August 22, 2003

A University Administrator Who Understands!

Ah! Finally! A university administrator who understands that the purpose of a university is to spread knowledge around--not to see how many people it can hold up:

John Quiggin: Patently right: There's an interesting piece in today's Fin (subscription required) about Uni of NSW Vice-Chancellor Rory Hume, who says universities should give away (nearly all) the research they produce rather trying to make money out of intellectual property. I think he's right for a number of reasons. First, despite some impressions to the contrary, the returns to universities from commercialising research have been very poor, even in the US where this has been going on for a long time. The Australian Research Council did a study on this and found that the returns from commercialisation were about 2 per cent of the cost of research. In fact, if unis fully costed their commercialisation outfits, including land and administrative overheads, I suspect that the true figure would be negative. Second there's the standard public good argument. The social benefits are greater if the results are free to use.

Third, the university's intellectual "property" has already been bought and paid for--by the donors in the case of a private university, and by the citizens in the case of a public university.

Posted by DeLong at August 22, 2003 04:26 PM | TrackBack


...the university's intellectual "property" has already been bought and paid for--by the donors in the case of a private university, and by the citizens in the case of a public university.

Or by taxpayers through the Tax Code in either case. Universities get a substantial amount of IP from corporations that develop the IP but then find it doesn't fit into their business plans, and which then donate the IP to a university research department for tax deductions.

But as to the role of a university being "not to see how many people it can hold up", that can be spread in other directions.

E.g., look at Harvard's near $20 billion endowment, calculate how much income it generates per student, then look at how much in tuition and other fees Harvard charges per student.

A prominent Yale law-and-econ prof (whose name I'm drawing a blank on at the moment) who specializes in tax exempts has said that if a Martian arrived and took a look at our major endowed private universities he'd conclude they were investment trusts that ran these little campus-based appendages for tax expemption and capital attracting purposes.

Posted by: Jim Glass on August 22, 2003 07:13 PM

There are those exceptions to the rule that drive the system. The Warfarin patent on rat killer has funded many a graduate student at U Wisconsin. The failure of universities to patent inventions that turned out to be wildly profitable makes for a cover your ass philosphy against letting the big one slip away on your watch. Why do people buy lottery tickets if the odds are stacked against them? The same optomism drives the patent system

The other consideration is that having a valid patent can aid the commercialization of an invention.

Posted by: bakho on August 22, 2003 10:54 PM

The public pays for major advances in technology or pharmacology. The breakthroughs are given to the public domain. Private enterprise tweaks the advances enough to get patent rights. This gives the public a second chance to pay for the same innovations and discoveries.

Thank you publicly funded researchers for your selflessness in giving away your productivity to private profiteers. Hail private enterprise, without you the taxpayer could not figure out what to do with a jet engine.

Posted by: CMike on August 23, 2003 07:06 PM

Frankly I believe we should do away with patents altogether. The
common argument made is that groups wouldn't invest in research
without the potential reward of a monopoly.

I highly doubt this, for one thing much research is publically
funded. For private groups what with six billion people on the
planet the pressure to advance is enormous and the advantage to
incrementally improving things great even in the absence of
a monopoly incentive.

For the most part, at this point, I suspect the main effect of
patents is to slow down innovation, perhaps massively. For those
that fear rapid change I suppose that's actually a feature.

Patents are rapidly becoming a bonanza for lawyers and corporate
monopolies and no one else.

Posted by: Mark Amerman on August 23, 2003 08:14 PM

Better - do something like the free source movement. Patent the information and say it can be used free of charge - so long as anything built on it is also patented with the same coda.

Not sure if that's legally possible.

But it would be a thing of beauty.

Posted by: Ian Welsh on August 23, 2003 11:21 PM

One thing that bears mentioning is how much it changes one's willingness to collaborate with others when your work becomes 'intellectual property'.

For example, the Biotech company where I work produces reagent systems for life scientists. One of our products, a chemiluminescent detection system, is licensed from another company. The fact that we absolutely cannot divulge the chemistry behind the product definitely does impair the ability of our customers to troubleshoot research problems and expand opportunities. Now, we are a private company and so it our partner, so there is a willingness for all concerned to accept that we need to maintain our secrets to get a return on R&D and thereby continue operating. However, I can imagine a definite slowdown in productivity in research if the academic community takes this point of view with each other.

Open sharing of information simultaneously reduces both the barriers and the incentives for discovery. It seems like the basic model for academic research was created to maximize the good, to insulate researchers from economic peril and lead to an environment where the 'higher values' might prevail. In that case the 'rewards' are based on earning a reputation for excellence among your peers and in solving real problems for humanity or making discoveries in science.

Conflicts of values definitely do arise when there is a requirement for capital to bring the discovery to 'market'.

Posted by: wetzel on August 24, 2003 04:58 AM

Comments on the desirability of patents at this always interesting blog:

As to "there's the standard public good argument. The social benefits are greater if the results are free to use", one wonders how that affects incentives to produce new information.

Also, if the university patents and licenses research, that would allow donors and taxpayers to reduce future contributions - sort of like capturing the value for those who paid for it.

Of course, that inhibits the free exchange of info. Maybe a solution would be to operate like the sports departments - have a Pac-12 entity which holds ALL the patents generated by the 12 member universities, and split the revenue, the way the teams split television fees.

Compete with the Big Ten and the SEC, have some sort of playoffs - hey, I'm partly serious, here - if the umberella organization was large enough, info would flow but value would be retained.

And Jim Glass has me scratching my head re the Harvard endowment: 5,000 undergrads at $50,000 per year is $250 Million; a $20 Billion endowment generating 10% yields $2 Billion.

Now, they are an exception, but still...

Posted by: Tom Maguire on August 24, 2003 09:12 AM
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