Evaluating the abolishment of the Finnish professor's privilege

Many case studies and plenty of quantitative work show that academia has an important role in contributing to invention and innovative activities. In particular, academics help by "translating" research into commercial products (Stokes (1997 )). This is because much tacit knowledge about inventions cannot fully be understood from e.g. patent documents and rather than just "transferring knowledge", academics' involvement in commercialization is often necessary (Zucker, Darby and Brewer (1998 )). Moreover, an emerging body of research shows that individuals who engage in commercialization activities also become more productive as researchers (Azoulay, Ding and Stuart (2009); Buenstorf (2009 )). If these results can be generalized and no open-access dilemma exists, research policy should direct attention to how to stimulate university researchers to engage in commercialization. Traditionally, academia in Europe has often followed a "hands-off" approach to regulating researchers' involvement in commercialization, although this has always varied with the institutional setup. Usually, the institute sector (small in e.g. Sweden and Switzerland, more important in e.g. Finland and Germany) has held ownership to inventions, whereas academia has followed the German model of a professor's privilege, where inventors retain rights to their inventions. This has changed, especially over the last fifteen years in many European countries that have abandoned this position, favoring a transition to university ownership (UO) following the model of the US Bayh Dole act of 1980. This trend has also come to the Nordic countries with Denmark switching to UO in 2000, Norway in 2002 and Finland in 2007. Yet, the effects of these switches are far from obvious. In fact, most academics are quite skeptical to the idea that moving to university ownership would facilitate smooth transfer of inventions, the basic reason being higher transaction or negotiation costs of inventions for researchers, not being outweighed by higher levels of efficiency (Lissoni (2013); Lissoni, Lotz, Schovsbo and Treccani (2009); Mowery, Nelson, Sampat and Ziedonis (2001); Mowery and Sampat (2005); Verspagen (2006 )). A few interesting studies indeed suggest that switching in fact may have the opposite effect (Kenney and Patton (2009); Kenney and Patton (2011 )). Yet, large-scale quantitative evidence is scarce. A recent exception is the working paper by Czarnitzki et al. ((2015 )) who compare German researchers at universities with researchers at institutes before and after the switch that took place in Germany using a difference-in-difference approach. They find a strong decline among university researchers in patenting. Still, this result may be specific to the German case; possibly technology transfer offices may have worked better in Finland.1 Thus, whether switching to university ownership generally leads to fewer inventions patented by university researchers remain an open question. This paper studies the case of Finland, with the help of a new unique database on Finnish inventors to be compiled in the project. Finnish policymakers will get an insight into the effects of the abolition, and whether it has lowered patenting by academia or even had positive effects, something which has not been studied before. For the paper, a database on inventors in Finland is to be created where Finnish inventors in the European Patent Office (EPO) databases will be linked with Statistics Finland (StatFi) databases. These registers enable us to access important demographic control variables, and importantly information on whether individuals work at universities or institutes. We choose EPO because it contains full address records of inventors, which makes identification much easier than e.g. USPTO records, and in order to compare results with studies from Europe. The basic method follows that of Czarnitzki et al. ((2015 )), i.e. comparing inventive productivity before and after the reform among university researchers with patenting by Finnish institute researchers. Basically, we will compare inventive activity of Finnish researchers before and after the legislative change. However, change in inventive activity can differ due to innate changes over time in patentability. For this purpose, two benchmark cases will be created. The difference in patentability for an individual compared to a benchmark person gives rise to the difference-in-difference method. That is for each person affected in the Finnish system, we need to find a control person with similar characteristics such as age, gender, technology and/or scientific field of work. The first benchmark case is the Finnish institute sector which never had a PP. This benchmark controls for Finnish-specific traits in the system. The second case is the Swedish university sector, which always had the PP (Ejermo (2012 )). This has the advantage of controlling for any trends in patenting by researchers that is due to being employed in academia and is not fully captured by age or cohort covariates. However, Finnish and Swedish university inventor data cannot be combined in one single database (thus allowing for a full difference-in-difference estimation of these groups). That analysis therefore has to be based on comparative descriptive statistics. The use of two types of benchmarks allows us to draw more robust conclusions. Also, the comparison with Swedish university patenting is interesting in itself.2 REFERENCES Azoulay, Pierre, Waverly Ding, and Toby Stuart, 2009, The impact of academic patenting on the rate, quality and direction of (public) research output, The Journal of Industrial Economics 57, 637-676. Buenstorf, Guido, 2009, Is commercialization good or bad for science? Individual-level evidence from the max planck society, Research Policy 38, 281-292. 1 See http://ec.europa.eu/invest-inresearch/ pdf/download_en/monitoring_and_analysis_of_technology_tra nsfer_and_intellectual_property_regimes_and_t heir_use.pdf for an overview of the professor's privilege in Europe, specifically p. 56 regarding Finland for the distinction between "contract" and "open" research. 2 The team of authors is divided in its prediction of the outcome, but currently Finland leads over Sweden 2-1.