Over the past 20 years, the number of patents assigned to universities has increased dramatically. This increase coincided with several policy initiatives, such as the Bayh-Dole Act of 1980, designed to foster technology transfer between universities and the private sector. This paper examines the effect of such policies using an institutional framework, designed to illustrate how factors both from inside and outside of academia influence the decision to patent university research. We find passage of the Bayh-Dole Act spurred university patenting, but did not induce additional applied research funding. Thus, Bayh-Dole fostered technology transfer, but did not result in more applied research at universities.