Enforce ‘Buy American’

Donald Trump has been right in his basic observation — as both candidate and president — that we need to do more to address our trade deficit, how other countries “game” international trade, and how American jobs move offshore. He may not realize it, but he could advance his “Buy American and Hire American” goals by activating a policy tool already buried in U.S. patent law.

The federal government has spent tens of billions of dollars supporting scientific and technological research — for example, more than $131 billion in 2015 alone. The 1980 Bayh-Dole Act established a government-wide policy that gave patent rights to the university or non-profit receiving the research grant.

There is practically no question that the technology transfer triggered by this new system has been a boon to the U.S. economy. According to one survey, university-licensed products in the past 20 years have generated up to 4 million jobs and contributed somewhere up to $600 billion to gross domestic product.

Bayh-Dole was in part a reaction to concerns over industrial decline. “Japan was busy snuffing out Pittsburgh’s steel mills, driving Detroit off the road, and beginning its assault on Silicon Valley,” The Economist later wrote. So it’s no surprise then that Bayh-Dole has a very explicit “make it in America” provision.

Section 204 of the law says no recipient of federal research monies — and that would be all or most research at some universities — may sell or license an invention to anyone “unless such person agrees that any products embodying the subject invention or produced through the use of the subject invention will be manufactured substantially in the United States.”

This requirement may be waived by the federal government only upon a showing that there were “reasonable but unsuccessful efforts” to find American manufacturers who could make the product and make a profit on it. Yet this provision of the law has been all but forgotten.

What would happen if a systemwide audit showed that universities have largely failed to include this “make it in America” provision in their license agreements with private industry? The bottom line is that the federal government has “march-in rights.” There is no ambiguity: You either are meeting the makeit-in-America requirement, you obtained a waiver from it, or the government can “march in” and license a different company. Yet over the decades, the march-in has never been used.

In keeping with his “Buy American and Hire American” executive order, Trump’s trade team should imagine how the Bayh-Dole Act can be used. First, we need a comprehensive audit of all the Bayh-Dole assignments and licenses. We need to find out how many federally funded inventions have been “off-shored.” Then, the administration’s message should be simple: If you moved (or are considering moving) manufacturing that uses federally funded technology out of America, we will “march-in” and license the technology to someone who will produce in America.

And all this is possible due to a bipartisan law from a time when NAFTA didn’t exist and “twitter” meant the chirping of birds.