Do you ladies have a patent for that?

No patent?  No problem.

The results of a recent study challenge the standard notion that most businesses started by academics are based on patents (“Start-up model patently flawed” in Nature magazine, July 2010).

The study found that the majority of companies started by US academics are started without patents.  This is contrary to the generally accepted wisdom about how entrepreneurship occurs in a university, which usually goes something like this:  academics disclose their invention to universities, get it patented and then spin-out their company from the university.   This is actually only part of the entrepreneurial picture in universities — and a smaller part of the picture at that.

Chart from Nature Magazine

The study looked at 11, 572 professors at institutions across the US.  Of the 1948 respondents who had started a business, two-thirds (1266) had done it without a patent.  Generally, these entrepreneurs started manufacturing, consulting and other service-based businesses. It’s not surprising that many consulting and service businesses were created since they do not require patents, nor that many of these businesses were started by social scientists.  What is surprising is that technical academics such as biomedical and physical scientists started more businesses without patents than with them.  (See graph.)

Universities are generally less involved in supporting companies without patents, for a number of reasons including the expectation that these companies will provide a lower financial return, or the view that they need less help than technology-based inventions need to get off the ground. Interestingly, the survey found that there was no discernible difference in financial returns between the businesses started with and without patents.   That’s great news for those starting businesses without patents.

On the other hand, the study also found that those who started businesses without patents were more likely to fail. This confirms the value of patents – they are clearly a business tool and useful for many businesses.  But getting a patent can be a long process and the technology could change again by the time you get it, so don’t let waiting for a patent or thinking you need one stop you from launching your business.  Even if something isn’t patentable, you can still commercialize it.

Indeed, if we count on just using the numbers of patents emanating from the universities as a measure of their overall innovation, we are underestimating the overall entrepreneurial efforts of academics.  We are also potentially overlooking ways to support the majority of entrepreneurs at universities who might not fit the profile of the traditional patent-based spin-offs which receive support through technology-transfer offices and formal intellectual property systems.  Professors with patents are only the tip of the iceberg of university innovation.

Keri Damen

Keri leads the strategic design, development, marketing and expansion of cutting edge business programs in the areas of entrepreneurship, innovation, marketing, HR, management and leadership at U of T’s School of Continuing Studies. See more…