Capitalizing on New Needs and New Opportunities Government-Industry Partnerships in Biotechnology and Information Technologies (2001) / Chapter Skim
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Public Research, Patents, and Implications for Industrial R&D in the Drug, Biotechnology, Semiconductor and Computer Industries
Public Research, Patents, and Implications for Industrial R&D in the Drug, Biotechnology, Semiconductor and Computer Industries
Pages 223-243
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From page 223... ...
The share of academic R&D supported by industry has also increased from 2.6 percent in 1970 to 6.9 percent in 1990. Although no systematic data exist on either spin-offs or faculty participation in new firms, anecdotal evidence suggests an increase over the past twenty years, especially in biotechnology and software.)
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So, the idea was to use the award of patents to "incentivize" the private sector to undertake the downstream R&D and related investments necessary for commercializations Although perhaps less critical due to the already existing incentives for faculty to publish, some suggested that patents could also benefit the public by similarly providing universities with an economic incentive to increase their technology transfer efforts.4 The conventional wisdom is that Bayh-Dole has indeed induced an outflow of commercially fruitful technology as reflected in recent increases in university patenting and licensing. Mowery et al.
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From page 225... ...
6While perhaps the clearest exemplar of such policies is Bayh-Dole, that is not the only one. Indeed, others might be quite subtle, For example, there are no federal strictures against the disclosure restrictions that are now sometimes associated with the research outputs originating from federally supported university-industry research collaborations.
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We sampled 3,240 labs,8 and received 1,478 responses, yielding an unadjusted response rate of 46 percent and an adjusted response rate of 54 percent.9 Our survey data are supplemented with data on firm sales and employees from COMPUSTAT, Dun and Bradstreet, Moodys, Ward's and similar sources. We have 40 observations in our drug industry sample, 21 in biotechnology, 34 in computers, and 25 in semiconductors.
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From page 227... ...
The results reported here are, however, qualitatively similar across all the measures. We begin our analysis by examining responses to a key question in the survey that considers the importance to each respondent's R&D activities of information originating from a broad range of information sources, of which university and government R&D collectively labeled "public research" are one.
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From page 228... ...
In contrast, public research has relatively little impact on the R&D of our computer industry respondents. One point to recognize here is that the conventional view of public research is that it principally suggests new ideas, presumably spawning new projects.
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From page 229... ...
We asked our respondents to report on a four point Likert scale the importance to a recently completed major R&D project of each of ten possible sources of information on the research findings or R&D activities of universities or government R&D labs or institutes. The information sources considered include patents, informal information exchange, publications and reports, public meetings and conferences, recently hired graduates, licenses, joint or cooperative ventures, contract research, consulting and temporary personnel exchanges.
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~ Semiconductors (N=24) Patents Publications Meetings or Conferences Informal Exchange Hires Licenses Joint Ventures Contracts Consulting Temp Personnel Exchanges 15.2 .
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This raises the question of the extent to which the overall impact of public research on industrial R&D depends on the effectiveness of specific channels, and particularly private channels. A different possibility and one that is not particularly consistent with the rationale for BayhDole-is that the overall impact of public research on industrial R&D may have little to do with the strength of any specific or set of channels, but rather simply i6Note that movement of people, either through recent hires of graduates or even through temporary personnel exchanges, are not considered to be as important as either the public channels or even the more market mediated channels for biotechnology and drugs.
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From page 232... ...
APPROPRIABILITY MECHANISMS In this section, we review the CMS results on how firms in the four industries protect their innovations, and address the question of the role of patents.l7 For the sake of brevity, we focus on the effectiveness of the different mechanisms that firms use to appropriate the returns to their product innovations, including patents, secrecy, lead time, complementary sales and service and complementary manufacturing facilities and know how.l8 The role of these mechanisms in protecting process innovations is reported in Cohen et al.l9 To measure the effectiveness of appropriability mechanisms, we asked respondents to report the percentage of their product and process innovations for which each appropriability mechanism had been effective in protecting their firm's competitive advantage from those innovations during the prior 3 years. The five response categories were: 1)
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233 11 ct.
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In fact, in Cohen et al., where biotechnology is included in the drug industry category, patents are reported to be more effective in drugs than in any other industry.23 Although patents are not considered to be among the most effective mechanisms for protecting the profits due to the commercialization or licensing of invention in the computer or semiconductor industries or for manufacturing firms in general that does not mean that they are not used or are inessential. Cohen et al.' s analysis of the relationships across the appropriability mechanism effectiveness scores for the manufacturing sector as a whole indicates that appropriability mechanisms are not mutually exclusive in the ways that they are employed.24 Firms will often use more than one to protect even the same invention.
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From page 235... ...
For drug industry respondents with greater than the median R&D intensity, product patent propensity is 47 percent as compared to a comparably computed 40 percent for the computer industry. The average patent propensity for the semiconductor industry is the lowest of the four industries, which is consistent with their low rating of patent effectiveness.
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The only cross-industry differences of note is that concern over the disclosure of information appears to be of less concern to the semiconductor respondents than others, perhaps because the technology is sufficiently complex and know-how based such that a patent discloses less of real value to rivals. Also, concern over the cost of either the patent application or subsequent legal defense is less of an impediment to patenting in the drug industry.26 REASONS TO PATENT In this section, we will try to develop a better understanding of how firms use patents, particularly when patenting does not appear to protect the commercialization or licensing of their patented inventions.
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From page 238... ...
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From page 239... ...
In contrast, in semiconductors, the same patents that are used for blocking are also commonly used for strengthening the firm's position in crosslicensing negotiations, suggesting that patent blocking tends to be directed against not substitute but complementary inventions. This makes sense in a complex product industry like semiconductors where commercialized innovations are often comprised of numerous separately patentable elements and incumbent manufacturing firms consequently either require access to one another's technology, or at least the freedom to pursue projects that are similar to those of rivals without being sued.30 Indeed, on the basis of both the survey data and field interviews, Cohen et al.3i conclude that firms will often patent in semiconductors not to profit directly from a particular patented invention through either its commercialization or licensing, but to build portfolios to compel their inclusion in cross-licensing negotiations or at least provide some protection against suits by other manufacturers.32 The use of patent portfolios to achieve such "player" status in the semiconductor industry suggests that patents will tend to be most useful to firms that can generate or acquire rights over numerous patents and have access to the considerable legal resources essential to such a strategy.
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From page 240... ...
Thus, patents on public research in areas such as semiconductors may be of limited relevance to the enterprise of commercialization, and consequently play little of the role envisioned by the framers of the Bayh-Dole Amendment. It does appear, however, that patents on public research outputs have stimulated universities and other publicly funded institutions to attempt to garner licensing revenues from firms.
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From page 241... ...
The enforcement of exclusionary rights on more "upstream" public research outputs essential to the research of a broader community may also impose, however, considerable costs, as noted by Mazzoleni and Nelson.35 In contrast to the role and importance of patents in drugs and biotechnology, patents are not reported to be very effective in protecting the commercialization 34I thank Robert White, Director of Carnegie Mellon university s NSF Data storage Engineering Research Center for suggesting this point.
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From page 242... ...
If granted exclusive licenses, semiconductor firms could conceivably use patents originating from public research like their own that is to strengthen their bargaining position in the industry.36 There is also, however, the prospect that if public research institutions attempt to enforce their property nghts, they could antagonize firms and undermine the reciprocal communication flows that contribute to the research efforts of all parties. REFERENCES Barton, John (1999)
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From page 243... ...
(1994) "American Universities and Technical Advance in Industry," Research Policy, 239(3)
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