University Patenting and Scientific Advancement by decree


									University Patenting and
Scientific Advancement
      Bradford Barham
        Jeremy Foltz

    How our work relates to stem cell
   Investigations of the role of increased patent
    activity in the research portfolio of university life
    science researchers
   Particular interested in:
    - Synergies or tradeoffs with other research outputs
    - Patent royalty payments
    - Other commercialization endeavors
    - Experience of researchers with “hold-ups”
   Here we apply lessons about academic patenting
    to the stem cell research context and future
    research prospects.

        Our research and data
   “The impact of academic patenting in the
    life and agricultural sciences at US
   Our data:
    • University level data (1981-2002) on life
      science and agricultural patents, articles,
      doctoral students, and research funding
    • Scientist level data (web surveys, NSF/NRI)
        Life scientists: 2005 survey, 1822
        Ag scientists: surveys from 2005, 1996,
         1989, 1979, n= ~1,200

           Bayh-Dole Act 1980
   Allows universities to sell exclusive licenses on
    innovations generated with federal dollars.
   Motivation:
     • Get ideas off the shelf w/o sacrificing
       university mission (synergies)
     • Generate university income for more research
   Critique:
     • Increased commercialization of university
       research agenda
     • Distraction from basic research (tradeoffs)
     • Hold-ups/Anti-Commons approach to research

         Life Science Patenting
 Intellectual property rights newly
  important in the biological sciences
 New ability to patent life-forms

  including plants and animals (Diamond
    v. Chakrabartty 1980, ex-parte Allen 1984, ex-
    parte Hibbard 1987)
 New technologies increase research
  speed: e.g., gene gun
 Increased private sector research

    Life Science research funding
 Historically largely federally funded
 Big increase in NIH budget in the
  1990’s (doubled over 10 years)
    • Coincides with the take-off in academic
   In 2005, average annual life scientist
    research budget in 2004 was
    $300,000, median $200,000 (direct

Issues related to university patents
 •   Tradeoffs or synergies between patents and
     other university research outputs
        Individual level tradeoffs (work on
         patentable/commercializable research at the
         expense of basic research?)
        Social level (loss of scientific commons?)
         •   patents create potential for hold-up problems and
             gum up the works of free-flowing Mertonian science
 •   Commercialization of university research
 •   Patents as a new way to pay for research
 •   Patents as a better way to commercialize
     technologies out of the university and
     thereby increase economic growth etc.

The growth in university life science
                                                          Figure 1:
                                          The Growth of University Life Science R&D
              60000                                                                              900


              40000                                                                              600



              20000                                                                              300


                 0                                                                               0
                 1980   1982    1984      1986   1988    1990    1992   1994    1996   1998   2000
                                                         Year                                                    9
      Synergies vs Tradeoffs: more
   Scope economies in life science research outputs,
    esp. patents and articles, based on panel data
    analysis, university level. AJAE article.
   Complementarities are strongest for top
    universities (UW-Madison, MIT, and others)
   Individual Scientist Level – Descriptive Evidence,
    no drop off in academic article publications from
    average researcher in ag or life science.
   Comparison of those who do and don’t patent in
    life sciences

  Publications by agricultural scientists
                over time
          (over past five years)
                       1979   1989   1996    2005
Journal Articles       13.1   13.3   13.3     13.3
Book Chapters           1.1    1.8    2.0      1.9
Books                   0.2    0.4    0.5      0.4
Bulletins / Reports     8.8    8.0    7.1      8.2
Abstracts               9.0   11.8   13.4     13.6
Total university                             235
agricultural patents    20    55     135
produced                                    (1999)

      Life scientist research output
               (last 3 years)
                          Scientists            Scientists w/o
                         with Patents              Patents
Journal                        12.0                     9.5
Completed                      1.23                     0.89
PhD students
Postdoctoral                   1.76                     0.99

All differences significant at a 95% confidence level          12
       Evidence on hold-up problems:
 Percent of life scientists reporting constraints
                                Not        None or    Some or
                             applicable     minor      major
                                          constraint constraint

Affordability of licensing    61.5         33.6         4.9
intellectual property

Materials transfer            49.1         39.1        11.8
agreements from
another university
Materials transfer            56.2         33.4        10.4
agreements from private
Patents as source of research funding
   25% of life scientists have a patent
    • Median patent holder owns 2 patents

   Patents as the “academic’s lottery ticket”
    • 33% of patent holders receive licensing revenues,
      representing 8% of all life scientists.
    • Average royalties ~$16,500 per patent
    • But in our sample:
          One patent accounts for ~90% of those royalties
          Of 1200 patents there are only three that make ~$1million
           or more.
          Median annual royalty income is $5,000
          License revenues account for less than 1% of research
           budgets for those with patents

Is there a commercialization of US
      university life sciences?
   53% of life scientists in our survey have no
    engagement with industry
     • No patents, invention disclosures, industry
       funding, service on industry boards,
       collaborations, etc.

   20% of life scientists report private industry
    funding, accounting for 25% of research budgets
     • They still get 54% from federal sources

   Overall in the life sciences, 67% of all research
    funding comes from federal sources, 15% from
    own university sources, 10% from private
    foundations, and only 5% from private industry.
Reflections on the stem cell debate
   What’s the issue?
    • Slow progress
    • Inadequate funding
    • Complaints about stem cell access and patent
   Work still in its infancy: i.e. it’s basic
    research, applied research still years away
   Where we have some evidence for how
    this might play out
    • Funding
    • Patent hold-ups

       Percent of lab funding from
        different funding sources
Source                              All life           Scientists
                                  scientists            who do
                                                      100% basic
Federal     (NIH, NSF, etc.)         66.9                71.2*
Own university                       14.6                15.7
Foundations                           9.5                9.7
Industry                              5.3                0.8*
State government                      2.4                0.9*
* Significantly different at a 95% confidence level
          Funding Basic Research
       Very difficult to fund without federal money
       Patents unlikely to provide much help because
    •     “lottery” – unpredictable returns
    •     timing of liquidity (can’t borrow against expected
          licensing earnings).
    •     reinforced by basic nature of research that are less
          likely to generate valuable patents.

       Industry funding small and unlikely to ever be
        much more than that (time horizon)
    •     Good news that stem cells won’t likely be the Trojan
          horse that brings commercialization into the university
    •     Bad news that industry won’t fund enough of this
          research to make up for federal funding

                   More funding
   Foundations possible, but likely on the order of
    10% rather than being a major part of what is

   State money (California) can look like federal
    funds in some ways, but
    • Shallow eligible project pools: State barriers limit the
      ability to choose the best project across the nation. If
      the best project is in Alabama it might never get funded.
      Concern over internal conflicts of interest.
    • Shaky peer review mechanisms: quality of the review
      process at the state level is more subject to politics and
      harder to get good outside reviewers (unless you pay

                    Hold ups
   Hold ups in stem cells claimed to be due to
    intellectual property, but also due to
    government constraints
   Our survey work suggests that in an
    unconstrained world holdups would likely
    disappear (if stem cells are like the rest of life
   Instead it seems that the federal rules have
    heightened the vigilance on IP and by
    constraining the system have created holdups.
   The prospects for lessening holdups will be
    driven by federal stem cell policy much more
    than the courts or patent holder choices

                Looking forward
       Pessimism:
    •     Most of the potential problems can be traced
          back to federal policy
    •     No easy substitutes
    •     No change in policy implies continued
       Optimism: With a policy change lots of
        improvement possible
    •     Holdups likely to go away
    •     Funding can improve dramatically with federal
          funds flowing to this area.


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