University Patenting in Wales and Scotland
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University Patenting in Wales, Scotland and Northern Ireland: A Comparative Analysis Andrew Beale, David Blackaby and Lynn Mainwaring, Swansea University, Abstract Using data on the patent portfolios of UK HEIs, the paper compares the levels of patenting activity (filings and grants) and patent quality (patents with commercial co- assignees and patent citations) at Welsh, Scottish and N. Irish institutions. Patent activity, per researcher, in Wales is on a par with that in Scotland and about twice the rate in Northern Ireland, but the academic research bases in Wales and N. Ireland are around half of that in Scotland in per capita terms. In respect of patent quality, Wales clearly lags Scotland and there are signs that it is falling behind N. Ireland. We conclude that bolder steps are needed on the part of the Welsh Assembly Government to develop the HEI-business interface. 1 Introduction The traditional research ‘mission’ of universities has been the generation of research outputs as public goods. Academics are strongly motivated by, and institutionally rewarded for, disseminating their findings in open-access academic journals of the highest standing and, therefore, of the highest readership among their peer groups. This approach is exemplified and reinforced in the UK by institutionalised procedures such as the regular Research Assessment Exercise (RAE) conducted by the Higher Education Funding Councils as a means of determining the allocation of public research monies. Publication is the main determinant of RAE success, and although patents and other forms of intellectual property (IP) are formally considered as publications for evaluation purposes (HERO, 2002), there is little doubt that most of the assessment panels in the sciences and engineering give overwhelming weight to academic rather than commercial publications.1 Even if Vice-Chancellors and academics themselves have been happy to play this game (and the seriousness with which they take RAE rankings suggests they have), there is a growing awareness, perhaps filtering down from other government agencies and a mass of academic studies, that failure to take IP seriously means that the universities are missing out on regional wealth-creating possibilities. In the United States, concern about the loss of potentially valuable benefits of university research through free international diffusion led, in 1980, to the Bay-Dohl Act (Jaffe, 2000) which allowed universities to patent findings that were generated from federally-funded research. In the UK, rights to IP arising from university research were formerly granted to a government corporation, the British Technology Group, but were ceded to the universities themselves in 1983. As a result, IP awareness and IP activity in 2 UK universities have been transformed in the last two decades (though not to the same extent as in the USA) (HEFCE, 2001; 2003). This more positive approach to HEI commercialisation is one facet of a changing attitude to modern economic development encapsulated in the notion of the ‘knowledge economy’ and which, in line with the ‘third missions’ of many institutions, tends to be focused on regional wealth creation.2 If some UK universities have been slower in this respect, that has been due partly to a lack of appreciation of the benefits of IP protection, partly to an understanding that many of the benefits are economy-wide and not fully appropriable by the institution, and partly because of unresolved tensions about the appropriate objectives of university research (see, for example, Poyago-Theotoky, et al., 2002; Owen-Smith and Powell, 2001; and Stephan, 2001). In respect of the first of these, change has come about largely because of emulation of institutional leaders. Cambridge, for example, was one of the first British universities (along with Heriot-Watt) to establish a science park (Siegel, et al., 2003), and it opened an Industrial Liaison and Technology Transfer Office (Lynxvale) as early as 1970, eighteen years before Oxford set up its commercial arm, Isis (Lawton Smith, et al., 2001). The second problem arises because academic institutions lack the experience, skills and acumen to commercialise their own research and may fail for a variety of reasons based on information asymmetries and transactions costs to realise the full value of their knowledge through licensing agreements (Shane, 2002). While learning by doing and by emulating best practice can help overcome these problems, the government, keen to maximise social benefits, has imposed implicit incentives on universities to do better. University expansion in the face of the limited growth of traditional (i.e., public) funds 3 has forced universities to look increasingly at their own wealth generating capabilities, and particularly at university-industry synergies. Moreover, even within the publicly- funded component, greater attention is now being given to third-mission activities, including contributions to local economic regeneration. The third problem remains: many academics continue to be concerned about the perceived assault on ‘open science’ or, more cynically, about any detrimental impact on conventional research rankings. The evidence here is mixed. Zucker and Darby (1996) find synergy between academic and commercial research in biotechnology, whereas Louis et al. (2001) found that commercially-oriented academics were more hostile to the ethos of open science. Our own findings, from 29 UK universities (Beale et al., 2006), is that patent productivity has a statistically significant positive relationship with RAE score and a small and insignificant relationship with a Teaching Quality Assessment measure. The purpose of this paper is to see how universities in Wales have compared with their counterparts in Scotland and Northern Ireland in the development of their patent portfolios. It draws on and elaborates results presented in a report published by IP Wales (Beale, 2005) the data for which were commissioned from MicroPatent Professional Services. The data in that report relate to patent filings and patent grants in the years 1983 – 2005 for all HEIs in Wales, Scotland, Northern Ireland and the Republic of Ireland and for all English universities belonging to the self-selected elite Russell Group.4 For the purposes of this paper, the English universities are excluded since they can in no way be claimed to be representative of overall HEI performance in England. Universities in the Republic of Ireland are also excluded from detailed consideration because other aspects of the comparison (notably staff counts) are not obtainable on a consistent basis. 4 The three regions/nations that remain are, however, of considerable interest in themselves because they are three distinct elements of the UK devolutionary settlement (Clifton and Cooke, 2005). Over the coming decades, observers will be able to assess the extent to which the differing degrees of political and economic autonomy and styles of government succeed in delivering improvements in living standards to these peripheral regions. Devolution is, however, imposed on different cultures and historical legacies, economic, political, legal and intellectual. So the gathering of base-line data is critical to the running of this natural experiment. The significance of university patent outputs is that it provides us with one metric (among several) of the extent and resilience of the region’s innovation system. Although the data presented in this paper run through to 2005, lags in invention commercialisation are estimated to be around six years (US, Department of Commerce, 2003). So, although the interesting questions (‘starting from base, where and how far do we go?’) can be asked now, the answers may take some time in coming. Patent filings and patent grants can be thought of as measures of commercial research outputs - subject to well-known qualifications; see Griliches (1990), Pavitt (1988). To compare productivity we need an input measure and for that we use academic staff counts derived from returns to the 2001 RAE (HERO, 2002). The input measure tells us something about the potential size of the HEI-based innovative potential in each nation/region, an interesting comparison in its own right. The input comparisons are discussed in the next section. We then consider increasingly refined productivity comparisons – refined in the sense that the output measures (i.e., patent documents) more effectively capture innovations of commercial value. The measures are, respectively: 5 patent filings, patent grants, and patents having a commercial co-assignee. Although patent filings may be regarded as a weaker measure of output value, they do provide a much larger data set and, in any case, they give insight into the degree of commercial research activity (and hence awareness of its importance) in individual HEIs. These comparisons are followed by an analysis of patent citations, which is an alternative way of looking at patent quality. The final section summarises and interprets the findings. The University research base So far as patentable outcomes are concerned, the research base is taken to consist of academic staff in research-oriented ‘old university’4 schools/departments in the sciences and engineering. There are a number of issues relating to this definition. First, it omits technicians and other support staff. Apart from the difficulty of getting consistent counts of such staff, it is reasonable to suppose that academics are the main source of new ideas and that, in any case, across institutions the ratio of academic to non-academic staff is roughly uniform. Secondly, it excludes staff in the ‘new’ universities, or former polytechnics and technical institutes. This is because the staff counts are based on returns to the science and engineering panels of the 2001 RAE. The old universities all have an explicit research mission and submit returns in all, or nearly all, relevant RAE ‘units of assessment’ (UoAs). This is not true of most new universities, whose comparatively weak research capabilities lead them to concentrate submissions in the few areas where they hope to make an impact. Thus entire schools/departments may fail to leave any trace in the RAE returns.