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Nov. 29. 2004 – Many of small tech’s success stories or at least promising prospects are based on technology from universities or research laboratories. But moving technology to market can be an unfamiliar, sometimes difficult process. A group of technology-transfer experts shed light on the topic in answers to questions by Small Times’ Jeff Karoub.
Experts include Allen Dines, assistant director, University of Wisconsin-Madison corporate relations office; Kenneth Nisbet, executive director, University of Michigan technology transfer; Lori Pressman, independent consultant, former assistant director of MIT’s technology licensing; and Neil Wyant, president of O’lala Foods, former licensing manager of ARCH Development.
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How do you measure success in technology transfer?
DINES: Technology transfer is all about getting inventions out of the research lab and into products where the benefit of the invention accrues to the public good. In that sense, the best measures of success for tech transfer should be related to how much public good in fact has been generated through commercialization of the advances in research. Unfortunately, readily available yardsticks for this kind of measurement are hard to come by. So, we fall back on more easily obtained proxies for success.
For example, according to a 2003 licensing survey published by the Association of University Technology Managers, U.S. universities, hospitals and research institutions collectively took in more than $1.3 billion in gross licensing income in fiscal year 2003. This would arguably be a reasonable indicator for the market’s recognition of the value of tech transfer.
Other measures that are easy to tally include number of patents issued (3,926 in fiscal year 2003) and number of licenses and options executed (4,464) or, perhaps, number of startup companies formed (374). To get to the issue of the public good requires a broader look at the extent to which the commercialized technology has improved our lives and stimulated our economic growth.
NISBET: 1. The number and quality of technologies transferred to the market to benefit the public. 2. The quality of service to our university researchers and other partners.
PRESSMAN: The availability of products derived from academic research that benefit the public is one universally agreed upon metric of success. In addition, there are as many ways to track and measure success as there are programs.
Some programs may emphasize sponsored research relationships, others, startup formation, job creation and economic development. Some may emphasize running a cash-flow-positive technology and patent licensing office, while others may see their patent licensing offices in a larger context, where a patent budget becomes a tool to attract sponsored research and creative entrepreneurial young faculty and/or to catalyze startup formation and job creation.
WYANT: I generally measure success in financial terms — revenue from product sales, licensing fees and royalties, contract research — things that have a direct impact to the bottom line of my company and help keep me on track with respect to key milestones in our business plan.
But success is a function of objectives, which can vary depending on where you are in the tech transfer continuum. For example, a university or national laboratory may have economic development objectives and the creation of “X” jobs, without a dime in royalties, seen as a big success.
What are some examples of successful programs or successfully transferred micro or nanotechnology, based on those criteria?
DINES: One can look to the institutions having the largest portfolio of patents under active license or the greatest license revenue. Typically these institutions are also the institutions with the largest R&D funding, places like University of California system or Massachusetts Institute of Technology. They are all examples of successful programs as these institutions are consistently among the top-ranked entities year in year out.
Though success is still in the works, an example of transferred nanotechnology is Arryx Inc. The company was formed in 2000, based on research of two University of Chicago physicists, who developed “optical tweezers” using beams of laser light to manipulate nanoscale particles. Arryx licensed the technology for use in nanoscale bioprocessing and manufacturing.
NISBET: (U-M spinouts) Discera, NanoBio and HandyLab.
PRESSMAN: Many programs have successfully attracted commercial interest to micro and nanotechnology, both from the venture community and from existing companies. Nanosys is an example of a startup that licensed a significant amount of university nanotechnology. Carnegie Mellon University’s atomically structured under layer for high-density magnetic memory is widely used in laptop memory.
WYANT: Arryx and NanoInk are Chicago companies that I’d consider successful. They are generating revenue from the sale of products and services based on technologies transferred from universities. And they are also having a positive impact on economic development.
How do tech transfer officials determine what research gets patented?
DINES: There is no magic here and certainly no one has a perfect system. Most technology licensing offices (TLOs) try to assess the “licensability” of new technologies, their potential sales and the markets that products based on the technology would serve. Some use outside consultants for this, some use business students, some do literature searches, some tap local business experts to serve on advisory panels.
Because the crystal ball is often clouded, the instinct of most officials should be to err on the safe side: File more patents in the hopes that you don’t miss the technology that could be the next cash cow. The immediate reality, however, is that patents cost money to write, file and prosecute.
Most TLOs cannot afford to file on speculation that licensees will be forthcoming. Even once licensed, the average patent never generates enough license revenue to pay for patent costs. So the TLO is dependent on the “big hit” license, which pays for itself plus all the other patents that were not so successful.
NISBET: Quality of the technology, value to market and value added by patent protection (all metered by available budget).
PRESSMAN: Academic technology transfer professionals typically ask themselves if a patent is likely to attract a commercial development partner otherwise not motivated to commercialize the technology. An important early step in the process is understanding the breadth of patent protection that might be obtainable, which is typically accomplished with the assistance of the inventor and an experienced patent counsel.
WYANT: The patent decision varies from institution to institution based on tech transfer budgets and human resources. But in general, a tech transfer manager will call people in industry and take their pulse about the commercial importance of a new invention. If there’s a licensee that pops out of that process they will patent. If not, but the patent is from a leader in the field, or there’s an opportunity to build a portfolio of patents in an emerging field, they will patent.
What are ways to overcome the conflict between publishing and patenting?
DINES: I think that is a bit of an over-generalization. It’s not that black and white. On the one hand academia certainly places a high value on publication, but there are industry researchers who publish as well. Moreover, patents are publications and many researchers are quick to list their patents prominently on their CVs. Universities also place a high value on patents. So I’m not sure there is really much of a conflict over this in most situations.
NISBET: They need not be in conflict. No agreement with a university can infringe on the freedom to publish. Patents must be initiated before publishing to allow the patent to be effective. It’s important to remember that a patent is publishing; it fully disseminates the knowledge of an invention in exchange for a limited monopoly period.
PRESSMAN: A modest, typically one to three month, delay in publication to permit the parties to evaluate the utility of securing patent protection on an invention, which is the current practice.
WYANT: I don’t think you overcome the conflict; rather, you manage it so that IP rights are protected without limiting the researchers’ opportunity to demonstrate leadership in their field. You can manage this contractually as well as through education.
Companies often complain that the tech-transfer process is overly difficult. Is this true, and if so, how can barriers be eliminated?
DINES: This is clearly a subject of much discussion and the situation varies widely. Sometimes individual inventors can substantially influence, positively or negatively, the perception of how complex the licensing process really is. All of our licensing and patenting is handled for us by an independent nonprofit foundation, the Wisconsin Alumni Research Foundation.
WARF has nearly 80 years of operating history under its belt and thus has been able to fine-tune its process many times over. Generally the feedback we hear from licensees is that WARF does extremely well in keeping the barriers low and the tech transfer process as streamlined as practical.
Even with this, they are always looking for ways to improve. The bottom line is WARF has been substantially customer-driven since its inception and I think that sensitivity to the needs of its customers has been a major contributor to WARF’s strong reputation. All the above being said, the old adage “it takes two to tango” comes to mind. Tech transfer is a negotiation between two parties and either one can unduly complicate the process.
NISBET: It’s all about relationships. Many universities are becoming very proficient at the difficult tasks of dealing with very early-stage opportunities. Much of this improvement is due to university personnel learning more about the corporate environment (and indeed many current university tech transfer people have come from industry).
It is also important that industry must invest the time to understand, not just the technology, but also the environment and people that produced these valuable assets. In my experiences, difficulties often arise from the actions, inactions and attitudes of the people involved, and both industry and universities can claim an equal share of responsibility for what difficulties arise.
PRESSMAN: Increased mutual understanding of the diversity of goals and stakeholders in the for-profit and not-for-profit communities and more cross-culturally trained personnel or those who have worked in academia, government and business.
WYANT: 1. Hire better people to do tech transfer at research institutions. Tech transfer is more of a sales and marketing job than a science or engineering job, so hire business development people who can understand technology, rather than hiring technologists and training them to sell.
2. Have a coffee or beer. Tech transfer has been called a contact sport. People on both sides of tech transfer need to get to know each other and understand each other’s organizational needs, capabilities and constraints.