American innovation and the resulting economic growth don’t have to be concentrated on the coasts. Policymakers increasingly want to ensure communities nationwide benefit from the cutting-edge research and development activities they host.
There’s good reason for this move toward “place-based” innovation policies. Well-meaning venture capitalists sometimes tend to pluck the most promising inventions from academic or nonprofit research institutions before jetting back to legacy powerhouses like Silicon Valley or Cambridge, Massachusetts.
That’s starting to change. Consider how much Congress has invested in place-based economic growth over the last few years. Together, three of the 117th Congress and President Biden’s most significant achievements — the American Rescue Plan, the Infrastructure Investment and Jobs Act, and the CHIPS and Science Act — invest nearly $80 billion in place-based policies.
Effectively implementing these laws will require looking at communities and institutions already taking a place-based approach to innovation and industrial policy.
One such locale is Madison, Wisconsin. Madison is a shining example of how smart policies can advance national interests while ensuring a more equitable distribution of economic growth. The author of a Brookings Institution report said, “We need 10 more Madisons.”
Right now, the University of Wisconsin-Madison is churning out cutting-edge inventions in areas like artificial intelligence, environmental engineering and biotech — all crucial fields for American innovation and competition in the 21st century.
My organization, the Wisconsin Alumni Research Foundation, patents and helps commercialize inventions developed at UW-Madison. Our model fosters economic growth, good jobs and sustainable development for our city and state.
Our place-based approach is made possible by a little-known law passed in 1980. That law, known as the Bayh-Dole Act, jumpstarted the commercialization of federally funded research in college towns everywhere.
Let’s start from the beginning.
By the 1960s, the federal government was financing a great deal of university research. Unfortunately, Washington also held full ownership of patents from that research. But those patented inventions weren’t going anywhere. By the end of the decade, federal bureaucrats had licensed less than 5 percent of 28,000 patented discoveries for development into real-world products.
This unfriendly policy environment impeded startups hoping to draw on patented university research. Eventually, leaders from UW-Madison, Purdue and other institutions negotiated a solution with the National Institutes of Health, which was later formalized into the Bayh-Dole Act.
Under the Bayh-Dole model, universities and other nonprofit research labs retain intellectual property rights to technologies they develop with the help of taxpayer funds.
This change had an enormous effect, allowing universities to license their intellectual property to private firms hoping to transform early stage discoveries into usable products. The law has been incredibly successful, contributing more than $1 trillion to the U.S. economy and helping support more than 15,000 startups.
There are countless success stories. For example, UW-Madison professors Thomas Mackie and Paul Reckwerdt invented an advanced cancer treatment system. After the Wisconsin Alumni Research Foundation patented the technology, entrepreneurs brought the product to patients through the Madison-based firm TomoTherapy. Another example involves Epicentre Biotechnologies, which licensed UW-Madison technology to craft enzymes and reagents for drug development.
Both companies opened facilities in Madison, invigorating the local economy with new jobs and development. Even after larger firms acquired both companies, they maintained significant operations in Wisconsin.
Many more communities can follow Madison’s lead, thanks to the Bayh-Dole Act and a flood of place-based investment at the federal level. But these well-meaning policies could fall flat if the government caves to partisans hoping to undermine the Bayh-Dole Act.
An obscure provision in the Bayh-Dole Act allows the government to forcibly re-license patents for federally funded inventions that aren’t available to consumers. But a cadre of lawmakers wants the government to use this “march-in” power to impose de facto price caps on widely available medicines.
Thankfully, the Biden administration rejected the most recent petition to abuse the government’s march-in authority. But a statement from the Department of Health and Human Services and Department of Commerce appears to leave the door open to future price-based use of march-in authority.
Twisting the Bayh-Dole Act would devastate UW-Madison and the Wisconsin Alumni Research Foundation’s successful model while jeopardizing public-private patent licensing nationwide. Misusing march-in rights would signal to potential private sector partners that patent rights for many inventions aren’t reliable. Investment in the commercialization of federally funded research would drop dramatically.
Place-based innovation is a worthy policy goal and one President Biden is right to promote. Protecting the Bayh-Dole framework will help keep America’s innovation ecosystem healthy.
