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Industry-Sponsored Academic Inventions Spur Increased Innovation

Published: Monday, March 24, 2014
Last Updated: Monday, March 24, 2014
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Analysis questions assumption that corporate support skews science toward inventions that are less useful than those funded by the government or non-profit organizations.

Industry-sponsored, academic research leads to innovative patents and licenses, says a new analysis led by Brian Wright, University of California, Berkeley professor of agricultural and resource economics.

The analysis, based on a study of two decades of records from the University of California system, is in today's science journal Nature.

The National Science Foundation's Directorate for Social, Behavioral and Economic Sciences funded the study. "There are two potential interpretations of the report," said Joshua Rosenbloom, program director for Science of Science and Innovation Policy (SciSIP). "One is optimistic. Corporate funding leads to research that is more likely to be commercialized and this greater focus is good.

"The second reading is that corporate funding shifts the focus of research away from basic science," added Rosenbloom.

During the last few decades, the share of gross domestic product supporting research and development has been stable, but the corporate share has increased substantially. "This may reflect a shift in emphasis away from basic science discoveries that provide a basis for future commercialization," Rosenbloom said.

SciSIP supports interdisciplinary social science research that builds an evidence base for informed policy choices and contributes to a better understanding of the interactions between science, technology and innovation.

The commentary's authors analyzed 12,516 inventions and related licenses at nine University of California campuses and three associated national laboratories. The inventions were disclosed between 1990 and 2005, and licensing activity was analyzed through 2010. Of the inventions, nearly 1,500 were supported at least partly by private industry.

The analysis found that industry-funded inventions yielded patents and licenses more frequently than federally sponsored ones, with results consistent across technical fields. The researchers also found that industry-sponsored inventions were more highly cited in subsequent patent applications--known as "forward citations"--the most widely used marker of a patent's quality and importance. Each corporate-sponsored invention generated an average of 12.8 forward citations compared with 5.6 for federally sponsored inventions.

"This runs counter to the expectation that corporate-sponsored inventions have narrow applications, and so create ... few benefits for others," the authors wrote.

Locking up inventions for profit?
Because corporations usually get first crack at negotiating licenses to the inventions they sponsor, there is an assumption that corporations tie up innovative discoveries in a way that restricts access to a broader audience.

However, the intellectual property data analyzed by the authors indicate that industry has not been more likely than federally sponsored research to tie up research discoveries in exclusive licenses. Overall, corporate-funded inventions were licensed exclusively 74 percent of the time, while federally funded inventions were licensed exclusively 76 percent of the time. Notably, among the corporate-funded inventions with exclusive licenses, half seemed to go to third parties and not the sponsor.

"We didn't expect these results," said Wright. "We thought companies would be interested in applied research that was closer to being products, and thus more likely to be licensed exclusively and less cited than federally funded counterparts, but that did not turn out to be the case."

The authors acknowledged that they might not have identified all third party licensees that were actually affiliated with the original corporate sponsor, but Wright said this does not affect the finding that licenses to corporate-funded inventions are not more likely to be exclusive.

"Industry-funded research need not be locked up by corporate sponsors if both the sponsored research office and the tech transfer office take care in protecting and marketing the results," said co-author Stephen Merrill, executive director of Science, Technology and Economic Policy at The National Academies.

Vigilance still needed
The authors of the new Nature paper said their findings should not be used to relax oversight over industry funding, particularly when it comes to trials of products rather than the invention disclosures covered in their analysis.

"The tobacco, food, pharmaceutical and other industries have been shown to manipulate research questions and public discourse for their benefit, and even to suppress unfavorable research," the study authors wrote.

The new analysis also covered only one university system, and it "may not be typical of all academia," said Wright. He added that the University of California system's strong reputation for basic research gives its tech transfer offices more pull when drawing up contracts.

During the 20-year period analyzed in the paper, University of California campuses accounted for up to 9 percent of total U.S. academic research expenditure, and it collectively obtained more issued patents than any other U.S. academic institution. Tech transfer offices at small universities may benefit by pooling resources to increase their negotiating power, said Wright.

The authors of the Nature paper concluded that while universities should remain vigilant when setting up contracts with corporations, "they should not assume companies are focused mainly on tying up intellectual property."

The other co-authors on the paper are Kyriakos Drivas, a postdoctoral research economist at the Agricultural University of Athens, and Zhen Lei, an assistant professor of energy and environmental economics at Pennsylvania State University.

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