Grants for Funding University Technology Transfer Introduced in Congress

[author: Kevin E. Noonan]

Washington - Capitol #5Companion bills were introduced in Congress on April 25th of this year with little fanfare (particularly in comparison to the Leahy-Smith American Invents Act) but they have the potential to provide significant funding for university-related start-up companies.  The bills, H.R. 4720 and S. 2369, are entitled the "America Innovates Act of 2012" and are sponsored by Reps. Rush Holt (D-NJ) and Timothy Bishop (D-NY) in the House of Representatives and Sens. Frank Lautenberg, Sherrod Brown (D-OH), and Kirsten Gillibrand (D-NY) in the Senate.  They have been referred to their respective committees (the House Sub-Committee on Technology and Innovation and the Senate Committee on Commerce, Science, and Transportation), but to be frank it is unlikely that they will receive positive action in this election year.

The bill provides for the U.S. to establish an American Innovation Bank as an "independent agency," (Sec. 101(a)) that will "promote the commercialization of science and engineering discoveries" (Sec. 102(a)) by "provid[ing] grants, loans, and other assistance to eligible entities and individuals to enable the entities and individuals to perform the necessary research and development to make research discoveries attractive for private investment that will lead to the development of new companies, products, and jobs." Sec. 102(b).  There are provisions for a Board (Sec. 101(b)(1)) and a Director, appointed by the President with the advice and consent of the Senate (Sec. 101(B)(2)); the Board will "advise the Director on new and emerging areas of research and industry that would benefit from investment from the Bank" (Sec. 101(b)(3)(A)) and "critically evaluate the success of the Bank's investments in helping to commercialize scientific discoveries and create new companies and jobs." (Sec. 101(B)(3)(B))  The bill also provides for annual Reports of its activities to Congress (Sec. 103(a)) that will include at a minimum the number of patents, products, new companies and jobs resulting from Bank investments (Sec. 103(b)).

Grants will be available to "eligible entities" (Sec. 104(a)) that will include "institutes of higher education" as defined by section 101 of the Higher Education Act of 1965 (20 USC 101), Sec. 104(B)(1) and "nonprofit research institution[s] that focus[] on science research" (Sec. 104(B)(2)).  The grants will be awarded "on a competitive basis" (Sec. 104(d)) in life sciences, medicine, computer sciences, communications, technology, physical sciences, engineering and "[o]ther research areas determined important for economic development by the Director" (Sec. 104(d)(1) – (4)) and using a priority system that awards institutions already receiving "a significant amount of Federal funding" from the National Institutes of Health (NIH), National Science Foundation (NSF), Department of Energy (DOE) or "other agencies" (Sec. 104(e)(1)), that "do not have a significant proof of concept fund already established at the entity" (Sec. 104(e)(2)), have "established relationships" with business and industry that can commercialize the technology and "may be" local industries (Sec. 104(e)(3)), that have "an institutional environment that is supportive of business development" (Sec. 104(e)(4)(A) & (B)) and "demonstrate the appropriate administrative capacity" to encourage patenting, companies, products or jobs from the grants (Sec. 104(e)(5)).  Decisions on grants will be made by an advisory panel of experts, both business leaders and scientists, who will make recommendations to the Director based on grant applications submitted by prospective awardees (Sec 104(c)).  Funds may be used to support the scientists performing the research as well as further research or data collection directed to making a discovery "more attractive" to corporations or venture capital firms (Sec. 104(f)(1)(A)), for facilities and business incubators (Sec. 104(f)(1)(C))  and to attract additional private investment (Sec. 104(f)(1)(D)).  The bill also contains additional provisions governing subgrants to individuals (Sec. 104(f)(2)) and for facilities construction (Sec. 104(f)(3)).  And of course there are provisions for Reports from grantees for each year during the grant period as well as for 5 years after the grant period ends (Sec. 104(g)).

In addition, the bill provides for direct grants to individuals (Sec. 105), governed by many of the same considerations and requirements for institutional grants (Sec. 105(a) – (c)), as well as grants to private companies in the form of loans "at competitive interest rates" (Sec. 106).  But when the government giveth it can also taketh away, under conditions where the grantees "do not use such grants or loans to make reasonable attempts to develop discoveries into new companies, products, or jobs" and can require repayment, as provided by Sec. 107.

Section 201 et seq. sets forth provisions for "improving science and technology" by amending Section 510 of the NSF Authorization Act of 2010 (42 USC 1869) to permit the NSF to award grants under the Integrative Graduate Education and Research Traineeship (IGERT) program to support students who perform "some or all of their graduate research in an industry setting." (Sec. 201).  In addition, the bill provides that NSF, NIH or any other Federally funded graduate student training program must provide students with training related to protecting intellectual property, commercializing inventions and developing scientific discoveries (Sec. 202(a)-(b)), exempting institutions of higher education that enroll fewer than 6 students (Sec. 202(c)).  The NSF Authorization Act is further amended to award grants for "professional science masters programs" (Sec. 301).

The Bank is intended, among other things, to help companies navigate the "valley of death" where university-related start-up companies go through initial funding monies before having sufficient experimental results to attract venture capital or large company investment or commercialize their products.  One of the bills' proponents, Senator Gillibrand, called the bill "common-sense legislation [that] will help develop scientific breakthroughs into cutting-edge businesses and new jobs."  That kind of promotion worked well for the AIA, and could be the ticket for accelerating consideration of the bills before November.