Academic Inventions Funded by Industry Benefit Innovation

Illustration: iStockphoto

Industry money in university labs can raise eyebrows among researchers who worry that corporate interests might hoard academic inventions through exclusive licensing deals and stifle broader innovation. But a new study based on two decades of evidence from the University of California system suggests such fears surrounding industry-funded university research may be overblown.

Many experts had assumed that corporate sponsorship of academic research leads to inventions with narrow applications tailored to commercial interests and restricted accessibility due to exclusive licensing. New analysis detailed in a commentary article in the 19 March issue of the journal Nature indicates that those assumptions do not hold up.  On the contrary, industry-funded inventions did not end up in more exclusive licensing deals than those funded by the government. The industry-funded inventions even spurred more citations by other patents than their government-funded analogues.

"We didn't expect these results," said Brian Wright, professor of agricultural and resource economics at the University of California, Berkeley, in a press release. "We thought companies would be interested in applied research that was closer to being products, and thus more likely to be licensed exclusively and less cited than federally-funded counterparts, but that did not turn out to be the case."

Wright and his colleagues examined 12 516 inventions submitted to offices of technology transfer within the University of California system between 1990 and 2005. They also tracked related licensing activities for the inventions from 1990 until 2010.

The surprising findings came from looking at rates for exclusive licensing and "knowledge spillovers" as measured by forward citation rates for patents. Industry-funded inventions had slightly less exclusive licensing rates (74 percent) compared to inventions with only government funding (76 percent). Half the exclusive licenses for industry-funded inventions also went to third parties rather than the original corporate sponsor—deals that allowed the third parties to use the licensed inventions while paying royalty fees.

Industry-funded inventions also outperformed government-funded inventions in terms of forward citations for the related patents (the number of times one patent is cited by subsequent patents). Industry-funded inventions attracted an average of 12.8 forward citations if licensed to a third party, and even more forward citations if licensed to the original corporate sponsor. By comparison, government-sponsored inventions attracted just 5.6 forward citations on average. Such findings seem to counter expectations of industry-backed inventions in academia spurring less innovation through knowledge spillovers. (See IEEE Spectrum's Patent Power report for 2013.)

Corporate funding represents a small but growing share of money supporting university research. The U.S. National Science Foundation's data showed that industry provided just over 5 percent (US $3.2 billion) of the annual spending by U.S. research universities. Of the 12 516 inventions in the recent University of California system study, almost 1500 had at least partial corporate sponsorship.

About 20 percent of all the University of California inventions in the study period were linked to at least one license, and almost 25 percent ended up being patented. Twenty-nine percent of industry-funded inventions ended up being licensed and 35 percent were patented; license and patent rates for government-funded inventions were 22 percent and 26 percent, respectively. Such results held up across the various technical fields of science and engineering.

Inventions with both corporate and government sponsorship had even higher rates of licensing (36 percent) and patenting (43 percent). This may reflect more focused research goals and projects that attract both types of sponsors, Wright and his colleagues said.

One of the obvious caveats for the study comes from the fact that it focused on the University of California system, which may not reflect the licensing and patenting situation at other U.S. universities. More data analysis from other university systems could help experts better understanding the dynamics of innovation at play beyond the University of California system.

Another caveat comes from how to interpret the study's findings, said Joshua Rosenbloom, program director for Science of Science and Innovation Policy at the U.S. National Science Foundation, in the press release. (The NSF provided the funding for the recent University of California study.)

"There are two potential interpretations of the report. One is optimistic. Corporate funding leads to research that is more likely to be commercialized and this greater focus is good. The second reading is that corporate funding shifts the focus of research away from basic science."

Government policymakers and universities will undoubtedly continue to debate the funding split between "basic science" and more focused applications. Both researchers and students will also likely continue to be wary of overbearing corporate influence through sponsorship of academic studies. Still, the recent NSF study does suggest that corporate sponsorship in academia is far from the innovation-stifling bogeyman that many had feared.

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