Abstract:
Since the late 1970s, patenting of
universities research has gone from nearly non-existent to a significant focus
of many research universities, in part due to the Bayh-Dole Act of 1980. This
represents a fundamental change from the norms of “open science” which
promote quick, full, public disclosure of research results by faculty. Many
important university research results are now protected by intellectual property
rights, and use of these research results is limited to the patent holders and
licensees. Since university research is an important input to the innovation
process in many industries, this potential “fencing off” of upstream
research has drawn interest.[1]
Many researchers have expressed concerns that increased university patenting may
limit access to knowledge necessary for innovation, noting restrictions to
follow-on development (Mazzoleni and Nelson 1998), reductions in information
sharing and collaboration (Louis et al. 2001, Campbell et al. 2002, Blumenthal
et al. 1996 & 1986), changes in faculty focus (Feller 1990), and
formalization of interactions that may destroy the informal organization of
knowledge transfer (Rappert et al. 1999). This dissertation examines firm
strategies for identifying, accessing, and exploiting public science and the
implications of these strategies for the innovative and economic performance of
the firm. In addition, I explore the effect of the increase in patenting by
universities on industrial innovation and publication behavior of patenting
university faculty members.
My
research investigates of the effect of increased university patenting on the use
of public science by firms and the lag with which patented knowledge is utilized
in follow-on patented innovations. Increased university patenting may slow the
pace of knowledge exploitation if university-based research results that are
useful as an input to the industrial innovation process are unavailable (due to
limited licensing or increased researcher secrecy) or available with delay (due
to lengthy licensing negotiations or delayed publication of research results).
In addition, limited dissemination of university research knowledge may benefit
firms that do gain access relative to firms that are excluded. A first analysis
of these issues is focused at the technology class level. Using patent data from
the NBER database (Hall et al. 2001), I measure changes in the pace of knowledge
exploitation in industrial patents within a given technology class using changes
in the distribution of backward citation lags to prior patents. I proxy for
exploitation of public science with the count of citations to non-patent prior
art contained in these industrial patents, and explore the change in the
variance of the number of such citations across firms over time.[2]
Results
indicate that an increase in university patenting is associated with an increase
in the variance of citation to public science across firms, suggesting the
public science is being increasingly channeled to some firms relative to others.
I also find that increasing university patenting is associated with a slowdown
in the pace of knowledge exploitation in industrial patents, particularly in
areas which rely more heavily on science as an input to the innovation process.
A 1% increase in the percentage of patents issued to universities is associated
with an increase of 2.4% in the mean citation lag. For example, in technology
class A61K (which covers pharmaceuticals, cosmetics, and dental preparations)
the cumulative percentage of university patents increased by 2.95% between 1985
and 1995. My results suggest that this would be associated with an average
increase in the mean citation lag of 8.5 months relative to the 1985 mean
citation lag of 9.8 years for patents in this class. This suggests a significant
slowdown in the pace of knowledge exploitation in fields in which university
patenting has increased since the Bayh-Dole Act.[3]
These
results raise the question of what enables some firms to exploit public science
more than others. Following on literature exploring the “absorptive
capacity” of a firm, or the ability to identify, assimilate, and exploit
knowledge from outside of the firm (Cohen and Levinthal 1990), my second paper
addresses the exploitation of public science in innovation at the firm level,
using panel data set covering 78 firms in the pharmaceutical and biotechnology
sectors which includes firm publication, patent, corporate structure, and
financial data for the 1975-95 time period. I examine the relationship between
firm activities expected to enhance absorptive capacity, such as research
intensity, internal basic science research, and collaborations with university
scientists, and the exploitation of public science in patented innovations for
firms in these sectors, which rely heavily on university science as an input to
the innovation process (Mansfield 1991, 1998). I also evaluate the relationship
between these firm activities and the pace of knowledge exploitation of the
firm. I find evidence that firms with more internal basic science and more
collaborations with university scientists cite public science more than other
firms and also that patented innovations by these firms exploit existing
knowledge more quickly. Finally, my results suggest that citation of public
science and a faster pace of knowledge exploitation are associated with a higher
market to book value ratio for the firm. Firms that invest in these absorptive
capacity-building activities do appear to exploit public science more than other
firms, and these firms enjoy advantages in terms of innovative and economic
performance.
I
follow up on these results with a researcher-level empirical investigation of
the relationship between faculty patenting and publishing in order to assess the
potential impact of university patenting on the open publication of research
results. Using a panel data set containing a broad group of patenting faculty
members and a matched control group of non-patenting faculty members constructed
with patent data from the NBER database, publication data from the science
citation index, and faculty personal information from internet searches, I
investigate the publication activity of university researchers following the
invention of a patented advance. Results of a negative binomial,
researcher-level fixed effects analysis suggest that the number of annual
publications by a researcher is significantly greater following patenting, and
increases with the cumulative number of patents, controlling for field, number
of years since the Ph.D. date, and year effects. These results suggest that
publication does not decrease after patenting by a university researcher.
The publication behavior of university patenters therefore does not seem
to explain the slowdown in knowledge exploitation documented in my first paper.
These
papers collectively add to the literature on knowledge transfer, absorptive
capacity, firm knowledge management strategy, and intellectual property rights
with substantive empirical evidence of interest to firm managers and policy
makers. The increase in formal property rights associated with university
research appears to be channeling the flow of university-based input to the
industrial innovation process and is potentially slowing the knowledge transfer
process. Firm research strategies do have some consequence for the exploitation
of public science in firm inventions, and these strategies provide innovative
and economic performance benefits. Incentives for faculty to publish research
are still strong, even if their research is also patented.
David Blumenthal, E.G. Campbell, M.S. Anderson, N. Causino, and K.S. Louis.
Withholding research results in academic lifescience: Evidence from a national
survey of faculty, Journal of The American
Medical Association, 277(15): 1224-28, 1996.
David Blumenthal, M. Gluck, K.S. Lewis, M.A. Stoto, and D. Wise.
University-industry relations in biotechnology: Implications for the university,
Science, 232: 1361-1366, 1986.
Eric G.
Campbell, Brian R. Clarridge, Manjusha Gokhale, Lauren Birenbaum, Stephan
Hilgartner, Neil A. Holtzman, and David Blumenthal. Data withholding in academic
genetics, JAMA, 287(4): 473 – 80,
2002.
Wesley M. Cohen and David A. Levinthal. Absorptive Capacity: A new perspective
on learning and innovation, Administrative
Science Quarterly, 397-422, 1990.
Irwin
Feller. Universities as engines of R&D-based economic growth: They think
they can, Research Policy, 19:
335-348, 1990.
Bronwyn
Hall and Adam Jaffe and Manuel Trajtenberg. The NBER patent citation data file:
Lessons, insights and methodological tools, NBER Working Paper #8498, 2001.
K.S.
Louis, L.M. Jones, M.S. Anderson, D. Blumenthal, and E.G. Campbell.
Entrepreneurship, secrecy, and productivity: A comparison of clinical and
non-clinical faculty, Journal of
Technology Transfer, 26(3): 233-45, 2001.
Edwin
Mansfield. Academic research and industrial innovation, Research Policy, 20: 1-12, 1991.
Edwin
Mansfield. Academic research and industrial innovation: An update of empirical
findings, Research Policy, 26: 773-76,
1998.
Robert
Mazzoleni and Richard R. Nelson. The benefits and costs of strong patent
protection: a contribution to the current debate, Research Policy, 27: 273 – 284, 1998.
Brian
Rappert, Andrew Webster, and David Charles. Making sense of diversity and
reluctance: academic-industrial relations and intellectual property, Research
Policy, 28: 873 – 890, 1999.
John P. Walsh, Ashish Arora, and Wesley M. Cohen. Effects of Research Tool
Patents and Licensing on Biomedical Innovation, in Cohen and Merrill (eds.), Patents in the Knowledge-Based Economy. The National Academies
Press, Washington, DC, 2003.
[1] Work
by Mansfield (1991, 1995, 1998), Narin (1992, 1997), and Cohen, Nelson, and
Walsh (2000, 2002), has documented the importance of public science, much of
which resides in universities, to the industrial innovation process. In
1998, 73% of papers cited by U.S. industrial patents were from public
sources, authored at academic, governmental, or other public institutions (Narin
et al. 1997). Industrial R&D managers report that a significant
percentage of their projects would not be possible or would be delayed
significantly without the public science upon which they rely (Mansfield
1991, 1998).
[2] Non-patent
prior art citation are dominated by citations to research generated at
public institutions, particularly universities (Narin et al. 1997).
[3] This is consistent with comments from biotechnology firm researchers interviewed by Walsh et al. (2003), who report that negotiations with universities over intellectual property rights cause delays of firm research on the order of months.