Small Business Council: Bayh-Dole Law Spawned 19,000 Startups

Since 2001, the Bayh-Dole system has helped launch more than 19,000 startups across the United States.

Karen Kerrigan, president and CEO of the Small Business and Entrepreneurship Council, presented these figures in a column for InsideSources.com. She stated that the legal framework, passed by Congress in 1980, remains the primary engine for turning federally funded research into commercial products.

Kerrigan noted that from 2021 through 2025, universities, hospitals, and nonprofit research institutes averaged more than 19,000 income-generating licenses per year. This figure is approximately double the annual average from the early 2000s. About 70 percent of these university licensing agreements are with startups and small companies.

The geographic distribution of these new firms shows a wide reach. More than 5,400 startups emerged in the South and Puerto Rico. The West region saw more than 4,900 new companies, the Northeast produced more than 4,800, and the Midwest added nearly 3,800. These businesses hire workers and partner with local firms, which Kerrigan said strengthens regional economies.

According to the report, the system has contributed up to $1.7 trillion to U.S. gross domestic product since 1996. It has also supported up to 7.6 million jobs. Kerrigan cited FluMist, smartphone cameras, and cryptocurrency platform technology as examples of inventions that trace back to federally supported research. She also identified the search algorithm developed by two Stanford graduate students as the foundation for Google.

Before the Bayh-Dole Act, the federal government held 28,000 patents on discoveries made with federal research dollars. The government licensed fewer than 5 percent of those patents for commercialization. The 1980 law allowed universities, nonprofits, small businesses, and federal laboratories to keep the patent rights to inventions they developed with federal support. This change created incentives for universities to license discoveries to small companies.

Kerrigan warned that the system now faces uncertainty. She said some policymakers are debating changes that could reduce startups' access to federally funded research. One proposed rule would allow the government to cancel long-term research funding on a political whim. Another agency adopted guidelines that require product-access plans, which Kerrigan said can be used to revoke licenses even after products have been developed.

Startups often build their businesses around a single unproven invention. They have fewer resources than larger companies to absorb the risks of developing new products. Kerrigan stated that if small companies cannot reliably protect their patent rights, it becomes harder to raise investment for research, testing, and manufacturing. The Small Business and Entrepreneurship Council argues that preserving the current framework is essential for entrepreneurs to bring new technologies to market.

The administration has expanded government-backed financing for small firms and attracted more private capital to startups. The Working Families Tax Cuts Act made permanent the 20 percent small-business deduction and personal tax rates. These measures, along with the Bayh-Dole framework, have strengthened the cash flow and competitiveness of small businesses.

Kerrigan concluded that the technologies defining America's future are already taking shape in university laboratories. She said Congress can ensure these technologies reach the public by protecting the framework that lets entrepreneurs license inventions, attract investment, and bring them to market.