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Study Reveals Differences Between Industry, Academia in International Patent Strategies

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The number of international patent applications filed by US corporations and universities has increased in the last 10 years, but the US share of such applications compared with the rest of the world has decreased during that period, according to a recently released report by the Ewing Marion Kauffman Foundation and Duke University.
 
The report also notes that US corporations file international patent applications far more frequently than US universities and research institutions; and that California and the University of California system file far more international patents than their peers.
 
In addition, the report may provide a snapshot of the specific fields of innovation – in particular, life sciences, nanotechnology, and testing – where industry is looking to academic research for intellectual property rather than developing IP of its own.
 
The report, entitled “US-Based Global Intellectual Property Creation,” was prepared by researchers in the masters of engineering management program at Duke’s Pratt School of Engineering, with financial support from Duke and the Kauffman Foundation.
 
According to Vivek Wadhwa, executive-in-residence at the Pratt School and lead author on the report, the study was a byproduct of previous research his group had conducted on the contribution of immigrant entrepreneurs in the US.
 
“We analyzed the [World Intellectual Property Organization] databases to understand the filings by foreign nationals residing in the US, and came across a lot of other very interesting data that warranted its own paper,” Wadhwa wrote in an e-mail to BTW. “We need to start looking and thinking globally now. The world has changed. Global patents and markets are becoming increasingly important, hence the focus on WIPO rather than [US patents].”
 
In their study, Wadhwa and colleagues examined full records of all 1998 and 2006 patent cooperation treaty (PCT) applications published by WIPO’s US receiving office. The researchers chose those specific years because 1998 was the first year WIPO records were available in electronic form, and 2006 was the most recent year for which complete data were available.
 
The researchers counted only PCT applications with inventors living in the US, and they grouped patent applications by US state; whether the application was filed by either a company or a university or research institute; and by specific technical areas, industries, or fields of study.
 
The study revealed that the number of US PCT applications has increased by approximately 68 percent from 14.9 applications filed per 100,000 workers in the 50 US states and District of Columbia in 1998, to an average of 25.1 applications per 100,000 workers filed in 2006.
 
Despite this increase, the researchers said that other countries have gained on the US in terms of the total share of worldwide patent applications. Citing a February 2007 WIPO report on international patent filings, they noted that the US share of PCT applications has decreased from 37.4 percent to 34.1 percent in the last four years. Meanwhile, several other countries’ shares have increased over the same period – especially Japan, whose share rose from 12.7 percent to 18.5 percent; and Korea, whose share rose from 2.3 percent to 4.1 percent.
 
Other key findings included the fact that the state of Delaware had the highest number of PCT applications per 100,000 workers in 2006, with 82.1; followed by Massachusetts (79.0), Minnesota (69.5), and California (58.5). Meanwhile, Oregon, Vermont, and North Dakota saw the largest increases in their numbers of applications filed per 100,000 workers between 1998 and 2006.
 
Massachusetts and California’s rankings in PCT applications filed come as little surprise given the states’ industrial strengths, particularly in the areas of high technology and life sciences. On the other hand, Minnesota and Delaware – states with relatively small populations – likely achieved their rankings because of Minnesota’s 3M and Delaware’s DuPont. Indeed, those two companies ranked first and fifth, respectively, in a list of individual corporations filing the highest number of PCT applications in 2006.
 
The researchers also compared PCT applications filed by corporations and universities or non-profit research institutions. In 2006, 92.2 percent of US PCT applications were filed by industry, compared to 91.1 percent in 1998. California was responsible for almost a quarter of industry applications in 2006 – more than four times that of industry PCT applications filed by the next closest state, New York.
 
Meantime, the study revealed that universities and research institutes were responsible for just 8.9 percent of all PCT applications in 1998, dropping to 7.8 percent in 2006. According to Ben Rissing, research scholar and project manager at Duke’s Pratt School of Engineering and one of the study’s co-authors, the discrepancy between international patents filed by companies and universities can be mostly explained by the fact the PCTs are extremely complex and expensive to file.
 
“Cost and time almost certainly factor into the breakout between university and industry patent filings,” Rissing wrote in an e-mail to BTW. “However, at a fundamental level there are far more industrial organizations than academic ones.”
 
Lesa Mitchell, vice president of advancing innovations at the Kauffman Foundation, further explained the gap, telling BTW that “universities, one would assume, would be filing for US patents in many cases, and if they are doing global patents, they’re probably doing it under the assumption that they already know who their licensor would be. This is [a reason] why they would expend that much of a cost.”
 
Rissing wrote in his e-mail to BTW that the group has not compared US-based PCT filings to US-based USPTO filings, but has discussed a future study along those lines. “Research of this nature is difficult because tracking specific pieces of IP between the two filing organizations is a time-consuming task,” Rissing wrote.
 

“We need to start looking and thinking globally now. The world has changed. Global patents and markets are becoming increasingly important.”

However, Rissing added that in 2004, there were 42,907 PCT applications filed by all US residents and 290,048 US non-provisional, or regular utility, patent applications filed through the USPTO. Approximately 96 percent of the PCT applications were based on original US patent applications, so it stands to reason that data for USPTO filings would be similar to that of PCT filings, save for perhaps the relative percentages of industry versus academic filings.
 
Among university PCT applicants, the state of California produced the largest number of applications in 2006 with about 6,000; followed by Massachusetts with approximately 3,400. Not surprisingly, the University of California system filed more international patent applications than any other university, with 10.9 percent of all university PCT applications in 2006; followed by the Massachusetts Institute of Technology with 4.4 percent.
Rissing wrote in his e-mail that the UC system ranks so highly because “it incorporates IP filings from all of its member universities, providing a substantial faculty and student research base.” California’s state ranking was also driven by significant PCT filings from non-UC system schools such as Stanford University, the California Institute of Technology, and the Scripps Research Institute, the researchers wrote.
 
Fishing for University Patents?
 
Though on the surface the report seems to underscore some fairly obvious trends in international patenting by US entities, a deeper look may reveal specific categories – in particular, life sciences, nanotechnology, and testing – where industry most frequently dips into the academic patent pool rather than developing intellectual property of its own, according to Kauffman’s Mitchell.
 
“Frankly there aren’t too many surprises here,” Mitchell said. However, she added that one particularly interesting – and thus far, unexplained – set of statistics were the types of PCT applications filed by companies and by universities.
 
Specifically, the researchers parsed PCT applications in 2006 into particular groups as defined by WIPO’s International Patent Classification Codes. WIPO’s codes are used to categorize patents into a variety of technical areas beyond even the general classifications of life sciences, engineering, or IT.
 
For example, the top field in terms of PCT applications filed for both universities and industry was “Preparations for medical, dental, or toilet purposes” – not surprising as, according to the WIPO website, this category contains most pharmaceuticals and related biological compounds.
 
Lists of the top ten patent application fields for universities and industry also contained overlapping categories such as “Investigating or analyzing materials by determining their chemical or physical properties;” “Diagnosis, surgery, identification;” and “Semiconductor devices; electric solid-state devices otherwise provided for.”
 
However, the researchers noted that universities appear to apply for more patents, at least internationally, in biological, testing, and chemical-related categories; while industry filings included more electronics and personal medical care applications.
 
Most striking were the third, fourth, and fifth highest ranked university categories: “Micro-organisms or enzymes,” “Measuring or testing processes involving enzymes or micro-organisms,” and “Peptides” – none of which appear on the top-ten list of industry filings.
 
Mitchell said that there is not yet enough information to draw a definite conclusion about these statistics, but that the study’s authors are currently considering the implications.
 
“The question is, ‘Why are universities patenting [in] these [areas] when the same kinds of patents aren’t being exercised in industry?’” Mitchell said.
 
According to Mitchell, the stats may say a lot about which specific patent categories industry is looking to academia for licensing opportunities.
 
“Are we seeing the uptake of patents from universities, and are they patenting the right things?” Mitchell asked hypothetically. “For the most part it looks like they are. But of the items that universities are patenting and industry is not, is there a big bundle of techs still sitting on the shelf [at companies]? Or, is it that this is such early-stage research at a basic level … this is where industry in fact looks to universities, which would make a lot of sense?”
 
Rissing did not provide a specific answer for the discrepancy in patents filed by universities and industry in these categories, but noted that industry is still fairly active in those areas – just not at quite the same relative level as universities.
 
“PCT application activity in these areas likely reflects university interest in nanotechnology, bench-top testing, and medical pathways,” Rissing wrote in his e-mail. “In 2006 industry groups also actively filed PCT applications in these fields, which ranked 14th, 15th and 19th, respectively, among industry groups.
 
“While the absolute number of industry PCT filings in these fields exceed university filings, a larger percentage of total university filings were devoted to these fields than total industry filings were,” he added.
 
The complete report from Duke and the Kauffman Foundation can be downloaded here.

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