1. FRAMING THE BAYH-DOLE DEBATE: MAJOR POLICY ISSUES AAAS Science & Technology Colloquium April 11, 2003 Marie Thursby DuPree College of Mgmt, Georgia Tech & National Bureau of Economic Research

2. THE POLICY DEBATE Intended effect – Facilitate industry use of federally funded research licensing Unintended effects –Change the direction of faculty research –Restrict dissemination of research

3. BAYH DOLES INTENDED EFFECT Facilitate industrial application of federally- funded research –Dramatic increase in university licensing –For embryonic inventions a positive role –Survey of 62 universities & 113 businesses Is exclusivity important? When? –High risk and need for further development –806 MIT inventions

4. GROWTH IN UNIVERSITY LICENSING (AUTM) 1991-00 growth00 level Invention Disclosure 84% 12015 Patent applications 238% 6098 Licenses executed 161% 4049 Royalties 520%$ 1.2Bil* Cashed-in Equity$169Mil* Growth in Tech Transfer Offices (TTOs) 20 in 1980 to over 200 in 2000

5. NATURE OF LICENSES % of Licenses to % Exclusive Small Businesses 5141 Startups 1590 Large Businesses 3436 Types of Inventions UniversityBusiness Proof of Concept4838 Lab-scale Prototype3936 Inventor Cooperation Required 7140 Ready for Use1214

6. LICENSE INCOME Shares to Inventor 39 Inventors Department15 TTO11 Administration26 Other 9 % of Licenses including Running Royalties 84 Minimum Royalties 78 Milestones 58 Equity 23

7. LICENSING AND FACULTY INCENTIVES Embryonic Inventions –87% (75%) Proof or Lab-scale Prototype –71% (40%) Require Faculty Faculty Incentives –Moral Hazard –Returns Tied to Success –Royalties & Equity (Jensen & Thursby 01) –Milestones (Thursby, Thursby, Dechenaux 03)

8. EXCLUSIVE LICENSING & COMMERCIALIZATION Embryonic Inventions –88% Require Development –46% Fail Evidence (Dechenaux, Goldfarb, Shane, & Thursby 2002) –803 Exclusively Licensed MIT Inventions –269 Terminated, 188 Commercialized –Patent Effectiveness, Scope & Age Important

9. UNINTENDED EFFECTS Restrict dissemination of faculty research –Delay of publication –Delete information Change the direction of faculty research –Toward research with commercial potential

10. RESTRICTED PUBLIC ACCESS Delete Information Publication Delay Sharing of Materials & Research 48% Licenses46% 3.9 mo Sponsored Research72% 4.7 mo Blumenthal 1997 JAMA

11. RESEARCH FOCUS Tradition of applied research before Bayh-Dole Mowery, Nelson, Sampat, Ziedonis 1999 Research Policy New willingness of faculty to disclose inventions Thursby & Thursby 2002 Management Science Evidence of changes in academic research Cohen, Florida, Randezzese, & Walsh 1997 Morgan, Kannankutty, & Strickland (NSF )

12. RESEARCH FOCUS Panel database of research and disclosure of 7000 faculty from 11 universities 1983-1999 Change? If so, is it individual or policy effect? –Age distribution of faculty –Funding availability –University policies Thursby & Thursby (2003) Ongoing NSF-funded study

13. PUBLIC POLICY – EFFECTS OF BAYH-DOLE Intended Increase Industry Use of Federally Funded Research Unintended Divert Faculty Research to Applied Work Restrict Knowledge Flows + ?