University Patenting: Estimating the Diminishing Breadth of Knowledge Diffusion and Consumption

by Carlos Rosell and Ajay Agrawal

Comments by Mark Schankerman

(LSE and CEPR)

Policy Concern Does university patenting and technology management

restrict the dissemination of university-based knowledge?

Empirical formulation: Are university patented inventions increasingly cited by a more concentrated set of subsequent patentees, relative to corporate patents?

Why is this interesting?

1. Knowledge may be interesting/useful to a smaller or more concentrated set of firms

2. Knowledge may be more restricted by university tech management for income maximisation objectives

Paper is original, and the authors do a very nice, careful job of demonstrating that the answer is yes to the empirical question.

Moreover, the narrowing (increase in assignee concentration) of cites is mainly due to heavy patenting (‘experienced) universities; thus probably not transitional. Overall the finding is robust and I believe it.

But in my view the authors cannot tell distinguish between hypotheses 1 and 2, so there is no basis to claim that dissemination for downstream use is restricted (patent thicket problem exacerbated) on this evidence.

Approach: Difference in differences regression framework, comparing fragmentation of backward cites for universities to corporate patents, and the same for forward cites.

For forward cites: patents issued in 1980-83 and 1986-89 For backward cites: patents applied for in 1980-83 and 1990-93

Truncation issues probably second order (though citing distributions do differ for university and non-university patents)

Authors are careful to control for patent characteristics, including tech field, originality, and generality. Thus their finding of increased concentration of cites to university patents is not due to reduced generality of patents.

Some Queries and Suggestions

• Why the specific periods chosen? Large samples, so authors can include multiple time windows to identify the fuller pattern of changes.

• If the concern is patent thickets and complementary technologies (PTCT), then we should examine whether the increased concentration is stronger in ‘complex’ tech areas (e.g. semiconductors, software) relative to ‘linear’ tech like pharmaceuticals.

Authors interact tech class dummies with the period dummy, but do not ask if the coefficients link to the complexity issue. Also could interact tech class with university-period dummy.

• If the issue is PTCT, then the offending patents should be the ones still in force. Lapsed patents create no hold-up or licensing problem. Can authors distinguish cites to patents still in force versus those to lapsed patents? If their interpretation is right (it is about strategic restriction), shouldn’t their finding be stronger (only present?) for cites to in-force patents.

• I am unclear why backward and forward cites are symmetrical for your argument. Why should backward cite concentration reflect licensing behavior, even under the null hypothesis that strategic restriction through licensing occurs?

• Would be useful to have information on use of exclusive v non-exclusive licensing by universities over time -- direct evidence linking to nature of licensing activity. If the authors’ interpretation is right, use of exclusive should be growing. AUTM data has such information for 1990’s and I don’t think it shows that.

My central concern about how to interpret the interesting empirical finding in the paper is this:

Patent cites are references to prior art. They constrain the property rights in the citing patent by circumscribing the scope of allowable claims. We also think they tell us something about patterns of sequential (cumulative) innovation.

But cites do NOT imply anything directly about 1. complementarity in production: Do I need to license

your patent to implement mine?2. complementarity in research: Did I need to license

your patent to conduct the research that generated my patent?

Thus, observing fewer assignees citing university patents does not by itself mean that the dissemination of university patents for downstream use is narrowing.

Original, well executed paper that delivers new, interesting findings.

Interpretation: jury is still out, more needs to be done.

In summary: we now know something new. We are just not sure what it is.