Article,
The Effects of University Patenting and Licensing on Downstream R&D Investment and Social Welfare
The Journal of Technology Transfer, 31 (4): 431--441 (July 2006)
DOI: 10.1007/s10961-006-0004-x
Abstract
A central argument behind the Bayh-Dole Act presumed that firms had no incentives to invest in downstream R&D aimed at developing university inventions committed to the public domain. The empirical evidence on university patenting and licensing is partly at odds with the premises of this argument. Non-exclusive licensing of university patents has been common and lucrative, and in the area of biomedical technologies university patents and licensing restrictions may be a hindrance to downstream R&D, rather than a stimulus. The paper presents a model of R&D competition based on a university invention where appropriability conditions are defined by the patentability of downstream innovations and imitation opportunities. A comparison of equilibria under “open access” to university inventions and under “university patenting” shows that only under restrictive conditions the latter regime results in increased R&D investment and social welfare. In general, university licensing royalties are therefore a poor gauge of social welfare gains from university patenting.
