1. 1 25 Nov 20032nd EPIP Conference - Maastricht1 Academic Patenting in OECD Countries Mario Cervantes, OECD

2. 2 25 Nov 20032nd EPIP Conference - Maastricht2 Today’s Themes (1) Academic Patenting as Policy (2) Concerns about academic patenting (3) Evidence from the literature (4) Insights from OECD Survey on Academic Patenting 5) Lessons

3. 3 25 Nov 20032nd EPIP Conference - Maastricht3 Academic Patenting as Policy Before Bayh-Dole 1920-1970s Ad hoc petitions by US universities 1970s- Institutional agreements between Federal Agencies/Departments & Universities “ Success” breads emulation Reforms to funding rules in Germany, Japan, Korea Abolishment of professor’s privilege in Denmark, Germany Austria, Norway Policies based on US “success” - and not on evidence of under- utilisation of IP by professor inventors

4. 4 25 Nov 20032nd EPIP Conference - Maastricht4 Academic Patenting as Policy (con’t) - What is success? Patents and Licenses Royalty Revenue New Products Spin-off companies Good Jobs and Growth

5. 5 25 Nov 20032nd EPIP Conference - Maastricht5 Academic Patenting as Policy (con’t) - Stylized facts: US universities held 270 patents in 1970 ; and 3,617 in 2000. US universities earned $200 million in licensing revenue in 1991 and $1.2 billion in 2000 390 new firms by 2000. Thousands of jobs, billions to economic development (MIT, AUTM reports)

6. 6 25 Nov 20032nd EPIP Conference - Maastricht6 The problem with success Success in Academic patenting does not happen in isolation Need markets for technology Need entrepreneurial academics Need tacit knowledge Need institutional structures that give TTOs independence and credibility vis-a-vis academia and industry Need management and financial skills Need luck - success is highly skewed

7. 7 25 Nov 20032nd EPIP Conference - Maastricht7 Concerns about Academic Patenting 1. Concerns with patents in general - scope, quality, patent strategy (to exploit, to defend), fragmentation of IP rights (anti-commons) 2. Concerns about the mission of universities - shift from basic to applied, impact on academic freedom, conflicts of interest, costs and benefits 3. Concerns about academic patents in particular- will they aggravate the shift? Will they block research? Will they stifle other forms of knowledge transfer? Exclusive vs. non-exclusive licenses

8. 8 25 Nov 20032nd EPIP Conference - Maastricht8 Evidence from the literature (Based on review by Sampat for OECD Working Paper Series, forthcoming, 2003) Shift to applied: Jensen and Thursby 2002- 48% of university inventions are “proofs of concept” Thursby and Thursby - 44% licensed inventions by firms (n=112) are “ proofs of concept. (Mowery/Sampat 2001) difficult to disentangle the cause as academic patenting increased in parallel to industry-science linkages

9. 9 25 Nov 20032nd EPIP Conference - Maastricht9 Evidence from the literature Shift to applied research? Hendersen, Jaffe and Trajtenberg 1998 found increase in academic patenting was accompanied by decline in quality of patents as measured by citations but not conclusive as to there was a shift towards applied research Sampat, Mowery Ziedonis (2003) find no “quality decline” after Bayh-Dole. Mowery et al 2001- based on bio invention disclosures find little evidence

10. 10 25 Nov 20032nd EPIP Conference - Maastricht10 Evidence from the literature (con’t) Does involvement in patenting “crowd out” publication activity ? Agrawal and Henderson (2002) number of patents positively related to quality of patents as measured by citations Stephan et al. (2002) based on NSF data find positive relationship between patents and publications Involvement in post-licensing at the expense of basic research (David 1999, Thursbys,2002) In summary : evidence is inconclusive

11. 11 25 Nov 20032nd EPIP Conference - Maastricht11 Evidence from the literature (con’t) Effects on secrecy, disclosure: Blumenthal et al. 1997 found 20 of life science faculty delayed publications, nearly half of them in order to protect patentability Campbell et al. 2002 found that 47% of academics in genetics were denied data requests resulting in delays in their publications or inability to replicate results

12. 12 25 Nov 20032nd EPIP Conference - Maastricht12 Evidence from the literature (con’t) Effects on research progress: Eisenberg 1999 finds increased administrative burden and costs in accessing research tools Walsh, Arora and Cohen (2002) - little evidence that research tool patenting and licensing have halted downstream research Sampat (2002) finds increase in number and share of citations to non-patent literature in university patents since Bayh-Dole and since 1990

13. 13 25 Nov 20032nd EPIP Conference - Maastricht13 Evidence from the literature (con’t) Effects on research progress : Universities are patenting more upstream research Researchers that patent also publish more and hence could be citing more of their or peers’ research in their patents Effects on access are very dependent on claims and licensing practices

14. 14 25 Nov 20032nd EPIP Conference - Maastricht14 Evidence from the literature (con’t) SUMMARY - Most academic licenses involve embryonic inventions - There has not been a dramatic re-orientation from basic to applied - Evidence of a growth in secrecy and limits on disclosure - Universities are patenting inputs to research that were previously released in public domain - Need for more research as well as dissemination of safeguards

15. 15 25 Nov 20032nd EPIP Conference - Maastricht15 OECD Survey on Patenting and Licensing - background To document the laws and regulations that affect the protection and licensing of innovations by PROs To measure actual PRO IP activity To assess nature of license agreements To identify best practices for framework conditions and IP management, in an effort to balance PRO commercial objectives with research missions

16. 16 25 Nov 20032nd EPIP Conference - Maastricht16 Methodology 2 surveys administered by participating countries –1 st to national governments on legal framework –2 nd (modelled on AUTM and national surveys) to PROs on patents and licenses 13 countries administered questionnaire (‘00 or ‘01) Belgium, Canada, Denmark, Germany, Italy, Japan, Korea, Netherlands, Norway, Spain, Switzerland, Russia, USA Questionnaire responses not directly comparable –Mix of univs and PROs dependent on country –Response rates range from 59% to 90 % but some questions not answered –Normalisation by PRO size or research intensity not possible –Australia and US used existing survey

17. 17 25 Nov 20032nd EPIP Conference - Maastricht17 A Focus on Licensing No int’l comparisons of licensing income Better commercial proxy than patents Captures broader range of IP activity License clauses reveal information about PRO public mission License info helps create new indicators: efficiency, income skew

18. 18 25 Nov 20032nd EPIP Conference - Maastricht18 Legal Frameworks for IP at PROs are Complex Intellectual Property Legislation Employment Laws Law/rules on government research funding Contract Law Legal Frameworks

19. 19 25 Nov 20032nd EPIP Conference - Maastricht19 Do countries need a Bayh-Dole Act? Emulation of Bayh-Dole - Japan; Germany; Korea Reform of Employment Laws – abolishment of “Professor’s Privilege” at Universities - Austria, Denmark, Germany, Norway - Issuance of National “Codes of Practice or “IP policy guidelines” - Canada, Ireland

20. 20 25 Nov 20032nd EPIP Conference - Maastricht20 Trends in regulations IP policies are not well disseminated, including among faculty and students Administrative or legal requirements to disclose inventions, protect and work inventions are lacking Royalty sharing rules sometimes set nationally, but move to greater autonomy at institutions Non-IP barriers remain: –Government limits to keeping royalty revenue –-limits against equity ownership by universities –Public pay-scales that limit hiring of tech-transfer professionals

21. 21 25 Nov 20032nd EPIP Conference - Maastricht21 TTO Organisation & Managment Most TTOs are less than 10 years old Most have less than 5 FTE staff Most univ TTOs are integrated into the university but not dedicated to tech transfer Informal relations are main channel of tech transfer (own or researcher contacts) Licensing-in technology is less frequent than licensing-out

22. 22 25 Nov 20032nd EPIP Conference - Maastricht22 Most TTOs less than 10 years old, less than 5 FTE staff

23. 23 25 Nov 20032nd EPIP Conference - Maastricht23 Most TTOs are internal to the univ but not dedicated to tech transfer

24. 24 25 Nov 20032nd EPIP Conference - Maastricht24 Patent Data Data refers to patents assigned to institutions Stock of patents smaller at univs than at other PROs (<20) Number of patents granted per year per PRO is <10 Most patent applications are in health but others fields - energy, ICT, production technologies present

25. 25 25 Nov 20032nd EPIP Conference - Maastricht25 Stock of patents and renewal of portfolio

26. 26 25 Nov 20032nd EPIP Conference - Maastricht26 Licensing Practices Great variability in number of licenses negotiated, IP type and technology sector Licensees more often small than large firms, more often domestic than foreign PROs uneven in their use of safeguards in licensing agreements No consensus yet on what are good licensing practices

27. 27 25 Nov 20032nd EPIP Conference - Maastricht27 Average # of licenses negotiated per PRO: 1-24 per year

28. 28 25 Nov 20032nd EPIP Conference - Maastricht28 % of licenses negotiated by IP type

29. 29 25 Nov 20032nd EPIP Conference - Maastricht29 PROs do use safeguard clauses in licenses to protect mission, but do so inconsistently

30. 30 25 Nov 20032nd EPIP Conference - Maastricht30 Licensing Revenues Gross license income per PRO varies from 10k - 10m Euros per year across OECD countries Wide variety in the number of licenses at PROs that are earning income: 1-90 per PRO, median or 0-5 license earn income In most countries, only 10% active patents in a PRO portfolio are ever licensed and earn revenue in a given year Cost of patenting and licensing not well documented

31. 31 25 Nov 20032nd EPIP Conference - Maastricht31 In most countries, 10% active patents are ever licensed and earn revenue

32. 32 25 Nov 20032nd EPIP Conference - Maastricht32 Gross licensing revenue by type of PRO in (1 000s)

33. 33 25 Nov 20032nd EPIP Conference - Maastricht33 Lessons Learned Legal action can stimulate tech transfer, but national context matters A change in mindset is needed: more can be done to increase awareness of IP policies and rules at PROs Monitoring of IPR activities at PROs is ad hoc and weak Critical size of TTOs larger than present average No one-size fits all model of TTO organisation University vs. non-university PROs in most countries have taken very different approaches to tech transfer

34. 34 25 Nov 20032nd EPIP Conference - Maastricht34 Lessons Learned IP protection and licensing differs by field/sector Too much focus by policymakers on patents as outcome hides large variety of IP activity at TTOs PROs are experimenting with different models of TTO (regional vs. sector) Good licensing practices need better identification and dissemination

35. 35 25 Nov 20032nd EPIP Conference - Maastricht35 Ultimate Goal of Tech Transfer Too much focus on patenting as opposed to spin-offs or other channels of tech transfer Unpredictable nature of financial returns Tech transfer capacity takes time and skills, not just money Evaluation of short vs. long term benefits of tech transfer is necessary

36. 36 25 Nov 20032nd EPIP Conference - Maastricht36 How can governments support IP management at PROs? Need to establish a clear and coherent IP framework for PROs Need to provide incentives for PRO reporting and disclosure by inventors Set example for conflict of interest rules – national research guidelines help Mobilize National Patent Offices to disseminate information to universities; training to tech transfer professionals

37. 37 25 Nov 20032nd EPIP Conference - Maastricht37 How can governments support IP management at PROs? Subsidizing Patenting and licensing costs at PROs - Denmark (8 million EUR over 2000-2003) - Germany (50 million EUR to develop TTOs) - Japan (exempt TLOs from patent fees ) BUT avoid capture and dependency culture TTO Networking Initiatives - UK (around hospitals) - Germany (regional networks) - Korea (sectoral) Training & Awareness - United Kingdom - Leveraging Patent Offices (US, Denmark, Japan, UK)

38. 38 25 Nov 20032nd EPIP Conference - Maastricht38 How can governments support IP management at PROs? Encourage data collection International co-ordination of surveys is necessary, especially OECD-wide Need follow-up work on effects of academic patenting

39. 39 25 Nov 20032nd EPIP Conference - Maastricht39 www.oecd.org From OECD Home Page: Right bar – OECD Online Bookshop Right bar – Source OECD

40. 40 25 Nov 20032nd EPIP Conference - Maastricht40 Thank you! Mario.cervantes@oecd.org Benedicte.callan@oecd.org