research seems likely to lead to an effective product. As a result, many high-potential discoveries may never make it to market.


The Biden Administration’s march-in framework might drive VCs away from collaborations with university and non-profit researchers who receive public funding. If the White House wants to maximize the real-world impacts of government-funded research, it should not finalize this plan.

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