Technology Transfer | May 7, 2007 Issue - Vol. 85 Issue 19 | Chemical & Engineering News
Volume 85 Issue 19 | p. 44
Issue Date: May 7, 2007

Technology Transfer

Report claims universities' focus on revenue generation in licensing stifles innovation
Department: Business

University technology transfer offices (TTOs), established in the early 1980s to manage the commercialization of inventions derived from federally sponsored academic research, are hobbled by administrative bureaucracies focused more on generating revenue than on benefiting society, according to a report by the National Bureau of Economic Research.

"Commercializing University Innovations: A Better Way" charts the proliferation of TTOs following passage in 1980 of the Bayh-Dole Act. The legislation allowed the transfer of exclusive control over the fruits of government-funded university research to the universities themselves.

The report contends that emphasis on money-making licensing deals is impeding the flow of new ideas into the market. Its authors, Robert E. Litan, Lesa Mitchell, and E. J. Reedy, all of the Ewing Marion Kauffman Foundation, propose options for investment and strategy development to help TTO officials increase the volume of commercialized technologies coming from university labs. The foundation advocates entrepreneurial efforts.

The opportunity presented by Bayh-Dole has been undercut over the years by an unintended centralized approach to managing the commercialization process, according to the report. "TTOs were envisioned as gateways to facilitate the flow of innovation but have instead become gatekeepers that in many cases constrain the flow of invention and frustrate faculty, entrepreneurs, and industry," the authors write in an abstract prefacing the report.

The report describes a prevailing "revenue maximization" strategy "whereby TTO officers focus their limited time and resources on technologies that appear to promise the biggest, fastest payback."

The authors' proposals hinge on empowering entrepreneurs in university research settings. "The answer does not lie, in our view, in expanding the role for TTOs," the report states. "Many research faculty members are likely to have better opportunity recognition skills???both scientific and entrepreneurial???than TTO professionals."

The report suggests four possible approaches for shifting from income generation to maximizing the number of inventions that get commercialized. A free-agency approach, which would give faculty members leeway to choose a third party (or themselves) to negotiate licensing deals, would introduce "a strong dose of competition to the university TTO," according the report. The document also proposes a regional alliances strategy in which multiple universities form consortia to develop commercialization mechanisms.

The paper also suggests an Internet-based extension of the regional alliance approach and floats an idea called "faculty loyalty" under which universities give up all intellectual property rights, "anticipating instead that loyal faculty will donate some of the fruits of their success back to the university."

While admitting this is a radical option that carries high risk, the report provides examples of faculty entrepreneurs who donated a portion of profits on inventions to universities. One is Jan T. Vilcek, who pledged $105 million to New York University School of Medicine in 2005, mostly from royalties earned from the Crohn's disease therapy Remicade, which Vilcek worked on at the school's department of microbiology.

According to Litan, one of the authors, while maximum revenue generation is pervasive among TTOs, universities are toughest in their negotiations with industrial partners. "Universities can't assume that a big company is going to somehow, out of gratitude, give them a bunch of money simply because they may license technology," he says. "They play much more hardball."

Commercialization of university research has become a topic of increasing debate, with industrial research managers claiming that the profit motive at TTOs is hampering partnerships (C&EN, March 19, page 25). A joint industry-academic working group, the University-Industry Demonstration Partnership (UIDP), was recently formed under the auspices of the Government-University-Industry Research Roundtable to develop partnership negotiation tools. The Kauffman Foundation is a founding member of UIDP, and report coauthor Mitchell is on the board of directors of the working group.

"A lot of the system is directed toward getting the home run, and I think that is something that has just become part of the culture of tech transfer," says Robert A. Killoren, executive director of the Ohio State University Research Foundation and cochair of UIDP. "But I think that we are all realizing it may not be the best way to get technology transfer to happen."

Killoren adds, however, that revenue generation is an important function for TTOs, which are expensive operations to run. "There is the home-run mentality, but a lot comes from a desire to break even," he says. "Most TTOs are not leading entities like the University of Wisconsin, Stanford, and MIT. Most are struggling to get enough income from licensing and options to pay for the operations of the office."

Killoren adds that licensing intellectual property is not the only way in which university research interacts with the commercial world. A great deal of informal transfer takes place in collaborative research and via publication of research in professional journals.

He characterizes the report's proposals as adding to a discussion of options to improve commercialization. "It's part of what should be an expanding dialogue about how to make TTO operations more gateway-oriented and less gatekeeper-oriented," he says.

 
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