Brookings: Experts - Walter D. Valdivia

Rethinking Responsibility in Innovation

Thu, 30 May 2013 10:00:00 -0400

Event Information

May 30, 2013
10:00 AM - 11:30 AM EDT

Saul/Zilkha Rooms
Brookings Institution
1775 Massachusetts Avenue NW
Washington, DC 20036

While emerging technologies—like nanotechnology, synthetic biology and advanced manufacturing—bear the promise of great benefits to society, they also pose significant risks. New sciences and technologies substantially affect society and yet it is nearly impossible to anticipate every major consequence of their advancement, development and commercialization. Who is responsible for those consequences? How is responsibility distributed among the various actors who influence and regulate innovation such as private enterprises, the government, inventors and the general public?

On May 30, the Center for Technology Innovation at Brookings hosted a public forum to discuss the role of social responsibility in each stage of the innovation process. A panel of experts discussed the kinds of institutions and incentives that govern innovation and how they shape the behavior of researchers, high-tech firms, capital investment firms, and regulatory agencies.

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Rethinking Responsibility in Innovation

Tech Transfer Policy: Bayh-Dole has Distributional Consequences

Walter D. Valdivia — Fri, 26 Apr 2013 08:59:00 -0400

Editor’s Note: This article first appeared in Innovation: America’s Journal of Technology Commercialization (April/May 2013; Volume 11, Number 2).

The sequester will have a negative effect on federal R&D of $9.6 billion, that is about a 7 percent cut with respect to the 2012 budget. These cuts will renew the urgency of figuring out how to maximize the social return on public R&D investments. That is a complex question because social returns are not only a function of the pace of innovation but also depend on how the benefits of innovation are distributed across society. Federal agencies that fund research as well as universities and national laboratories have an important role to play here. Not only can they rebalance their research portfolios but also they can improve technology transfer—the dynamic exchange of knowledge between research organizations and the private sector.

One important channel for technology transfer is patenting and the licensing of those patents to industry. These activities are primarily regulated by the Bayh-Dole Act of 1980. Think privatization of public assets where the assets are public patents—patents derived from federally funded research. The act introduced in this way the profit incentive to develop commercial products from public research. Under this act, the research contractor (generally a university or national laboratory) can take title to patents and to subsequently license those patents to private companies or other agents with the only proviso that the licensee takes reasonable efforts to practice the patent, that is, to develop it into a practical application.

The ostensible goal of Bayh-Dole was precisely to maximize the social benefit of federal R&D investments. We must then ask if this policy has delivered and if taxpayers are receiving a social return commensurate to their investment in research. The answer is inconclusive. There is some evidence that the translation of federally funded research into market products has increased but Bayh-Dole has also had unanticipated consequences—patenting has moved upstream to research tools creating what legal scholars Michael Heller and Rebecca Eisenberg have characterized as the tragedy of anticommons. In addition, it is not at all clear how widely the benefits of public patents have been distributed. Therefore, a fair assessment of Bayh-Dole must address at least two questions: Are the unanticipated consequences undercutting efficiency gains? And, are social returns from innovation concentrated or broadly distributed?

Regarding efficiency, a concern of the first order is that universities are patenting research tools. Scientific research is a collective effort that requires an active intellectual exchange at the outer boundaries of knowledge. Among the goods traded there are research tools, materials, and data. The patenting of reagents, cell lines, chemical compounds, raw datasets and other materials and the strict enforcement of those patents poses the risk of slowing down innovation at the headspring. A sensible answer to this problem would be to modify the statute to allow an exemption for non-profit research institutions. The exemption must at least apply to public patents. Universities and laboratories wanting to negotiate exclusive licenses on research tools would then be required to demonstrate that such an arrangement is in the interest of science and the public good. Complementing this solution, federal research contractors could benefit greatly from organizing a system-wide consortium for sharing research tools. This patent pool, chartered as a not-for-profit organization, would guarantee access to its patents (or at least patents on research tools) to all its members at fair licenses fees.

Beyond efficiency, there is an equity concern. That a public patent is developed into a product doesn’t directly imply maximum social benefit. If a new product is priced so high that only very few people can afford it, the social return will be minimal. Consider the effect of innovation in the pricing of drugs. If pharmaceutical companies are allowed to charge as high prices as they wish, only patients with prescription drug coverage in their health insurance will afford new medicine. If health insurance is universal, the effect will be deleterious for society because insurance prices will have to keep pace with drugs prices. A good indicator of the social return on public investment in biomedical research is therefore affordability. Amidst budget cuts and inflationary pressure on prescription drugs, policymakers are taking this issue seriously; for instance, Senator Ron Wyden (D-OR) has recently asked the NIH to “revisit the idea of striking a better balance between encouraging profit, innovation, accessibility and affordability.”

If public patents are a steady source of innovation in the biomedical sector, pricing excesses should be disallowed or at least regulated. Let’s be clear that companies that take a public patent and commit significant resources to its development are justly entitled to recoup their investments and even to retain a profit margin. But they did not incur in the full back-to-back investment—they did not invest in the expensive portfolio of blue-sky research out of which one program resulted in the patent they have come to license—it was the taxpayer that incurred in that high-risk investment. Put shortly, companies cannot assume a right to maximum profit when selling products based on public patents.

Federal agencies should be empowered, under Bayh-Dole, to promote competitive markets in high-tech sectors. One area where this can be done is defining better the conditions for exclusive licenses. While exclusive licenses are well justified in the case of start-up companies—they use these intangible assets to raise investment capital—the same rationale does not hold for large companies with high liquidity or easy access to credit. This kind of safeguard was part of the original intent of the act; Bayh-Dole originally limited to five years exclusive licenses for large companies. Another safeguard is the march-in rights provision. Federal agencies retain a royalty free license to all public patents and they can practice their licenses if the private sector shows no active effort to develop the patents or to satisfy public health and safety needs. Executive action should allow federal agencies to apply this provision to curb pricing excesses, for instance by linking need to affordability. The sole threat of intervention would curb pricing while still allowing companies to make some profit.

Congress and the federal government can help universities and national laboratories maximize the social returns of research by encouraging licensing practices that ease scientific collaboration and by curbing pricing excesses.

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Walter D. Valdivia

Publication: Innovation

Invention and the Mobile Economy

Tue, 05 Mar 2013 15:00:00 -0500

Event Information

March 5, 2013
3:00 PM - 4:30 PM EST

Falk Auditorium
Brookings Institution
1775 Massachusetts Avenue, N.W.
Washington, DC 20036

In the 40 years since the creation of the cell phone, creative engineers have developed a range of new products that enable mobile activity. From cellular networks and microchips to batteries and antennas, invention has been a big part of mobile technology, resulting in an industry that has become a vibrant driver of economic development. The mobile industry contributes significantly to GDP growth and job creation around the globe. In many countries, mobile is among the fastest-growing business areas. With mobile devices spreading at a rapid pace, it is important to understand how progress has been made and how government and business can facilitate continued development.

On March 5, as part of the Mobile Economy Project, Governance Studies at Brookings hosted an event focusing on key inventors, how different countries encourage and protect invention, and barriers that need to be overcome in order to promote mobile invention. A panel of experts discussed the culture of invention that has propelled the mobile industry to the economic forefront.

Read Darrell West's related paper»

Event Materials

Smart Policy: Building an Innovation-Based Economy

Darrell M. West, Allan A. Friedman and Walter D. Valdivia — Tue, 15 Jan 2013 00:00:00 -0500

Darrell West, Allan Friedman and Walter Valdivia argue that the United States needs smarter technology innovation policies in order to capture the economic advantages of the digital economy and improve long-term growth. Growth through smart innovation policy should be front and center for lawmakers as they wrestle with social and economic challenges in an information age, these scholars write.

This paper sets a robust domestic tech policy agenda for 2013 and beyond, as well as offers ideas to reform our economy, improve public sector performance, and train people for 21st century jobs. West, Friedman and Valdivia show how government and civil society can move from ideas, norms, structures, and regimes developed during an industrial period to institutions and policies attuned for the digital world.

Specifically, the writers propose the following to encourage an innovation-based U.S. economy:

Create better metrics for measuring worker productivity in the 21st century economy. Past approaches based on worker hours or total employees in relation to Gross Domestic Product (GDP) ignore the transformational nature of digital technology.
Encourage entrepreneurship by expanding Small Business Administration credit for start ups, adding entrepreneurial skills to school curricula, and making changes in immigration policy that encourage entrepreneurs to come to America.
Retool governments that learn to innovate and collaborate, and develop new approaches to service delivery, transparency, and participation. This includes placing more data online and employing data analytical tools, social media, mobile technology, and search results that improve decision-making.
Strengthen infrastructure by investing in broadband, data centers, and mobile cell towers, and improving access to spectrum for wireless applications.
Protect vital digital assets by updating the Federal Information Security Management Act and developing procedures for monitoring threats to critical infrastructure
Improve knowledge transmission through faster adoption of digital textbooks, more widespread use of creative commons licenses for instructional materials developed with taxpayer dollars, and policy changes that speed education innovation.
Increase technology transfer and the commercialization of knowledge from universities and federal laboratories so that public and private investments translate into jobs and economic activity as well as better health, security, and well-being.
Harmonize cross-border laws to promote global innovation and freedom of expression.

These policy prescriptions draw on a day-long workshop the Center for Technology Innovation at Brookings organized with two dozen innovation leaders in June 2012, well as online crowd-sourcing responses of several hundred experts from around the country in the areas of innovation, technology, and economic development.

Please download the full paper »

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Smart Policy: Building an Innovation-Based Economy

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Image Source: © Steve Marcus / Reuters

Technology Transfer, the Public Interest and Re-Igniting Public Research Investments

Thu, 06 Dec 2012 10:30:00 -0500

Event Information

December 6, 2012
10:30 AM - 12:00 PM EST

Saul/Zilkha Rooms
Brookings Institution
1775 Massachusetts Avenue NW
Washington, DC 20036

Technology transfer is the exchange of specialized knowledge between research organizations and firms within countries and, in an increasingly global economy, across borders. It encompasses transactions with intellectual property rights but also partnerships and programs of scientific exchange. The policies shaping the current technology transfer system in the United States are three decades old. While these policies have had some success aligning the needs of government, universities, and industry with the public interest, inadequacies in the system have made reform a necessity. The challenge is to make the technology transfer system a more effective instrument to translate research investments into sustained economic growth, better public health and national security.

On December 6, the Center for Technology Innovation at Brookings hosted a discussion examining ways to reform the U.S. technology transfer system, improve its effectiveness, and address its inadequacies. A panel of experts explored the government’s role in configuring the technology transfer system within the United States and toward other nations; how public policies can support new and competitive industries and facilitate knowledge transfer with U.S. trade partners; and how international standards of patent law can be reformed to address anti-competitive practices.

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Technology Transfer, the Public Interest and Re-Igniting Public Research Investments

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Event Materials

20121206_technology_transfer

Building an Innovation-Based Economy

Darrell M. West, Allan A. Friedman and Walter D. Valdivia — Tue, 13 Nov 2012 11:13:00 -0500

In a paper released in conjunction with a panel discussion, Darrell West, Allan Friedman and Walter Valdivia identify promising policy ideas to encourage entrepreneurship and innovative growth in the technology industry.

The policy recommendations draw on the expertise and recommendations gathered from a June 2012 workshop, organized by the Center for Technology Innovation at the Brookings Institution, as well as feedback from online crowd-sourcing.

Highlights include:

• We need better metrics for measuring worker productivity in the 21st century economy. Past approaches based on worker hours or total employees in relation to Gross Domestic Product (GDP) ignore the transformational nature of digital technology.

• We should encourage entrepreneurship by expanding Small Business Administration credit for start ups, adding entrepreneurial skills to school curricula, and making changes in immigration policy that encourage entrepreneurs to come to America.

• We need governments that learn to innovate and collaborate, and develop new approaches to service delivery, transparency, and participation. This includes placing more data online and employing data analytical tools, social media, mobile technology, and search results that improve decision-making.

• We should strengthen infrastructure by investing in broadband, data centers, and mobile cell towers, and improving access to spectrum for wireless applications.

• We should protect vital digital assets by updating the Federal Information Security Management Act and developing procedures for monitoring threats to critical infrastructure.

• We need to improve knowledge transmission through faster adoption of digital textbooks, more widespread use of creative commons licenses for instructional materials developed with taxpayer dollars, and policy changes that speed education innovation.

• We need to increase technology transfer and the commercialization of knowledge from universities and federal laboratories so that public and private investments translate into jobs and economic activity as well as better health, security, and well-being.

• We should harmonize cross-border laws to promote global innovation and freedom of expression.

Download Paper » (PDF)

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Building an Innovation-Based Economy

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A First 100 Days Innovation Agenda for the Next Administration

Tue, 13 Nov 2012 14:00:00 -0500

Event Information

November 13, 2012
2:00 PM - 3:30 PM EST

Falk Auditorium
Brookings Institution
1775 Massachusetts Avenue NW
Washington, DC 20036

The Internet is creating tremendous social, economic, and cultural value. Through digital connections, people are communicating with one another, overcoming social and political hierarchies, and building businesses around the world. Yet despite these positive benefits, many nations are experiencing slow-growing economies and barriers to innovation. In an era of limited growth, it has been difficult to lay the basis for long-term development.

On November 13, the Center for Technology Innovation at Brookings looked at ways to reform the U.S. economy, improve innovation, and address the difficult economic problems the country faces which demand new solutions. How can policymakers encourage growth through innovation? What areas offer the most promising growth for the 21st century? A panel of experts focused on broad topics in the areas of infrastructure, entrepreneurship, knowledge transmission, and protecting digital assets.

After the program, panelists took audience questions.

Related paper: Building an Innovation-Based Economy by Darrell M. West, Allan A. Friedman and Walter D. Valdivia

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Full Event - A First 100 Days Innovation Agenda for the Next Administration

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A First 100 Days Innovation Agenda for the Next Administration

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