Do University Patents Pay Off? Evidence from a Survey of University Inventors in Computer Science and Electrical Engineering

Abstract

Studies of the costs and benefits of university patent ownership have, to date, focused on life sciences technology. Increasingly, however, many of the most lucrative university-owned patents relate to computing and telecommunications, not genes or pharmaceuticals. In 2007, a University of California spin-off named Eolas settled a patent suit with Microsoft for $100 million. In 2010, Cornell University won a $184 million jury verdict against Hewlett-Packard in a case that later settled on confidential terms. And most recently, in 2014, Carnegie Mellon University received a $1.5 billion judgment — one of the largest patent damages awards in history — in an ongoing suit against Marvell Semiconductors.

As universities shift their focus in the patent arena, so too must those studying tech transfer. Commentators generally agree that the costs and benefits of the patent system vary greatly across industries and many place the high-tech and bio-tech industries at opposite ends of that spectrum. Accordingly, universities would be well advised to reassess the costs and benefits of their own tech transfer programs as they allocate more resources to high-tech patenting.

This Article examines the pros and cons of university patenting in the high-tech field by reporting the findings of a survey of professors at major U.S. universities who teach and research in the areas of computer science and electrical engineering. Among other findings, survey responses suggest that:

- Patenting high-tech inventions made on university campuses may not be a profitable undertaking, even at those universities best-positioned to profit from tech transfer. Based on the patenting and licensing activities of survey respondents, I estimate that university patent programs collectively earn a negative rate of return — an overall loss of more than three percent — on funds invested in high-tech patenting.

- The prospect of obtaining patent rights to the fruits of their research does not appear to motivate university researchers in high-tech fields to conduct more or better research. Eighty-five percent of professors report that patent rights are not among the top four factors motivating their research activities. Moreover, fifty-seven percent of professors report that they do not know how, or if at all, their university shares licensing revenue with inventors.

- University patent programs may, instead, actually reduce the quantity and quality of university research in high-tech fields by harming professors’ ability to obtain research funding, to collaborate with faculty from other institutions, and to disseminate their work to their colleagues.

- University patent programs seem to be, at best, a modest benefit to professors seeking to commercialize high-tech academic research. Entrepreneurial professors report that these programs hinder their ability to work as consultants with companies that show interest in their research, and fewer than half of university spin-off founders report that the ability to patent their research affirmatively helped their commercialization efforts.

Keywords: university patents, technology transfer, technology management, technology licensing, technology transfer office, TTO, office of technology transfer, OTT, office of technology management, OTM, software patents, patent theory

JEL Classification: I23, L3, O3