North Carolina Journal of Law & Technology


David Orozco


Universities are unique environments that thrive on the research and curiosity of faculty and students. To disseminate knowledge and potentially derive lucrative sources of funding, universities have aggressively entered the field of technology commercialization and patenting. The passage of the Bayh-Dole Act was instrumental to encourage this activity and the result has been an explosion of university-related patenting. This activity comes at a social cost, however, since patents restrict knowledge transfers and may create deadweight losses. These costs are amplified if technology transfer office (TTO) activities are viewed from a narrow financial or cost-benefit viewpoint. As demonstrated in this study, twenty institutions belong to an elite grouping of leader institutions that have financially sustainable TTO operations. The rest are classified as laggards and consistently operate with losses.

This article examines why the leaders excel and why the laggards continue to support TTO activities when they present a financial drain on universities. Transaction cost economics, institutional theory, signaling, and expected value theory can all offer insights related to the organization and maintenance of these offices. These theoretical perspectives help to explain why universities engage in technology transfer. An in-depth examination of the highly successful Taxol case at Florida State University, a laggard institution, sheds light on some of the antecedents for a successful, yet rare, technology transfer event. The case reinforces the view that technology transfer should not be viewed narrowly, even among laggard institutions, but rather it should be viewed as a strategic endeavor that involves signaling, the observance of social conventions and investment for broader technological and economic objectives.

Two negative consequences have resulted despite the success of Bayh-Dole. These include the increasingly predatory and commercial behavior of universities and the highly-skewed distribution of value among TTOs. If left unaddressed, these problematic results may result in legislative reforms that could weaken the ability of universities to practice technology transfer.

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