How are UK universities faring in patenting and innovation as compared to their European contemporaries?

I recently reported (1) that I listened to a webinar hosted by the European patent office (EPO), which discussed some of the findings from their report looking into patents and innovation in European universities (2). The comprehensive report includes detailed analysis on European patent applications stemming from more than 1200 European universities, across all EPO member states. As such, this includes details from not just EU member state universities, but also from universities in non-EU member states including the UK, Switzerland and Norway.  

The report was eager to stress that the data looked at direct patent filings (patent applications that identify a university as an applicant) and indirect patent filings (patent applications that identify a third party as an applicant, but include one or more university academics as inventors). By including both direct and indirect patent filings, it is intended to provide a clearer picture of the role universities play in the innovation and patenting landscape across Europe. Indirect patent filings include applications filed by large entities, as well as start-ups. The report generally uses the term start-up, which it should be noted includes both spin-outs from a University and young companies unrelated to a university looking to utilise university intellectual property (IP).  

The report found that more than 10% of all patent applications filed at the EPO from within Europe in 2019, originated, directly or indirectly, from European based universities, an increase from about 6% in 2000. Whilst historically universities were perhaps focussed more on education and academic research, knowledge transfer (the process of sharing information, skills, or expertise from one person or group to another) is increasingly seen as being of importance to universities and the increase in filings is an appropriate reflection that this is happening.  

Moreover, the relative proportion of direct versus indirect filings has also increased, showing that universities and/or their technology transfer offices (TTOs) are taking a more active role in seeking out and protecting university originating IP.  The report suggests that direct applications are more likely to be based on research that still needs to find a route to commercialisation, but that indirect applications are filed more in response to industry needs. Assuming this to be the case, universities need to find a revenue generating route for their direct applications, be that through, for example, licensing to existing entities or through spin-out company formation and licensing IP to the spin-out.  Spin-outs usually involve university staff and an initial university equity stake and they almost always are located near originating university. As such, spin-out formation requires significant additional resources and support from a university and not just the generation of IP.  

In terms of patent filings at the EPO (between 2000 – 2020) German Universities filed the most patent applications (24.1%), followed by France (18.0%) and the UK (12.3%). Moreover, the number of university derived patent applications filed per researcher in full-time employment, shows the UK trails someway behind both Germany and France, although it is not clear from the report how the term “researcher” has been determined. However, in terms of total patent applications, only 5.8% of all applications filed by applicants from within the country were filed by German Universities, as compared to 10.9% and 13.9% for French and UK Universities respectively. This perhaps points to a difference in industrial make-up between the countries and the relative importance universities play in each country with respect to overall innovation.  

In the same timeframe, 12 and 15 universities in Germany and France respectively, filed at least 250 direct patent applications, but only 4 fell into this category in the UK (Oxford, Cambridge, Imperial College and University College London). Moreover, during this period, the 4 identified UK universities filed over 6000 (direct and indirect) patent applications at the EPO, accounting for over 45% of all UK university derived EP patent applications. Whilst these universities regularly receive the most research funding and are recognised has having the largest TTOs, proportionally they appear to still be filing many more patent applications at the EPO, than other UK Universities. It would be interesting to try to better understand this apparent disparity within the UK and between the French and German Universities.  

The UK and Ireland are unusual, as being the only European countries where higher education is mostly funded through student fees (partially subsidized by the state). Although some technology transfer funding is also provided by a Higher Education Innovation Fund (HEIF) in England and similar (although less generous) versions of this in the devolved administrations of Northern Ireland, Wales and Scotland. Elsewhere, a typical European Higher Education institution still receives about two-thirds of its revenue from a basic state contribution (3).  Given that many UK universities are experiencing challenges with financial sustainability due to a decreased unit of funding for students from the UK (4) and a collapse in international student numbers, it may be difficult for many UK universities to increase the numbers of patents they are filing, due to tightening resources. Certainly, our experience from working with many UK universities is that their patent budgets are becoming increasingly strained and their TTOs are having to conduct more comprehensive initial reviews of the potential for commercialisation and exit strategies for their IP, before deciding whether or not to file patent applications. Of course, such rigorous initial review may result in fewer, but better quality patent applications being filed. However, it would be worrying if potentially good patent applications are not being filed, simply due to a lack of financial resources. With this in mind, it will be interesting to see how the UK university patent filing figures develop over the coming years and whether or not an even larger gulf develops between the “big 4” and other UK universities.  

The report also looked at start-ups (including spin-outs) that filed indirect patent applications utilising university derived IP and found that 12% of all academic patents were filed by European start-ups, but three-quarters of these companies sourced the IP from only 25 European Universities.  In the UK, it is notable, but perhaps not entirely surprising that the four universities with the most patent filings, are also associated with the most start-ups, with university derived IP (between 80 – 93 each). However, our experience is that many other UK universities are looking to increase spin-out formation, whilst at the same time seeking to ensure a high quality of their spin-outs. The high quality of UK spin outs is supported by the fact that UK university spin-out investment increased five-fold from just over £1 billion in 2014 to over £5 billion in 2021 (5).  

The ability and/or desirability to form spin-outs varies between each university, but there is a general trend throughout Europe that the universities that file the most patents, tend also to be the universities creating the most spin-outs. This may point to the relative experience of these universities’ TTOs and how they manage innovation derived from within their universities, but it may also be due to relative resources. Whilst Universities and their TTOs are sometimes criticised for the amount of equity stake and royalties they request from their spin-outs, it would nevertheless appear that European universities do see spin-out creation as being a good route to transfer knowledge and to commercialise their IP and that Europe is still a good place for spin-out creation.    

However, the report also points out that almost 10% of start-ups with European university derived IP filings, between 2015 – 2019, are based in the US, pointing to the importance of European derived innovations, but perhaps also the attractiveness of the US market and SMEs there being able to successfully commercialise innovations. Whether this is a growing trend remains to be seen. 

The report is certainly comprehensive and compelling reading. However, it will be interesting to see how any trends grow and evolve over the next 5 – 10 years. In particular, following Brexit, how will the UK university filing figures evolve, as compared to elsewhere in Europe. The previous UK Government set out a vision to make the UK a global hub for innovation by 2035 (6) and the new UK Government appears to be adopting this and considers IP generation as vital to cement the UK’s place as a global leader in science and technology (7). Given the importance UK universities play in generating new IP and its protection, time will tell how UK universities patent filings compare to their European university compatriots.

1. https://reacts.marks-clerk.com/post/102jmdh/patents-and-innovation-in-european-universities
2. https://link.epo.org/web/publications/studies/en-the-role-of-european-universities-in-patenting-and-innovation.pdf 
3. https://eter-project.com/uploads/analytical reports/ETER_AnalyticalReport_02_final.pdf 
4. https://www.universitiesuk.ac.uk/what-we-do/policy-and-research/publications/financial-sustainability-uk-universities 
5. https://assets.publishing.service.gov.uk/media/6549fcb23ff5770013a88131/independent_review_of_university_spin-out_companies.pdf
6. https://www.gov.uk/government/publications/uk-innovation-strategy-leading-the-future-by-creating-it/uk-innovation-strategy-leading-the-future-by-creating-it-accessible-webpage 
7. https://www.gov.uk/government/publications/ip-for-a-creative-and-innovative-uk-strategy-2024-to-2027/ip-for-a-creative-and-innovative-uk-strategy-2024-to-2027