Federal government agencies provide about $33 billion a year to universities to conduct scientific research. That continuing investment expands human knowledge and helps educate the next generation of science and technology leaders. New discoveries from university research also form the basis for many new products and processes that benefit the nation and its citizens. In fact, in the knowledge economy, technological innovation and the scientific research on which it is based are critical for much of the nation's productivity growth. New products and processes do not spring fully formed from the basic research performed at universities. They require not only discoveries or good ideas but also further development, capital, manufacturing capability, and marketing. Universities and other organizations use the process of technology transfer to move scientific findings to the private sector for further development and commercialization. The human capital aspect of technology transfer is often undervalued, but students and faculty are usually the most effective means of translating research discoveries into new technologies. Many of the most successful university-industry interactions are based on the education and training of students who have the knowledge and skills to meet industry needs, or on relationships that faculty members have developed with particular companies. This document provides basic information on university technology transfer. It describes how it works and how the public benefits from it. A brief description of the Bayh-Dole Act and an explanation of its success are also presented. Finally, how royalties are used by the universities from licensed technologies is described.