Universities' involvement in the use of formal intellectual property rights (IPR) such as patents and registered copyright has increased steadily in the last two decades. Mainstream arguments, embedded in economic theory and policy, advocating the application of IPR protection to academic research results are based on the view that IPR marketplaces work well and allow universities to reap significant benefits. However, evidence based research to justify or critically evaluate these claims is lagging behind.
Building upon an original survey of 46 universities and public research organizations (PROs) in the UK, this paper analyzes the quality of the institutions underpinning markets for patents and copyrights with respect to IPR transactions between 'universities and PROs' and the users of the academic research base (mainly firms, but also other public bodies). The inefficiencies in markets for patents and copyright which are analyzed in this paper - and which lead to underperformance of the IPR system – include: (i) IPR market failures with respect to: IPR and client search processes and IP value transparency; (ii) institutional failures with respect to enforcement and regulation; (iii) failures experienced in IPR price negotiation processes; and (iv) uncertainties reflected in the perception of the economic value of the IP and the relationship with R&D cost. The analysis pays particular attention to the role of IP governance forms (e.g. alternative types of licensing agreements) through which IPR exchanges take place.
We find that universities report a high degree of "market failures" when exchanging patents and copyright. They reject the assumption of perfect information or transparency with respect to accessing the economic value of patents and copyright. Furthermore, because of the difficulty in agreeing on the value of the IPR, there are substantial difficulties in the negotiation of the price, so that the market does not clear very easily. Universities consider "institutional failures" to be less problematic, although universities do report problems in negotiating the terms of the IPR contract, and with regard to cost and difficulty of enforcing the IPR, when using particular IP governance forms. In general, IP governance forms matter for the types of market obstacles that are encountered during IPR transactions.
While some inefficiencies could be reduced via interventions aimed at increasing the circulation of information and transparency in IPR markets, some other inefficiencies seem to be closely linked to the economic properties of knowledge and as such very difficult to reduce. Given the importance of widely disseminating university research outcomes, in order to foster innovation and economic development, the persistence of these inefficiencies suggests that these objectives may be more properly obtained by openly disseminating knowledge, rather than government policies encouraging privatization of academic knowledge as a best practice.