Summary of the Article “Reconsidering the Bayh -Dole Act and the Current University Invention Ownership Model” Martin Kenney, Donald Patton 2009 Research Policy, 38(9): 1407 - 1422. Team A Pontedera, 23/01/2015 Ali, Anand, Giuseppe, Yasmin 1
2015 Pontedera Pisa 1966 Shuzo Saito – Nippon Telegraph Volterra and Telephone 2003 Fumitada Itakura – Nagoya University Dane Janus Friis Swede Niklas Zennström Inventor, University, Market 2
The Bayh-Dole Act 1980 “provided U.S. universities with the right to commercialize employees’ inventions made while engaged in government- funded research” Aim of normative “In the name of providing the fruits of university inventions to society in an efficient, effective, and socially optimal The public policy objective was manner , Congress designed the BD Act to to incent the transfer of the allow federal contractors including benefits of federal funded universities to claim title to inventions research to society . ” made as a result of federally funded research. Inventor, University, Market 3
Bayh-Dole Act 1980 • Authors are not describing WHY the US Government decided to promulgate the Bayh-Dole Act (1980) Stevens, Phil (2006) By 1978, Government owned title to 28,000 patents and had licensed fewer than 4% of them (Included royalty-free licenses) Professor were licensing his own inventions Source: « The Opportunity and the Challenge: You own the technology. So now what?” Ashley J. Stevens, D.Phil Associate Director; Boston University, 2006 4
Countries with Similar Bayh-Dole Legislation UK (included Cambridge, 2001) Brazil Norway Japan China Philippines Canada Russia Denmark Singapore France South Africa Finland South Korea Malaysia Sources: David C. Mowery;Bhaven N. Sampat, Journal of Technology Transfer, 2005 - Association of University Technology Managers 5
What is Technology Transfer? • Broadly: Sharing of skills, knowledge, technology among institutions to ensure that scientific and technological developments are accessible to a wider range • Identify research that has a potential commercial interest and develop a strategy to maximize utilization • First formal tech transfer program started in University of Wisconsin in 1924 6
Licensing In the broad sense, is a discipline that makes it possible to transfer technology from a proprietor (the licensor) to an interested purchaser (the licensee) in a well defined and effective manner Types of Licenses • Exclusive - there can only be one licensee; the licensor has no rights to exploit the technology/product • Sole - exclusive but for the licensor; i.e., the licensor has rights to exploit the technology/product • Non-exclusive - there is no limit to the number of potential licensees 7
Why License? The Licensor’s reasons might include: • to make money • to help sell products, services, equipment • to obtain technology via grantback • to secure a market • to settle a patent dispute • cross-licensing of other, existing technology • rights to future technology • to buy continued development of the licensor’s technology 8
Motivation • In 1980, in U.S, the Bayh-Dole act provided the universities to commercialize the inventions • Paper argues, invention ownership model is neither economically viable nor rapid commercialization for social interest . • Perceives that this model is plagued by ineffective incentives, information asymmetries • Contradictory motivations for the university, the inventors, potential licensees, and university technology licensing offices (TLOs) • Resulting in delays in licensing, misaligned incentives among parties, and obstacles to the flow of scientific information and the materials necessary for scientific progress. • Paper suggest two alternative, vest ownership with inventor, free to contract with university TLO’s or other entities, All invention should be publically available or licensed through non exclusively • 9 •
TLO Inventor Accusation IO Model WO Model Conclusion The role of Technology Licenses Office (TLO) after BD The academic writings on TLOs have been theoretically confused: “TLO is an inventor’s agent” Markman, 2004: “An excellent idea, but in the current situation, an impossible formulation Kenney, Patton 2009: because the inventor has no contractual authority over the TLO ” “TLO as an agent of both the inventor and the university” Jensen, Thursby (2001): “Contradictory situation. TLO is an agent of the university, although for success Kenney, Patton 2009: it depends upon the inventor’s knowledge and cooperation . Oddly, the researchers are also university agents ” Universities have a long history of generating inventions with commercial value, which are used by industry and TLOs dedicated to commercializing inventions have become commonplace at research universities, as suggested by the patent literature, demonstrates how university TLOs 10 need different procedures, methods, and goals for differing industries
TLO Inventor Accusation IO Model WO Model Conclusion What TLO exactly do? Office under the administrator responsible for research (University); After BD: - Introduced as the intermediary between the inventor and the potential licensees ; - Perform a service considering its institutional power and licensing experience: must expend resources to market and manage the invention, and in return negotiate a license contract with an outside firm; - Or in the case of the inventor founding a startup , it would negotiate a contract with the inventor; When the inventor forms a startup, the inventor pays an initial fixed fee to the university for use of the invention and royalties which are contingent upon successful commercialization The financial returns from TLOs vary significantly, but the most successful have gross returns of between $20 million and $60 million, while most have returns under $5 million. There are outliers such as NYU, which received $197 11 million.
TLO Inventor Accusation IO Model WO Model Conclusion Macro-Level Analysis (TLO) Case Study 1: TLO in development of Electronics and Software Sector NOT HAVING UNIVERSITY LICENSE HAVING UNIVERSITY LICENSE Sun Microsystem (Stanford); Google (Stanford); The significance of university patents in software Yahoo (Stanford); Lycos (CMU); and electronics in terms of facilitating technology Netscape (University of Illinois) Cisco (Stanford) transfer is dubious (Jaffe and Lerner, 2004). Case Study 2: TLO in development of Biological Sciences PUBLIC DOMAIN UNIVERSITY OWNED-PATENT Monoclonal Antibodes (MABs) - 1975 Cohen-Boyer (C-B) patent – 1980s Georges Köhler/César Milstein (Cambridge) ($255 million in Revenue General Purpose technologies such as C-B and (Hybritech and other MABs-based firms) For Stanford and University of California) MABs contributed to an efflorescence of entrepreneurship, but patenting had no impact on their adoption. 12
TLO Inventor Accusation IO Model WO Model Conclusion Macro-Level Analysis (TLO) Case Study 3: TLO as a Negative Impact Develpoment of Stem Cell Technology at University of Madison 1. Patent Rights given to WARF (Wisconsin Alumni Research Foundation) 2. Liscenicing agreement applied to every user including university reserachers. 3. They maintain the right to “reach - in”and demand royaltiesfrom any inventions using this technology. It seems that the goal of the TLO was more income- based than technology diffusion 13
TLO Inventor Accusation IO Model WO Model Conclusion The Technology Licenses Office (TLO) Is it useful? Thomas Hellman (2007): assumes that the TLO , acting on behalf of the university owning the patent, has knowledge superior to that of the inventor on how the invention may be used and by which firms. Kenney, Patton (2009): are we sure about that? Who has more knowledge? : The commercial entity, because it operates in specific business areas, almost invariably has a better understanding of the value of the invention than does the TLO. Asymmetry of Information and Monetary gain : if inventor has ownership vs TLO has more experience? If TLO has ownership vs. inventor has more exploitation skills? Bureaucracy/Politic : decisions to patent may not be made purely on merit (i.e. Patenting to retain Professors with large federal grants); promoting a particular person Complicate or retard commercialization s badly managed TLO with an intention of only protecting invention can impede commercialization 14
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