Mowery Ziedonis (2001) - How Has The Bayh Dole Act Affected Us University Patenting And Licensing

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Has article title	How Has The Bayh Dole Act Affected Us University Patenting And Licensing
Has author	Mowery Ziedonis
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Reference

• Mowery D., & A. Ziedonis, (2001), "Numbers, Quality, & Entry: How Has the Bayh-Dole Act Affected U.S. University Patenting and Licensing?", in Innovation Policy and the Economy, NBER. pdf

Abstract

This paper summarizes the results of empirical analyses of data on the characteristics of the pre- and post-1980 patents of three leading U.S. academic patenters: the University of California, Stanford University, and Columbia University. We complemented this analysis of these institutions with an analysis of the characteristics of the patents issued to all U.S. universities before and after 1980. Our analysis suggests that the effects of the Bayh-Dole Act on the content of academic research and patenting at Stanford and the University of California were modest. The most significant change in the content of research at these universities, one associated with increased patenting and licensing at both universities before and after 1980, was the rise of biomedical research and inventive activity, but Bayh-Dole had little to do with this growth. Indeed, the rise in biomedical research and inventions in both of these universities predates the passage of Bayh-Dole. Both UC and Stanford university administrators intensified their efforts to market faculty inventions in the wake of Bayh-Dole. This enlargement of the pool of marketed inventions appears to have reduced the average "yield" (defined as the share of license contracts yielding positive revenues) of this population at both universities. But we find no decline in the "importance" or "generality" of the post-1980 patents of these two universities. The analysis of overall U.S. university patenting suggests that the patents issued to institutions that entered into patenting and licensing after the effective date of the Bayh-Dole Act are indeed less important and less general than the patents issued before and after 1980 to U.S. universities with longer experience in patenting. Inexperienced academic patenters appear to have obtained patents that proved to be less significant (in terms of the rate and breadth of their subsequent citations) than those issuing to more experienced university patenters. Bayh-Dole's effects on entry therefore may be as important as any effects of the Act on the internal "research culture" of U.S. universities in explaining the widely remarked decline in the importance and generality of U.S. academic patents after 1980.

History of University IP Policy

The timeline for funding sources for R&D at public and private university in the US is loosely as follows:

• Pre-World War II: Public funding of agricultural research and local funding to a broad array of fields (the university system was/is decentralized). Collaborative research relationships between faculty and industry were common
• The Research Corporation was founded in 1912 by private money derived from patent royalties, and supported research
• Post-World War II: Federal funding increases, industry funding declines from 1950's to early 1970's, by the 1970's 70% of funding was federal (2.6% private)
  • Key players include the Department of Defense, the Department of Health, Education and Welfare (HEW) (now the HHS, which includes the NIH)
• 1970's to 2000: Federal funding declines, private funding increases again. By 1997, federal funding is at 59% and private at 7%.

In the post war period, many federal agencies allowed patenting of funded research under Institutional Patent Agreements (IPAs), which were negotiated by individual univerities. Tensions in these agreements, over exclusivity, intensified in the late 1970s, when the HEW wanted to limit exclusive licensing.

AUTM is the Association of University Technology Managers

Bayh-Dole is the Bayl-Dole act of 1980 (see below)

TTO is a Technology Transfer Office (Ed's jargon)

UC:

• 1926: All employees required to report patentable inventions (MIT, University of Wisconsin, and others were similar)
• 1963: Members of faculty and employees required to disclose inventions and licenses
• 1976: Office of the President assumes control over patent policy from the General Counsel
• 1991: Patent Office Reorganized

Stanford:

• 1970: Office of Technology Licensing established (disclose optional)
• 1994: Disclosure manadatory, assignment of patents to the university required, copyright to software belongs to the university

Columbia:

• 1970's: No formal policy
• 1975: Ban on patenting of medical inventions rescinded
• 1981: New policy on July 1st (same day as Bayh-Dole) - Reserved patent rights and shared royalties.
• 1982: Founded a TTO
• 1984: Clarified policy and codified rules - required disclosure
• 1970-1980: Modest portfolio of 10 patents
• 1980's: Was a leader in licensing revenues, mostly from Biotech

Other key events:

• 1974: Cohen-Boyer DNA splicing patent is disclosed and licensed to UC and Stanford
• 1970's Nixon's War on Cancer
• Mid 1970s: Biotech begins to become a productive field.

The Bayh-Dole Act

The Bayh-Dole Act of 1980:

• Took effect on July 1st 1981
• Provided blanket permission for performers of federally funded research to file for patents and grant licenses (inc. exlusive licenses).
• It facilitated university patenting by:
  • Replacing the need for negotiation of IPAs with a uniform policy
  • Allowing exclusive licenses
• Occured before the creation of the Court of Appeals for the Federal Circuit (CAFC) in 1982, which served as the final appeal court for patent cases
  • The CAFC emerged as strong supporter of patent holder rights
• Passed after Diamond vs. Chakrabarty (1980) Supreme Court case, that allowed patenting of lifeforms and certain other biotechnology.
• University patenting sharply increased around this time - patenting by leading research universities doubled between 1979 and 1984
• Ratio of patents to R&D spending in universities doubled.
  • At the same time overall patenting per R&D dollar was declining.
• AUTM reports that the number of univerity TTOs increased from 25 (1980) to over 200 (1990)

Results

The paper focuses mainly on biomedical patents, as (it claims) these are the most frequent and important class of university patent.

The results in the paper include:

• Overall upward trend for UC/Stanford invention disclosures, of which Biomedical take the lion's share (for Stanford, net of software)
• Licensing revenues concentrated among top earners - by mid 1990's this is biotech related
• page 201 - much of the increase in patenting and licensing in biotech would have occured without Bayh-Dole.
• Bayh-Dole appears to have increased marketing efforts
  • More patent protection sought for a broader range of patents
  • Issued percentage of patents shrank - suggest decline in quality
  • Share of licenses yeilding positive royalties shrank dramatically
  • Though any patent with a marginal positive benefit greater than its cost of issue (assuming research costs are sunk) should be applied for.
• Patents from UC, Stanford and Columbia more frequently cited that non-academic - implying higher quality
• UC and Stanford's patents appear to have increased in importance post 1980 (as measured by citations)
• No evidence in decline of patent generality
• New entrant university appear to have a period of learning, where they over patent and patent non-revenue generating ideas.
• But change in universities occurs slowly!
• And universities transfer knowledge through a variety of channels.

Conclusion

Bayh-Dole's effects were modest at best. There were too many other factors and changes that could account for the same results, including just basic growth trends. It did appear to influence the marketing efforts, but did not change the composition of portfolios. Most changes would probably have occured without the introduction of Bayh-Dole.

Problems

Expected patent and expected citation measures were not used, so patent inflation and class creation effects may skew or undermine the results. Furthermore Bayl-Dole's introduction could have been endogeneous, and this was not addressed at all.