Innovation and Technology

Washington, D.C. – Following the National Association of Manufacturers’ submission of comments opposing the Biden administration’s proposal that would allow the government to march in and seize the rights to groundbreaking innovations developed by manufacturers, NAM Vice President of Domestic Policy Charles Crain released the following statement:

“Undermining America’s world-leading patent system is a recipe for reduced innovation and significant economic damage, with a disproportionate impact on small manufacturers. The administration’s march-in proposal would raise the spectre of government price controls on a wide range of technologies—fundamentally reshaping how life-changing innovation is developed, financed and commercialized in the United States. The administration must affirmatively and unequivocally withdraw this radical and flawed proposal.”

The NAM’s comments on the proposal are available here. Key excerpts from the comments are below:

• The proposal contemplates an expansion of the Bayh-Dole Act’s march-in provision, which has never previously been used during the 44 years since the law’s enactment. This unlawful expansion of a 44-year-old statutory provision would prompt the government to exercise march-in rights to force patent licenses to private-sector inventions that are derived at least in part from federal funding. This price control measure would impact innovative companies of all kinds across the manufacturing sector.
• Undermining manufacturers’ IP rights would have sweeping ramifications for innovation in the United States and America’s world-leading innovation economy. In particular, start-ups and small businesses would bear the brunt of the drastic changes proposed by the administration, as the spectre of government march-in would disincentivize early-stage entrepreneurship and dissuade much-needed capital formation from outside investors.
• If the administration moves forward with the proposal, the unprecedented expansion and use of the Bayh-Dole Act’s march-in provision would impede R&D, investment and the commercialization of innovative technologies. It would cause significant market uncertainty as to current and future patent licenses that are derived in any part from federal funds—directly contradicting the intent and purpose of Bayh-Dole. And it would hinder industry collaborations with research universities and laboratories across the country, stymieing manufacturers’ efforts to develop the products and technologies of the future and bring them to the public.
• Courts have found that an agency violates the major questions doctrine on matters of significant economic importance when the agency cannot “point to clear congressional authorization for the power it claims.” The government’s ability to seize private-sector IP is undoubtedly a topic of vast economic and political significance; as discussed, America’s robust patent system lies at the heart of the innovation economy in the United States—and the proposal would threaten the financing of that innovation ecosystem and the economic viability of many of its key participants (including start-ups, entrepreneurs, small and medium-sized businesses, universities and more). The effects of the proposal would be felt in every state and every congressional district. Yet, the proposal cannot point to “clear congressional authorization” for including a price consideration in the government’s march-in analysis because it does not exist; as explained above, price is wholly absent from the Bayh-Dole Act’s text. More broadly, the act was enacted to support public–private partnerships and bolster the innovation economy in the United States—yet, the proposal would undermine and endanger American innovation. It is unlikely that Congress, in passing the Bayh-Dole Act, “could reasonably be understood to have granted” the administration the power to vitiate the primary goal of the act itself.
• The NAM respectfully encourages the administration to provide certainty to manufacturers and other stakeholders in the innovation economy by affirmatively and unequivocally withdrawing the proposal and making clear that the administration will not implement any of its recommendations. Abandoning and disclaiming the proposal’s attempts to impose price controls and undermine the Bayh-Dole Act will ensure that manufacturers in the United States can continue to lead the world in R&D and innovation—and continue to create and support well-paying jobs vital to the success of the U.S. economy.

-NAM-

The National Association of Manufacturers is the largest manufacturing association in the United States, representing small and large manufacturers in every industrial sector and in all 50 states. Manufacturing employs nearly 13 million men and women, contributes $2.85 trillion to the U.S. economy annually and accounts for 53% of private-sector research and development. The NAM is the powerful voice of the manufacturing community and the leading advocate for a policy agenda that helps manufacturers compete in the global economy and create jobs across the United States. For more information about the NAM or to follow us on Twitter and Facebook, please visit www.nam.org.