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Report: Tech-Transfer Shops Fixated on IP 'Homeruns' May Limit Commercialization

Should academic and non-profit tech-transfer shops change the way they do business?
The mindset dominating technology-transfer offices today — in which universities focus on the “homerun” of patenting and licensing a select few technologies that promise big profits  — is actually impeding the progress of overall technology commercialization, according to a report released last week by researchers at the Ewing Marion Kauffman Foundation.
Instead, the report suggests that universities and non-profit research institutions should adopt a model that supports a larger number of inventions that may not have as big of a payoff, and suggests several ways such a model could be implemented.
But according to several top university tech-transfer managers, the report contains dubious research methods and suggests alternative techniques for tech transfer that are overly idealistic or have already been shown not to work.
In addition, the report may not have the impact it seeks because it blindsided professional organizations such as the Association of University Technology Managers rather than initiating a conversation on the topic, some university officials claim.
“I knew nothing about this, nor did any of my colleagues,” the director of technology transfer at a prominent East Coast research university, and a member of AUTM, told Biotech Transfer Week last week. “It’s a very poorly written hatchet job, basically. They picked a hypothesis, and then picked out some data to match their hypothesis,” said the director, who asked not to be named to avoid conflict between the university and the Kauffman Foundation, which he termed “very misguided but powerful.”
He added that the report “basically blows up everything AUTM is trying to do. To blindside a major organization of research institutions like that was just dirty. The AUTM meeting wasn’t that long ago.”
Representatives from the Kauffman Foundation, an entrepreneurial education and research center based in Kansas City, Mo., “tend to go to the [AUTM] meetings,” said the director. “They might have said ‘Hey, we’ve got a draft of this report, and we need some of your leadership to give us feedback on it.’”
Biotech Transfer Week confirmed with several AUTM members and directors of university technology-transfer offices that they had no prior knowledge of the Kauffman report.
The report, entitled “Commercializing University Innovations: A Better Way,” was funded by the National Bureau of Economic Research and presented last week at the Innovation Policy and Economy Summit in Washington, DC.
The paper was authored by Robert Litan, vice president for research and policy at the foundation; Lesa Mitchell, vice president for advancing innovation; and EJ Reedy, senior research analyst.
Reedy told BTW that the Kauffman Foundation “work[s] with AUTM on an ongoing basis,” but said he was not personally aware of how well AUTM was informed of the concepts in the paper.
Banking on Blockbusters
Among the report’s main points is that universities focus time and resources on patenting and licensing technologies that offer the promise of a bigger, faster payback. The authors contend that universities have developed policies and administrative structures that compromise the spirit of the Bayh-Dole Act – to accelerate the movement of research from bench top to marketplace.
Specifically, a summary of the report claims that newly developed layers of administration have centralized the tech-transfer process, narrowed the definition of innovation to only patents, and emphasized revenue generation rather than volume of innovations.
“Centralized technology-transfer offices, once envisioned as gateways to facilitate the flow of innovation, have instead become gatekeepers that in many cases constrain the flow of inventions and frustrate faculty, entrepreneurs, and industry,” the summary states.
But some in the field disagree that all universities are in tech transfer for the money. “Almost everyone in my profession would say that we're in it to transfer technology to the public for public benefit,” Katharine Ku, director of the Office of Technology Licensing at Stanford University, wrote in an e-mail to Biotech Transfer Week last week.
As examples, Ku cited the recently published “Nine Points” white paper that she and several top US research institutions co-authored. That paper emphasized a “social contract” that universities have with the general public and suggested guidelines for adhering to this contract while working under a modern tech-transfer model (see Biotech Transfer Week, 3/19/2007).
In addition, Ku cited AUTM’s Better World Project, implemented in 2005, which publicizes examples of how the commercialization of recent university research has benefited the greater good.
“I also think that the university tech transfer community does have a ‘volume’ model,” Ku wrote in her e-mail. “The AUTM survey always essentially asks, ‘How many deals have you concluded?’ And at Stanford, for sure, we always say [that] ‘success is planting as many seeds as possible.’ Unfortunately, the media tends to write stories about money and number of patents.”
The unnamed director claimed that universities could not possibly pick out those technologies with high potential for revenues even if they tried.
“It’s like investing,” the director said. “You have so much money that you’re going to invest for your retirement. Would you put it all into one stock? You don’t know how to pick a winner. That’s the same way we do tech transfer.”
As an example, he cited the well-known case of New York University’s deal with Centocor in the early 1980’s for a monoclonal antibody to TNF, which Centocor eventually developed into the Crohn's disease and rheumatoid arthritis drug Remicade. In 2004, NYU generated about $109 million in licensing revenue from the asset, the lion’s share of which stemmed from sales of Remicade, according to the school.
“You’re telling me that 20-some years ago [NYU] was planning for this homerun, and they only did that deal because they knew that 20 years [later] they’d be making $100 million?” the director asked. “It’s unbelievable. Particularly for those of us in the biomedical field; we’re always at least 10 years away from payday.
“Our measure of success is that a technology at least has a chance to become something, and that some company has tried to make a product out of it,” he added. “If they fail, they fail because a lot of things fail.”
‘Warning Signs’
The Kauffman report does concede that “US institutions of higher learning and their research output appear to be in good shape,” but it also cites several “warning signs” beneath the surface.
Among these are claims that, in recent years, R&D investments in the US have remained stagnant or declined; that industry-university co-authorships have decreased; that the number of US science and engineering articles cited by industry has fallen; that there is “some indication” that non-US universities are getting a growing share of R&D funding because these schools are more innovative; that industry investments in US university-based R&D have stagnated; and that research commercialization is largely concentrated at a “handful of universities” in the US.
According to the tech-transfer director, research is moving offshore primarily because it’s cheaper, just as in any industry. In addition, he said, the report “makes a big deal about the results being concentrated at a handful of universities, but the results they look at are financial results.
“Of course [they’re] going to find that, because that’s what [they] looked for” — as opposed to successful product commercialization or invention disclosures, he said.

“To blindside a major organization of research institutions like that was just dirty.”

“If you look at Nobel Prize winners, science citation indices, grant funding — these, too, cluster,” he said. “There are a few schools doing very well. They’re usually on the coast. This is a fault of the Bayh-Dole act? You can pick your data, but you have to pick the right controls.”
In her e-mail, Stanford’s Ku said that “universities can interact with industry in many, many ways, and should. Those of us in university licensing know that licensing is only a small part of the broad concept of technology transfer and commercialization, but unfortunately the phrase ‘technology transfer’ has become synonymous with ‘licensing.’ We all know that graduated students and publications are by far the main means for ‘technology transfer.’”
The Kauffman report also suggested four models that universities should consider to maximize the volume of innovation. These include:
  • “Free agency,” under which faculty members are given the power to choose a third party, or themselves, to negotiate license agreements, provided they return a portion of their profits to the university;
  • “Regional alliances,” in which multiple universities form consortia that develop mechanisms for commercialization that may allow universities to share costs, thereby helping smaller research universities with limited resources;
  • “Internet-based approaches,” which proposes using the web to facilitate commercialization; and
  • “Faculty loyalty,” which calls for universities to consider giving up their IP rights in exchange for the hope that loyal faculty will donate a portion of their commercialization proceeds back to the school.
According to some tech-transfer officials, however, many of these models are overly idealistic.
Joel Kirschbaum, director and senior technology portfolio manager at the University of California, San Francisco’s Office of Technology Management, wrote in an e-mail to Biotech Transfer Week that some of these models have even been tried without success.
“One of the ‘solutions’ proposed entails letting faculty inventors retain ownership of their inventions and take responsibility, with or without institutional help, for commercializing their technologies,” Kirschbaum wrote. “This is the model that Europe and Japan have used [and] concluded [that it] hinders tech transfer,” according to Kirschbaum.
“These countries are moving towards a Bayh-Dole model as we speak because [they] have concluded that allowing universities to take title to and manage faculty inventions produces more tech transfer, based on their experience [versus] the experience in the US post-Bayh-Dole.
“Thus the [Kauffman] Foundation is proposing a solution as being superior when in fact other countries believe it to be inferior and are abandoning it in favor of US practices,” Kirschbaum added.
Reedy of the Kauffman Foundation stressed that the intention of the report was to start a dialogue about the current state of the field. “The notion that research universities need to make some sort of change in the way they do tech transfer is not new or uncommon,” he said. “We wanted to provide some broad perspectives on the range of possible ways tech transfer and commercialization could be improved.”
Reedy added, “This is a very region-specific and school-specific conversation, and every school or group has to have their own conversation on this.” 

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