Commercialization of university research is a big business, with some researchers estimating that it adds $20 billion to the American economy annually. While much of this activity consists of licensing patents to existing companies – think the University of Florida’s invention of Gatorade here – perhaps the most noted aspect is the formation of new companies to bring to market products and services based on technological inventions created in academia.
Some important high tech companies have been formed to commercialize the outputs of academic research, with the most famous being Internet search giant, Google. But many other less famous companies are started every year to commercialize inventions assigned to universities, with the Association of University Technology Managers reporting that over 550 such companies were formed in 2007.
Because university inventors have an obligation to disclose their inventions to the institutions where they are employed, one might expect all new companies founded to commercialize inventions funded by government agencies would be licensed through university technology transfer offices.
However, academic researchers have found that some university researchers fail to disclose their inventions to their universities, starting companies to commercialize their research “through the backdoor.” In fact, a recent study by Taylor Aldridge and David Audretsch of the top 20 percent of National Cancer Institute grant recipients from 1998 through 2002 shows that 30 percent did not assign at least one of their patentable inventions to their university employers.
The authors say their results show three potentially troubling patterns:
- Inventors who don’t assign their patented inventions to their universities tend to be starting companies, suggesting that academic entrepreneurs are the researchers most likely to use the back door.
- Inventors with technically more important inventions are more likely to use the backdoor, suggesting that inventors are cherry picking their best inventions for themselves and assigning the lesser ones to their universities.
- Inventors from Ivy League schools are more likely than others to use the back door.
The article made me think that we should take a closer look at how academic researchers are commercializing federally funded research. After all, these are tax dollars the researchers are using.
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Scott Shane is A. Malachi Mixon III, Professor of Entrepreneurial Studies at Case Western Reserve University. He is the author of nine books, including Fool’s Gold: The Truth Behind Angel Investing in America: and The Costly Myths that Entrepreneurs, Investors, and Policy Makers Live By.