Principle Investigator:
Yin Xia, Assistant Professor, Department of Agricultural Economics, University of Missouri-Columbia, 124 Mumford Hall, Columbia, MO 65211.  Tel.: 573-882-8496; Fax: 573-882-3958: Email: XiaY@missouri.edu.

Co-Principle Investigator:
Nicholas Kalaitzandonakes, Professor, Department of Agricultural Economics, University of Missouri-Columbia, 125A Mumford Hall, Columbia, MO 65211.  Tel.: 573-882-0143; Fax: 573-882-3958: Email: KalaitzankonakesN@missouri.edu.

Graduate Research Assistant:
Yiyong Yuan, Graduate Research Assistant, Department of Agricultural Economics, University of Missouri-Columbia, 327 Mumford Hall, Columbia, MO 65211.  Tel.: 573-882-7360; Fax: 573-882-3958: Email: yy3z5@mizzou.edu.

Executive Summary
U.S. universities were inactive in patenting and licensing their research results throughout most of the twentieth century.  However, 1980 passage of Bayh-Dole Act set up a uniform federal patent policy for academic institutions, and subsequent court decisions such as Diamond vs. Chakrabarty established patentability for more university inventions.  University patenting and licensing have increased dramatically since then.  The recent upsurge of privatization of university research, particularly in biotechnology, has attracted considerable attention from the scientific community and university administrators as well as from government officials and the general public. 

Progress has been made to achieve the goal of this research — to better understand the net effect on aggregate social welfare of university patenting and licensing activities in agricultural biotechnology:
(1)  A conceptual and econometric framework was constructed for assessing the impact of university patenting and licensing.
(2)  A survey questionnaire of university technology transfer offices (TTOs) was developed.
(3)  Data on inputs and characteristics of universities and biotech firms were collected.

Progress
Based on a comprehensive literature review, we constructed a conceptual and econometric framework for assessing the impact of university patenting and licensing on university research and on the downstream research which builds on university proprietary technologies to develop commercial agbiotech products.  Two companion analyses are envisaged, one of the input-output relationships in the agricultural and biological programs at U.S. universities, and another of the input-output relationships in small and large biotechnology firms.  In the first, we will examine non-proprietary bioscience publication and proprietary agbiotech patent outputs as function of university R&D expenditures — those from technology licensing revenues and from all other sources.  In the second, we will examine biotechnology firms’ agbiotech product development success as function of their R&D expenditures and of the university bioscience literature and agbiotech patents they utilize.  By means of the licensing revenue variable in the university analysis and the licensed university patent variable in the biotech firm analysis, we will link the two studies together, providing a framework for evaluating the net effect on aggregate social welfare of university patenting and licensing activities in agricultural biotechnology.

After consulting with the staff in Office of Technology and Special Projects at University of Missouri-Columbia, we developed a survey questionnaire of TTOs at major U.S. universities.  This survey will enable us to seek information on agbiotech patent that universities license out and the commercial products that firms develop with the licensed university technology.  In doing so, we will construct a paper trail of technology flow from university to firm, which is crucial for implementation of the econometric model discussed above.  

Annual data on R&D expenditures in agricultural and biological programs at each major public and private university in the U.S. were collected from National Science Foundation’s WebCASPAR database.  Records on number of faculty, average faculty salary, number of postdoc researchers and graduate students, degrees awarded, and other variables were also collected from this source.  Data on other university characteristics, such as Carnegie classification, public-private status, land-grant status, and graduate program ranking were gathered from U.S. Department of Education and the Gourman Report.   Information on the R&D expenditures, number of scientists and engineers, sales, employment rates, and financial performance measures such as stock market value for a sample of biotechnology firms were extracted from COMPUSTAT database.

Plans for the Coming Year
The first task in the coming year is to complete the database construction.  The survey questionnaire will be sent out, allowing for the option to answer our survey questionnaire or to provide copies of licensing contracts.  Follow-up telephone calls will be made to those TTOs which do not respond.  Upon completion of the survey, we will enter the data in an electronic format and merge the survey data with our collected input and output data by university and by firm.  The resulting database will be analyzed and benefit and cost measures of university research privatization constructed.  

The second task is to conduct econometric estimation and assessment.  In particular, we plan to improve the university and biotech firm models by further examination of the joint-product nature of these entities, by paying attention to potential endogeneity of the explanatory variables, by stratifying the university and firm samples in a number of ways, by experimenting with other input variables, and by examining the error structure implicit in the count-data estimation employed.

Finally, we plan to merge the results of the two analyses in order to show analytically the impacts of university patenting and licensing on innovation and the commercialization of agricultural biotechnology products, highlighting how these impacts are affected by such factors as the characteristics of the technologies patented and licensed, the history and culture of a university’s technology transfer, and a biotech firm’s own characteristics.

Bibliography
Xia, Y., Y. Yuan, and N. Kalaitzandonakes.  “Privatization of Agricultural Biotechnology Research in U.S. Universities.”  Selected paper presented at the American Agricultural Economics Association Annual Meetings, Providence, Rhode Island, July 2005.

Yuan, Yiyong.  “A Re-examination of Patenting Behavior Under Hold-up Risks.”  Working paper, Department of Agricultural Economics, University of Missouri-Columbia, 2005.

Buccola, S. T. and Y. Xia.  “The Strength and Structure of Intellectual Bio-Property Market.”  in Seeds of Change:  Intellectual Property Protection for Agricultural Biotechnology, edited by Jay Kesan, CABI Publishing of Oxford, 2006.