Manuel Bóia Nelson Marques University Technology Transfer “Do Patents Reflect the Useful Research Output of Universities?” Pavitt, K. (1997) “University-based Technology licensing in the Knowledge- based Economy” Conceição, P., Heitor, M.V., and Oliveira, P. (1998) “On the Need of New Mechanisms for the Protection of Intellectual Property of Research Universities” Conceição, P., Heitor, M.V., and Oliveira, P. (1999) 2001/02/16

Patent: temporary monopoly on a invention in exchange for the publication of its details.Patent: temporary monopoly on a invention in exchange for the publication of its details. Patents granted are imperfect measures of activities contributing to technical change.Patents granted are imperfect measures of activities contributing to technical change. Intellectual property awards private rights to knowledgeIntellectual property awards private rights to knowledge Patents Offices Services: Public Goods or Not?Patents Offices Services: Public Goods or Not? University Technology Transfer

The US Patent Office Case 80% of all patents granted to business firms80% of all patents granted to business firms 50% of all patents granted to technological most active large firms50% of all patents granted to technological most active large firms Considerable differences between sectors:Considerable differences between sectors: Science-based => Dominance of large firms Non-electrical machinery, measure and control instruments => Dominance of small firms 5% of all patents granted to universities5% of all patents granted to universities Top Twenty Universities responsible for 70% Licensing provides $21 billion to US Economy in pre- production investments and post-production sales University Technology Transfer

The US Patent Office Case University Technology Transfer University License RevenuesUniversity License Revenues MIT - $38 Million Stanford – $111 Million Recomb. DNA - $53.4 Million Recomb. DNA - $53.4 Million FM Sound – $13.9 Million FM Sound – $13.9 Million

The US Patent Office Case University Technology Transfer On average, share of royalties over total R&D expenditures is small (0,2%) On average, share of royalties over total R&D expenditures is small (0,2%) Only 40,5% of all institutions covered the administrative office cost Only 40,5% of all institutions covered the administrative office cost Only 48,8% operated at profit level Only 48,8% operated at profit level

The US Patent Office Case University Technology Transfer Effectiveness of Patent Protection Effectiveness of Patent Protection - one of the instruments to protect inventions against imitation - one of the instruments to protect inventions against imitation - others: secrecy, learning curves, after-sales service - others: secrecy, learning curves, after-sales service - patents protect better product than process innovations - patents protect better product than process innovations

The US Patent Office Case University Technology Transfer Why Universities Patent so Little? Why Universities Patent so Little? “Whilst business firms concentrate on developing and testing specific inventions and artifacts, universities provide them with the underlying knowledge skills and techniques that help them solve even more complex and demanding problems.” “Whilst business firms concentrate on developing and testing specific inventions and artifacts, universities provide them with the underlying knowledge skills and techniques that help them solve even more complex and demanding problems.” “World class technology requires world class basic science.” “World class technology requires world class basic science.” Pavitt, K.

University Technology Transfer European CaseEuropean Case - no integrated patent awarding system - much more costly patent application (+200%) - weakness of European industry - lower level of R&D expenditure - inadequate links between universities and enterprises, etc. - outstanding scientific performance, but low transfer to innovations

University Technology Transfer European CaseEuropean Case

University Technology Transfer ImplicationsImplications Patenting by Universities is not a potentially useful measure of R&D performance: offers a very restricted and distorted view of Universities contribution of research to practical applications; University R&D feeds invention and innovation and it’s not a substitute for it; A more reliable measure? Patents citations of R&D publications (73% are public science) “...but, should be taken only as an indication of the multifaceted interplay between science and Technology.” Meyer, M. (1998)

University Technology Transfer Should universities pursue Should universities pursue intellectual properties policies?

University Technology Transfer The Economics of Knowledge and Intellectual Capital (I) A - Books, Music CD’s, Software ProgramsA - Books, Music CD’s, Software Programs From User point of view could be accessed by multiple users at the same time => Non-Rival From the “Producer” point of view it has the power to prevent the access to it, e.g. IPP => High Excludability B – Science based Concepts (Theories, Definitions, Formulas, etc.),B – Science based Concepts (Theories, Definitions, Formulas, etc.), National Defense, Public Roads (all Public Goods) National Defense, Public Roads (all Public Goods) From User point of view => Non-Rival From the “Producer” point of view => Low Excludability C – Common Pool Resources (Fisheries, Pastures, Gas &Oil, etc.)C – Common Pool Resources (Fisheries, Pastures, Gas &Oil, etc.) From User point of view => High Rivalry (High Scarcity) Low Excludability in prevent the access D – Personal Computer, Mobile Phone (all Private Goods)D – Personal Computer, Mobile Phone (all Private Goods) From User point of view => High Rivalry From the “Producer” point of view => High Excludability

University Technology Transfer The Economics of Knowledge and Intellectual Capital (II) A B C D

University Technology Transfer University Institutional Integrity “Universities have developed over the centuries an institutional specialization,... leaving public their research results and teaching activities” “The rationale for undertaking intellectual property protection in ‘research universities’ is the strengthening of the institutional integrity of universities.” Conceição at al., 1998

University Technology Transfer The Economics of Knowledge and Intellectual Capital (III) B A Push Up Knowledge Classification: WetwareWetware What is inside human brain (Human Capital – Rival Good) “Software”“Software” What is codified and stored outside the human brain (Non-Rival Good) University Institutional Integrity Menace The lack of Private Incentives could force Universities to push up to higher level of excludability goods production in search for Revenues

University Technology Transfer Exploitation of R&D University Results in a Institutional Integrity Concept

University Technology Transfer Challenges! 1 st – Balancing Innovation and Diffusion not to emphasize on innovation at the expenses of diffusion, e.g. Worksheet, VisiCalc/Apple II => Lotus123, Quattro, Excel/Multiplatform 2 nd – Beyond the Excludable/Non-excludable dichotomy of software Property Rights makes software highly excludable (e.g., Human Genome) Need for new institutional settings beyond public/private approach 3 rd – Integrating Intellectual Property Protection Systems variety of systems creates bureaucracy and inefficiency 4 th - Facing New Knowledge Need for a more workable and effective system.