Government sponsorship and nature of patenting activity of US universities and corporations

This paper studies the relationship between government sponsorship and nature of innovation produced by US universities and corporations. Using detailed patent data information and, in particular, from the patent document wrapper, where the applicant is obliged to disclose any federal support, we examine whether (i) federally funded patented innovations are more basic than their non-federally funded peers, and (ii) federally funded corporate and university patented innovations are very different from their existed research agenda. Our results strongly support that federally funded corporate patents are more basic in nature, while the evidence for universities is less nuanced. Also less pronounced and conclusive are the findings about university patented inventions and their ties to university's own research agenda. Results, however, may vary depending on university (corporation) size. While the federal government finances high-risk basic projects, it appears that some firms do not incorporate them in their overall research portfolio.