Effects on academia-industry collaboration of extending university property rights

Several recent studies show European university scientists contributing far more frequently to company-owned patented inventions than they do to patents owned by universities or by the academic scientists themselves. Recognising the significance of this channel for direct commercialisation of European academic research makes it important to understand its response to current Bayh-Dole inspired reforms of university patenting rights. This paper studies the contribution from university scientists to inventions patented by dedicated biotech firms (DBFs) specialised in drug discovery in Denmark and Sweden, which in this respect share a number of structural and historic characteristics. It examines effects of the Danish Law on University Patenting (LUP) effective January 2000, which transferred to the employer university rights to patents on inventions made by Danish university scientists alone or as participants in collaborative research with industry. Sweden so far has left property rights with academic scientists, as they also were in Denmark prior to the reform. Consequently, comparison of Danish and Swedish research collaboration before and after LUP offers a quasi-controlled experiment, bringing out effects on joint research of university IPR reform. In original data on all 3,640 inventor contributions behind the 1,087 patents filed by Danish and Swedish DBFs 1990-2004, Difference-in-Difference regressions uncover notable LUP-induced effects in the form of significant reductions in contributions from Danish domestic academic inventors, combined with a simultaneous substitutive increase of non-Danish academic inventors. A moderate increase in academic inventions channelled into university owned-patents does appear after LUP. But the larger part of the inventive potential of academia, previously mobilised into company-owned patents, seems to have been rendered inactive as a result of the reform. As a likely explanation of these effects the paper suggests that exploratory research, the typical target of joint university-DBF projects in drug discovery, fits poorly into LUP's requirement for ex ante allocation of IPR. The Pre-LUP convention of IPR allocated to the industrial partner in return for research funding and publication rights to the academic partner may have offered more effective contracting for this type of research. There are indications that LUP, outside the exploratory agenda of drug discovery, offers a more productive framework for inventions requiring less complicated and uncertain post-discovery R&D.