Some academics do work on specific problems with a known commercial application, and sometimes this research is funded by commercial entities. The primary goal

Some academics do work on specific problems with a known commercial application, and sometimes this research is funded by commercial entities. The primary goal of most academics isn't to produce commercial products, but in the course of research useful things can pop up. Giving patent rights to grant awardees gives them the ability and incentive to commercialize offshoots of their research. Here's an example (I'm not a biomedical guy, so please excuse the errors): Dr. Brown researches some disease. He's not particularly trying to come up with a treatment for it, just trying to understand it better. He's in academia, so he needs to publish papers to get tenure and receive grant funding. The NIH funds his research because it's somewhat promising and because he will do a good job educating students. Suppose his group happens to discover a chemical compound that seems to be effective in treating this disease. What happens next depends on whether the university can patent this discovery. Before the treatment can be prescribed by doctors it needs to receive FDA approval, which requires expensive clinical trials. Without patent protection, no one (neither the university or outside companies) is willing to fund the trials because they won't have exclusive rights to sell the treatment once it's approved. Dr. Brown could work on the trials himself, but that would mean neglecting his other responsibilities. No one has a sufficient financial incentive to make the next step, so the treatment never makes it to the market.