Recent Research: Understanding the University Tech Transfer Black Market

An assessment of patent activity for 3,200 faculty who were awarded patents at 54 U.S. research universities concluded that 33 percent were assigned outside of the university and its technology licensing offices (TLOs). Furthermore, 42 percent of the faculty members who were awarded patents from 1989 to 2003 bypassed their university and TLO at least one time to attain a patent.



In their paper, Full-Time Faculty or Part-Time Entrepreneurs?, Gideon Markman of the University of Georgia, Peter Gianiodis of Clemson University, and Phillip Phan of Rensselaer Polytechnic Institute investigate the occurrence of university scientists to privately sell or license their discoveries separate from their university's technology licensing program. This is of particular interest to the TBED community because of the fiscal benefits that universities may collect from patent licensing, especially considering that many universities provide equipment, space, and additional infrastructure that is necessary for successful research.

 

The authors created a regression model that accounted for the TLO legal structure and affiliation, the entrepreneurial culture surrounding the scientists, strength of the university's patent portfolio, and the extent of incentive payments by the university for patenting. Their model supports these conclusions:

• Highly cited patents are associated with increased bypassing of university licensing compared to patents cited less often. Thus, patents with greater value are taken directly to the private sector more often.
• Universities with TLOs housed within their university structure are associated with increased bypassing as compared to TLOs that are separate legal entities.
• Universities with a greater amount of entrepreneurial activity, measured by startup ventures, have increased bypassing activity.
• Universities with medical schools have increased bypassing activity.
• Universities endowed with more patents have increased bypassing activity.

Because of the tendency for faculty working in locations with a stronger entrepreneurial culture and stronger existing patent portfolio to bypass the institutions technology licensing program, for universities there may be a downside of lost revenues associated with existing knowledge spillovers. The authors remark that producing incentive systems to research scientists, such as increased royalties to both scientists as well as their departments, may encourage patent disclosure with the universities.

 

This study brings up an interesting question: Should universities support traditional TLO programs which may possibly decrease patent behavior and increase revenues, or should universities encourage the involvement of entities outside of the university system to exploit valuable scientific research and increase the local entrepreneurial culture?

 

This paper was recently presented at the Technology Transfer Society Conference held in Atlanta. A copy of the paper, as found at the website for the conference, can be accessed at: http://www.cherry.gatech.edu/t2s2006/papers/markman-1001-T.pdf



Links to the paper and more than 4,000 additional TBED-related research reports, strategic plans and other papers can be found at the Tech-based Economic Development (TBED) Resource Center, jointly developed by the Technology Administration and SSTI, at: http://www.tbedresourcecenter.org/.