University Patents & Legal Expenditures
17 Pages Posted: 15 Aug 2019
Date Written: August 12, 2019
Universities are engines of innovation. To encourage further innovation, the federal government and charitable foundations give universities grants in order to enable university researchers to produce the inventions and discoveries that will continue to fuel our knowledge economy. Among other things, the Bayh-Dole Act of 1980 was supposed to encourage additional innovation by enabling universities to patent inventions and discoveries produced using federal funds and license those patents to private companies, rather than turning their patent rights over to the government. It certainly encouraged universities to patent inventions and license their patents. All major research universities have created technology transfer offices to manage their patent portfolios. While the Bayh-Dole Act can be viewed as successful in this regard, the Bayh-Dole Act and other patent policy and doctrine changes since 1980 may have also created perverse incentives to which universities have responded.
It appears that university patents also make universities increase their legal expenses. We present a preliminary empirical study of the relationship between university patents and university legal expenses. Our findings show that increases in university patent applications, patent grants, and research expenditures are associated with increases in legal expenses. In particular, our analysis demonstrates that relatively small increases in university research expenditures are associated with significant increases in legal expenses.
Keywords: University Patents, Technology Transfer, Non-Practicing Entities, Federally-Funded Research
JEL Classification: C01, C13, I23, I28, K00, K39, L24, L38
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