The road to the next life-altering discovery, invention or device often begins with university-imagined Intellectual Property (IP) and ends when an outside company makes the investment to productize the discovery. Is there enough emphasis placed on this pipeline nationwide? The more one looks at this complicated question, we see there are numerous problems; in a rush to publish findings, for example, researchers may lose the ability to obtain patent protection for their IP. What can universities do to make commercialization an end goal?
Protecting university discoveries
“Patents are the fulcrums that allow technology transfer to happen. Without the exclusivity a patent provides, there is [no] incentive on the part of pharmaceutical [companies] to invest in these university ideas,” Jessica Sebeok, associate vice president for policy at The Association of American Universities, was quoted as saying in Insight Into Diversity magazine. This same consideration can also be applied to non-biomedical discoveries.
A strong IP position gives a competitive edge to any business. The process at the university level starts with the faculty inventor disclosing the invention to the technology transfer office.
Researchers should always disclose to their technology transfer office what their discovery is and what steps they plan to take to secure the IP. Technology transfer offices give expert advice and have the university’s best interests in mind, as well as those of its individual inventors.
“Technology transfer offices are quickly able to evaluate an invention and file a provisional patent application. Once the provisional patent application is filed, the university is in a stronger position to work with the faculty,” said Tanushree Chatterji, assistant director of licensing at the University of Houston.
But is a patent just an expensive piece of paper unless it leads to a commercialized product?
Not necessarily, according to Richard W. Chylla, executive director for technology commercialization at Michigan State University. He said patenting an invention is an integral part of the mission of a research university, whether it is commercialized or not.
“Even if a patent is not commercialized in an end product, the patent serves a very useful purpose by describing the invention in such a detailed manner, that anyone skilled in the art should be able to duplicate it,” said Chylla.
This means that sharing knowledge is really an endpoint in itself. He adds: “Others will read the patent and build upon it to create new inventions.”
The patent and technology transfer process in a university is just another way of disseminating knowledge to the public, and akin to publication in a scholarly journal, according to Chylla.
Understanding the risk of not protecting ideas
Some researchers and technology transfer offices argue that a great deal of revenue is lost by not commercializing IP, which could conceivably be funneled back into research. For instance, U.C. Berkeley’s biggest IP licensing win was the monetization of a Nobel-Prize winning drug royalty from the first generation, which required massive amounts of corporate investment and 15 years to obtain FDA approval. The proceeds were used, in part, to build new research laboratories, reinvesting in and restarting the cycle of innovation.
But Chylla reiterates data that show only five to 10 percent of academic patent applications go on to be commercialized, which is the same percentage of patents granted for industry-related discoveries.
“Perhaps a better way to think about this question is not what do universities lose, but instead to understand that universities make a decision to patent or not based on a variety of criteria. They choose to patent because the university technology transfer office feels having a license to the patent rights provides the right incentives –a time-limited monopoly – for a company to invest the money that is required by a very early-stage, raw university technology.”
Evan Facher, vice chancellor for innovation and entrepreneurship and director of the Innovation Institute at the University of Pittsburgh, agrees.
“We don’t know at the outset if the product will make it to commercialization or if another discovery has been in the works and will be commercialized first,” he said. “It’s a game of roulette.”
That’s why the Innovation Institute at University of Pittsburgh casts a wide net and tries to patent IP across all disciplines, including within their medical school, computer sciences department and education sciences department.
Incentivizing commercialization
In the article “Changing the Academic Culture Valuing Patents and Commercialization Toward Tenure and Career Advancement” in Proceedings of the National Academy of Sciences, the authors posit that a change needs to be enacted. They claim that tangible incentives must be offered to faculty who wish to commercialize their discoveries: “Universities should expand their criteria to treat patents, licensing and commercialization activity by faculty as an important consideration for merit, tenure and career advancement, along with publishing, teaching and service.”
Currently, tenure is awarded based on the demonstrated quality of a faculty member’s teaching and their ability to maintain and fund a world-class research program. Promotion and tenure metrics are consistent with the mission of a university: teaching, research and public service.
Yet, universities are beginning to consider if technology commercialization should be considered as another criteria on top of teaching and research. The University of Pittsburgh has recently offered credit for commercialization in the tenure process, but still values education above all – not whether a faculty member produces a marketable discovery.
“Whether or not a given professor has patented or licensed a technology does not displace the three criteria for promotion and tenure, which are teaching, research and public service; it augments them,” said Carol Mimura, assistant vice chancellor for IP & Industry Research Alliances (IPIRA) at the University of California, Berkeley. “The pursuit of pure knowledge is no less impactful than commercializing a drug that saves lives. There are those who will never invent or commercialize a product, and they are no less an academic than those who have founded a dozen startup companies.”
Educating faculty on the process
In what other ways can a university support faculty who wish to commercialize their IP?
According to an anonymous researcher in a prominent United States public research university: “I never had to take a single course on anything to do with commercialization of science in my eight years of graduate school doing STEM research.” This omission caused her to miss out on knowledge regarding patents, the building of a business plan, how to communicate science to a non-scientific audience and other aspects of commercializing her invention. Sadly, her biomedical discovery now sits in a lab and the paper she published exists in an outdated journal.
One internal action a university can take is to add coursework that walks each faculty member through the steps. This may or may not involve the university’s business school, incubators or accelerators. Chatterji goes even a step further: “Every grant should have a requirement for commercialization activities and customer discovery,” she said. This basically means that if a professor’s project is funded, they are going to need to show a propensity for entrepreneurship.
Engaging industry
Mimura said: “Patenting and licensing are just two ways that we engage industry. Being relevant to the private sector and to [California’s] goals of creating economic development requires ongoing relationship continuums, not a single transaction type or another.” Mimura reflects on U.C. Berkeley’s philosophy of managing IP rights to achieve the dual goals of social and economic impact: “[U.C. Berkeley] believes ‘technology transfer’ means movement between academia and industry – in both directions.”
Mimura said this holistic, campus-wide approach to industry relations takes many forms, including corporate-sponsored research and collaborations, data and personnel exchange, consulting and other public service, IP creation and licensing, gifts, industry consortia, investment in startup companies, and participation in incubators, accelerators and with mentors. To operationalize the philosophy, U.C. Berkeley’s IPIRA has evolved through five business models from the first generation of “patent and shop the rights to industry” through the fifth, which focuses on a campus-wide infrastructure to help entrepreneurs and startup companies.
The largest form of ‘technology transfer’ is achieved by educating students who go out into the world to make a difference.
Carol Mimura, assistant vice chancellor for IP & Industry Research Alliances at the University of California, Berkeley
Supporting startups and spin-outs
“Once world class researchers are in place, the university needs to provide the infrastructure and resources needed,” said Chylla. “This includes supporting and funding the university technology transfer office, creating an ecosystem that supports university spin-outs and publicly celebrating the successes of university innovation that are creating impact.”
Many universities encourage faculty members to meet with industry partners, venture capitalists and entrepreneurs who have succeeded in the marketplace. The University of Houston, for instance, has instituted the Startup Pains Program. Residing within the Technology Bridge, a hub of innovation, Startup Pains brings CEOs and founders from both spin-outs of the University and startups (who tenant at the Technology Bridge) together with faculty. Others attend, as well: community members, graduate students who are working with principal investigators and post-doctoral students looking to move into full-time roles in companies.
“Startups and entrepreneurship have become an increasingly important focus of our activities due to the economic impact they create, their inclusiveness, and the speed and agility they demonstrate in identifying and solving problems,” explained Mimura. Like many universities that value innovation, including Stanford, U.C. Berkeley and the California Institute of Technology, the University of Houston System has launched a substantial research fund to help faculty members in bridging the gap between proof of concept and commercialization. Gap funding is especially helpful in the event that a startup experiences what is called “the valley of death” – a time when funding from the university has dried up and the private sector has not fully funded the commercialization yet.
Entrepreneurs in Residence (EIRs) programs are often credited with educating faculty members about the business of IP commercialization. The University of Michigan has more than 10 Mentors in Residence (MIRs) to support early-stage startup teams at their university.
“Our MIRs are experienced entrepreneurs, investors and domain experts and work on-site as embedded advisors for pre- and post-launch University of Michigan startups. MIRs provide assistance with technology de-risking, company building, fundraising and talent recruitment,” said Kelly Sexton, associate vice president for research, technology transfer and innovation partnerships at the University of Michigan. In the last two years alone, UM’s Tech Transfer team has launched 43 new startup companies thanks to this integrated program of startup support.
Universities, as much as they may protest otherwise, are still coveting that next blockbuster drug or the new device that will live in every American’s pocket. In the meantime, entrepreneurial-minded faculty should consider working closely with the technology transfer office on their campus, contributing to the diversification of their university’s portfolio of patents. If a university can top that five to 10 percent of patents that actually make it to commercialization, they will have done extremely well.
No to CEO
The Big Idea: Encouraging faculty to become more entrepreneurial and start a company based on their intellectual property is important. But is it also important for that faculty member to be the CEO?
While faculty members can become the CEOs of the companies they spin out, we recommend they do not. Hurdles, obstacles and even failures abound. Not to mention, running a company is time consuming and takes away from one’s position as a full-time faculty member. Additionally, there are conflicts of interest.
Shaheen Lokhandwala, formerly of the University of Houston
Entrepreneurial faculty members have to navigate COI and conflict of commitment of time policies of the university. U.C. Berkeley professors often serve on the scientific advisory board of a startup that (s)he is a founder of, because that is not a position that requires daily managerial responsibilities. Instead, it is a strategic position.
Carol Mimura, University of California, Berkeley
