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Academic entrepreneurship (defined in this case as the involvement of university faculty and researchers in commercial development of their inventions) has been a unique characteristic of the U.S. higher education system for most of the past 100 years. This long history of interaction, as well as academic patenting and licensing, contributed to the formation of the political coalitions that led to the passage of the Bayh-Dole Act in 1980. This paper reviews the evidence on university–industry interactions and technology transfer, focusing in particular on the role of the Bayh-Dole Act in (allegedly) transforming this relationship. I also examine recent research that considers the Act's effects on the formation of new, knowledge-based firms that seek to exploit university inventions. This research is in its infancy, and much remains to be done if we are to better understand the relationships among high-technology entrepreneurship, the foundation of new firms, and the patenting and licensing activities of U.S. universities before and after 1980.

Licensing from US universities is done within the overall legal framework of the Bayh–Dole Act of 1980 and the employment agreements of universities. This chapter explains common contracts used by universities to license technologies developed by their faculty and students within the context of these laws. In addition to the legal framework, the nature of license agreements is affected by the embryonic nature of most university inventions, which necessitates faculty and student involvement in development, and the entrepreneurial goals of the university. Universities have diverse goals in terms of revenue, licenses executed, inventions commercialized, patents filed, and number of startups formed. The somewhat obvious problem is that the goals of faculty, students, the university, and the licensee may not be aligned. Common contracts used are meant to align these goals. While some contracts include multiple terms such as upfront fees, running royalties, annual payments, and equity, Express Licenses are increasingly being used to accommodate the entrepreneurial environment. This chapter discusses these issues and also the importance of the rights to sublicense inventions.

In this chapter we provide a general overview of the university licensing process and its dramatic growth over the past decade. We then discuss the role faculty play in commercialization through the licensing process. Concerns have been voiced in recent years over the possibility that the recent growth in university licensing suggests that the traditional role of faculty in the generation of “basic” research results – as well, possibly, as their role in “open science” – has been compromised. We discuss the available evidence for this downside to faculty licensing. Finally, we consider several impediments to the licensing process.

Scientific knowledge has characteristics of a pure public good. It is non-rivalrous in the sense that once generated, it is neither depleted nor diminished by use. Knowledge is also non-excludable since, once it is made available, in the absence of clearly defined property rights, users cannot be excluded from using it. These aspects imply that private market mechanisms will not provide adequate incentives for knowledge creation. Legal property rights, such as patents, are one means of dealing with this problem. Patronage in the form of government support for research provides another solution, as does the priority system of awarding credit for scientific discoveries to the first to find them. In the last two decades, there has been a growth in the relative importance of the use of legal property rights in the university setting and with it a growing controversy as to whether the costs may be outweighing the benefits. In this chapter, we discuss issues and evidence with regard to the ownership and licensing of publicly funded research intellectual property rights (IPR). We begin with an overview of incentives created by the patent system and discuss the ways in which these incentives differ from traditional norms of science. We then draw on the legal and economic literatures which distinguish among the incentives to invent, disclose, and innovate, and argue that the rationale for providing IPR for university research stems from the last of these. Finally, we discuss the available evidence on the creation and diffusion of academic research under current IPR regimes.

This chapter explains the structure of two contracts commonly involved in university licensing: the license granting a company (or companies) outside the university rights to make, sell, or lease products or processes based on a university invention, and the nondisclosure agreement (NDA) that plays a role in the license negotiation process. In the context of the Bayh–Dole Act, the chapter explains that license contracts often contain a complex combination of payment terms intended to provide sufficient incentives for licensees to undertake the (often risky) development of embryonic research. The authors relate the intent of the Bayh–Dole Act to the concerns of university licensing professionals who often negotiate licensing agreements. The chapter then examines the same incentive issues (and the universal contract issues of money, risk, control, standards, and endgame) in the context of NDAs, used by potential licensing partners to protect their respective interests while sharing information about a licensable technology. The chapter concludes with an assignment that provides students with an opportunity to evaluate a license, not from the university's perspective but from that of a client interested in licensing an invention owned by the university.

We review and synthesize the burgeoning literature on institutions and agents engaged in the commercialization of university-based intellectual property. These studies indicate that institutional incentives and organizational practices play an important role in enhancing the effectiveness of technology transfer. We conclude that university technology transfer should be considered from a strategic perspective. Institutions that choose to stress the entrepreneurial dimension of technology transfer need to address skill deficiencies in technology transfer offices, reward systems that are inconsistent with enhanced entrepreneurial activity, and education/training for faculty members, post-docs, and graduate students relating to interactions with entrepreneurs. Business schools at these universities can play a major role in addressing these skill and educational deficiencies through the delivery of targeted programs to technology licensing officers and members of the campus community wishing to launch startup firms.

U.S. industry–university (I–U) relations around intellectual property (IP) have become increasingly contentious since the Bayh-Dole Act of 1980, while especially lucrative patents and licenses resulting from biomedical and pharmaceutical discoveries capture the headlines. Some assert that I–U relations around IP are in crisis, others suggest that no such problem exists, and still others bemoan the “increasing commercialization” of U.S. education. This chapter develops a multi-level model of I–U IP dynamics, drawing on pluralistic, multi-theory perspectives, field interviews, and secondary data. The model includes three levels: the institutional (economy) level, I–U (sector) level, and the organizational level. These levels jointly affect the immediate context of any deal. The chapter closes with a discussion of this model's implications for further research and some theoretical speculations.

University–industry technology transfer is growing at a rapid rate in China, involving both multinational and domestic companies. This chapter describes unique characteristics of Chinese National Technology Transfer Centers (NTTCs) and examines whether they can function as an effective policy instrument in promoting the commercialization of university research findings. Our qualitative and quantitative study finds that NTTCs are not by themselves an effective policy tool in accelerating the commercialization of university inventions. We found that universities without NTTCs can achieve the same or even greater success than those with NTTCs. We suggest that Chinese universities should mimic the Western approach by providing an attractive reward system and autonomy to technology management programs that stimulate their efforts in marketing patented technology.

Colleges and universities play a vital role in the creation and dissemination of the innovations that feed the knowledge economy. First, universities carryout a significant portion of the basic research that is conducted in the United States. In 2006, the National Science Foundation reported having awarded $30 B in research-based funding to colleges and universities (National Science Foundation, 2007). While this figure is not an indicator of innovation output, the number helps to demonstrate the scope of research activity that is occurring within the academy. Mansfield (1995) noted that government funding for university research is bent toward science that holds commercial potential and highlighted that such research is likely to produce a high amount of social benefits. Mansfield also concluded that measuring the social returns of university-born (and federally funded) innovations though difficult, is important. Second, universities are instrumental in the production of economically relevant human capital, including students trained in key science and technology disciplines (Leslie & Brinkman, 1988). Audretsch (2007) indicates a highly educated workforce that is capable of creating and moving innovative technologies into the marketplace is a critical component of the current entrepreneurial economy. Also, faculty who intersect industry through consulting and other commercial-related activities make valuable contributions to the economic growth and prosperity of communities, regions, and beyond. In short, colleges and universities are key contributors to the production and function of the innovations that largely drive the knowledge economy.