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LES Panel Promotes IP 'Clustering' Approach To Speed University Tech Commercialization

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ATLANTA – The commercialization of university intellectual property is hampered by a “one-off” licensing approach in which isolated invention disclosures fail to reach their full potential due to a lack of industry interest, said moderators of an IP licensing workshop at the Licensing Executives Society spring meeting held here this week.
 
This inefficiency can be addressed, however, by implementing a technique known as IP clustering, which can include intrauniversity collaborative research, multi-university regional partnerships, and even a publicly traded tech-commercialization approach that has met with success in the UK, panelists said.
 
Various experts from the tech-transfer industry discussed these points and offered up several examples during an LES spring meeting workshop session entitled “Intellectual Property Clustering: Adding Value and Efficiency to University Intellectual Property.”
 
Panel participants included Michael Martin, president of TechTransfer Associates, a tech-transfer consultancy located in Blacksburg, Va.; Richard Sheehan, president of Technology Resource of the Southeast, a technology valuation firm based in Johnson City, Tenn.; and Güven Yalcintas, vice president of technology transfer for the State University of New York system.
 
According to Martin, one of the biggest causes of inefficiency in university technology transfer is that the missions of businesses and universities simply don’t match: Businesses are driven by the bottom line and must answer to their stockholders, while universities are charged with conducting research solely to benefit the greater good.
 
“The bottom line is that university research is not driven by the marketplace as it is in business,” Martin said. “University research often produces a one-off solution, and then the tech-transfer office has to look for a problem that might be solved by this.”
 
Further enhancing the disconnect between corporations and universities is the fact that universities are organized by discipline, while corporations are organized by product lines. Also, as compared with businesses, universities show a surprising lack of interdisciplinary research.
 
“Various research groups at universities are not that aware of what other researchers are even doing, except maybe within their department,” Martin said.
 
As a result of this disconnect, universities often have a “wealth of IP and unused technologies” that may not be attractive to larger companies on their own, but could potentially represent components of a final product, TRS’ Sheehan said.
 
One possible solution to these problems, the panelists said, is “clustering” IP using one of several methods to provide greater overall value to each individual piece.
 
Martin presented an example of IP clustering through increased interdisciplinary research at Virginia Tech, where TechTransfer Associates helped aggregate scientific research and IP that would be of interest to DuPont under a grant from the DuPont Center for Collaborative Research and Education.
 
Specifically, TechTransfer Associates and Virginia Tech officials identified areas of overlap, or “focal points,” in ongoing research related to DuPont’s specific needs. As a result, they were able to provide something of a product-development team to DuPont comprising Virginia Tech researchers from multiple disciplines.
 
According to Martin, “without bringing together apparently disparate research,” they wouldn’t have been able to present anything of value to DuPont. The group published results of its approach in 2004 in a peer-reviewed article in Economic Development Quarterly.
 
Martin said benefits of this approach include an opportunity for researchers to engage in valuable cross-disciplinary discussions, for companies to communicate market needs to scientists, and for teams of researchers to approach companies with platform solutions to specific problems.
 
Some downsides to the approach, on the other hand, include the fact that universities may often still be left guessing what the appropriate “focal points” are due to the confidential nature of research at large corporations, and the need for human resources to coordinate such an effort.
 
Bioregional Partnerships
 
Another example of IP clustering involves regional collaborations between universities and, in some cases, smaller companies, TRS’ Sheehan said.
 
One of the main advantages of this type of approach, he said, is that such collaboration can often tie into regional clusters of activity in which cities, regions, or states already have the infrastructure in place to support particular industry sectors.
 
Sheehan provided several successful examples of this type of clustering, including a recent undisclosed startup company investigating genetic contamination of crops using RNA silencing-related IP bundled from several research universities; and a company commercializing treatments for equine laminitis, a serious health problem affecting race horses, by aggregating IP from several small companies and universities.
 
Sheehan also said that another undisclosed company has recently identified a target market and bundled IP from several undisclosed sources for assistive technologies for the aging population, based on recommendations in a recent report from the Ewing Marion Kauffman Foundation that advocated, among other proposals, a regional collaboration approach as a way for universities to maximize IP licensing deal flow (see BTW, 4/23/2007).
 
Sheehan cited statistics from the US Patent and Trademark Office that less than three percent of patents ever generate more money than was spent on their prosecution; that at least 70 percent of university patents go unlicensed; and that of the 30 percent that are licensed, only 10 percent exceed in revenues the initial investment in patent costs.
 

“The bottom line is that university research is not driven by the marketplace as it is in business,” Martin said. “University research often produces a one-off solution, and then the tech-transfer office has to look for a problem that might be solved by this.”

“Does this mean that these are bad ideas?” Sheehan asked. “Not necessarily. Clearly some of those items should never have been patented, some items are patented for political reasons, and some are only incremental improvements to an existing process or technology.
 
“But after separating out these items, there is a whole category of technologies that are not incremental improvements or IP patented for defensive purposes,” he added. “They are good ideas that on their own simply cannot sustain a business model or have sufficient importance to be attractive to the investment community.”
 
So why doesn’t everyone bundle IP in such a fashion? For one thing, Sheehan said, negotiations can be very complex. Getting universities on board for such collaborations is usually not an issue; rather, the key is negotiating a reasonable revenue distribution for all parties involved, he said. In addition, the process can take a lot of time, and not all identified IP owners will be willing partners.
 
One way that the process can be facilitated, Sheehan said, is through an independent, third-party assessment of the value of the various IP components.
 
IP to IPO?
 
The last example of IP clustering was presented by SUNY’s Yalcintas, who, along with colleagues in the SUNY system, is in the process of establishing a publicly traded company called Academy IP that would specialize in commercializing various pieces of technology from the 64 campuses with a SUNY affiliation.
 
Academy IP is in the nascent stage, and while Yalcintas said that the firm has chosen to remain fairly tight-lipped about the details its business model, he noted that it will be loosely based on similar models in the UK that have met with early success.
 
These models include the IP2IPO project, a company that trades on the London Stock Exchange and has established partnerships with 10 UK-based universities to turn their research into start-up companies or attractive IP bundles; BioFusion, an AIM-registered company that exclusively licenses and commercializes IP from the University of Sheffield and Cardiff University; and Imperial College London’s tech-commercialization company, Imperial Innovations.
 
Yalcintas said that Academy IP has already closed a bridge round of funding, is open for Series A financing, and has signed a drug-licensing agreement with an undisclosed pharma. He added that Academy IP will likely consider bundling SUNY technologies from other universities in the US and the UK in an attempt to foster start-up companies in the US.
 
“This has worked in the UK, and we believe that it will work in the US,” Yalcintas said.

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