Universities face a challenge when hawking innovations

Dec. 14, 2006 -- Hundreds of technology-transfer offices have popped up on campuses over the past 20 years to enable universities to facilitate the commercialization of innovations and discoveries pioneered by their professors. Licensing patents for the inventions is a commercial opportunity for universities, which hope to make money selling the intellectual property and to see faculty research make a tangible impact in the marketplace. While all the inventions might be equally genius, they aren't all equally valuable. The question for technology-transfer offices is: what will sell?

Daniel Elfenbein, assistant professor of organization and strategy at the Olin School of Business, found that the ease of selling intellectual property doesn't necessarily depend on whether the innovation has received patent protection.

Elfenbein examined the timing of licensing with respect to whether a patent for the invention had already been applied for or granted by the U.S. Patent and Trademark Office, a process that typically takes multiple years.

"Getting intellectual property protection does increase the likelihood of finding a buyer - that's true on average," Elfenbein said. "However, if you are an established professor with a great reputation, receiving a patent grant isn't as necessary in order to sell the technology. But professors who are still relatively young, or who haven't attained high status yet, benefit from receiving this intellectual property protection from the patent office."

In other words, it's not necessarily the invention that attracts buyers. It's the inventor.

"If a firm is searching the marketplace for new technologies, perhaps to avoid the cost of developing them from scratch, it's more likely that it will look in places where there are people whose work is well known," Elfenbein said.

Daniel Elfenbein

The advantage that high-status professors have in producing work that will sell regardless of patent status does not translate into commanding higher prices.

"You would expect people to actually pay more when they license technologies from a high-status professor than when they license technology from the lower-status people," Elfenbein said. "We actually don't see this. The market status is functioning as a way to direct people towards certain professors and certain labs, but it's not dictating the dollar value of the invention."

Elfenbein said his research suggests that universities can be more strategic in how they allocate scarce resources available for obtaining patents. Universities might not need to spend as much money to patent an innovation from a well-established professor because that person's work is more likely to sell regardless of its patent status. However, investing in patent protection for the work of younger, less well-known professors may be more likely to pay off for the university in less time.

Editor's note: Professor Elfenbein is available for phone, e-mail and broadcast interviews. Washington University has VYVX and ISDN lines available for news interviews.