University Patenting Aldo Geuna SPRU-University of Sussex PECS – July 2007

Content Knowledge transfer activity University patenting in US: – The Bayh-Dole act; University patenting in Europe – Legal framework; – Current situation and historical development for a few countries; Possible benefits and negative consequences.

Knowledge Transfer 1 There are various forms of knowledge transfer (KT) activities, ranging from: – research carried out in collaboration between public and private organisations (e.g. research contracts); – Labour and students mobility; – consultancy; – new technical artefacts – IPR (e.g. databases, software, patents); – Spin-offs. KT activities moved from being mainly in the area of managing research agreements with firms, to the current view that sees KT as mainly technology transfer and especially focused on ‘assess and protect IP and make it available to industry’.

Knowledge Transfer 2 Knowledge Transfer Units (KTUs): – TTO: Technology Transfer Office – US, Uk, Spain; – TTC: Technology transfer Company – Israel; – Holding companies – Sweden; – Industry Liaison Offices (ILOs) or Technology Liaison Offices (TLOs). Two model the TTOs focused on IPR mostly if not only and the ILOs concerned with knowledge transfer in general (in the UK two association UNICO and AURIL).

Knowledge Transfer 3 KTUs in universities were established in the 1960s and 1970s, e.g. Belgium and Israel. But it was not until the late 1980s and early 1990s that KTUs became widespread in European universities generally. Association or network of KTUs aim: – to support the transfer of best practice across members, – to develop training support and international connections, – to influence national and European policy – to collect data on the performance of its members.

Knowledge Transfer 4 – AURIL (UK), CURIE (France), NetVal (Italy), RedOtri (Spain) are members of the ProTon network (financed by the EC FP6). – Some of the national associations more oriented to IPR management, such as UNICO (UK), are member of the ASTTP (Association of European Science and Technology Transfer Professionals).

University patenting in the US

Bayh-Dole Act (1980) This Act created a uniform federal patent policy that allowed universities to retain rights to any patents resulting from government funded research and to license these patents on an exclusive or non – exclusive basis (Sampat, Mowery 2003) Prior to the Act, universities wishing to retain title to patents resulting from federally funded research utilized Institutional Patent Arrangements (IPA’s). The Research Corporation managed IP for nearly 200 research universities from 1912 to 1980 (Mowery & Sampat, 2001). The Act was enacted in the throes of the “Competitiveness crisis” in the belief that IPA’s were impeding technology transfer and commercialization of federally funded research

Bayh-Dole Act Consequences of the Bayh-Dole Act Rise in university patenting – A result of Bayh-Dole? Alternative suggestions for increases – Emergence of biomedical and ICT fields. – Trend of increased federal funding in biomed. – Court rulings/federal policy shifts (possible to patent living organisms, software, management,etc.): 1980 Diamond vs.Chakrabarty – Organisms, molecules & techniques emerging from biotechnology are declared patentable.

U.S. patenting activity of U.S. universities and colleges: 1983–2003 Source: NSF, 2006

University patenting in Europe

University IP in Europe Very little reliable historical data on patenting and licensing by universities for European countries. Surveys from the OECD, national KTOs networks and umbrella organisations such as Proton and ASTTP. Most of them still in a very preliminary phase (except the Spanish network Red-OTRI for historical reasons).

University- owned patents 1 OECD PROs survey (Universities and public research organisations): – Modest IPR portfolio of most TTOs. The stock of patents under management by TTOs ranges on average between less than 10 in some countries to a few dozen patents in the most active countries; – Patents are filed first and foremost domestically but almost all TTOs reported that they also filed abroad;

University - owned patents 2 – Between 10% and 60% of reporting organisations that had an active TTO derived no gross income whatsoever from IP. – Very small number of licenses per year, often less than ten. PROs tend to license inventions to small domestic firms.

University - owned patents 3 UK UNICO survey 2002 (77 universities): – The majority (56%) of the responding institutions had not had any patents granted; – 60% of respondents earned less than £50,000 from licences (while 40% received no income from this at all ); – for 68% of institutions expenditure on IP management was less than £50,000, but only 14% had no expenditure for this item.

University - owned patents 4 The problem with the results of these type of survey is that they only take into account university owned patents. See also the recent Proton survey: - If you are interested I can provide you with set of survey results)

University – invented patents 1 University-owned: those patents that are assigned to the university and usually managed by a TTO. University-invented: Those patents that have in the list of the inventors at least one university employee. They are usually assigned to a firm. There are many more university-invented patents than university-owned patents across European countries.

(Source: Geuna and Nesta, 2006)

University - invented patents 2 The scientific field with highest activity is the bio- medical area across countries; however the strongest technological sectors in each country tend to have high university patenting. The historical development in Italy and Germany seems to confirm the view that university patenting is not a new phenomena and its development (as pointed out in the US by Mowery et al, 2001) is due to the opportunities in the bio-medical area (and may be ICT) more than to policy incentives.

University - invented patents 3 Patval Database: – 9,000 EPO Inventors ; 18% of EPO pats; – UK, NL, I, F, D and S. European university patents (433 or ~5%): – 82% University-invented; – 18% University-owned. For similar evidence from a few European countries see the KEINS project coordinated by Bocconi Univeristy.

University invented patents 4 Though interesting the OECD data from the PRO IP survey are not sufficient; national data on university invented patents such as developed in the PatVal project and for the above countries should be gathered from the same PTO to ensure comparability. This is most important because current European polices are based on the view that European universities are not active in patenting, while the data on university-invented patents point to a different institutional process of knowledge transfer.

Benefits and shortcomings of University patenting

Benefits and shortcomings Current policy literature put forward a set of benefits (and sometimes shortcomings). These are assumed. Not much evidence has been provided in support for them in Europe (some in the US). Benefits and shortcomings should be taken as hypothesis worth being tested.

Benefits of university patenting 1 Increased financial means (through increased licensing and royalty) that could be allocated on a discretionary base for example to foster new area of research or new teaching developments that are usually difficult to finance with traditional funding. – See the Cohen-Boyer Patents by Stanford; – See list of top earner in the US; BUT see OECD survey and evidence from AUTUM of long tail with very few univ making money. – UC net income from IPR is < 1% R&D budget.

The Cohen-Boyer Patent Feldman et al. (2005) Cohen-Boyer recombinant technology patent: USPTO 4,237,224 Nonexclusive licence. 468 licensees – companies. $254 millions of which 90% ($228) from royalties. 10 companies accounted for 77% of royalties ($197): Amagen$54.7 Lilly$36.6 Genentech$34.7 Schering$17.9 J&J$13.4 Merk$10.0

Licensing Revenue*: Fiscal Year Columbia University $143,342,000 2 MIT $77,040,976 3 University of California System $72,899,000 4 Florida State University $62,077,749 5 Stanford University $41,167,000 6 Michigan State University $30,397,759 7 University of Rochester $29,589,000 8 University of Florida $28,683,282 9 University of Washington/WRF $26,446, New York University $25,691,655

Benefits of university patenting 2 Increased contract research funding for the further development into a final product of the IPR. Possible creation of spin-off companies partially owned by the university (e.g. see the case of Oxford university: innovation.com/ or KUL Louven (B)). Faster exploitation of new inventions.

Possible shortcomings of university patenting 1. Publishing versus patenting; 2. Teaching quality; 3. Possible negative impact upon the culture of ‘open science’; 4. Threat to future academic investigation; 5. Divert research resources from long term fundamental research questions.

Publishing versus patenting Substitution effect between publishing and patenting. Evidence of complementarity for cross-sectional samples: top scientists do both. Particularly important is the possibility of different impacts depending on the age of researchers. A hypothesis worth testing is that older researchers may have the ability to publish and patent at the same time, while for young researchers, publishing activity has a greater effect than patenting on the formation of intellectual capital.

Teaching quality Teaching is not associated with a heavy weighting in the assessment of the performance of university professors; thus teaching has a low impact on their careers. If patent output is to be used in the academic evaluation process, this will create incentives for researchers to reduce their time/commitment to some of their activities - and, given the current weighting scheme, teaching will be the activity likely to suffer the highest time reduction.

Open science Negative impact on the culture of open science, in the form of increased secrecy (reduced willingness to share data with colleagues), delays in publication, increased costs of accessing research material or tools, etc. Some evidence in the US (in support see Blumenthal et al.; 1996; mix view see Walsh et al. 2003)

Future academic investigation Patent law provides a research and experimental use exception from patent infringement that allows university researchers to use patented inventions for their research without being obliged to pay licence fees. However, this exception can be weak if the firm that obtains the exclusive right to exploit a patent decides that the research exception is not applicable to university projects financed by industry. The Duke v Madey (2002) court case. WARF licence of stem cell to a university (univ-univ licence).

Conclusions 1 Major increase of univ patenting (both owned and invented) due probably to a combination of regulation changes and the development of biotech and ICT. Slowing down in most recent years in the US. Few univ make a large amount of money out of IPR, however a large majority of univs loses money in this business. No clear evidence on benefits or shortcomings.

Conclusions 2 Need of more comparable data across countries and at the university level (especially in the EU) to analyse the phenomena; Much of the attention is on monetary returns when the real problem is knowledge transfer. – There is no evidence that IPR is the “only” solution to the problem of diffusion of knowledge