What Determines University Patent Commercialization What Determines University Patent Commercialization? Empirical Evidence on the Role of University IPR ownership Paola Giuri, Federico Munari, Martina Pasquini Department of Management, University of Bologna Financial support from the EC project 217299 InnoS&T and from the EIBURS programme of the EIB (FinKT project) is gratefully acknowledged. 1

Objectives of the paper 1) Understand whether and how the ownership of IPRs by universities and PROs affects their subsequent commercialization 2) Identify other relevant factors influencing the commercialization of university and PRO patents by considering three exploitation routes: Patent sale Licensing Spin-off formation Empirical evidence from a sample of 858 EPO patents with inventors employed by universities and PROs in 23 countries 2

Motivations of the study The need to enhance patent valorization for growth and jobs (EC working document, 2012). The “Innovation Union” initiative emphasizes the need to improve the economic exploitation of unused IPRs (Europe 2020). With specific regards to universities and PROs, several reforms over the last two decades have tried to foster the commercialization of research results (Henderson et al., 1998; Wright et al., 2003; Coupe, 2003; Mowery and Ziedonis, 2002; Sapsalis et al. 2006). Implementation of Bay-Dole like reforms in various European countries moving towards institutional ownership of academic inventions (Rossi and Geuna, 2011) However, there is little or no empirical evidence assessing the effects of such reforms on the commercial exploitation of university and PRO inventions. 3

Background Literature: The reforms of University IPRs regimes In the US, the turning point was the Bayh-Dole Act (1980) In Europe, several reforms have been introduced since the late 1990s. Most European countries moved towards a system of institutional ownership (e.g. Baldini, 2006; Della Malva et al., 2008; Meyer and Tang, 2007; Geuna and Rossi, 2011) Significant heterogeneity remains across and within European countries, also due to specific university bylaws. Institutional ownership regime The university maintains the ownership of patents resulting from publicly-funded research i.e Most European countries Professors’ privilege regime The researcher maintains the ownership of patents resulting from publicly-funded research i.e. Italy, Sweden 4

Literature: university IPR ownership and impact on TT activities Empirical evidence on the consequences of university IPR ownership patterns on the success of technology transfer activities is still limited (Shane, 2001; Crespi et al., 2010). University-owned patents Patents generated by an academic inventor and owned by the university employing the academic inventor University-invented patents Patents generated by an academic inventor and not owned by the university employing the academic inventor 5

Literature: university IPR ownership and the efficacy of TT activities Both university-invented and university-owned patents have increased (e.g. Baldini, 2006; Della Malva et al., 2008; Meyer and Tang, 2007; Tang, 2008) A high percentage of academic patents still remained owned by private businesses (Geuna and Rossi, 2011; Lissoni, 2012) Mixed evidence on the number of forward citations per university- owned patent as compared to company-owned academic patents (Czarnitzki et al., 2011; Lissoni et al., 2010) The study by Crespi et al. (2010) on a sample of European university and PRO patents from the period 1993-1997 does not find significant evidence of a university ownership effect on the commercialization of patents 6

Our study: research questions and intended contributions Does the ownership of patents on university or PRO research (university-owned vs. university-invented) impact on the final commercialization outcome? Are there significant differences depending on the type of exploitation route adopted (sale, license, spin-off formation)? Is the relationship between university IPR ownership and commercial exploitation influenced by the type of national IPR legislation on university patents (institutional ownership regime vs. professors’ privilege)? Which other factors (scientific background of the invention, incentive systems, funding sources) affect the commercialization outcome? 7

Sample We used data from the PatVal-EU II survey of inventors of EPO patents with priority dates in 2003-2005 in 20 European countries, US, Japan and Israel. 22,533 responses by the inventors in all surveyed countries in the PatVal-EU II dataset, corresponding to a corrected response rate of 20%. Of these, 1310 patents (6% of the total) refer to inventors employed in universities or PROs at the time of the invention. Our final sample is represented by 858 patents (out of 1310) from university and PRO inventors, due to missing information on some covariates. 8

Sample Distribution of sample patents by affiliation of the inventor Distribution of sample patents by country Country % AT 0.94% BE 2.12% CH 2.36% CZ 0.71% DE 18.63% DK ES 2.59% FI FR 14.98% GB 6.37% GR 0.47% HU 0.24% IE 1.18% IL 1.77% IT 8.37% JP 15.80% NL 4.60% NO 0.35% PL 0.83% SE 1.89% SI US 12.97%   Total 100.00% Affiliation of the inventor % University 63.4 PRO 36.6 Total 100% Distribution of sample patents across OST 6 technological sectors Sector % Electrical engineering 17.45 Instruments 24.06 Chemistry, Pharma 39.98 Process Engineering, Special Equipment 9.2 Mechanical Engineering 6.13 Consumption (Consumer goods, Construction) 3.18 Total 100 9

Dependent and Explanatory Variables DEPENDENT VARIABLES DEFINITIONS Patent Sale Dummy variable equal 1if the patent has been sold at the time of the survey, and 0 otherwise Patent Licensing Dummy variable equal 1 if the patent has been licensed, and 0 otherwise Spin-off Formation Dummy variable equal 1 if the patent has been used to form a spin-off, and 0 otherwise External Use A dummy variable equal to 1 if the patent has been externally used (sale or license or spin-off), 0 if it was not used EXPLANATORY VARIABLES University-owned patent Dummy variable equal to 1 if the patent was owned by the university that employed the inventor, and 0 otherwise PRO-owned patent Dummy variable equal to 1 if the patent was owned by PRO that employed the inventor, and 0 otherwise PRO-invented patent Dummy variable equal to 1 if the patent was not owned by PRO that employed the inventor, and 0 otherwise Institutional ownership regime Dummy variable equal to 1 if the inventor’s country adopted the institutional ownership regime of university patents, and 0 otherwise 10 10

Control Variables -- Inventors’ characteristics: age, experience, number of scientific publications related to the inventions -- Financing resources used to generate the invention: internal resources, EU, VCs, bank loan, suppliers, customers -- Available incentive systems for inventions: influence for promotion, salary increase, one-lump payment. -- Country and technology dummies (5 OST macro sectors) Sources of data: PatVal II survey 11 11

Descriptive statistics: main findings Our descriptive analyses suggest that the share of university/PRO owned patents, as compared to university/PRO invented patents, has significantly increased over the last decade. However, a large share of university patents in our sample are still not owned by universities (46%). There is not a large difference between university/PRO owned patens vs. university/PRO invented patents in the overall likelihood of external commercialization (via sale or license or spin-off). However, the results suggest the need to distinguish the different modes of commercialization in order to more clearly understand the impact of university ownership. In particular, university/PRO ownership seems to be positively associated to licensing. 12

Descriptive statistics: main findings Moreover, the analyses suggest that it is important to distinguish universities and PROs, since they seem characterized by different commercialization patterns. The positive impact of the direct ownership of patents is particularly pronounced in the case of universities. In the subsample of university patents, the commercialization of university-owned patents seems more frequent than for university-invented patents (expecially for what concern the licensing route). 13

Descriptive results: the ownership patterns of university and PRO patents Patval II Patval I (Crespi et al., 2010) N. Countries 22 6 Priority dates 2003-2005 1993-1997 University-owned 54% 55% 18% University-invented 46% 45% 82% PRO-owned 79% 81% 42% PRO-invented 21% 19% 58% 14

Descriptive statistics: the commercialization of university/PRO patents according to the type of owners All patents (n=858) Non-commercialized Commercialized   Patents Sale Licensing Spin-off University/PRO-owned 66.67% 33.33% 7.65% 25.95% 14.75% University/PRO-invented 73.14% 26.86% 11.33% 11.97% 14.89% University patents (n=521) University-owned 53.93% 46.07% 13.21% 34.29% 21.79% University-invented 72.71% 27.39% 12.45% 11.62% 14.52% PRO patents (n=337) PRO-owned 79.93% 20.07% 1.90% 15.24% 7.43% PRO-invented 75.00% 25.00% 7.35% 13.23% 16.17% Multiple answers on type of use were possible. 15

University IPR ownership regimes in the different countries in the period of the study (2003-2005) Source: Geuna and Rossi (2011) 16 16 16

Descriptive statistics: the commercialization of university/PRO patents according to the national regime on university IPRs Multiple answers on type of use were possible. * External use = sale or license or spin-off. 17

Regression results: main findings We estimate multivariate probit regression models in order to control for the influence of other factors which might impact on patent commercialization. The results of regression analyses on the whole sample of university/PRO patents confirm that patents owned by universities are more likely to be licensed. However, once controlling for other factors, PRO owned patents are less likely to be exploited through direct sale or spin-off formation. Institutional ownership regime has only a negative and significant effect on the probability of selling the patent 18

Regression results: main findings The number of scientific articles at the basis of the patent is positively associated to licensing or spin-off formation. The existence of an incentive system based on ad hoc payments is positively associated to all types of commercialization. The funding sources exploited for the patented invention have a significant impact: the use of funding from external sources (external firms, customers, suppliers) and the receipt of VC funding are associated to a higher likelihood of sale of spin-off formation. 19

Policy implications Our analyses suggest that the share of university owned patents (as compared to university invented patents) has significantly increased over the last decade. The reforms towards institutional ownership regimes seem to had an impact in this respect. A large share of university and PRO patents still remain commercially unexploited. Need to understand in more depth the barriers to commercialization. In our data, PRO patents tend to have significantly different commercialization rates as compared to university patents. Further evidence is needed on this point. Most of the attention of academic research has been devoted to universities, less to PROs. Further analyses (not reported here) show that US patents in our sample tend to have significantly higher licensing rates than European patents (differences in terms of sale and spin-off formation are less pronounced), suggesting the existence of a gap in this respect. 20

Policy implications We provide evidence-based support for a positive impact of university ownership on licensing, less for the other two forms of commercialization. Our results thus suggest the need to disentangle the different forms of exploitation. Our results suggest that inventions more intensively rooted in science tend to have higher commercialization outcomes. Need to strengthen the university/PRO position in science in order to promote technology transfer. The financial sources adopted to generate the patented invention do affect commercialization results. Importance of implementing adequate financial instruments to support technology transfer and address the existence of funding gaps. 21

The FinKT project: objectives Overall goal: to map and analyse the financial instruments and the forms of partnerships between financial investors and universities/PROs that can facilitate technology transfer in Europe The project is undertaken by the Department of Management of the University of Bologna, in collaboration with Bocconi University (Duration: Mar 2012-Feb 2015) The project is funded by the European Investment Bank, under the EIBURS measure Project website: finkt.unibo.it 22

Contacts and project website Project website: finkt.unibo.it Federico Munari, federico.munari@unibo.it 23