Academic Entrepreneurship: Bayh-Dole versus the “Professor’s Privilege”

[We’re pleased to welcome authors Thomas Astebro of HEC Paris, Serguey Braguinsky of the University of Maryland, Pont Braunerhjelm of KTH Royal Institute of Technology, and Anders Brostrom of  KTH Royal Institute of Technology. They recently published an article in the ILR Review entitled “Academic Entrepreneurship: Bayh-Dole versus the “Professor’s Privilege”, which is currently free to read for a limited time. Below, Dr. Astebro recounts the motivations for this research.]

ILR_72ppiRGB_powerpointThrough the Bayh-Dole Act (BDA) of 1980, the US pioneered a systemic change in which Intellectual Property Rights (IPR), traditionally held by the granting agency, was transferred to universities if the research had been conducted using federal funds. This change in the IPR regime aimed to simplify relationships with granting agencies and to increase American competitiveness through increased licensing of university-based research. In Europe, the Professors’ Privilege (PP) prevailed. Under the PP, the university has no ownership rights to IP created by a university employee. However, about a decade and a half ago and following the apparent success in the US, many countries were about to abolish the Professor’s Privilege in favor of adopting BDA-type IPR regimes.

We were motivated in writing this paper by the recent evaluations of introductions of Bayh-Dole type IPR regimes in several European countries, including Germany, Denmark, Norway, and Finland. (Other countries have also made such changes.) The evaluations are consistent: these legislative changes have lead to drastic reductions in both the number of patents claimed by university professors, the number of companies started by university professors, and, when measured, a reduction also in the quality of the patents submitted. One of the authors had also recently been appointed advisor to a Swedish Parliamentary investigation on the possibility of abolishing the Professor’s Privilege in Sweden, which would be the third such investigation in a relatively short period of time.

The paper shows that as long as they are stable and supported by an appropriate institutional framework, both types of legislations — BDA and PP — can generate fruitful outcomes in terms of invention commercializations by their creators. However, the many studies investigating the abolition of the Professor’s Privilege in favour of Bayh-Dole type IP regimes in Europe leads one to conclude that wholesale changes to the legislation have had very significant negative consequences, at least when it comes to academic entrepreneurship. Countries have struggled to change the institutional framework to reflect the new legislation, in some cases taking decades to do. The conclusion is thus: don’t rock the boat. Make small changes if necessary. In Sweden, the final report to the parliament suggested that just like in Canada, each university should have the right to decide themselves how to regulate IP rights.

This paper has been challenged by some who do not believe the figures we present on the relative rate of start-ups by academics in Sweden versus the US, which show a slight edge for Sweden. (The US on the other hand outperform Sweden when it comes to start-up rates by non-academics.) This reaction might partly be due to that the US is more known than Sweden, or by some questioning the data. Granted, the two datasets we use are generated in different ways, but on the other hand represent rather substantial efforts to collect either representative data (by the National Science Foundation) or register-based data on all start-ups (Statistics Sweden). Further evaluations will surely appear on this important topic.

 

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