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The article analyzes the U.S. licensing experience longitudinally, discussing policy implications, addressing emerging trends specifically among developing nations, and suggesting that royalty revenue-driven technology licensing in developing countries is the wrong public policy to adopt. Enactment of the Patent and Trademark Law Amendments Act in 1980 encouraged research institutions in the U.S. to patent technology developed with federal funding. This enabled substantial growth in patenting. The article explores the effects of the act in licensing at U.S. research institutions. A detailed examination of licensing patterns among U.S. institutions reveals four broad institutional categories. Investment in patents and licensing programs has certain advantages, such as encouraging development of technology and innovation. But earning licensing income from academic research is neither a lucrative nor a reliable financial investment. It is unlikely that scientific centers in developing countries would prove more likely or capable or producing readily commercial technologies than those in the U.S. The article suggests that efforts to transfer technology and foster economic growth in developing countries ought to be encouraged, but emphasis on licensing programs may prove to be financially unproductive.

The pharmaceutical and biotechnology industries have long relied on patenting as the primary means of allocating ownership and control over new discoveries. Yet, patent protection is a double-edged sword that has major implications for the future of innovation in biomedical science in the United States. Excessive “upstream” patenting of genes and molecular targets could hinder further research by creating a need for expensive and inefficient cross-licensing. However, limiting such basic science patenting could allow private entities to use the results of years of costly publicly funded research to produce and market lucrative products without compensating university- or public sector–based innovators. Academic and other nonprofit research centers would, therefore, be deprived of revenue for pursuing novel therapeutics or other seminal research work that may not be patentable. Recent court cases illustrate the inherent conflicts in allocating ownership and control of basic biomedical discoveries. Several options exist to avoid the complex problems of overlapping basic science patents while still rewarding pivotal discoveries and encouraging further innovation. These include establishing basic science patent pools and mandating arbitration arrangements that would assign credit and royalties for biotechnology innovations that depend on prior research that was performed, financed, or both in the public sector. [ABSTRACT FROM AUTHOR]