The document summarizes the use of royalty income from federally funded inventions at major U.S. research universities, based on a 2001 survey conducted by the Council on Governmental Relations (COGR) at the request of the NIH. The findings, verified by data from the Association of University Technology Managers (AUTM), confirm that the Bayh-Dole Act has successfully incentivized universities to commercialize federally supported research and reinvest royalty earnings into research and educational activities. Typically, after deducting inventors’ shares and legal costs, institutions distribute royalty income among inventors, their departments, and the university itself, often allocating further support for administration and redistribution within the institution.
While universities have used royalty income to fund diverse initiatives—such as supporting graduate education, seeding research for junior faculty, and infrastructure improvements—overall, such revenues constitute a small fraction of their research budgets, averaging only about 3% of total federal research funding. Only a minority of institutions receive substantial royalty revenue, often stemming from singular, highly successful inventions, with most technology transfer programs generating modest or even negative net revenue. The document notes that universities are not required to track or report the specific “end uses” of royalty funds at the departmental level, nor do they systematically separate royalty income by field or sponsor. Despite inherent challenges in linking specific federal investments to eventual royalty returns, the report concludes that while the system fosters valuable technology transfer and research reinvestment, the notion of widespread "windfall profits" for universities is unfounded.
