Academic Patents and Materials Transfer Agreements: Substitutes or Complements?
David C. Mowery Walter A. Haas School of Business University of California, Berkeley Berkeley, CA 94720
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Arvids A. Ziedonis Stephen M. Ross School of Business University of Michigan 701 Tappan Street Ann Arbor, MI 48109-1234
[email protected]
Abstract: U.S. universities and academic medical centers long have been important performers of research in the life sciences, but their role as a source of patented intellectual property in this field has changed significantly in the late 20th and early 21st centuries. The expanded presence of formal intellectual property rights within the academic biomedical research enterprise has occasioned numerous expressions of concern from scholars, policymakers, and participants. One widely expressed fear involves the effects of patenting on the conduct of the scientific research enterprise. There is also considerable concern over the possible role of Material Transfer Agreements “MTAs” in raising research “transaction costs.” On the other hand, others suggest that the contractual structure provided by MTAs may reduce transaction costs and facilitate exchange. This paper undertakes a preliminary analysis of the role of MTAs in the biomedical research enterprise at the University of Michigan, a significant patenter and licensor of biomedical intellectual property. We examine the relationship among invention disclosures, patenting, licensing, and the presence or absence of an MTA. Although data limitations make any conclusions tentative, our analysis suggests that the increased assertion of property rights by universities through MTAs does not appear to impede the commercialization of university research through patenting and licensing.
JEL Codes: I32, O32, O34 We are grateful to participants at the “Bringing Science to Life" Symposium at the University of Toronto and the 2005 Western Economic Association Annual Meeting, San Francisco, an anonymous reviewer, and the editor for useful comments. Robin Rasor generously provided data for this study. Mary Braun provided excellent research assistance. Research for this paper was supported by the Andrew W. Mellon Foundation and the Kauffman Foundation.
Electronic copy available at: http://ssrn.com/abstract=950457
Introduction Since the 1970s, patenting by U.S. universities has grown roughly from 0.2% of all U.S. patents in 1970 to nearly 4% by 1999, and the share of universities in the narrower class of “biotechnology” patents has grown from slightly more than 2% in the mid-1970s to almost 11% by 2001 (Figure 1, from Sampat, 2004). By the end of the 20th century, biomedical inventions accounted for 35-40% of university patents, having more than doubled from 17% in the early 1970s. ** Insert Figure 1 Here ** U.S. universities and academic medical centers long have been important performers of research in the life sciences, but their role as a source of patented intellectual property in this field has changed significantly in the late 20th and early 21st centuries. There are a number of reasons for this transformation. Among the most important are the following: a.
the Bayh-Dole Act of 1980, which facilitated the patenting by U.S. universities of inventions derived from publicly funded research;
b.
an array of nearly simultaneous policy shifts in U.S. intellectual property policy that strengthened patentholder rights and enhanced the patentability of biomedical research advances in particular;
c.
the important scientific advances in biomedical research of the 1970s and 1980s; and
d.
the rise in U.S. public funding for biomedical research during the 1960-2000 period.
The expanded presence of formal intellectual property rights within the academic biomedical research enterprise has occasioned numerous expressions of concern from scholars, policymakers, and participants. One widely expressed fear involves the effects of patenting on the conduct of the scientific research enterprise. Will academic researchers, motivated more than
1 Electronic copy available at: http://ssrn.com/abstract=950457
in the past by the pursuit of near-term financial returns from patenting and licensing their discoveries, become less willing to share information and research materials? Alternatively, will university intellectual property regulations interfere with the free flow and exchange of information and research materials, either through patenting of inputs to science or through other restrictions on information exchange? Will the “transaction costs” of conducting biomedical research increase, impeding the advance of scientific research? Previous work on this topic has examined the effects of increased patenting on biomedical researchers’ willingness to share information on their work in progress (Blumenthal et al., 1997; Campbell et al., 2002). More recent research has analyzed the effects of patenting of discoveries that are also disclosed in scientific papers on the extent of citation to these papers, and finds that the issue of a patent results in modest but significant declines in citations to the research papers related to the patent (Murray and Stern, 2004; Sampat, 2005). Still other work, however, argues that biomedical researchers rarely if ever search to determine whether a prospective research project or experiment will infringe on patents (Walsh, et al., 2005; Lei et al., 2005). If researchers are (purposefully or otherwise) unaware of the existence of patents on a given area of research, what may cause them to shift their research agenda away from topics for which patents have been issued to other researchers? One possible explanation for these apparently conflicting findings is the difficulties that researchers encounter in seeking access to essential research materials (biological materials or research tools) from other researchers on results covered by patents. An instrument of growing importance in the governance of transfers of materials among researchers in both academia and industry is the “Materials Transfer Agreement” (MTA). MTAs are agreements among researchers governing the transfer and exchange of biological materials used in research. Their complexity and detailed provisions vary, but many of them include provisions for “reach-through” royalties on patents resulting from the use of the materials, and other such agreements limit the ability of the recipient of the materials to patent or license the results of research using the materials. MTAs are used widely by both industry and
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academic researchers, and cover exchanges of materials within industry, within academia, and between industry and academia. If patents on research results typically are complemented by widespread use of MTAs covering access by other researchers to these results, the findings of Murray and Stern and Sampat can be reconciled with those of Lei et al. and Walsh et al. Rebecca Eisenberg (Eisenberg, 2001) argues that the increased use and formalism (including oversight and management by university technology licensing offices) of MTAs are one result of the growth of patenting in biomedical research. According to Eisenberg, MTAs may impede the progress of research. But no systematic analysis has yet been conducted on the extent of use or effects of MTAs on biomedical research. This paper undertakes a preliminary analysis of the role of MTAs in the biomedical research enterprise at the University of Michigan (UM), a significant patenter and licensor of biomedical intellectual property. We examine the relationship among invention disclosures, patenting, and the presence or absence of an MTA. We provide a descriptive analysis of the links between MTAs, which cover inputs to science, and patents on the disclosures covered by these MTAs, interpreting the latter as an effort to enhance the “excludability” of these inputs to science. In addition, we examine the effects of MTAs on the extent of future citations to patents associated with the disclosures covered by the MTAs, in an effort to quantify any incremental effect of the existence of an MTA on the utilization by other inventors of the intellectual property contained in the patent. We also compare the probability of licensing patented disclosures for which MTAs are negotiated with the extent of licensing of patented disclosures for which no MTAs exist. Although our analysis is limited by the small size of our sample and the inability to control fully for differences between invention disclosures linked to MTAs and those without MTAs, our results do not indicate that MTAs significantly constrain industrial demand for licenses to these inventions, nor are associated with lower levels of forward citations to patents.
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MTAs and research materials exchange: Facilitator or impediment to research? The exchange by researchers of biological materials for use in fundamental research has a long and occasionally controversial history in the biomedical sciences.1 Such exchange has rarely been required by the terms of funding agreements with government agencies or other entities, but has instead been regulated by the Mertonian “norms” of scientific research, in which disclosure is paramount. Nevertheless, reluctance to discuss research or share materials is far from rare among research scientists—35% of academic researchers surveyed in Campbell et al. (2002) concluded that withholding of materials or information increased during the 1990s, but 65% reported no increase in such restrictions on sharing. The survey found that roughly one-half of respondents had been denied access to materials by fellow researchers at least once in the 3 years prior to the survey, although overall, 90% of their requests were granted (about 12% of the survey respondents stated that they had denied requests from other researchers). Historically, materials exchanges were governed by little more than a letter from the source accompanying the materials, requesting acknowledgement and in some cases asking that the materials not be passed on to third parties (See McCain, 1990). The materials exchange agreements utilized by biological resource centers (Stern, 2004), depositories of biological materials used by many researchers, were somewhat more formal. Nevertheless, the more elaborate MTAs used in contemporary materials exchanges appear to be a byproduct of the post1980 surge in academic patenting.2
1
One celebrated controversy concerned the failure of the Gallo research team at the NIH to acknowledge that the pathbreaking isolation of the AIDS virus relied on a cell line established by another research team, at the Veterans Administration Clinical Oncology Branch (See Rubinstein, 1990 for further details). The Milstein-Kohler hybridoma technique for producing cell lines also was patented not by the discoverers but by another research team that requested and received a sample of the Milstein laboratory’s plasmacytoma cells (See Wade, 1980). 2 Respondents to the survey of University of California agricultural biotechnology researchers by Lei et al. (2005) report “moderately more” use of MTAs than in 1999.
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Many MTAs used for exchanges of materials among academic researchers, especially those governing materials exchanges between industrial and academic researchers, now contain clauses requiring that the recipient of the materials surrender all claims to intellectual property based on discoveries using the materials (Marshall, 1997). In other cases, the source of the materials being requested has required a royalty on any commercial product resulting from research employing the material, a so-called “reach-through licensing agreement” (RTLA). These provisions need not in and of themselves limit researchers’ freedom or delay their access to important materials. But the overall increase in academic patenting of biomedical discoveries, as well as the higher perceived value of biological and genomic materials used in biomedical research, also have expanded the number and diversity of the institutions seeking to obtain or being asked to exchange these materials. The greater diversity of participants makes the negotiation of satisfactory terms among the parties to a given MTA more difficult, according to Eisenberg (2001),3 and thus can delay researcher access to materials. These more elaborate MTAs appear to be more common in materials exchanges that span the academia-industry divide.4 Nevertheless, even in materials exchanges among academic researchers, many university licensing offices have become more active in overseeing the terms of MTAs, and requirements for approval of their terms may impose significant delays. Still another problem associated with the growing use of MTAs and their growing complexity is the demands on licensing office staff for review and approval. The director of the University of Pennsylvania technology licensing office noted in 1997 that that number of MTAs reviewed by his office had more than doubled
3
The implications of a more diverse array of parties to these exchanges are complex, as the NIH Working Group on Research Tools (chaired by Professor Eisenberg) pointed out in its 1998 report: “The very term ‘research tool’ connotes a user perspective rather than a provider perspective. What a user sees as a research tool, a provider may see as a valuable end product for sale to customers.” (NIH, 1998, p. 4). 4 Consistent with this characterization, more than 73% of respondents to the survey by Lei et al. (2005) reported using MTAs for more than 60% of the research tools that they obtained from industry in 2004, while only 35% of respondents relied on formal MTAs for more than 60% of the research tools that they obtained from academic researchers.
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during the previous 12 months from 197 to 425, even as the provisions of many of them had become more complex (Marshall, 1997). The NIH Working Group on Research Tools reported that the University of Washington’s technology licensing office was dealing with an average annual volume of “incoming” MTAs (dealing with materials being requested by their institution’s researchers) in the mid-1990s of roughly 1,000. The National Institutes of Health, the leading governmental source of financial support for biomedical research in the United States, has long been concerned over the potential impediments to research created by the proliferation of complex MTAs, and has mounted several initiatives to simplify their structure. In 1995, NIH developed the “Uniform Biological Materials Transfer Agreement” (UBMTA), which was intended to provide a simple, common agreement for use by academic institutions in materials exchanges with one another. A parallel effort to develop a UBMTA for industry-academia materials exchanges proved to be far more contentious, and ultimately failed (Marshall, 1997). Moreover, many of the academic institutions that originally had endorsed the UBMTA developed “modifications” in its terms for their use in universityuniversity materials exchanges, defeating the goal of simplicity and uniformity in terms. The NIH “Working Group on Research Tools” noted in its 1998 report that “…it is increasingly common…for the terms of these agreements to interfere with the dissemination of research tools among scientists, either because owners and users are unable to reach agreement on fair terms or because the negotiations are difficult and cause protracted delays.” (NIH, 1998, p. 3). The Working Group further noted that few of the universities originally endorsing the UBMTA “…seem actually to use it even for routine exchanges of materials.” (p. 10), and recommended that the agency encourage more widespread use of the UBMTA. A somewhat different perspective on the role and effects of MTAs is provided by Stern (2004) in his brief discussion of their use by biological resource centers, as well as by Walsh et al. (2004). Biological resource centers (BRCs) are nonprofit materials depositories that play a key role (the subject of Stern’s pathbreaking analysis) in maintaining the reliability and provenance of
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cell lines used by industrial and academic researchers—as Stern notes, contamination of widely used cell lines has caused major research fiascoes in the past several decades. Stern argues that the use by BRCs of MTAs has aided the exchange of materials,5 and recommends that MTAs be a standard complement to patents covering biological discoveries: “Putting MTAs in place at the time of patent approval lowers the cost of mutually beneficial transactions between the developers of materials and follow-on researchers and widens the availability of patented biomaterials.” (2004, pp. 96-97). Similarly, Walsh et al. argue that the formalization of materials exchanges through MTAs may simplify these transactions and facilitate researcher access.6 Discussions of the role of MTAs thus reach no consensus on their effects on the scientific research enterprise. There is considerable concern over the possible role of MTAs in raising research “transaction costs” in the discussions of Eisenberg and the NIH Research Tools Working Group. On the other hand, Stern and the Walsh research team suggest that the contractual structure provided by MTAs may reduce transaction costs and facilitate exchange, although they do not consider the potential differences in incentives and exchange characteristics in industryacademia, as opposed to academia-academia, materials exchanges. Finally, the nature of any relationship between MTAs and the existence of patents on research results remains unexplored. As we noted above, however, the nature of this relationship may underpin the otherwise conflicting findings of on the role of patents in affecting researcher choices among topics and research trajectories.
MTAs at the University of Michigan
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“BRCs balance IP rights against the need for access through materials transfer agreements (MTAs), which offer nonexclusive licensing rights to BRC users. By enhancing the effectiveness of the market for the exchange of licensed materials, BRCs have increasingly come to serve as key knowledge brokers for researchers throughout the life sciences.” (Stern, 2004, p. 82). 6 “This commercialization of research materials may actually increase access by creating market-based institutions for distributing them rather than relying on gift exchange among researchers. Several university scientists noted that the demand for important research agents can easily become overwhelming, and licensing these to a commercial firm was seen as a way of increasing, rather than limiting, access for the research community.” (p. 322).
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The data for this study come from archival records of material transfer agreements at the University of Michigan Office of Technology Transfer (OTT). The OTT administers MTAs for materials transferred by a UM researcher or laboratory to an outside institution. The UM OTT also manages invention disclosures by all Michigan faculty, students, and research staff, and directs the patenting and licensing of the technologies covered by these disclosures. Since the early 1980s, the OTT has received over three thousand invention disclosures. These 3000 invention disclosures include 83 disclosures that we are able to link to MTAs. We supplement the UM OTT data with publicly available information from the US Patent Office on all patents issued to the University of Michigan, linking these patents to invention disclosures and licenses. Our MTA data cover only a subset of MTAs involving the University of Michigan. Incoming research materials and the MTAs associated with them that are signed by UM researchers are handled by the Division of Research Development and Administration (DRDA) under the Office of the Vice President for Research, and are not considered in this study. Moreover, our data include only a subset of outgoing MTA covering materials developed by researchers at the University of Michigan. University policy does not require researchers to utilize the OTT to transfer research materials outside the university, particularly when these materials transfers are directed to other nonprofit or academic research institutions. Technology transfer officials at OTT believe that many researchers bypass the OTT by generating their own MTAs and estimate that the OTT manages less than half of the total volume of research materials transferred outside the university. Our MTAs data thus represent a biased sample of all of the MTAs utilized by University of Michigan researchers. It is likely, for example, that only MTAs covering “more important” disclosures may trigger involvement by the UM OTT in their negotiation or approval. Interviews with OTT officials also suggest that their involvement is more likely for MTAs involving transfers from academic to industry researchers. In future work, we hope to be able to survey researchers or employ other methods to compare the characteristics of those MTAs that are filed
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with the OTT at the University of Michigan with those that do not enlist the OTT’s involvement. The 83 invention disclosures that we linked to at least one MTA at the UM OTT constitute 3% of all disclosures made to the UM OTT since the early 1980s (624 of these 3000 disclosures, or 21%, generated at least one U.S. patent). The MTAs linked to our 83 invention disclosures include 86 agreements governing the transfer of materials to private firms and 178 MTAs governing transfers to universities and other non-profit institutions. Table 1 reports the distribution among departments of disclosures with at least one MTA, as well as the number of MTAs to private firms and non-profit organizations. Figure 2 plots the MTA-linked disclosures by year of disclosure. MTA-linked disclosures originate in the life-sciences departments within the University of Michigan--the five leading sources of such disclosures are Internal Medicine, Human Genetics, Biological Chemistry, Pathology, and Pharmacology, which collectively account for approximately 55% of our MTA-linked disclosures. There are only slight differences in the relative importance of departmental sources of disclosures resulting in MTAs with academic/nonprofit entities and those resulting in MTAs with industrial research enterprises. Nearly half of the 86 MTA agreements with private firms (42) came from three departments, Internal Medicine, Biological Chemistry, and Pathology, while 80% of the academic/nonprofit MTAs were associated with disclosures from Internal Medicine, Human Genetics, and Biological Chemistry. Internal Medicine accounts for the largest share of both industrial and academic MTAs, and Biological Chemistry ranks second in both of these areas. *** Insert Table 1 and Figure 2 Here ***
The majority of disclosures generate relatively few MTAs. Figure 3 reports the distribution of MTAs by disclosure, showing that shows that 49 of the 83 disclosures in our sample are linked to only one MTA. Only three disclosures generated more than 20 MTAs, and all of these MTAs were with academic/nonprofit research organizations (Figure 5). The
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distribution among disclosures of MTAs to private firms (Figure 4) is even more highly skewed than the overall sample. None of the 61 disclosures linked to a corporate MTA generated more than 5 MTAs, and 45 of those produced one MTA each. Of the 34 disclosures that were linked to a non-profit MTA, 25 disclosures produced 2 MTAs or fewer (Figure 5). *** Insert Figures 3, 4, and 5 Here ***
Empirical Analysis Analysis of the relationship between MTAs and patenting provides one avenue for assessing the implications of MTAs for the exploitation of academic research advances linked to these agreements. If MTAs and patents are substitutes, one would expect that an MTA-linked disclosure is less likely to be patented than a disclosure not linked to an MTA.7 If MTAs raise the barriers to exploitation of knowledge embodied in invention disclosures, we should observe lower rates of citation to patents associated with MTA-linked disclosures, as well as longer lags in the timing of these citations. Finally, if MTA-associated impediments to knowledge exploitation depress the demand for licenses associated with these inventions, we predict that patents that issue on MTA-linked disclosures will be less frequently licensed. All of these descriptive analyses rely on a comparison of MTA-linked disclosures with UM OTT disclosures for which no MTAs are observed. Our “control sample” consists of 83 UM OTT disclosures that are not linked to MTAs. Each of the 83 observations in the control sample matches its counterpart in the sample of MTA-linked disclosures by disclosure date and
7
We do not consider the criteria employed by the University of Michigan for determining whether or not to file for a patent on a research disclosure. This university may employ unusual or idiosyncratic criteria for such decisions, but since this paper deals only with MTAs and disclosures at the University of Michigan, any differences between the University of Michigan and other institutions on patenting should not affect our findings. Obviously, however, the generalizability of our findings is limited by our focus on a single research university. We plan to collect invention-disclosure and MTA data from additional research universities, and hope to examine the importance of any differences among institutions in decisionmaking processes and criteria in this work.
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represents a “biomedical” invention reported by one of the same academic departments generating the MTA-linked disclosures. This analytic approach introduces some problems. We are not able to control for systematic differences between invention disclosures that are linked to an MTA with those that are not. 8 It is possible, indeed plausible, that MTA-linked disclosures may be more technologically or economically “important” than disclosures for which no MTA is found in the OTT records. It is also possible, although less plausible, that MTA-linked disclosures are “closer” in some sense to application and therefore more likely to be patented and/or licensed. These caveats mean that the results of our analysis should be interpreted with caution. How does the probability that a disclosure will be patented in the MTA-linked population compare with this probability for our control sample of disclosures? The disclosures associated with an MTA are more likely to receive at least one U.S. patent than are disclosures in our control sample of disclosures. Twenty one, or 25%, of the MTA disclosures are patented, considerably larger than the share (8%, or 7) of the control disclosures that are patented. This difference in proportions is significant at the 1% level.9 We also compare the rate of citation by other inventors of the patents in our MTA-linked and control samples of disclosures. The patents associated with the MTA disclosures are cited more intensively than those in the control sample; Table 2 reports the mean and median number 8
If MTA requests from other academic or industrial researchers affect the decision by UM OTT officials seek a patent for an invention, this could have important implications for the interpretation of the linkage between patents and MTAs. For the 19 MTA-linked inventions that were patented and for which we were able to ascertain the date of the earliest MTA, all but one invention reported a patent application date before the date of the earliest MTA. This suggests that a request for an MTA may spur the university to apply for a patent. However, only three of the MTA-linked and patented inventions in our sample generated patent applications within 12 months of earliest MTA request for the corresponding invention. The time difference between patent application date and MTA grant date for the 16 disclosures with differences greater than 12 months ranged from 1.2 to 9.5 years with a mean of 5.14 years. If patenting decisions by the university were driven primarily by requests for MTAs, we would expect the time lag between the first MTA request and a patent application to be shorter. For most of the disclosures in our sample therefore, MTA requests do not appear to drive the decision to apply for a patent. 9 As an anonymous reviewer of this paper has pointed out, it is possible that a single disclosure in our sample could generate more than one patent. But we are comparing the probability that a disclosure linked to MTAs is associated with at least one patent with the probability that a disclosure lacking an MTA is linked with at least one patent. The “multiple-patent” issue therefore should not affect our results.
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of forward citations by the end of 2004, excluding citations made by researchers at the University of Michigan (self-citations). To limit the effects of truncation in the post-issue “window of vulnerability” for citation to a patent (i.e., more recently issued patents have less time to be cited by subsequent patent applicants), we confine our analysis to patents for which we have at least four years of citation history after the date of their issue. Accordingly, we omit from this analysis patents issued after 2000, a restriction that removes 7 of the 21 subject group patents and one of the control group patents from the sample. Patents issued on disclosures associated with MTAs received 7.29 citations on average, compared to 0.83 citations on average for the patents within the control group, a difference that is significant at the 5% level. Similarly, the median number of citations to the first group of patents is 4, compared to a median of 0 for the control group. Although substantial, this difference between median citation rates is not statistically significant. ** Insert Table 2 Here ** To investigate whether academic-industry MTAs and MTAs within academia differentially affect the extent of citation to MTA-linked patented disclosures, we disaggregated these MTA disclosures into two groups – disclosures with a high ratio of industrial to non-profit MTAs (defined as disclosures for which private firms accounted for over 50% of MTAs) and disclosures dominated by non-profit MTAs (more than 50% of MTAs are with academic/nonprofit institutions). This disaggregation results in a divide in which the “high industrial MTA ratio” subsample consists of disclosures that are associated only with industrial MTAs, whereas the “low industrial MTA ratio” subsample contains three patented disclosures with both industrial and non-profit MTAs.10 Here too, we face the problem that these two samples of MTAs will differ in other ways for which we lack controls. Table 2 also reports the number of citations for patented disclosures within the two subsamples of MTAs and their corresponding control patents. The six patents linked to only
10
We also constructed a subsample of disclosures linked to MTAs linked solely to other universities or nonprofits. We discuss results from this subsample below.
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academic-industry MTAs received 9.17 citations on average, compared to one citation per patent for the 4 control group patents; because of the small sample size, however, the difference is not statistically significant. The difference in median citations to these two groups also was not statistically significant. Patented disclosures dominated by non-profit MTAs received fewer citations on average than patented disclosures linked to industry MTAs (5.88 vs. 9.17), but their mean citation rate was significantly greater (at the 5% level) than mean citations to the control sample (the difference in median number of citations between the non-profit MTA dominated disclosures and control disclosures is not statistically significant). Although we are unable to control for other, unobserved differences between MTA-linked disclosures and our control samples, these results do not indicate that the presence of MTAs linked to patented disclosures restricts the exploitation of this patented knowledge, to the extent that citations proxy for such exploitation. Moreover, we find no difference in the relative intensity of citations to patented disclosures that are linked primarily with industrial MTAs and those linked primarily with nonprofit/academic MTAs.11 Another indicator of impediments to knowledge exploitation associated with MTA-linked patents is the average lag in citations to patents; greater impediments to knowledge flows could lead to longer lags in citations to patents (Fabrizio 2005). Figure 6 plots the time distribution of citations to the patents from our MTA-linked and “control samples” of disclosures that received at least one citation by the end of 2004, excluding self-citations. The pattern of citations for patents associated with MTA-linked disclosures depicted in this figure peaks in the first year at slightly more than two citations per year on average, dropping to less than one citation per year, rising in the the fifth and sixth years after the patent issue date to 1.5. In contrast, average
11
We conducted but do not report a similar analysis considering the more restrictive group of patented disclosures linked to only non-profit MTAs, excluding the three patented disclosures that produced MTAs linked to both industry and academia. Citations to the MTA-linked patented disclosures are higher than the corresponding control patents. We were unable to determine whether this difference is significant however, because the control sample consists of only one patent, preventing us from calculating a standard error.
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citations to the patents from the control group are more evenly distributed over time at 0.5 citations per year for the first three years after issue. By the fifth year, control group patents are no longer cited. Patents associated with MTA-linked disclosures thus appear to be cited more intensively in the first year after their issue by comparison with patents not associated with MTA-linked disclosures. Keeping in mind that other differences between these classes of disclosures are not easily observed within our data, this finding seems to suggest that MTAs are not a significant impediment to rapid citation of associated patents by other inventors. It is possible that other factors, such as the extent of related inventive activity in fields of patenting for which MTAs are especially likely and fields of patenting for which MTAs are rare, may contribute to these differences in citation lags. But there is little evidence to support such an interpretation of citation lags, and the comparative analysis in this paper seeks only to test the hypothesis that MTAs themselves are associated with longer average citations to patents. Although the time pattern of citations to patents for patented disclosures linked to MTAs and those without MTAs differs, the average citation lag to patents receiving citations in each group is not significantly different. Citations to the 12 cited patents in the subject group (again excluding patents issued after 2000) were from citing patents that were applied for 2.45 years after the issue date of the cited patent on average. For the two cited patents in the control group, this lag is 2.19 years. The average citation lags for the subsamples of patents linked to disclosures with industrial MTAs and those with a majority linked to non-profit institutions were both longer than the lags to their respective control patents. Although we could not determine whether these differences are statistically significant because of the very small number of observations in the relevant control subsamples, the differences (0.29 and 0.20 years) are similar in magnitude to the nonsignificant difference in the larger overall samples (0.26 years).12 The
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When we exclude the three patented disclosures that are linked to both industrial and academic MTAs, the mean citation lag for the “low industrial MTA ratio” patents (now consisting of patents linked to
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lack of a significant difference in average citation lag for the overall samples of MTA-linked and control group patents further suggests that MTAs are not an impediment to early citation by others. Moreover, the institutional composition of the signatories to these MTAs (i.e., industry vs. nonprofit/academic) also does not appear to influence the subsequent citation of these patents. The very small numbers in our various samples nonetheless undermine the statistical significance and generalizability of conclusions based on these differences. Table 3 reports the differences in average citation lags between the overall sample, the two subsamples and the respective control samples. ** Insert Table 3 Here ** Our third test of the linkage between MTAs and the dissemination of university inventions considers the effect, if any, of MTAs on the likelihood that an invention will be licensed (in this case, licensed on an exclusive basis). Of the 21 patented disclosures linked to MTAs in our sample, 8 were licensed (38%). Moreover, 31 of the 35 firms licensing these patented inventions did so (a) without taking a prior MTA, and (b) despite at least one (and often more than one) MTA having been negotiated with other firms and institutions. By contrast, none of the patented control disclosures were licensed, although licenses were negotiated for two disclosures in our control sample for which patent applications were filed but subsequently abandoned. The 38% licensing rate of patented MTA-linked disclosures differs from the control group rate of zero at the 5% level. MTAs thus do not seem to impede the licensing of patents linked to them, even when these MTAs are negotiated with nonlicensee firms. This finding also must be interpreted with caution, of course, since we are unable to control for other unobserved differences between disclosures with and without MTAs. (For example, MTA-linked disclosures may be “closer to market” than non-MTA linked disclosures, thus more attractive candidates for
disclosures with to non-profit MTAs only) increases to 3.19 years. This change in sample construction increases the difference in the mean citation lag between this more restrictive subsample and the corresponding control by almost 9 months, but the single observation in the control sample prevents us from determining whether this larger difference is significant.
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licensing.) We are comparing only those disclosures for which patents were granted; nevertheless, we are unable to control for unobserved but possibly significant differences in the underlying “importance” of these patents.
Conclusion The debate over the effects of MTAs on knowledge dissemination and commercialization has proceeded with very little analysis of data on these agreements. In part, the lack of empirical analysis of MTAs reflects the difficulty of obtaining reliable and representative data on MTAs. As we pointed out above, the sample of MTAs from the University of Michigan employed in this analysis may not be representative of the universe of MTAs for outward materials transfers negotiated by University of Michigan administrators and researchers. In particular, it is likely that our MTA sample includes a smaller share of MTAs covering outward transfers of research materials to other academic researchers. It is possible as well that our control sample of disclosures differs systematically from the sample of MTA-linked disclosures, despite our efforts to control for year and field of the disclosures in each sample. The small number of observations in the data also makes any conclusion from this analysis tentative. In future work, we plan to collect MTA data from other institutions, in an effort to develop an analysis that is more fully representative of the heterogeneous distribution of research universities employing MTAs. We also intend to analyze citations to publications based on disclosures in our control and MTA-linked samples, in an effort to develop a “difference in differences” analysis that compares citations to publications before and after the negotiation of MTAs covering materials related to the invention disclosures. Keeping these caveats in mind, our descriptive analysis provides little evidence that MTAs impede knowledge diffusion or commercialization of university research. Material transfer agreements do not appear to preclude patenting – the proportion of MTA linked disclosures within our sample that are patented is greater than the patented proportion of
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matching biomedical inventions disclosed on similar dates. Moreover, MTA-linked patents were more widely cited than control disclosure patents, as was the subsample of patents linked exclusively to the more elaborate MTAs governing transfers of materials to industry, contradicting arguments that patented inventions covered by MTAs would be less fully utilized in subsequent inventive activity. There is also little evidence that MTAs weaken the demand for licenses of University of Michigan inventions. Twenty-eight percent of MTA-linked patented disclosures were licensed, often by firms other than those obtaining related materials through MTAs. Our findings nonetheless provide some insight into the usage of MTAs by research institutions. The results of this descriptive analysis suggest that MTAs and patents are complements rather than substitutes. Moreover, the increased assertion of property rights by universities through MTAs does not appear to impede the commercialization of university research through patenting and licensing. Indeed, this analysis suggests that if anything, MTAs are associated with more extensive exploitation by subsequent inventors as well as licensees of the knowledge embodied in the patents associated with them.
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References
Association of University Technology Managers (2003). AUTM Licensing Survey. Blumenthal, D., E.G. Campbell, M.S. Anderson, N. Causino, and K.S. Louis (1997). “Withholding Research Results in Academic Life Science,” Journal of the American Medical Association 277: 1224-1228. Campbell, E.G., B.R.Clarridge, M. Gokhale, L. Birenbaum, S. Hilgartner, N.A. Holtzman, and D. Blumenthal (2002). “Data Withholding in Academic Genetics; Evidence from a National Survey,” Journal of the American Medical Association 287: 473-480. Eisenberg, R.S. (2001). “Bargaining over the Transfer of Propietary Research Tools: Is this Market Failing or Emerging?” in R.C. Dreyfuss, D.L. Zimmerman, and H. First, eds., Expanding the Boundaries of Intellectual Property: Innovation Policy for the Knowledge Society (Oxford: Oxford University Press). Fabrizio, K. (2005). “Opening the Dam or Building Channels: University Patenting and the Use of Public Science in Industrial Innovation”, Working Paper, Goizueta School of Business, Emory University. Heller, M.A., and R.S. Eisenberg (1998). “Can Patents Deter Innovation? The Anticommons in Biomedical Research,” 280 Science 698. Lei, Z., R. Juneja and B. Wright (2005). “Implications of Intellectual Property Protection for Academic Agricultural Biologists,” unpublished MS, Agricultural and Resource Economics Department, U.C. Berkeley. Marshall, E. (1997). “Need a Reagent? Just Sign Here,” 278 Science 212. McCain, K.W. (1991). “Communication, Competition, and Secrecy: The Production and Dissemination of Research-Related Information in Genetics,” Science, Technology, & Human Values 16, 491-516. Murray, F. and S. Stern (2004). “Do Formal Intellectual Property Rights Hinder the Free Flow of Scientific Knowledge? Evidence from Patent-Paper Pairs,” Working Paper. National Institutes of Health (1998). Report of the Working Group on Research Tools, http://www.nih.gov/news/researchtools/. Rubinstein, E. (1990). “The Untold Story of HUT78,” Science 248, 1499-1507. Sampat, B.N. (2004). “Genomic Patenting by Academic Researchers: Bad for Science?” Working Paper. Stern, S. (2004). Biological Resource Centers: Knowledge Hubs for the Life Sciences (Washington, D.C.: Brookings Institution). Wade, N. (1980). “Hybridomas: A Potent New Biotechnology,” Science 208, 692-693. Walsh, J.P., and W. Hong (2003). “Secrecy is Increasing in Step with Competition,” letter to the editor, Nature 412, 801-802. Walsh, J.P., A. Arora, and W.M. Cohen (2003). “Effects of Research Tool Patents and Licensing on Biomedical Innovation,” in W.M. Cohen and S.A. Merrill, eds., Patents in the Knowledge Based Economy (Washington DC: The National Academies Press). Walsh, John P., Charlene Cho and Wesley M. Cohen. "The View from the Bench: Patents, Material Transfers and Biomedical Research" Science, September 23, 2005: 2002-2003.
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Table 1: Disclosures Linked to MTAs Reported to the UM OTT by Department and Number of Private Firm and Non-Profit MTAs by Department (% of Column Total in Parentheses) Number of Number of Number of Private Firm Non-Profit Disclosures with MTAs MTAs MTAs Department Anesthesiology 1 (1.2) 2 (2.3) 0 (0.0) Biological and Materials Science 1 (1.2) 0 (0.0) 1 (0.6) Biological Chemistry 8 (9.6) 11 (12.7) 51 (28.7) Biomedical Engineering 2 (2.4) 1 (1.2) 1 (0.6) Cell and Developmental Biology 1 (1.2) 1 (1.2) 0 (0.0) Chemistry 1 (1.2) 1 (1.2) 0 (0.0) Dentistry 4 (4.8) 2 (2.3) 4 (2.2) Dermatology 1 (1.2) 2 (2.3) 2 (1.1) Epidemiology 2 (2.4) 6 (7.0) 3 (1.7) Human Genetics 8 (9.6) 2 (2.3) 23 (12.9) Internal Medicine 17 (20.5) 21 (24.4) 67 (37.6) Microbiology and Immunology 2 (2.4) 1 (1.2) 1 (0.6) Obstetrics and Gynecology 1 (1.2) 0 (0.0) 6 (3.4) Ophthalmology 1 (1.2) 0 (0.0) 1 (0.6) Orthotics 1 (1.2) 2 (2.3) 0 (0.0) Otorhinolaryngology 3 (3.6) 3 (3.5) 0 (0.0) Pathology 7 (8.4) 10 (11.6) 0 (0.0) Pediatrics 2 (2.4) 1 (1.2) 1 (0.6) Pharmacology 6 (7.2) 4 (4.7) 4 (2.2) Pharmacy 2 (2.4) 2 (2.3) 2 (1.1) Physiology 1 (1.2) 1 (1.2) 0 (0.0) Psychiatry 2 (2.4) 3 (3.5) 9 (5.1) Radiation Oncology 2 (2.4) 4 (4.7) 0 (0.0) Surgery 3 (3.6) 3 (3.5) 0 (0.0) Urology 4 (4.8) 3 (3.5) 2 (1.1) Total 83 (100.0) 86 (100.0) 178 (100.0)
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Table 2:
Forward Citations to Patents Issued to Invention Disclosures Associated with MTAs and Control Group Patents, Excluding Self-Citations and Patents Issued after 2000 Overall High Private Firm Share Mean Median Mean Median N Citations Citations N Citations Citations N per Patent per Patent per Patent per Patent MTA 14 7.29 4 6 9.17 4 8 Disclosures (2.33) (4.71) Control 6 0.83 0 4 1.00 0 2 Group (0.65) (1.00) Difference 6.46** 4 8.17 4 Notes: * p>0.10 ** p>0.05 Standard errors in parentheses
20
Low Private Firm Share Mean Median Citations Citations per Patent per Patent 5.88 4 (2.26) 0.50 0.5 (0.50) 5.38** 3.5
Table 3: Mean Citation Lags to Patents Issued to Invention Disclosures Associated with MTAs and Control Group Patents with At Least One Citation, Excluding Self-Citations and Patents Issued after 2000 (Application Date of Citing Patent – Issue Date of Cited Patent) Overall High Private Firm Low Private Firm Share Share Mean Mean Mean N Citation N Citation N Citation Lag Lag Lag (Years) (Years) (Years) MTA 12 2.45 5 2.39 7 2.48 Disclosures (0.81) (1.05) (1.23) Control 2 2.19 1 2.10 1 2.28 Group (0.09) --Disclosures Difference 0.26 0.29† 0.20† Notes: * p>0.10 ** p>0.05 Standard errors in parentheses † Significance cannot be computed due to lack of multiple observations in Control Group subsample
21
Figure 1: University "Biotech" Patenting, 1976-2001 (Source: Sampat, 2004)
10% 8% 6% 4% 2%
Year
22
00 20
98 19
96 19
94 19
92 19
90 19
88 19
86 19
84 19
82 19
80 19
78 19
76
0% 19
% of All Biotech Patents
12%
19 0 8 19 1 8 19 2 8 19 3 8 19 4 8 19 5 8 19 6 8 19 7 8 19 8 8 19 9 9 19 0 9 19 1 9 19 2 9 19 3 9 19 4 9 19 5 9 19 6 9 19 7 9 19 8 9 20 9 0 20 0 0 20 1 0 20 2 0 20 3 04 5
10
15
Figure 2: Invention Disclosures Generating MTAs, 1981-2004
23
45 50 0
5
10 15
20 25
30 35 40
Figure 3: MTAs per Disclosure
0
5
10
15
20
25 30 35 Number of MTAs
40
45
24
50
55
45 50 0
5
10 15
20 25
30 35 40
Figure 4: Private Firm MTAs per Disclosure
0
5
10
15
20 25 30 35 40 Number of Private Firm MTAs
45
25
50
55
45 50 0
5
10 15
20 25
30 35 40
Figure 5: Academic/Non-Profit MTAs per Disclosure
0
5
10
15 20 25 30 35 40 Number of Academic/Non-Profit MTAs
45
26
50
55
Average citations per patent
Figure 6: Annual Citations per Patented Disclosure (Excluding Self-Citations and Patents Issued after 2000) 2.5 2.0 1.5
Disclosures w ith MTAs
1.0
Control Group Disclosures
0.5 0.0 1
2
3
4
5
6
7
8
9
10
Years subsequent to patent issue date
27
