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MIT Study Finds University Patents Add Billions

By Brett Altschul

Further, the effects of university patents take place even before the public sale of inventions begin, according to Lori D. Pressman '79, the technology licensing officer who initiated the study.

The study is first to document that university licensing stimulates investment and promotes jobs. It used investment information gathered directly from MIT licensees.

The study, which appeared in the Journal of the Association of University Technology Managers, reports that companies invest a minimum of $2 billion to $5 billion each year in order to market university inventions, Pressman said. Using 1994 U.S. Census Bureau figures, the average cost of a research and development job was determined to be $125,000. This means that "tens of thousands of jobs" are created before public sales as the result of this investment, Pressman said.

Additionally, a previously reported figure to the Association of University Technology Managers estimated that sales of university-patented inventions generate $17 billion dollars annually once the inventions reach the market, she said.

Universities have benefited from less-restrictive patent regulations. The current patent regulations, approved in 1980, give the ownership of government-funded patents to the developing university.

Before then, patents belonged to the government agency that provided the funding. "Companies had to knock on the door of the Air Force and ask what new inventions they had," Pressman said. "The new laws made new technology more accessible to companies," thereby spurring economic growth, she said.

"These results dramatically demonstrate the success of the 1980 federal policy change which gave universities the right to own and the responsibility to license the inventions made on campuses that have received federal research funding," she said.

Pressman said the particular method used in the study should provide a good blueprint for universities to track the economic impact of their efforts to move academic research results outside of the ivory tower for the practical benefit of society.

MIT contributes $1 billion to economy

There are currently 702 active, exclusive MIT patents under development by companies, Pressman said. Development of these patents is responsible for 2,300 jobs and adds close to $1 billion to the economy. This represents roughly $1 million per patent per year, she said.

The reported figures may actually underestimate the total impact of university research. The figures exclude computer programs covered by copyrights, non-exclusive patents, and older inventions no longer involved in the licensing process, Pressman said. A total of about 1,500 MIT patents have been involved in the licensing process since 1980.

Only a few million dollars of the $1 billion total go directly to MIT in licensing fees, said Pressman. "But the existence of patents here attracts industrial sponsors," she said. "The very direct effect is very small. The major effect is in getting new sponsorship."

The study also found that patents derived from biological research induced about twice the investment of patents in the physical sciences. "Immature industries like biotechnology have young companies and patents are more valued than in established industries," Pressman said. "Biotechnology is only about 10 years old. Biotechnology is a young, quickly growing industry."

Other authors of the study included Lita Nelsen, director of the Technology Licensing Office, Sonia K. Guterman, Associate Technology Licensing Officer Irene T. Abrams, and Licensing Associate David Geist.