This year will mark 30 years since the passage of the “University and Small Business Patent Procedures Act” in 1980 (also known as “Bayh-Dole”, for the two senators who sponsored the legislation, Birch Bayh of Indiana and Bob Dole of Kansas).

This is arguably one of the most significant pieces of legislation that most people have never heard of. The bill was later described by the Economist Technology Quarterly as, “possibly the most inspired piece of legislation to be enacted in America over the past half-century…more than anything, this single policy measure helped reverse America’s precipitous slide into industrial irrelevance.”

The legislation was a fairly simple proposition. Since World War II the federal government had developed a robust system of funding public research at universities and other laboratories. Excellent research was being conducted and thousands of students were being educated. Yet, while the federal government accumulated 30,000 patents over 35 years of funding, only about 1,500 of these patents (5 percent) were commercialized into useful products or processes.

Bayh-Dole changed all of that. The legislation gave title to intellectual property developed from federally funded research to the universities and institutions where the research was conducted in return for having these organizations proactively commercialize these innovations.

The results have been staggering. In 2008 alone, 5,039 technologies were licensed (a 100-fold increase in annual activity from the pre-1980 pace), 648 new commercial products were introduced, and 595 companies were formed. All by harnessing the motivation of inventors and institutions to promote their own work, rather than storing inventions away in bureaucratic limbo. Happy 30th birthday, Bayh-Dole!

Daryl Weinert is the Executive Director of the University of Michigan’s Business Engagement Center. He can be reached at weinert@umich.edu.