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RIT’s New President Urges US Universities To Give Up IP in Industry-Sponsored R&D

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Bill Destler
President
Rochester Institute of Technology
 

NAME: Bill Destler, President, Rochester Institute of Technology
 
BACKGROUND: Senior Vice President for Academic Affairs and Provost, University of Maryland, College Park; various faculty and administrative positions, University of Maryland
 
In July, Bill Destler was inaugurated as the ninth president of the Rochester Institute of Technology. It didn’t take him long to stir the pot at the 178-year-old institution: Last week, Destler released an essay entitled “A New Relationship Between Business and Academia,” in which he called for a new approach to industry-sponsored research at US universities and research institutions.
 
Specifically, Destler described a dearth of new product development and R&D at US corporations, which in turn has led to a decrease in the US’ leadership position in the global economy. He claimed that institutions of higher education in the US have a significant role to play in boosting innovation and R&D through industrial collaboration, but that such collaborations have been slowed by significant roadblocks put up by both industry and academia.
 
As such, Destler has proposed that, among other things, academia be more willing to relinquish all future intellectual property rights in exchange for a single, modest, up-front payment when that intellectual property is generated under corporate-sponsored research. In addition, Destler said that RIT is prepared to adopt such a policy in the hopes of providing an example to other universities and research institutions.
 
Destler’s entire essay can be downloaded here. BTW caught up with Destler last week to discuss his reasons for writing the essay and some of the recommendations it provides to both industry and academia.
 

 
Why did you feel a need to issue this statement?
 
I think my biggest concern is that global competition has all but forced the elimination of corporate R&D for anything but the shortest-term projects in the private sector. My general feeling is that our standard of living has been maintained, in many ways, by innovation and creativity; research, being at the very cutting edge of technology, and so forth. If our companies are no longer doing their own R&D, then one of our clear competitive advantages may be lost, unless we can find a way to more effectively use the assets in our higher education institutions.
 
You were recently inaugurated president of RIT after having spent more than 30 years at the University of Maryland.
 
Yes, and we had our own challenges in these areas. We had a tech-transfer office, and like many other tech-transfer offices, we were pretty clear-cut on trying to insist that we own the intellectual property associated with the work done by faculty and students, even when the work was funded by industry.
 
How does the tech-transfer culture at the University of Maryland compare to that of RIT? Did you need an institutional change to get your message out?
 
No, I was making a lot of this noise when I was back at Maryland. The key issue is that RIT, like Maryland, has an IP inventory of its own already. The issue is not so much whether we would give that away to industry – I don’t think we would. The issue is if industry approached us and saw that we had faculty, students, and laboratory assets to support a research project that they were interested in, whether or not we would be willing to take on that project without claiming any IP rights associated with the results of that work. I think that most institutions now will claim that if our faculty and students work on it, then they own the IP associated with their work.
 
My proposal is really that we find a new model where companies would feel much more comfortable doing the work at universities, and where they would pay perhaps an up-front modest payment of some kind that might be shared with the investigators and university, and would be used as a substitute for future IP claims. We would relinquish those up front, and the company would know that they would basically own all the IP moving forward from the project – however it panned out – if it was performed by university faculty and students.
 
Do you think that it might be just as difficult — if not more so — to negotiate such an up-front payment, especially when basing it on research that has not yet been performed and technology that has not yet been developed?
 
I think the difficulty increases as the up-front payment gets bigger. You have to be reasonable in your expectations. If the up-front payment is something like $10,000, then in the grand scheme of things, that’s not going to be considered a huge investment by the company. If the payment is more like $100,000, then that’s a different story. Our goal is to keep the payment modest, perhaps around that $10,000 figure, and then move forward with the company, which then has the assurance that if good things happen, they are in control of their own destiny.
 
Would this type of policy have to apply only to purely industry-sponsored research, since any federal funding would then trigger Bayh-Dole obligations?
 
One thing we would need to make clear is that if an institution already owns IP in a specific area, and a company wants to come in and use it, then I think typical licensing terms might apply. But the objection I’ve heard from companies is that they would like to use [universities] more as an R&D operation, because certainly they’re cost-effective in that area; but on the other hand, they don’t want to spend a couple hundred thousand dollars supporting an R&D project at a university only to find that later on they have to license the results they paid for from the university. That’s the hurdle we’re trying to get around. The issue of a company coming in and wanting a university to give them IP that they’ve previously developed under, for example, federally [funded] sponsorship – I’m not advocating that.
 
Your essay mentions that one of the major hurdles academic institutions have been putting up is the idea of “give us the money, and we’ll work on something related to your interest,” as opposed to faculty conducting the basic research they want and letting industry scan for applicable technologies.
 
This seems to counter some recent trends in academic-industry relationships in which industry is helping shape the research more into applied projects – for example, the recently established BP-sponsored Energy Biosciences Institute at the University of California, Berkeley (see BTW, 11/19/2007).
 
I don’t think so. I think this is very consistent with that. When we’ve spoken about my ideas with the faculty here, in general they’ve been very supportive. They’d like to have these problems dealt with up front, they’d like to have no ambiguity, and they think it would make it easier to reach agreement with companies. We’ve had experiences where companies have wanted to do R&D on campus and have not been able to come to an agreement with our legal staff over IP issues. So we’re just proposing a new approach.
 
Universities like RIT, Maryland, Berkeley, or wherever, will of course continue to do a lot of basic research funded by the federal or state governments, or even companies. Some of that work, frankly, you’d have to be pretty optimistic to think that something of IP value is going come out of it.
 
But I think in many cases, the companies would like to do more applied work on campuses, if we could overcome some of these barriers – one of them being this IP barrier, but another one being the tendency of universities to work in these three-year time scales associated with a PhD thesis. We need the short and large time scales – perhaps think more in terms of a one-year master’s timeline for these corporate R&D projects.
 
Do you think a proposal such as this, then, might increase the ties between academia and industry in the US?
 
That’s what we’re hoping. I’m not too concerned about corporate intrusion into academic freedom or issues like that. These would be projects undertaken only if the faculty and students involved agreed to do so, and only if they were happy with the opportunity to do constructive work and make a contribution. We wouldn’t be forcing this on anyone.
 
On the corporate side, your essay also mentioned some hurdles.
 
I mentioned the overhead issue. I do find it amusing that companies basically are reluctant to pay indirect costs, or overhead, at universities, when they charge themselves typically 100 percent internally for the same costs. We do have the costs of maintaining facilities; we do have to get the light and power going, so there needs to be some recognition that there are actual costs in maintaining the kinds of facilities we have here.
 
Also, the essay discusses a corporate attitude of “we’ll buy anything we need” in terms of mergers and acquisitions sapping R&D funding.
 
Yes, I think that’s a short-sighted policy by American companies. There is a lot of money going into mergers. When companies need a technology, they’ll often just find a start-up company developing that technology and purchase that company. That can be a very workable strategy for many companies, and we’ve had a lot of companies make a fair amount of money doing that. The unfortunate thing about that strategy is that a fair amount of resources there are going toward the legal costs associated with the acquisition. You could argue that if they were to spend more of that money on R&D, then we might get more bang for our buck in terms of innovation and new products and services.
 
Do you think the policy you’re suggesting might encourage more university spin-out companies, as well?
 
Absolutely. And in principal, they could make an up-front payment for technology or research in stock, where the university would take a small equity position in the company. There are lots of options you can take if you’re dealing with cash-poor startups. Not many of them would have a lot of cash to hand over, anyway.
 
The essay posits that maybe a group of universities or colleges could join together to enact a policy like this. Have you received support from leadership or tech-transfer concerns at other universities?
 
There isn’t a group at present. I’ve been speaking to some of my colleagues on campus about it. Right now, I’ve been trying to get companies on board, and so far, four or five companies have expressed a real interest in working with us on this so that we’ll have the kind of poster-child models that we need to encourage discussions along these lines at other institutions.
 
So you think you might be able to set an example by just doing this at RIT?
 
We’re going to. These companies have already signed on.
 
Are these companies mostly in the high technology and engineering areas, as opposed to biosciences?
 
Yes. We have a biosciences program, but we don’t have a medical school. We do biomedical research here, though.
 
Do you think that this policy could be applicable across several industry sectors —  i.e., would it be easier to achieve with engineering and IT than biomedical research?
 
The few examples of cases in which universities have reaped huge rewards from their own IP are mostly in the area of pharmaceuticals. As a result, my guess is that those institutions that have medical schools, and especially research medical schools, will be reluctant to move in this direction because they don’t want to give up that potential source of financial windfall. I am trying to remind institutions that we are, after all, non-profit institutions, and the notion that we should be in business for these financial windfalls does seem to be at odds with our tax-exempt status.
 
Many university officials have said that they need these financial windfalls due to dwindling, or at least stagnant, R&D support from the federal government.
 

There certainly is a lot of concern about dwindling support from the state and federal government, especially at public institutions. The real issue, though, is how much of this opportunistic research are we not doing because of these impediments we’ve put in the way? If you argue that there is a substantial amount that companies would be doing with universities if we got away from some of our current practices, then you might argue that there are greater rewards for the institutions moving to a less restrictive policy.

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