Encouraging university entrepreneurship? The effect of the Bayh-Dole Act on university patenting in the United States

Universities are seen as a source of technology development that is useful to entrepreneurial activity. As a result, policy makers often consider mechanisms to stimulate technology commercialization at research universities as a way to encourage entrepreneurial activity in a region. However, the transfer of technology from universities to the private sector requires the exploitation of markets for knowledge, which are fraught with difficulty [Arrow, K., 1962. Economic welfare and the allocation of resources for inventions. In: Nelson, R. (Ed.), The Rate and Direction of Inventive Activity. Princeton, NJ: Princeton Univ. Press.]. This article examines the effect of one U.S. public policy initiative-the Bayh-Dole Act in the United States-on one aspect of technology commercialization-university patenting. Specifically, the article explores the university share of patents from 1969 through 1996 across 117 lines of business, and shows that the effectiveness of licensing in a line of business is significantly correlated with university share of patents in the post-Bayh-Dole period, but not in the pre-Bayh-Dole period. These results suggest that the Bayh-Dole Act provided incentives for universities to increase patenting in those fields in which licensing is an effective mechanism for acquiring new technical knowledge. The paper discusses the implications of this shift in patenting for research and public policy. (C) 2002 Elsevier Science Inc. All rights reserved.