Summer 2005

Power of Ideas


Publicly Funded Innovation

Professor David Mowery sheds light on the debate over who benefits.


By Marguerite Rigoglioso


David Mowery is the William A. & Betty H. Hasler Professor of New Enterprise Development at the Haas School of Business.

The American university system has proven to be a remarkable engine of innovation, generating an unprecedented number of new licenses for faculty inventions over the past 20 years, says Haas Professor David Mowery. Such patents have spurred significant and sometimes lifesaving new developments in science and technology. But, says Mowery, new debates over who should reap the financial benefits of publicly funded R&D threaten to disrupt the free flow of technology transfer from university to industry — a development that would ultimately hurt the global public interest.

The productivity of US universities is particularly unique among world's educational systems for a number of reasons, Mowery explains. "The American system is so much bigger than those in Europe or Asia," he says. "Unlike its foreign counterparts, it is also not centrally administered by the government. Instead it's very decentralized and characterized by lots of institutional autonomy and inter-university competition. One thing universities compete for is resources, and that creates strong incentives for faculty to seek out research collaborations with industry."

The presence of a healthy venture capital industry has also been a major institutional force in the commercialization of university technology in the United States. "There are not many counterparts of the same scale in other industrial economies," Mowery notes. In addition, American universities are characterized by much more professional mobility than foreign institutions of higher learning. Faculty members and post-doctoral students are continually moving back and forth between universities and industrial research laboratories, which creates an atmosphere of entrepreneurial vitality.

Mowery's most recent research on what motivates the transfer of technology from universities to industries appears in Ivory Tower and Industrial Innovation, a volume co-authored with Richard Nelson, Bhaven Sampat, and Arvids Ziedonis. In the volume, he argues that public policy, particularly the Bayh-Dole Act of 1980, which made it easier for a university to file for patents and negotiate licenses associated with that patent, has been a facilitator but not a catalyst for the commercial development of new technologies over the past two decades.

"Although the law gives universities more legal and financial control over their inventions, it's really the unique infrastructural characteristics of the American educational and industrial complexes that govern innovation," says Mowery. Another volume he has co-edited, The Oxford Handbook of Innovation, also explores the wider systematic setting influencing innovation and the role of institutions and organizations in this context.

The question of legislation's role in promoting innovation is important for foreign governments, who are looking at Bayh-Dole as a possible template for stimulating technology research and commercial transfer in their own universities. Mowery's study of records from the technology licensing offices in the University of California system, Stanford University, and Columbia University, reveals that these universities were already actively licensing and patenting faculty inventions well before the act, and that Bayh-Dole increased such activity only modestly.

Mowery cautions that American universities may now face a threat from a public that is increasingly concerned over where profits generated by the commercialization of new technology should rightfully go. A particularly vociferous debate now taking place in California, for example, concerns how public funding for Proposition 71, which has opened the door to stem cell research, should be handled. Should intellectual property and patenting laws be tweaked to make some of the royalties from developments in this area go back to taxpayers and not just into the coffers of universities and biotech companies? Mowery argues that doing so will only create bureaucracy and raise the costs of such research.

Although Bayh-Dole may not have contributed to the economic boom of the 1990s as some observers assumed, then, it still serves as an adequate body of rules to govern who should reap the rewards of scientific innovation, Mowery contends. "To begin tampering with this legislation on the question of stem cell research in order to set up what amounts to a separate set of laws for this new area of research will dramatically raise overhead costs and serve as a drag on innovation," he says. "The relatively small amount of money that will be returned to taxpayers will hardly make it worth it."


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David Mowery