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The effects of appropriability on invention have been well studied, but there has been little analysis of the effect of appropriability on the commercialization of existing inventions. Exploiting a database of 805 attempts by private firms to commercialize inventions licensed from the Massachusetts Institute of Technology (MIT) between 1980 and 1996, we explore the influence of several appropriability mechanisms on the commercialization and termination of projects to develop products based on university inventions. Our central hypothesis is that the relationship between a licensee's decision to either terminate or commercialize the invention is driven by the current market value of the invention, as well as the option value of delaying its commercialization. We use a competing risks framework that allows for nonparametric heterogeneity and correlated risks. We find that better appropriability in the sense of more effective patent strength and secrecy has a strong negative effect on the hazard of license termination. The effectiveness of learning has a strong positive effect on the hazard of technology commercialization, while lead time has a negative effect. Key words: competing risks; innovation; optimal stopping problem; patent scope; lead time; learning; university licensing; termination History: Accepted by Wallace J. Hopp, R&D and product development; received September 8, 2005. This paper was with the authors 1 year and 2 weeks for 3 revisions. Published online in Articles in Advance February 20, 2008., 1. Introduction Do strong intellectual property rights enhance the commercialization of new technology? Surprisingly, we do not know the answer to this question (Gallini 2002). Although the role of property [...]

Universities have substantially focused on the licensing of their inventions as evident in the success of technology transfers between schools and industries. The rationale behind university patenting and inventions, as well as the difference between exclusive and non-exclusive licensing, are discussed.

To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jebo.2006.05.016 Byline: Marie Thursby (a), Jerry Thursby (b), Swasti Gupta-Mukherjee (c) Keywords: No licensing versus licensing; Tenure system; Base model; Life cycle model Abstract: Do financial returns to licensing divert faculty from basic research? In a life cycle model in which faculty can conduct basic and/or applied research (the latter can be licensed) licensing increases applied relative to basic effort. However, leisure falls so basic research need not suffer. If applied effort also leads to publishable output, then research output and stock of knowledge are higher with licensing than without. In a tenure system licensing has a positive effect on research output unless license incentives are high. Overall results suggest a positive impact of tenure on research output over the life cycle. Author Affiliation: (a) College of Management, Georgia Institute of Technology and NBER, United States (b) Department of Economics, Emory University, United States (c) College of Management, Georgia Institute of Technology, United States Article History: Received 16 June 2005; Accepted 19 May 2006

Understanding the nature of the involvement of faculty in university licensing is important for understanding how technology is transferred through licensing as well as more controversial issues, such as the need for university licensing. Using data from a survey of firms that actively license in from universities, the authors explore the importance of faculty in the licensing and development of inventions, as well as how and why they are used and how the use of faculty relates to characteristics of firms. In particular, the authors find that the use of faculty through sponsored research in lieu of a license is closely related to the amount of basic research conducted by firms, whereas the use of faculty within the terms of a license is related to the prevalence of personal contacts between industry research and development researchers and university faculty. (JEL J44, 031), 1. INTRODUCTION Are faculty critical to university--industry licensing? The short answer is, of course, yes because without faculty there would be no university inventions to license. To stop here, however, [...]

Byline: Jerry G. Thursby (1), Marie C. Thursby (2) Abstract: The authors previously explored invention licensing from the university's perspective. In this paper we focus on the process from the perspective of firms activity engaged in licensing technology. A survey of industry licensing professionals addresses why some firms license technologies from universities and why others do not. The paper then considers the stage of development of university technologies, the characteristics of their licensing contracts, and sources of information about university technologies, all to better understand how the process works and what advantages and disadvantages it offers to all participants. Author Affiliation: (1) Department of Economics, Emory University, 312E Rich Memorial Building, Atlanta, GA, 30322 (2) Dupress College of Business, Georgia Tech, USA Article History: Registration Date: 07/10/2004

Historically, commercial use of university research has been viewed in terms of spillovers. Recently, there has been a dramatic increase in technology transfer through licensing as universities attempt to appropriate the returns from faculty research. This change has prompted concerns regarding the source of this growth--specifically, whether it suggests a change in the nature of university research. We develop an intermediate input model to examine the extent to which the growth in licensing is due to the productivity of observable inputs or driven by a change in the propensity of faculty and administrators to engage in commercializing university research. We model licensing as a three-stage process, each involving multiple inputs. Nonparametric programming techniques are applied to survey data from 64 universities to calculate total factor productivity (TFP) growth in each stage. To examine the sources of TFP growth, the productivity analysis is augmented by survey evidence from businesses who license-in university inventions. Results suggest that increased licensing is due primarily to an increased willingness of faculty and administrators to license and increased business reliance on external R&D rather than a shift in faculty research., 1. Introduction According to the Association of University Technology Managers (AUTM) surveys, licensing activity in U.S. research universities has increased dramatically in the 1990s. For the 64 universities responding to [...]

Byline: Jerry G. Thursby (1), Richard Jensen (2), Marie C. Thursby (1) Abstract: This paper describes results of our survey of licensing at 62 research universities. We consider ownership, income splits, stage of development, marketing, license policies and characteristics, goals of licensing and the role of the inventor in licensing. Based on these results we analyze the relationship between licensing outcomes and both the objectives of the TTO and the characteristics of the technologies. Patent applications grow one-to-one with disclosures, while sponsored research grows similarly with licenses executed. Royalties are typically larger the higher the quality of the faculty and the higher the fraction of licenses that are executed at latter stages of development. Sponsored research is more likely to be included in a license if the new technology is at an early stage of development or if the TTO evaluates it as important. We find that additional disclosures generate smaller percentage increases in licenses, and those increases in licenses generate smaller percentage increases in royalties. Author Affiliation: (1) Department of Economics, Krannert Building, Purdue University, W. Lafayette, IN, 47907 (2) Department of Economics, University of Notre Dame, South Bend, IN, 46556 Article History: Registration Date: 08/10/2004

Byline: Donald S. Siegel (1), Jerry G. Thursby (2), Marie C. Thursby (2), Arvids A. Ziedonis (3) Author Affiliation: (1) Business School, University of Nottingham, Nottingham, NG8 1BB, United Kingdom (2) Department of Economics, Krannert School of Management, Purdue University, West Lafayette, IN, 47907 (3) Department of Management, The Wharton School, University of Pennsylvania, 2000 Steinberg Hall-Dietrich Hall, Philadelphia, PA, 19130-6370 Article History: Registration Date: 08/10/2004

We examine anticipatory product standards intended to improve the strategic position of firms in an international patent race where firms do R&D to develop products that are close substitutes. The effects of a standard depend on the way the standard is specified, which firm develops which product, and the order of discovery. Simple standards can be time inconsistent because of consumer losses that occur when products ruled out by the standard are discovered first. A state-contingent standard is shown to be time consistent when compulsory licensing by the foreign firm is introduced.

Proponents of the Bayh-Dole Act argue that industrial use of federally funded research would be reduced without university patent licensing. Our survey of U.S. universities supports this view, emphasizing the embryonic state of most technologies licensed and the need for inventor cooperation in commercialization. Thus, for most university inventions, there is a moral-hazard problem with inventor effort. For such inventions, development does not occur unless the inventor's income is tied to the licensee's output by payments such as royalties or equity. Sponsored research from the licensee cannot by itself solve this problem. (JEL 031, 034, 038)

In contrast to recent literature, we show that market access requirements (MARs) can be implemented in a procompetitive manner even in the absence of threats in related markets. By focusing on subsidies that are paid only when the requirement is met, we show that a MAR can increase aggregate output relative to free trade provided that the right set of firms is targeted. In the context of a model with multiple Japanese and U.S. firms, we show that a MAR on U.S. imports is procompetitive as long as the U.S. firms are the ones targeted to receive the subsidy. JEL Classification: F13

INTRODUCTION Large differences in state cigarette excise tax rates can lead to smuggling of cigarettes from low to high tax states. Smuggling originates both with consumers who cross state lines [...], We develop a model of commercial smuggling in which some firms smuggle a portion of the cigarettes they sell. The model is used to estimate the extent of smuggling across state lines and the effects of federal efforts to control smuggling via the Contraband Cigarette Act (CCA). We find that commercial smuggling accounted for three to four percent of all cigarettes sold during the 1970s, a decade of high excise tax differentials. Further, the CCA had the unintentional effect of increasing commercial smuggling, a result consistent with a change in enforcement and modes of smuggling reported subsequent to the Act.

The Bayh-Dole Act of 1980 allows universities to patent and exclusively license federally funded inventions. With dramatic growth in university licensing, the Act has become controversial and the subject of [...]