University’s majority share of patent profits can stifle innovation

Science : In the US, university researchers who apply for patents share any benefits earned with their home university. Typically the university receives a majority share, often as much as two-thirds the value of the patent. That approach has been touted by experts who claim it nurtures innovation, and they have urged other nations to adopt a similar formula. Now, however, its effectiveness is being called into question. In 2002 Norway ended its long-running practice of “professor’s privilege” in favor of the US-style system granting university researchers just a one-third share. A decade and a half later, Hans Hvide of the University of Bergen in Norway and Benjamin Jones of Northwestern University in Illinois looked at how university commercialization in Norway has been affected. They found that not only did the per capita number of patents drop by 53% and the number of university-backed startup companies by 67%, but overall quality of commercial activity declined, based on the companies’ success and the number of citations earned per patent. They attribute the drop to the uneven division of profits and emphasize the importance of negotiating terms that satisfy all parties.