The case of the interrupting funder: dynamic effects of R&D funding and patenting in U.S. universities

Abstract

Federal funding for biomedical research at U.S. universities increases universities’ research funding from non-federal sources. Most previous research on the relationship between research and development (R&D) expenditures and patenting has considered aggregate R&D expenditures or funding contributed from a single source. However, the dynamic relationships between federal and non-federal R&D funding may confound single-source funding estimates. This paper uses a novel dataset with university patents for drug and medical inventions, non-self-citations to those patents in subsequent drug and medical inventions’ patent applications, and R&D expenditures by funding source for 16 U.S. research universities, with a panel vector autoregression (PVAR) methodology to account for endogeneity and dynamic effects. Results confirm prior research findings showing that increases in federal research funding yield subsequent increases in non-federal funding. This subsequent receipt of non-federal research funding significantly decreases universities’ number of patents filed. Results also suggest that federal R&D funding may contribute to universities' patenting more useful (or more broadly used) inventions.

Appendices

Appendix 1: Research universities included in the sample

Boston University

Columbia University

Cornell University

Harvard University

Johns Hopkins University

Massachusetts Institute of Technology

Stanford University

University of California, Berkeley

University of California, Davis

University of California, Los Angeles

University of California, San Diego

University of California, San Francisco

University of Illinois at Urbana-Champaign

University of Minnesota

University of Utah

University of Wisconsin at Madison

Appendix 2: Patent class assignments for drug and medical inventions

Class	Sub Class	Description
Hall et al. (2001, 2002) Category 3 "Drugs & Medical" Classes
128 600–607		Surgery
351		Optics: Eye examining, vision testing, and correcting
424 514		Drug, bio-affecting and body treating compositions
433		Dentistry
435		Chemistry: molecular biology and microbiology
623		Prosthesis (i.e., artificial body members), parts thereof, aids & accessories
800		Multicellular living organisms and unmodified parts thereof
Additional Drug & Medical Subclasses
250	363	Body scanner or camera with radiant energy source
	461	Biological cell identification with an ultraviolet source
	492.1	Irradiation of objects or material
	492.3	Subclass of 492.1, with ion or electric beam irradiation
324	306	Determine fluid flow rate
	307	Using nuclear resonance spectronmeter system
	309	Obtaining localized nuclear magnentic resonance within a sample
	310	Subclass of 307—scanning frequency spectrum
	318	MRI Components
	319	Subclass of 318: Polarizing field magnet structure for use with spectrometer
	320	Subclass of 318: Spectrometer components
356	39	Blood Analysis
	40	Hemoglobin concentration
	41	Oximeters
378	37	X-Ray or Gamma Ray Systems or Devices: Mammography
	38	Dental panoramic
	62	Imaging
	63	Imaging combined with non-X-ray imaging
	64	Irradiating
	65	Irradiation therapy
	68	Irradiation including object support or positioning
	69	Irradiation with object moving
382	128	Image analysis: Biomedical applications
	129	Subclass of 128: DNA or RNA pattern reading
	130	Subclass of 128: Producing difference image (angiography)
	131	Subclass of 128: Tomography (CAT scan)
	132	Subclass of 128: X-ray film analysis (radiography)
	133	Subclass of 128: Cell analysis, classification or counting
	134	Subclass of 133: Blood cell analysis
554	213	Fatty acid compounds with additional oxygen in the acid moiety
	214	Subclass of 213: Alicyclic ring (e.g., prostaglandin analogs)
	215	Subclass of 214: with a benzene ring
	218	Subclass of 213: with a benzene ring
	219	Subclass of 213: polyunsaturated
	224	Polyunsaturated fatty acids