Academic Patenting in OECD Countries Mario Cervantes, OECD

25 Nov 2003 2nd EPIP Conference - Maastricht

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Academic Patenting in OECD

Countries

Mario Cervantes, OECD


22

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


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Academic Patenting as PolicyBefore 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


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Academic Patenting as Policy (con’t)

- What is success? Patents and Licenses Royalty Revenue New Products Spin-off companies Good Jobs and Growth


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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)


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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


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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


88

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


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Evidence from the literatureShift 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


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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


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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


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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


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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


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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


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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


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Methodology 2 surveys administered by participating countries

– 1st to national governments on legal framework– 2nd (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


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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


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Legal Frameworks for IP at PROs are Complex

Intellectual Property Legislation

Employment Laws

Law/rules on government research funding

Contract Law

Leg

al F

ram

ew

ork

sLeg

al F

ram

ew

ork

s


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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


2020

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


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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


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Most TTOs less than 10 years old, less than 5 FTE staff

Germany

Italy(Univ.)

Italy (PROs)

Korea(Univ.)

Korea (PROs)

Japan

Russia

Norway

Switzerland (Univ.)

Switzerland (PROs)

0

10

20

30

40

50

60

70

80

90

100

0 20 40 60 80 100

Structure with less than 5 FTE(% responses)

Es

tab

lis

he

me

nt

aft

er 1

99

0

(% r

esp

on

se

s)


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Most TTOs are internal to the univ but not dedicated to tech transfer

Denmark

Germany

Korea (Univ.)

Korea (PROs)

Norw ayJapan

Italy

Netherlands (Univ.)

Netherlands (PROs)

Russia

Sw itzerland (Univ.)

Sw itzerland (PROs)

0

20

40

60

80

100

0 20 40 60 80 100

Internal TTO(% reporting to be integrated into the PRO)

Sp

ecia

lised

on

tec

hn

olo

gy

tran

sfer

(% r

epo

rtin

g d

edic

ated

TT

O)


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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


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Stock of patents and renewal of portfolio

30 58 43 47 78 40 18 38 54 3320

0

20

40

60

80

100

Ger

man

y

Italy

(Uni

v.)

Belgiu

m

Korea

(PRO

s)

Spain

Norway

Italy

(PRO

s)

Japa

n

Nethe

rland

s

Korea

(Uni

v.)

Switzer

land

(Univ

.)

Switzer

land

(PRO

s)

Siz

e o

f th

e p

aten

t p

ort

folio

(%

res

pons

es)

Less than 10 patents Less than 50 patents

Renewal of the portfolio (less than 10 applications)


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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


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Average # of licenses negotiated per PRO: 1-24 per year

0

5

10

15

20

25

30

UnitedStates -

Univ.

GermanyPROs

Netherlands -ALL

Korea ALL Russia ALL AustraliaUniv

Japan ALL SwitzerlandALL

Italy ALL Norway ALL Spain -Univ.

avg

. p

er

PR

O


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% of licenses negotiated by IP type

Univ% PRO% No. % Univ% PRO%

Patented inventions 8% 8% 9 6% 11% 26%Patent pending 12% 9% 16 11% 17% 23%Non-patented 52% 41% 12 8% 14% 29%Copyrighted material 24% 42% 106 73% 42% 23%Industrial designs 0% 0% 3 2% 5% --Plant breeder's rights 1% 0% 0 0% 1% --Other 2% 0% 0 0% 12% --Total 100% 100% 146 100% 100% 100%

AllNetherlands Norway Switzerland


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PROs do use safeguard clauses in licenses to protect mission, but do so

inconsistentlyLicense requirements (all apart from the NRLs)

0

5

10

15

20

25

30

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Requirement to w orkthe invention

Requirement to w orkthe invention in the

country

Right for licensee todelay publication of

papers

Reach-throughclauses for the

institution

Licensor has right off irst refusal for future

inventions by thelicensee institution

% r

espo

nses

All Some None


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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


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In most countries, 10% active patents are ever licensed and

earn revenueItaly Japan Norway Spain

PROs All Univ PROs All Univ Univ PROs

Total # of active patents 515 432 277 247 114 781 914 270

% Ever licensed 19% 21% 19% 51% 40% 8% 17% 36%

% Currently earning income

8% n.a. 7% 13% 23% 4% 8% 9%

Netherlands Switzerland


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Gross licensing revenue by type of PRO in (1 000s)

Year All Univ PRO currency Australia 2000 99 525 79 834 19 691 USD Belgium 2001 240 - - EUR Germany 2001 - - 46 468 EUR Japan 2000 1 397 - - EUR Korea 2001 3 822 1 032 2 790 USD Netherlands 2000 11 400 - - EUR Norway 2001 - 2 000 7 700 EUR Spain 2001 961 - - EUR Switzerland 2001 5 650 2 800 2 850 EUR United States

2000 - 1 297 452 69 600 USD

Russia 2001 1 375 - - EUR


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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


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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


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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


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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


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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)


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Encourage data collection International co-ordination of

surveys is necessary, especially OECD-wide

Need follow-up work on effects of academic patenting


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Documents

Academic Patenting in OECD Countries Mario Cervantes, OECD