Innovation, Inequality, and the Commercialization of … Capital: evidence from survey data (Gans,...
Transcript of Innovation, Inequality, and the Commercialization of … Capital: evidence from survey data (Gans,...
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Innovation, Inequality, and the
Commercialization of Research
Walter D. Valdivia Center for Technology Innovation
The Brookings Institution
University of Nevada, Las Vegas September 25, 2013
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Outline
1. Innovation and inequality
2. BDR Effects
3. Self-replicating asymmetries
4. Implications
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Innovation and jobs
QuickTime™ and a decompressor
are needed to see this picture.
Source: David Rotman (June 12, 2013), How technology is destroying jobs. MIT Technology Review.
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Innovation and inequality
Source: David Rotman (June 12, 2013), How technology is destroying jobs. MIT Technology Review.
QuickTime™ and a decompressor
are needed to see this picture.
QuickTime™ and a decompressor
are needed to see this picture.
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Innovation-driven change
Modes of innovation • Forms economic integration
Creative Destruction • Political and Economic
Skill-biased technical change • CTIs only?
Long-term productivity gains • During the transition?
• Distribution?
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Outline
1. Innovation and inequality
2. BDR Effects
3. Inequalities
4. Implications
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What is Bayh-Dole?
• Who owns patents from federally
funded research?
• Before: discretion of agency
• After: research contractors
• Universities
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Patenting in the U.S.
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US (domestic only)Ñleft axis UniversityÑright axis
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Patenting: Forecast 1980-2005
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Actual Forecast '80 (OLS) Upper bound Lower bound
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Bayh-Dole Regime (BDR)
• Stevenson-Wydler 1980 (PL 96-480)
• FTTA 1986 (PL 99-502)
• CAFC 1982 (PL 98-462)
• NCRA 1984 (PL 98-462)
• Hatch-Waxman 1984 (PL 98-417)
• Diamond v. Chakrabarty 1980 (447 U.S. 303)
• Diamond v. Diehr 1981 (450 U.S. 175)
• Reforms in Financial Sector (ERISA, 74)
• Reforms in International Commerce (Special 301, 1994)
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BDR Effects: Efficiency
• Quality of patents
• Crowding-out basic research
• Republic of science
– Tragedy of anti-commons
– Research tools
• Perverse incentives
– Cultural change?
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BDR Effects: Tradition
• Ideal type science: Mertonian norms.
• Ideal type university = traditional type – Public disclosure of research
– Faculty defined research agenda
– Impartiality of research (peer review)
• New values – Secrecy
– Donor defined agenda
– Conflicts of interest
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The role of the university
Richard Levin (American Council of Education March 6, 2011)
• “Congress did not intend to give us the right to maximize profits”
• “…it gave us private-property rights for a
public purpose: to ensure that the
benefits of research are widely shared.”
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BDR Effects: What is missing?
• How are the benefits of innovation
distributed?
• Are there distributional outcomes in
T2?
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Outline
1. Innovation and inequality
2. BDR Effects
3. Self-replicating asymmetries
4. Implications
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Nexus: innovation-distribution
• Asymmetries of inputs tend to
reproduce in outputs.
• Entrepreneurship
– Creative destruction.
– Small businesses
• Industrial Organization of high-tech
sectors.
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Modes of innovation
• Are there asymmetries in university tech transfer?
• Is tech transfer a catalyst of entrepreneurship?
– inadvertently strengthening incumbents market power?
• Are high-tech industries concentrated or competitive?
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OTTs: Org-isomorphism
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Distribution of Licensing Income
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Research Funds & Licensing Income
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Research Funds & Licensing Income
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Asymmetries
Distribution of licensing income
• Of 218 OTTs, 132 at a loss
• Stable top 40 earners
• Input-output asymmetries
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Why stay in T2 business?
– Not current but expected revenues
– Internal: Manage existing IP portfolio. Train
faculty.
– External: Partner in economic development
– Public mission: profit motive in check with other
values
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Research is not a lottery
• Re-balance research portfolio
• Cultivate entrepreneurial spirit in campus
• Organizational incentives
Also…
• New T2 business model
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New T2 models
• Socially responsible licensing
• “Nurturing” start-ups
– Legal: IP portfolio
– Incubator services
– Experience in negotiation
– Networking (investors, suppliers)
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A new OTT model
Pros
• Easier than selling
licenses
• Higher deferred
income
• Prestige: fostering
entrepreneurship
Cons
• Hard to sell
lackluster start-ups
• Early large negative
cash-flow
• Univ. going out of
traditional roles
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Lessons from history
• Venture Capital: evidence from survey
data (Gans, Hsu, Stern, 2000)
• Biotechnology
• Creative destruction
– Baumol: “Why Computers Get Cheaper and Health Care Doesn't”
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Outline
1. Innovation and inequality
2. BDR Effects
3. Self-replicating asymmetries
4. Implications
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Three levels
• University
• Federal Agency
• Congress: changes to the statute
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Universities
• Explain role of university beyond “economic rationalization” – Education:
• Labor force but also consumers.
• Civic education.
– Public mission not-for-profit character
– Equal opportunity (social mobility)
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Universities
• Emphasis on best practices (9 points)
• Socially responsible licensing programs
• Preference for non-exclusive licenses – Research tools, humanitarian, environmental.
– Multi-site research and commercialization
– Patent Pools
• Nurturing start-ups: Longer horizon for investments
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Policy: Federal Agencies
• Declare preference for non-exclusive
licenses from their research grants
• Invite grantees to voluntarily opt-out
from aggressive licensing practices
– E.g. Reach-through fees
• More multi-site research grants
• Sponsor patent-pools
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Policy: Congress
• Reaffirm the role of the university as broker-agent
• Create incentives for university cooperation
• Relax “exceptional circumstances” (35 U.S.C. §202-a-ii) – For agencies to limit or cancel rights to inventions
• Expand powers for “marching-rights” (35 U.S.C. §203) – To control of monopolistic prices