Inefficiencies in markets for intellectual property rights: experiences of academic and public research institutions

The formal use of such intellectual property rights (IPR) as patents and registered copyright by universities has increased steadily in the last two decades. Mainstream arguments, embedded in economic theory and policy, advocating the use of IPR to protect academic research results are based on the view that IPR marketplaces work well and allow universities to reap significant benefits. However, there is a lack of evidence-based research to justify or critically evaluate these claims. Building upon an original survey of 46 universities and public research organizations in the United Kingdom, this study analyses the quality of the institutions underpinning the markets for patents and copyright, investigating potential inefficiencies that could lead to underperformance of the IPR system. These include ‘IPR market failures’ with respect to search processes and transparency; price negotiation processes; uncertainties in the perception of the economic value of IRP and the relationship with R&D cost. Further sources of underperformance may include ‘institutional failures’ with respect to enforcement and regulation. Particular attention is paid to the role of governance forms (e.g. alternative types of licensing agreements) through which IPR exchanges take place. We find that a high share of universities report market failures in IPR transactions and that the choice of IPR governance forms matter for the obstacles that are encountered. Given the importance of widely disseminating university research outcomes to foster innovation and economic development, the presence of inefficiencies in IPR markets suggests that such objectives could best be achieved by encouraging open distribution of knowledge, rather than privatization of academic knowledge