The Potential Threat of March-In Rights to Entrepreneurial Separation to Transfer Technology Programs

Abstract

In this paper, we present the application of Entrepreneurial Separation to Transfer Technologies from federally funded research and the difficulties associated with the transfer of intellectual property. With the increased threat (call) by the government to exercise “march-in” rights, which could limit both the licensing terms and what firms charge for goods (e.g., prescription drugs) that come from intellectual property (IP) resulting from federally funded research, researchers may be disinclined to commercialize their IP. While the government wants to exercise its March-In Rights to help consumers, it may be unintentionally harming them. The government is increasingly more vocal about the threat of march-in rights, in part because of the high consumer prices that have resulted from pandemic-related inflationary pressures. This threat has the potential of rolling back 40 years of gains from the Bayh–Dole Act. We present an overview of Entrepreneurial Separation to Transfer Technology and Entrepreneurial Leave Agreements and how they serve as one tool to support the transfer of early-stage technology. In a Volatile, Uncertain, Complex, and Ambiguous environment, university and federal laboratories need all the tools available to facilitate innovation and its commercialization. We present here why the development of these programs can help support their activities.

1. Introduction

Commercialization of intellectual property (IP) from research can be difficult, and is often referred to as a “full contact sport.” The reason that it is considered a challenging task starts with the identification of suitable IP on the supply side (the labs) and finding an appropriate match on the demand side (via companies that may want to license the technology). The subsequent process of negotiating the terms of agreement under which the IP will be contracted can be extremely laborious. Nonetheless, it is in the best interest of society that the IP that was funded under federal dollars through laboratory research be commercialized to maximize national innovation, competitiveness, and social welfare. For the purposes of this article, we use the term “research” to describe the federally funded investigative projects undertaken by both national laboratories and research universities. Segmenting the work in question into two categories will aid our understanding of the characteristics of these projects.

Typically, we may categorize the research that is conducted in the labs (here, we will use labs to account for both federal and university) as either applied or basic. Applied research focuses on the development of procedures, solutions, or technologies which address specific problems and is expected to produce solutions to those problems. Applied research tends to be more advanced with respect to both technology and adoption readiness levels (TRL and ARL, respectively). Basic research, conversely, is conducted to increase knowledge or understanding, without a specific notion of practical applications for the discoveries resulting from the research. Basic research tends to be lower with respect to both TRL and ARL. One might imagine, as an example, at the time when the Internet was first invented, no one would have imagined what it has become today.

Nearly half, 42%, of all basic research in the United States is funded by the federal government, and research universities conduct 48% of all U.S. basic research. Much more of applied research (well over half) is being funded and performed by the commercial sector. Hence, without the basic research of federal and university laboratories, U.S. innovation will likely stagnate. It is not surprising that the commercial sector does so little of the overall work (and investment) on basic research, given that the failure rate is so high. Nonetheless, basic research is fundamentally necessary for future applied research.

As mentioned, basic research takes place in universities and national laboratories primarily because of the speculative nature of and inherent risk associated with basic research and development. Most early-stage research and development projects fail to produce results which can be commercialized, and few businesses have the tolerance for such risk. This is not to say that basic research is not productive—some of the world’s most impactful inventions resulted from federally funded basic research. Because of this, to promote basic research, the federal government funds national laboratories and invests in universities through grants, cooperative research and development activities, and a variety of other mechanisms.

The return on investment (ROI) in basic research realized by the taxpayers is immense, whether measured in economic growth, improvements in healthcare, or increased productivity in the workplace. A few of the commercialized technologies developed in national labs and research universities include the following:

• Lithium-Ion Batteries (Argonne National Laboratory)
• GPS (Naval Research Laboratory)
• Gene Sequencing Technology (DOE Joint Genome Institute and Los Alamos National Laboratory)
• High Efficiency Solar Cells (National Renewable Energy Laboratory)
• 3D Printing (Oak Ridge National Laboratory)
• Google Search Engine (Stanford University)
• MRI Technology (SUNY Stony Brook)
• Gatorade (University of Florida)
• Improvements to GPS Technology (Cornell University)
• Recombinant DNA Technology (Stanford and UC San Diego)
• Internet Protocol (Stanford and UCLA)

Prior to the Bayh–Dole Act of 1980, also known as the Patent and Trademark Law Amendments Act, all intellectual property (IP) developed from federally funded research remained the property of the government. This federal ownership of the IP provided no incentive for the originator of the ideas and the people involved in the research to support it after the project ended, which was seen as an impediment to the successful commercialization of the research. Once the research had been completed and the project ended, the laboratory had fulfilled its obligation; future development of the IP became the responsibility of the federal government. As the government doesn’t commercialize IP, this arrangement stagnated innovation.

Under the provisions of the Bayh–Dole Act, researchers in universities, businesses, and non-profits that receive federal funds for research now own, if not all, at least a residual claim to and can commercialize the IP resulting from the research. The resulting financial incentive to both the researcher and the lab to commercialize the IP increased the likelihood of the IP becoming available to consumers, which ultimately benefitted the U.S. taxpayers who funded the basic research that developed the IP.

As the Bayh–Dole Act (1980; PL 96-517) and later the Federal Technology Transfer Act (1986; PL 99-502) were being drafted, there was concern among some of the opponents of the legislation that researchers would be able to hold an innovation hostage by charging exorbitant prices or otherwise leveraging sole ownership of the IP to prevent it from being broadly available, thus preventing the full realization of the potential public good that would come from the government funded research. Senators Bayh and Dole added to their bill a series of “march-in” provisions to assuage the concerns those who worried about unfair market advantage. Under these provisions, the March-In Rights allow the federal government to “march-in” and grant licenses to other entities or take control of a patent under certain conditions. Those conditions include the following:

• The contractor or patent holder fails to take effective steps to achieve practical application of the invention.
• Public health and safety needs are not being reasonably satisfied.
• The invention is not being made available to the public under reasonable terms.
• Requirements for public use are not met.

These provisions were designed as a safeguard to ensure that inventions developed with taxpayer funding would benefit the public, particularly if they are not being properly commercialized or made accessible (U.S. Government Accountability Office, 2009). To date, there have been very few instances of the exercise of March-In Rights being suggested, and no successful use thereof. In light of the lack of use and the recent COVID-19 pandemic, there are some who suggest that it is time to update the Bayh–Dole Act (Cook-Deegan et al., 2022; Sarpatwari et al., 2022; Sencer et al., 2023). They suggest that it is difficult to execute March-In Rights, and the time that it takes to go through the process makes the provision ineffective. March-In cases that have been put forward thus far are related to pharmaceuticals amid concerns that an inventor might hold a new drug hostage during times of crises or where individuals have no other viable options (pandemics, climate change, natural disasters, etc.).

In this paper, we argue that increasing and strengthening the threat of March-In Rights now, when both the severity and novelty of the challenges facing society are increasing (Camillus et al., 2021), threatens to roll back 40 years of gains made under the Bayh–Dole Act, and worse, has the potential to decrease the likelihood of researcher entrepreneurship.

We present Entrepreneurial Separation to Transfer Technology (ESTT) programs, also known as Entrepreneurial Leave Agreements (ELAs), as one policy that may be better suited to benefit the market in the face of wicked problems (Camillus, 2016). We see the use of ESTT mostly in the federal laboratory space, where there is a concern over potential conflicts of interest requiring the researcher to separate from the lab; we see the use of ELAs mostly in the university setting, where sabbaticals and other temporary separation mechanisms may be used. The main contribution of the current work is that we define March-In Rights in the context of chaotic ambiguity (which has yet to be done). Further, we propose ways to test the validity of our presentation and illustrate the risk that walk-in rights pose to researcher entrepreneurship. Finally, we contribute to the literature stream by suggesting how ESTT and ELA programs may be best suited to promote the development of IP from federally funded research.

The remainder of this manuscript is structured as follows. In Section 2, we present a brief literature review as it relates to commercialization of federally funded research. In Section 3, we develop the propositions suggested herein. In Section 4, we suggest how the propositions might be tested and steps forward for validating the model. Finally, in Section 5, we present conclusions and discussions.

2. Theoretical Framework

Knowledge developed in a laboratory is inherently ‘sticky’ (von Hippel, 1994; Minutolo & Potter, 2011; Potter et al., 2012). When we use the term ‘sticky’, we mean that the knowledge created in the laboratory is not easily transferred from the lab to commercialization. There are a variety of reasons why the IP is difficult to transfer, which include both tacit and explicit reasons. For instance, the firms acquiring the IP may lack the “know what”, the understanding of the basic technology, or the “know how”, the understanding of the implementation of the IP (Szulanski, 1996, 2003). Hence, the stickiness of knowledge creates a barrier to the successful commercialization of the IP, requiring innovative structuring to facilitate the movement.

2.1. Tacit Knowledge (Stickiness)

Tacit knowledge, often contrasted with explicit knowledge, is widely recognized in knowledge management and technology transfer literature (Dubickis & Gaile-Sarkane, 2016). It represents knowledge that is embedded in individuals’ minds and is difficult to quantify or articulate (Odigie & Li-Hua, 2008; Murray & Hanlon, 2015). Despite its elusive nature, tacit knowledge is vital for innovation and technology transfer (Grant & Gregory, 1997). For instance, a significant portion of university spin-offs, specifically 55%, leverage tacit knowledge acquired at the university rather than codified research findings (Karnani, 2013). This suggests that tacit knowledge can lead to both technology-oriented and service companies, not differing from codified knowledge-based start-ups in terms of job creation (Karnani, 2013).

The transfer of tacit knowledge often occurs outside formal channels and is influenced by various factors (Agrawal, 2001; Fang-wei et al., 2006). Key factors influencing its transfer include the characteristics of the knowledge itself, the willingness of the transferor, the ability of the recipient, and the specific scenario of the transfer (Lee, 2020). Effective transfer relies on social interaction, creating a supportive and team-oriented environment that de-emphasizes competitiveness (Duffey, 2013). Techniques such as apprenticeship, long-term exposure, hands-on practice, and dialogue are suggested to facilitate its transfer (Duffey, 2013). Furthermore, information technology can support tacit knowledge transfer, particularly in stages related to the cognitive systems of both providers and receivers, and in externalization and interpretation processes (Wu et al., 2010).

Tacit knowledge is inherently sticky. Sticky knowledge refers to the inherent difficulty and cost associated with transferring knowledge to new locations or for new applications (Schuller, 2014; Chang et al., 2005). This concept, first introduced by von Hippel (1994), emphasizes that the more socially embedded or tacit the information is, the higher its stickiness (Fang-wei et al., 2006). In technology transfer, the stickiness of knowledge can significantly impede the process, making it costly and time-consuming (Fang-wei et al., 2006; Murray & Hanlon, 2015). Part of the reason that the knowledge from basic research is so sticky is that the team that worked on the project may be the only team in the world with knowledge of the know-how. Hence, to move that knowledge from the lab to commercialization may necessitate the active involvement of the researchers, which may require their physical presence in the licensee’s facilities.

The challenges of sticky knowledge transfer are often categorized into “macro” and “micro” levels (Sarif, 2009). Macro-level stickiness can stem from vague or inadequate government policies that do not sufficiently encourage knowledge transfer (Sarif, 2009, 2012). For example, in Malaysian technology parks, governmental policies focusing on national unity, foreign direct investment, and short-term profit-taking by firms have been identified as contributors to macro-level stickiness (Sarif, 2009, 2012).

Micro-level stickiness, on the other hand, relates to the firms’ contributions to the transfer difficulties (Sarif, 2009). This level considers factors such as transfer mechanisms, types of transfer, knowledge barriers, and transfer contexts (Sarif, 2009; Ismail & Sarif, 2012). These factors can make knowledge transfer costly, thereby hindering active participation from firms (Sarif, 2009). Understanding these subjective and objective influences on knowledge stickiness is crucial for developing effective management strategies to facilitate its transfer (Chang et al., 2005).

Therefore, when working to enable the transfer of IP from the lab, the lab’s Office of Technology Transfer must consider both macro and micro-level factors simultaneously. This is, by definition, a Wicked Problem. At the macro-level, the federal government is making policies that match whoever is in administration at the time. That administration is attempting to adapt national policies to meet the current national needs (e.g., unemployment, security, market, etc.). Concurrently, the Office of Technology Transfer (OTT) at the lab is attempting to develop policies and allocate resources to support the commercialization of IP, which may or may not be in line with national policies. To the degree that the lab is able to develop dynamic policies, those that are flexible to a fluid environment, we suggest it will be more successful in technology transfer (TT). We suggest that proactively developing ESTT and ELA programs is one mechanism that may support this.

2.2. Technology Transfer

Technology transfer (TT), within the context of federally funded research, is a pivotal process designed to transition innovations, knowledge, and scientific advancements developed through government investment into practical applications for commercial, industrial, or broader societal benefit (Wang et al., 2003). This process is crucial for maximizing the return on the United States’ significant annual investment in research and development (R&D), which includes approximately USD 150 billion each year from the federal government (Armstrong et al., 2019; Jordan et al., 2021). The overarching goal is to convert the scientific discoveries and engineering achievements emanating from federally funded R&D into tangible products, services, or improved processes that foster economic growth, address societal needs, and enhance the quality of life (Wang et al., 2003; Armstrong et al., 2019). It involves the sharing of relevant knowledge and facilities among federal laboratories, universities, industry, and government, often leading to the commercialization of new products or processes or enhancements to existing ones (Wang et al., 2003). The United States has a historical commitment to leading in technology creation and development, with federal funding playing a major role in bringing forth these new technologies (Wang et al., 2003).

Despite the fact that the United States has traditionally played a leading role in innovation, as stated earlier, the government wrote into the Bayh–Dole Act the provision that it has the right to March-In and dictate the terms of usage of the intellectual property. These rights empower federal agencies to intervene and require the original patent holder to grant additional licenses to other “reasonable applicants” under the conditions previously outlined. The intent of this provision is to serve as a safeguard against potential misuse by private beneficiaries and to protect the public’s interest in federally funded inventions. The March-In authority can be invoked if specific criteria are not met by the patent holder, ensuring that the benefits of publicly funded research are realized by society. However, the exercise of these rights have rarely been attempted. A few instances where exercise has been attempted include the following:

Norvir (AbbVie, formerly Abbott Laboratories)—2004: This case involved the HIV/AIDS drug Norvir, developed with federal funding. Abbott raised the price by 400%, leading public health advocates to petition for March-In Rights, arguing that the drug was no longer available at reasonable prices. However, the NIH (National Institutes of Health) rejected the petition, stating that the Bayh–Dole Act was not intended to control drug pricing, as the drug was still being made available (Treasure et al., 2015).

Xalatan (Pfizer)—2004: A glaucoma drug, Xalatan, was another instance where a request for March-In rights was filed due to concerns over pricing. Like Norvir, the NIH declined the request, stating that price regulation was not a valid reason for exercising March-In rights under Bayh–Dole (Treasure et al., 2015).

CellPro—1997: In the 1990s, CellPro developed a cancer treatment and was sued by Johns Hopkins University for patent infringement. The company petitioned the government to march in, arguing that the invention was not being made widely available due to patent disputes. The NIH declined, stating that the Bayh–Dole Act does not allow March-In rights to be used as a remedy for patent disputes (Treasure et al., 2015).

Xtandi (Astellas, Pfizer)—2016 and 2021: Xtandi, a prostate cancer drug developed at UCLA with federal funds, became the subject of multiple March-In petitions due to its high cost. The NIH has repeatedly refused these petitions, arguing that price alone is not sufficient grounds for exercising March-In Rights under the Bayh–Dole Act (Treasure et al., 2015).

Under the Biden administration, there was an increased call for the government to exercise its March-In rights, especially in pharmaceuticals, given the high cost of medical prescriptions. However, there are some who claim that the increased threat of March-In rights might roll back 40 years of advancement under the Bayh–Dole Act. The argument is that the uncertainty around commercialization due to the threat of the government exercising this right might limit the ability to realize a favorable return on its investment, which might hinder the rate of commercialization. This would constitute a macro-level stickiness of the IP. Moreover, where the technology readiness level is quite low (high tacit knowledge and stickiness) and the adoption readiness level is also low, the likelihood of commercialization is even lower. Therefore, entrepreneurial leaves may offer a mechanism to increase the probability of licensing and commercialization (a micro-level intervention) if it is perceived to minimize the potential of March-In. However, there is the potential that if the researcher perceives the risk of March-In to be too high, then the risk of leaving the lab may be too great given the perceived diminished return.

3. Proposition Development

Entrepreneurial Separation for Technology Transfer (ESTT) and Entrepreneurial Leave Agreements (ELA) refer to the process by which individuals or small groups within a university or research institution separate from their day-to-day roles to pursue the commercialization of technologies developed through research. Once their role in the commercialization effort is complete, these individuals usually, but not always, return to their previous role within the research organization. In previous research, when asked why the laboratory would support this, researchers were told that the developers of the IP “might leave anyway”, and this facilitates some form of control, connection, and local development (Minutolo & Potter, 2011; Potter et al., 2012).

In the context of the Bayh–Dole Act, which allows universities, laboratories and researchers to retain ownership of inventions resulting from federally funded research, ESTTs/ELAs (hereafter ESTT) can be key to successful technology transfer since those with the knowledge of the intellectual property are instrumental to its commercialization. While ESTT programs that incentivize researchers to take a leave of absence from the laboratory have been around almost since the inception of the Bayh–Dole Act, little research has been conducted and published on those programs. In fact, we only know of two research articles directly related to ESTT programs (Minutolo & Potter, 2011; Potter et al., 2012). These papers showed that among the impediments to successful commercialization were problems with ESTT program management and intellectual property ownership. To this end, we propose to update the prior work, now more than 10 years old, and to significantly extend the previous research to identify those best practices that will ensure a greater likelihood of success in ESTT programs. In the context of recent calls for funding agencies to exercise “March-In” rights, ESTTs may represent a preemptive option that aligns stakeholder interests.

“March-In rights” under the Bayh–Dole Act allow the federal government to intervene and license a federally funded invention to third parties or take other actions if certain conditions are not met by the original patent holder. This provision is designed to ensure that the benefits of federally funded research are available to the public. However, the exercise of March-In Rights presents several risks and concerns:

• Uncertainty for investors: The potential for the government to exercise March-In rights can create uncertainty for investors and companies interested in licensing technology from universities. This uncertainty might deter investment and commercialization efforts, as companies might fear losing exclusive rights to their licensed inventions.
• Impact on university–industry collaborations: Companies may be hesitant to collaborate with universities on federally funded research if there is a perceived risk that their investments could be undermined by government intervention. This could reduce the number of public-private partnerships and slow the commercialization of new technologies.
• Administrative and legal challenges: The process for the government to exercise March-In rights involves significant administrative and legal complexities. Determining whether the conditions for March-In Rights are met can be contentious and may lead to lengthy disputes and litigation.
• Effect on licensing strategies: Universities may need to adopt more conservative licensing strategies to mitigate the risk of March-In rights being exercised. This could limit their ability to negotiate favorable terms with industry partners and reduce the overall impact of their technology transfer activities.
• Innovation and public benefit: While March-In rights are intended to ensure public access to federally funded inventions, their exercise could paradoxically hinder innovation if companies are discouraged from investing in the development and commercialization of new technologies. Balancing the need for public access with the need to incentivize private sector involvement is a delicate challenge.
• Perception and public relations: The exercise of March-In rights could lead to negative perceptions among stakeholders, including researchers, industry partners, and the public. Universities and companies might be viewed as failing to meet public needs, even in situations where market dynamics, rather than unwillingness, limit the availability of inventions.
• Policy uncertainty: The lack of clear guidelines on when and how March-In rights will be exercised adds to the uncertainty faced by stakeholders. Consistent and transparent policies are needed to reduce this uncertainty and build confidence in the technology transfer process.

To mitigate these risks, it is important for universities, industry partners, and policymakers to do the following:

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Develop clear and transparent guidelines for the exercise of March-In rights.

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Foster open communication and collaboration between universities and industry partners to ensure that the commercialization of federally funded inventions meets public needs.

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Provide assurances to investors and companies that March-In rights will be exercised judiciously and only when necessary to address significant public health or safety concerns.

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Encourage policies that strike a balance between protecting public interests and promoting innovation and commercialization.

Successful technology commercialization programs exist because they operate in the public’s best interest. While the process can be lengthy and is not without its challenges, commercialization of government-funded research represents the best way to produce a return on the investment made by taxpayers. In this context, we propose to explore what makes a successful Entrepreneurial Separation to Transfer Technology program and the impact that the threat of March-In Rights plays on the likelihood of the inventor engaging in them. The key steps in ESTT programs include the following.

By surveying all the IP that the lab develops, the Office of Technology Transfer must work to identify marketable technologies. Institutions identify technologies with commercial potential arising from their research activities. Often, the technology transfer office is involved in this process to help facilitate market identification. This suggests that the OTT needs to ensure that the office is equipped with the expertise to support the researcher with those activities necessary for market identification.

P1: We propose that where the market is easy to identify and exploit, direct licensing of the technology is the most likely activity.

P2: When the market for the technology is less clear, the researcher is more likely to separate to support commercialization.

The lab must be equipped to support the formation of spin-off companies. Entrepreneurs, often researchers or faculty members, may form spin-off companies to further develop and commercialize the identified technologies. This suggests that the OTT should have supporting mechanisms, legal and otherwise, that help with the formation of the spin-off to include entrepreneurial mentorship.

P3: We propose that the formation of a spin-off company is more likely when there is no clear identification of an existing firm to license the technology.

The lab needs to be prepared to develop licensing agreements with the researchers. Universities or research institutions may enter into licensing agreements with these spin-off companies, granting them the rights to use, develop, and commercialize the technologies. While the researcher developed the IP and likely has a residual claim, it is the lab that owns the technology, which must then be licensed to the spin-off.

P4: The nature of the license agreement will depend on the stickiness of the technology.

While the researcher is likely very good at their discipline, they are likely lacking skills in the development of funding and support. Spin-off companies usually require external funding, such as venture capital or grants, to support the development and commercialization of the technologies. Prior to the actual need, the development of an entrepreneurial ecosystem capable of providing support will help enable the transfer of technology.

P5: We propose that the extent to which the laboratory or university provides support to develop funding sources and mechanisms to facilitate commercialization is directly related to the likelihood that the venture will succeed.

Additionally,

P6: The more support the laboratory provides, the more likely the researcher is to engage in an ESTT program to commercialize the technology.

As stated earlier, technology transfer and commercialization is a full-contact sport. Hence, there will need to be a great deal of collaboration between the university or laboratory and the spin-off companies, fostering a synergistic relationship between academic and basic research and entrepreneurial activities.

P7: Laboratories that provide ESTTs are more likely to see greater regional economic development and increased revenue to the organization.

The rationale is that the university or laboratory provides a support mechanism for commercialization that encourages the entrepreneur to stay in the local area and cooperate with the lab for activities like service contracts and equipment loan agreements.

Finally, support of risk mitigation is crucial to the development of any start-up activity. Typically, the intellectual property coming out of a federally funded research lab is in an early technology readiness level, making it risky to commercialize and more difficult to license. Hence, mechanisms to reduce the riskiness of the commercialization will make the likelihood of success greater. The threat of the exercise of March-In Rights is one such risk that needs to be managed.

P8: As the threat of the government exercising March-In rights increases, the likelihood of commercialization decreases.

The rationale is that the licensee may believe that they will not be able to price the product at a point at which they will be able to recover their investment and make a profit in a timely manner.

The ESTT process is crucial for maximizing the impact of research outcomes and ensuring that innovative technologies reach the market. This process directly aligns with the goals of the Bayh–Dole Act, which incentivizes universities and federally funded research institutions to actively participate in the commercialization of federally funded research.

As we envision a research agenda that may provide insights into the propositions developed here, we suggest the following:

First—identify Research-1 (R1) institutions that are more likely to have ELA programs as well as ESTT for the Federal Laboratories.

Second—once the research team identifies laboratories (academic- and government-related) that are identified as having ESTT programs, the Technology Transfer Managers (TTMs) may be contacted to gauge their willingness to participate in the research. Those interested should be scheduled for an interview with the research teams to gather the history and insight about their program. Where possible, the collection of longitudinal information about the ESTT instances that they have had (number, size, if the research returned or left, stayed in the region or went outside, etc.) should be documented to gauge success.

Third—from the instances of ESTT identified by the TTMs, those entrepreneurs who have used the program should be invited to participate in the research. From this set, we would expect to find entrepreneurs who experienced varying degrees of success, as well as ones who returned to the university/lab (or not). This allows for the identification of enabling and non-enabling activities that need to be either supported or improved upon to help develop a more supportive ecosystem.

Analysis of the interviews and empirical data will allow the research team to develop a set of ‘best practices’ and help to facilitate the future development of this research stream. We suspect that the results will suggest, but not prove, that there may be certain researcher personalities more suited to this type of program; that some technologies may be more conducive to ESTT programs; and that some types of labs may be more supportive and therefore more successful. The potential implications include policy recommendations, conferences, and supportive systems that help to further support the intent of the Bayh–Dole Act.

4. Conclusions and Discussion

At a time when the world is Volatile, Uncertain, Chaotic, and Ambiguous (VUCA), we need to take every opportunity to commercialize innovations developed through federally funded research, whether it is from a university or a federal laboratory. Much of the basic research that comes from federally funded projects is at an early Technology Readiness Level (1–3). These early-stage innovations are largely tacit, as we explained earlier, and the researcher or research team may be the only people in the world with a full grasp of how the technology works. Large companies that may have the fiscal ability to commercialize the IP may be at an early Adoption Readiness Level, given the lack of proof of the technology and the risks associated with attempting to take the IP to market. Hence, there is a real risk that the IP may lie fallow in the laboratory.

Given the challenges to IP commercialization from laboratories, all tools and techniques available to the lab must be used. In this paper, we developed a set of propositions for testing the potential conditions under which Entrepreneurial Leave and Entrepreneurial Separation to Transfer Technology Agreements may be beneficial in the commercialization process. The conceptual understanding of where these agreements may be helpful is only one key part of the successful development of these programs. The other key part is the development of the Human Resource policies specific to the lab that incentivize the researchers, fit with the lab strategy, and protect the rights of all parties.

The U.S.’ investment in basic research is a matter of national security and a source of American competitiveness. However, if we do not have mechanisms in place to ensure that the tacit, sticky knowledge created during the process of this research can be transferred from the lab to commercial application, then the investment will not realize its ultimate potential. Therefore, proactively developing programs that may better adapt to VUCA environments by simultaneously addressing both the macro and the micro stickiness of tacit knowledge is imperative to the lab’s success. Research such as this, which attempts to gather insight into the policies that work and those that do not, so they can be spread across the entire laboratory system, may help build the foundation for such efforts.

5. Limitations and Future Extensions

The current study has several limitations. The first is the non-systematic gathering of data on ESTT. Since there was no formal randomized gathering of data from organizational ESTT programs, the findings cannot be generalized across a larger body of laboratories. In this regard, the sample may suffer from sampling bias. The study further lacks generalizability due to a lack of testing; these results were derived through inductive reasoning and not quantitative data. Since this study consists of inductive reasoning, it may not be representative of all ESTT program managers’ beliefs or management of their programs. In order to increase confidence in the findings, future work should test the propositions through surveys of a larger sample set.

Despite the current limitations that result mostly from the use of inductive reasoning, the current work suggests many areas for future research. First, there is the obvious need for additional study of the ESTT program phenomenon. Greater insight into the practice is likely to result in additional insights that may have been overlooked by the exploratory nature of this study. As more insights are gained into the motivations, types of knowledge, and policies that influence the choice of an inventor to participate in ESTT, a greater understanding of knowledge transfer and technology licensing in general is likely to emerge; this will have a greater impact on policy development and management.