If your research is that valuable, don't take federal money. A lot of universities are taking federal money for research and then selling those discoveries to companies that sell them back to the taxpayers. It's not always that clean but it just doesn't seem right.
That's not what's happening, nor is it federal money being taken. Federally-funded research products lead to patentable inventions. Those patents are held by the government. In order to make that research commercially valuable, additional research is needed and private investment is required to bring the research to a marketable level of maturity. In turn, private entities agree to fund the necessary further research, without which the first sets of patents are worthless.
Sure, I guess the issue is that there are different models for doing that. If researchers didn't patent an invention but simply published the idea openly those inventions are highly likely to still make it in to products. Quite regularly in fact a company will develop a product without holding the patents and only acquire them once they've proved the concept.
Without the patents those ideas would be in the public domain. The researchers would be providing a service which provides inventions to industry and the public on an open bases. Note, I'm not saying this would be a better model but it's a possible way of distributing the IP without patents.
Essentially what patent protection does is insure that the funding body or researcher who developed the invention gets something back. That keeps some of the money generated within the country that funded the project. So for example you can't end up with the situation that the US government funds a project, it gets exploited in the Japan and the US gets nothing. In the current model, US develops it, Japanese company wishes to exploit it they have to buy rights to the invention.