Introduction to patents

Unlike tangible property, such as building, vehicles, and equipment, some property are inventions of the mind, called intellectual property.  Examples include inventions, designs, phrases, symbols, literature, and music.  Tertiary education institutions, like all organizations, like to register and to protect their intellectual property because

 

• they might want to sell or license this intellectual property

• they might want to earn revenue from this intellectual property and prevent rivals from competing

• they might want to increase the value of their organization, because such property is an asset

 

The value of this intellectual property depends on the level of income this property might generate, the likelihood that an alternative could be developed, the value of similar intellectual property, and many other considerations.  To protect this value, institutions can utilize a variety of instruments, such as trademarks, designs, copyright, trade secrets, and patents.  Specifically.

 

• trademarks protect logos, slogans, shapes like the iPod, sounds like the ticks in 60 minutes, color palettes, gestures, and symbols

• designs protect new and distinctive configurations, patterns, or decorations that confer a unique appearance to products—rather than one particular shape or sound like trademarks

• copyright enables authors to determine whether and when other people or organizations can utilize their articles, novels, poetry, movies, songs, computer software, visual art, plays, choreography, and architecture but not ideas. 

• patents protect a device, substance, method, or process that is new, useful, and inventive or innovative

 

The benefits of patents vary across nations.  To illustrate, in Australia

 

• patents will protect most inventions for 20 years and other innovations for 8 years

• patents will protect drugs for 25 years

• during this time, no other person or organization can produce, use, or sell this invention in this nation, without the permission of the patent holder; otherwise, this person or organization is liable to pay damages

 

In Australia, and in most nations, institutions should utilize specialist assistance to apply for a patent, because the application process is challenging and can cost about $30 000.  Nevertheless, even in Australia, about 30 000 or so patents are approved each year.   In essence, to apply, institutions should

 

• first decide whether to apply for a standard patent—in which the invention comprises an inventive change that is not obvious to someone with knowledge and experience in the field and is thus more than merely an incremental advance—or an innovation patent—in which the invention comprises an original and useful feature but not necessarily an inventive change.   Innovation patents are often approved more promptly

• determine whether the benefits of this patent, such as the commercial returns, are likely to offset the costs of this patent—often about $30 000 over 20 years.  Otherwise, trade secrets and non-disclosure agreements may be sufficient.

• conceal the invention until the patent is approved

• visit the website in which applications are submitted.  In Australia, this website is www.ipaustralia.gov.au/patents

• search other patents in your nation, at https://www.ipaustralia.gov.au/patents in Australia for example or Google Patents, to check your invention is indeed original.

• write your patent application, often comprising a title, background, summary, description, claims that stipulate which activities would constitute an infringement, and drawings. 

• In Australia and many other nations, submit a provisional application before the final application. Then submit the final application—and seek examination—within five years. 

• After the final application is submitted, an examiner assesses whether the patent achieves the relevant criteria, usually within 12 months. 

 

Which inventions or innovations can be patented has changed over the years.  For example, in Australia, algorithms, formulas, or software could not be patented.  Now, algorithms, formulas, or software can be patented if related to a specific application. 

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Introduction to patents in universities and research institutions

Universities first patented their discoveries in the 1980s.  Until 1980, individuals and organizations could not generally patent discoveries they distilled from research that was funded by federal government.  The Bayh–Dole Act of 1980 essentially erased this impediment.  According to this act, scientists, universities, and businesses could patent from discoveries they derived from federally funded research.  Analogous legislation was enacted in Europe and other nations soon afterwards, igniting the pursuit of patents in universities and other research institutions. 

 

Over the last couple of decades, universities have become increasingly motivated to patent their inventions and innovations.  In some projects, the researchers had planned to patent the work even before they commenced the research, called intention-based inventions (Wu et al., 2015).  On other projects, the researchers had not foreseen the possibility of a patent until after they had analyzed the data and uncovered an important discovery, called opportunity-based inventions (Wu et al., 2015). 

 

University patents are especially beneficial to society.  To illustrate, relative to patents derived from corporations, patents derived from universities tend to be cited more often in subsequent patent applications and utilized by a broader range of disciplines and fields (Schmid & Fajebe, 2019).  This finding implies the knowledge and insights that emanate from university patents permeate across industry and society, inspiring significant advances in technology.   

 

Despite this increase in patents, only a small fraction of academics patent their discoveries.  To illustrate, as a review, conducted by Perkmann et al. (2013), reveals:

 

• Only about 12% of academics in Sweden and 7% of academics in Norway have participated in patent applications

• Only 5% of US academics, employed at research universities, have contributed to patent applications

• Higher percentages have been observed in some other nations, such as 25% in Ireland

• These variations depend on the sample of interest in each study and not only systematic differences across nations

 

Patents do not always emanate from large, prestigious research institutions.  To illustrate, Daniel and Alves (2020) interviewed academic inventors who had secured patents in Portuguese public universities.  They discovered that most of the patents had emanated from Masters or PhD research, conducted in small work teams, often with no or limited industry engagement. 

 

Determinants of the value and impact of patents: Ownership

Some of the patents that emanate from universities or research institutions are owned by these organizations.  Other patents that emanate from universities or research institutions are owned by the inventors or by corporations that are associated with the inventors.  As research has revealed, ownership might affect the commercial benefits and consequences of patents.

 

To explore this possibility, Giuri et al. (2013) examined patents in a sample of 858 universities or research institutions that had filed patent applications with the European Patent Office between 2003 and 2005.  The authors explored whether the ownership of these patents affected whether these patents were licensed—an important source of income, sold, or translated into a university spinoff.  The analysis generated some key insights.  Specifically

 

• when universities own the patents, the likelihood the patent is licensed increases.  Organizations will not license a patent unless they feel they can maintain an ongoing relationship with the owners of this patent over an extended period.  Universities may seem to offer the continuity and support these organizations value.

• When research institutions, rather than inventors or associates, own the patents, sales are more common.  Conceivably, inventors do not want to sustain their relationship with industry partners over an extended period.  These inventors, in contrast to the institutions, might thus prefer to sell the patent to obviate the need to maintain these relationships

 

Admittedly, many considerations may influence universities decide to own the patent or not.  As Schoen and Buenstorf (2013) revealed, whether universities choose to own a patent varies considerably across institutions.  For example, as Thursby et al. (2009) revealed, in the US, public universities are more likely than private universities to own the patents generated in their institutions.  Likewise, universities that offer inventors larger shares of the royalties are more likely to own the patents as well.   

 

Determinants of the number and commercial value of patents: Government investment

Government funding schemes may affect the frequency with which universities submit patent applications and secure patents.  Specifically, as Nugent et al. (2021) revealed, government research grants that fund research collaborations between universities and industries—such as the Australian Research Council Linkage Grants—tend to increase the number of patent applications submitted and the number of patents secured or sealed.  In contrast, government research grants that are not restricted to research collaborations between universities and industries—such as the Australian Research Council Discovery Grants—do not generate these benefits.           

 

To explore how these government research grants contribute to patents, Nugent et al. (2021) also examined this relationship longitudinally.  The findings were nuanced:

 

• When the grant was confined to collaborations between universities and industries, grant applications and patent applications were submitted in the same year.

• Presumably, these grants inspired engagement with industry, and this engagement with industry might have oriented the researchers to commercial imperatives

• When the grant was not confined to collaborations between universities and industries, patent applications were submitted a few years after grant applications

• In these instances, the researchers may not have considered the commercial possibilities of their work until after they discovered an important finding

 

Determinants of the number and commercial value of patents: University investment

Universities have introduced a range of policies to encourage patents.  To illustrate, universities might offer inventors a high royalty, in which they earn a significant proportion of the revenue or returns the patent generates.  For example, before 2004, the University of Washington did not pay inventors a share of the revenue.  After 2004, the university paid inventors 33% of the revenue.  Since 2005, the University of Iowa pay all the initial patent revenue to the inventor.  

 

Some researchers have explored how these policies affects the number of patents these institutions produce.  To illustrate, Lee (2021) examined how academic remuneration affects the number of patents.  Specifically, Lee showed that universities generate more patents if

 

• academics receive a considerable bonus or royalty if they secure patents or fulfill other research goals; modest bonuses are not as beneficial

• academics are paid more than average in the sector—although, the effects of greater remuneration tend to diminish at high levels

• the institutions dedicate more funding to research and research administration than competitors

 

Taken together, these results suggest that increases in bonuses are more valuable when bonuses are already reasonably generous.  In contrast, increases in salary are more valuable when salary is otherwise low, compared to the sector average.

 

Ouellette and Tutt (2020) explore how the prospect of royalties, in which inventors earn some of the revenue that a patent generates, affects the behavior of academics.  Specifically, the researchers examined whether various royalty polices from 152 universities over time.  Their analysis uncovered no relationship between royalty policies and patent submissions or patent success. If these findings are replicated, the results indicate that perhaps universities should retain most of the royalties because they can invest this money in research and education. 

 

Determinants of the number and commercial value of patents: Industry relationships

How academics collaborate with industry may also affect whether these individuals submit patent applications, secure or seal these patents, and commercialize these patents successfully.  To illustrate, Zhao and Cui (2021) examined whether the number of industry partners with which the university collaborates is related to the commercial value of patents, as measured by the number of patent licenses the university has arranged.  The research was conducted in China.  The researchers uncovered an inverted U relationship.  That is

 

• universities that collaborate with few industry partners arrange almost no patent licenses

• universities that collaborate with a moderate number of partners arrange many patent licenses

• but universities that collaborate with a very large number of partners arrange few if any patent licenses.   

 

As these findings indicate, a moderate number of industry partners is more likely to culminate in commercial returns from patents.  The study did not uncover the precise optimal number of industry partners.  However, if universities and research institutions feel they cannot maintain regular conversations or service their industry partners adequately, the number of these partners is probably excessive. 

 

Besides the number of relationships, the quality of relationships should obviously affect the commercial value of patents.  Petruzzelli (2011), however, conducted an insightful study that explores the similarities between the university and industry partner that might enhance these relationships and improve the commercial value of patents they secure jointly.  Specifically, Petruzzelli explored three kinds of similarities

 

• technological relatedness of the degree to which the university and industry partner have secured patents in overlapping fields and thus have developed capabilities in similar technologies

• geographical proximity

• previous collaboration on a patent

 

The analyses revealed that an inverted U relationship between technological relatedness and value of these joint patents—as measured by the number of times other patents applications cited this joint patent.  Presumably, if the university and industry partner share no overlapping capability in technology, their capacity to communicate effectively with one another and collaborate productively declines.  Yet, if the university and industry partner have developed almost the same capabilities in technology, they are not as likely to uncover novel insights, because their skills may not be diverse enough.

 

Interestingly, geographical proximity was inversely associated with the value of joint patents between the university and industry.  Conceivably, if the university and industry operate in separate locations, they may be exposed to distinct perspectives and opportunities.  They might, collectively, uncover more novel approaches to improve and to market the patented discovery. 

 

Previous collaborations on a patent enhanced the value of future joint patents.  These previous collaborations might enhance the capacity of universities and industry partners to understand one another, communicate effectively, and accommodate the styles and preferences of each other.  Consequently, the universities and industry partners may trust one another and be more willing to withstand the challenges and complications they will inevitably experience. 

 

Determinants of the number and commercial value of patents: Regional characteristics

In addition to the characteristics of inventors, universities, and industry partners, economic and social qualities of the surrounding region might also influence the generation and commercial value of patents.  That is, most scholars assume that knowledge tends to shift from universities to their local surrounds.  But, in many instances, knowledge shifts in the reverse direction, from the local community to the universities (Coronado Guerrero et al., 2017).  To illustrate, as Coronado Guerrero et al. (2017) revealed, when the local, regional economy specializes in advanced technologies, universities tend to secure more patents in advanced technologies as well. 

 

Determinants of the number and commercial value of patents: Motivations

The motivations of academics could also shape the likelihood that universities and other research institutions will secure patents.  In a study of academic inventors in Portugal, conducted by Daniel and Alves (2020), participants indicated their primary motivations revolved around the prestige and reputation of their team and themselves as well as university incentives that reward commercial ventures.

 

Barriers that impede patents: University practices

Some university practices can obstruct the capacity of inventors to secure patents or to utilize their patents effectively.  For example, as Daniel and Alves (2020) concluded, after conducting interviews of Portuguese academic inventors, many of these individuals felt that universities demonstrated inflexibility while negotiating with industry.   In addition, several inventors bemoaned the limited research and development funding that was directed to the refinement of these technologies—necessary to market and to optimize the invention.   Fortunately, as these inventors revealed, strong collaborative relationships with industry diminish the impact of inflexible universities and limited R&D funding. 

 

Consequences of patents: licensing and selling

Patents are not merely exclusive rights granted to the inventor but also an asset that can be monetized directly. Indeed, many of the patents that universities are granted are monetized—usually licensed to another institution or sold to another institution.  To illustrate, Caviggioli et al. (2020) explored the degree to which university patents have been monetized in the US.  These researchers examined the patent transactions in the top 58 universities in the nation between 2002 and 2010.  About 29% of these patents have been licensed. About 6% have been sold to other universities, National Laboratories, federal agencies, or non-profit entities.  Finally, about 1.3% have been sold to companies. 

 

Caviggioli et al. (2020) also examined the characteristics of patents that predict whether they will be licensed or sold.  The patents that were sold and transferred to companies tended to in fields outside the core priorities of the university. Patents that are licensed or, to a lesser extent, sold are more likely to be especially

 

• high in value

• high in technical merit, as measured by the number of times the application was cited by other patent applications

• high in legal robustness, as measured by geographic scope and number of other inventions cited in the application

• high in complexity, as measured by the number of researchers who contributed

 

Universities and research institutions often need to decide whether they would prefer to license a patent or sell a patent outright (e.g., Wu et al., 2015).  For example, when institutions are uncertain of whether the patent will generate significant revenue and profit, they may prefer to sell the patent and receive a lump sum (Megantz, 2002).  Accordingly, the university will receive income regardless of whether the patent is successful. Conversely, when institutions are more confident the patent will generate revenue and profit, they will prefer to license this patent (Jeong et al., 2013)

 

Several obstacles may impede the capacity of universities and other research institutions to license or to sell their patents.  For example, organizations that contemplate whether to purchase a patent or to seek a license

 

• are often uncertain about the scope of this patent—that is, the degree to which the patent can inhibit similar competitors—and hence may not be sure the patent is valuable and viable (Gambardella et al., 2007)

• are not certain they can utilize the patent effectively because they have not developed the tacit knowledge or other information that is not included in the patent application (Agrawal, 2006)

• are uncertain the degree to which the invention is marketable, because potential customers often do not understand or appreciate the implications of academic discoveries (Buenstorf & Geissler, 2012)

 

Consequences of patents: knowledge transfer

The priorities of universities tend to differ from the priorities of businesses.  The key objective of universities is to disseminate knowledge.  Universities, therefore, tend to conceptualize patents as an opportunity to disseminate knowledge.

 

One question that researchers often consider is how to measure this dissemination of knowledge from patents to society.  One measure is the number of times subsequent patent applications cite or refer to university patents.  As Mukherji and Silberman (2021), citations of patents is an imperfect measure of knowledge transfer but perhaps the most common and convenient. 

 

Mukherji and Silberman (2021) conducted a study to explore how relationships between universities and businesses can affect knowledge transfer from patents, as measured by the number of times these patents were cited in subsequent patent applications.  In particular, this study revealed that, in the United States

 

• businesses are more likely to cite patents from universities in the same region—especially if the university is public rather than private

• once the distance between a business and university exceeds 50 miles, further increases in distance do not affect the likelihood the business will cite the university patent application

• businesses are more likely to cite patents from universities that utilize similar technologies

 

Despite these findings, some research indicates that patents may actually impede the diffusion of knowledge from academics to industry and society (Huang & Murray, 2009; Murray & Stern, 2007). 

That is, patents often demand and instill a sense of secrecy, precluding forthcoming conversations about discoveries and thus impeding the transmission of knowledge from academia to society.  This pattern is sometimes called the anti-commons hypothesis.  

 

Consequences of patents: reputation

Patents may also improve the prestige, visibility, and reputation of university and research institutions.  Despite this possibility, patents do not affect university rankings appreciably.  Indeed, as Vernon et al. (2018) revealed, measures of intellectual property, such as patents, only explain 3.5% of the variance in university rankings overall.  Only four of the ranking schemes—the Clarivate Analytics Most Innovative Universities, the Center for World University Rankings, U-Multirank, and Scimago Institutions Rankings—depend on the number of patent applications or other measures of intellectual property.  For example

 

• the Clarivate Analytics Most Innovative Universities assesses a patent success ratio—the number of patents awarded divided by the number of patent applications

• the Center for World University Rankings and U- Multirank consider the number of patent applications

• the Scimago Institutions Rankings consider the number of university publications cited in patent applications and, therefore, is not dependent on the number of actual patent applications or patent approvals.

 

The other ranking schemes—such as Academic Ranking of World Universities, CWTS Leiden Ranking, QS World University Rankings, and Times Higher Education World University Rankings—do not consider patent activity.  Admittedly, patents tend to boost other research activity and, therefore, may improve rankings obliquely.  Nevertheless, the underlying message is unambiguous: patents do not affect traditional rankings to a marked extent.

 

References

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