Patenting Does Not Pay Off for Most Universities

November 23, 2013

A Study cited in the New York Times, reports that:

“University technology transfer has been largely dominated
by a business model of licensing university patents to the highest bidder.
This model is unprofitable for most universities and
sometimes even risks alienating the private sector. “


 The report (PDF Here) was produced at the Brookings Institution, and describes the following key findings:


  • The report estimates that 130 universities did not generate enough licensing income in 2012
    to cover the wages of their technology transfer staff and the legal costs for the patents they file.
    • With 84% universities operating technology transfer in the red,
  • 2012 was a good year because over the last 20 years, on average, 87% did not break even.
  • Patent licensing is profitable only for a few universities:
    • The top 5% of earners (8 universities) took 50% of the total licensing income of the university system; and 
    • The top 10% (16 universities) took 70%, nearly three-quarters of the system’s income.


The Report closes with the following recommendations:
  • The government should expand funding for the Small Business Technology Transfer program
    designating funds specifically for university start-ups.
  • Congress should authorize a patent use exemption for non-profit research organizations
    for the purpose of exclusive experimental use.
  • The government should create an equity rule for the distribution of funds among universities.

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