Intellectual
Property: New Questions about Academia's
Billion-Dollar Baby
Nan Knight
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In 2000 (the latest year for which data is available),
U.S. colleges and universities and their faculties
and staff collected more than $1 billion in royalties
on inventions and innovations stemming from research.
The top earner was the University of California
system, with $261.5 million in royalties. The growing
trend toward licensing and development of on-campus
research is the direct result of the Bayh-Dole
Act of 1980 and subsequent amendments. The Act
loosened the federal government's grip on most university-based
research and encouraged the transfer of new technologies
for development by private companies.
Under the rules that have been in place for almost
two decades, universities retain ownership of
patents, even those funded under government-sponsored
programs, with the specific legal obligation to
pursue licensing for commercial development. "Intellectual
property" (IP) is the term loosely applied
to the knowledge, skills, and technological expertise
that underlie any specific innovation. IP can
be as specific as the procedure for producing
a new pesticide or grinding a microscope lens
or as broad as the instructional content of a
course or the elements contained in a database.
The definition and protection of IP is the focus
of specialized legal analysis and practice and
substantial ongoing legislative activity. In the
fall, for example, Congress is expected to examine
the question of whether courses taught by television
at remote sites should be considered IP and whether
professors or universities have
rights of ownership to this material.
Despite the obvious monetary and control advantages
afforded by the provisions of the Bayh-Dole Act,
substantial concerns about the current status
of IP issues have been raised. At the April meeting
of the American Chemical Society, participants
in one well-attended session focused on current
conflicts over the commercialization of research
in academia. As Janet Bercovitz, Associate Professor
at Duke University's Fuqua School of Business
and chair of the session noted, "As these
university-industry partnerships proliferate,
one thorny issue with both legal and ethical dimensions
is who owns the intellectual property rights to
any discoveries." Participants in the session,
which included representatives from industry,
academia, and government, reported on debates
about the effects of lucrative licensing agreements
on basic research projects, professional and institutional
ethics, choice of research directions, and collegial
and incremental aspects of scientific information
sharing. This article takes a look at the background
of technology transfer and current concerns about
IP as the hottest commodity of the new millennium.
A Constellation of
Winners
Ask government, industry, and university managers
how the implementation of the Bayh-Dole Act is
working out and you're likely to receive enthusiastic
and glowing responses. An almost universal consensus
holds that the resulting licenses, collaborative
efforts, and innovations resulting from the Act
have been profitable for industry, enhanced financial
prospects for universities, improved scientific
investment, and ultimately benefited millions
worldwide.
In March 2002, the Association
of University Technology Managers (AUTM) released
the results of a technology transfer study that
included data from nearly 200 universities, teaching
hospitals, and research institutions. "Ten
years of data convincingly demonstrates that investments
in academic research not only advance scientific
knowledge and contribute to education, but also
yield new products that would not exist but for
the process of technology transfer," says
Terry A. Young, AUTM president and assistant vice
chancellor for technology transfer at Texas
A&M (College Station, TX). "The university
technology transfer process contributes to public
benefit in many other ways, such as in the formation
of new companies that create new jobs and new
streams of income that support further academic
research and education, corporate growth, and
new tax income for the public sector."
AUTM reported that:
- Nearly 3,000 new companies have been formed
since 1980 based on the licensing of an invention
from an academic institution. In 2000, more
than 450 new companies were formed, with more
than 80% operating in the academic state's home
state.
- $30-40 billion of economic activity each year,
supporting as many as 250,000 jobs, can be attributed
to the commercialization of new technologies
from academic institutions.
- More than 1500 products currently on the market
are based on university-licensed discoveries,
with 347 new products introduced into the market
from academic discoveries in 2000 alone.
AUTM cites a number of positive reasons that
universities participate in the technology transfer
process:
- To contribute to the creation of commercial
products that might not exist without the protection
given by patents and copyrights and the ability
to transfer protected IP to industry;
- To reward, recruit, and retain high-quality
faculty and students;
- To support and encourage industry/university
collaborations;
- To promote regional and national economic
growth and development; and
- To generate income to promote and support
teaching and research.
Technology Transfer
Offices: High-Tech Campus Conduits
To facilitate and implement their new powers under
the Bayh-Dole Act, universities large and small
established technology transfer offices with in-house
legal, scientific, technological, marketing, and
business management skills. At UCTech,
the University of Chicago's Office of Technology
and Intellectual Property, for example, the staff
works to protect the rights of the university
and its inventors, and to grant licenses to industries
that will develop and bring products to market.
Revenues from licenses secured by UCTech are shared
with the inventor, the inventor's lab, and the
inventor's academic division. At Florida State
University, the Office
of Research Technology Transfer publishes
a useful handbook
that provides a step-by-step guide for faculty
and staff, including legal requirements and a
glossary. [In fact, technology transfer offices
themselves offer promising campus-based job alternatives
for those who have scientific degrees but are
looking for nontraditional
careers.
Alan Thomas, director of UCTech, notes that technology
transfer brings more than financial benefits to
the university. "Commercialization can be
an extremely effective dissemination method for
beneficial or promising discoveries," he
says. "Universities can choose to work with
business and industry to see that new technologies
get to the public much sooner." Thomas, whose
own academic background is in chemical engineering,
reports that every member of his staff brings
to the job some technical background that is applied
in the delicate process of shepherding what are
sometimes at first only "proof-of-principle"
findings through the development, patent, and
licensing stages. Many younger scientists now
consider the track records of technology transfer
units when deciding to accept research or teaching
positions at universities.
The technology transfer doorway works both ways;
intellectual property does not always flow OUT
of universities to industry. In 1999, for example,
DuPont donated
$64 million in intellectual property to the University
of Iowa, Pennsylvania
State University, and Virginia
Polytechnic Institute. For each of the patent
rights reassigned in the donation, the technology
discovered or developed by DuPont was determined
to be important but not a strategic fit with the
company's long-term business plans. Such transfers
are only possible when the lines of communication
are open and collegial relationships are in place
between industry and academia.
IP: Who Profits?
The Bayh-Dole Act requires that universities
give inventors a share of the royalties that accrue
as a result of the development of their research
and that every staff member is apprised of the
university's policies for doing so. The formula
for allotting these royalties varies widely, with
some unionized faculty members receiving as much
as 60% and others receiving a much smaller percentage.
Many universities follow strict formulas that
allot a certain percentage to inventors, to their
ongoing research projects, and to their academic
departments. In those cases in which a researcher
is not governed by a specified university revenue
sharing policy (usually because his or her tenure
was established before such policies were in effect),
the division of royalties is resolved through
an academic and administrative committee.
Although many university staff members participate
in such programs and deem them successful (certainly
compared with such arrangements before the Bayh-Dole
Act), others have strong reservations about the
"corporatization" of campus science.
Gary Rhoades is a professor of higher education
and director of the Center
for the Study of Higher Education at the University
of Arizona who has written extensively on this
subject. What most concerns Rhoades is that "increasingly,
faculty members' intellectual products, including
those generated from their basic research and
teaching activities, are being considered as commodities."
He has looked at efforts of faculty members to
negotiate with universities over ownership of
IP and found that the models set up in technology
transfer are now being applied by universities
to the products that academics create in the course
of their regular professorial duties. The result
is what he calls a "corporate relationship,"
in which "academic managers increasingly
orient academic work and production to revenue
generation, in much the same way that CEOs manage
private corporations."
"Free-Floating"
Anxieties?
Rhoades is among a number of analysts who have
noted potential negative effects of IP commercialization.
In general, the focus of these concerns is on
possible co-opting of the direction and content
of scientific work. As yet, however, no persuasive
studies have pointed to concrete evidence of such
a change in academic science. However, scientists
take these concerns quite seriously, realizing
that perceptions of their motivations, choice
of research, and timing of publication may be
colored by their sometimes lucrative participation
in technology transfer.
Some of the questions raised by these concerns
include:
- Who's in control?
Rhoades notes, "Most academics are
driven less by commercial promise than by the
prospect of seeing their work have practical
impact." Every scientist has an intellectual
and emotional investment in his or her work
and a substantial interest in how and where
that work finds practical applications. What
happens when industry develops a product in
ways that a scientist may not have envisioned?
Does the scientist object? Continue to pocket
the money? Refuse to continue with ongoing research
projects in collaboration with the same company?
What legal rights and obligations constrain
the scientist's choices about control?
- Where's the focus?
Although the really big payoffs are few and
far between, many analysts worry that industry
funding and the potential for a "jackpot"
invention may shift the focus of scientific
research from long-term basic science to more
short-term end-based investigations. Universities
now have substantial financial incentives for
encouraging projects that carry more immediate
and lucrative development possibilities. Where
does the long-term research project fit into
this scheme? Will "pure" science find
itself living off the extras from application
success stories?
- How can conflicts
of interest be defined in this new environment?
Although the practice is sometimes prohibited
and often criticized, many university professors
maintain consulting contracts with industries
that may, in turn, provide funding for research.
But the commercialization of IP and the number
of spin-off companies resulting from the technology
transfer process has raised the possibility
of scientists who participate at multiple levels
in commercial processes: as inventors, as recipients
of revenues from royalties, as principals in
related research projects funded by industry,
and as stockholders or consultants to the same
companies. Even the most rigorous of university
conflict of interest policies cannot control
or even provide adequate guidance in such situations.
- Will the have-nots
get along with the haves? The
potential exists for unpleasant competition
in universities in which the royalties from
a single successful discovery can fund one academic
department at levels far beyond that of other
departments. What happens when decisions about
shared expenditures must be made? How can universities
make sure that interdepartmental rivalries don't
become moneymaking competitions?
- Is the big money
really out there? The University
of California system pulled in $261.5 million
in 2000, but only 13 other institutions had
royalty earnings in excess of $20 million. In
the AUTM survey, just under half the institutions
participating reported receiving less than $1
million. Several institutions that appeared
to have large royalty incomes were simply reporting
one-time cash-ins or lump-sum payments from
manufacturers that may not reflect long-term
or sustained growth. At Georgetown University,
for example, almost all of the $26 million in
2000 royalties came as a result of a one-time
payment from the makers of the allergy pharmaceutical
Allegra, developed on the DC campus. Does the
nature of payoffs from technology transfer really
benefit the overall level of education in the
ways that the framers of the Bayh-Dole Act envisioned?
- Remember the idea
of academia as a better world?
Many scientists choose to work in university
settings because they value collegiality, the
open sharing of knowledge across institutional
and national boundaries, and the opportunity
to learn from the wide spectrum of basic and
applied research being conducted by their peers.
What happens to this collegiality when time-to-publication
conflicts with time-to-market?
One biosciences industry analyst borrows a psychiatric
term to call these and other concerns "the
free-floating anxieties of academic staff who
have not yet found a way to cash in on the benefits
of technology transfer." Others recommend
that these concerns be kept in mind both on a
daily operational basis and in planning ways to
define and manage ownership of IP in the future.
The Outlook Remains
Positive
Although these concerns are often raised as talking
points, the number of technology transfer projects
underway has not slowed, even with the recent
economic downturn. For many, the good points simply
outweigh any conjectured negative consequences.
And for those who worry about issues of control
and subversion by transfer of IP, the pursuit
of technology transfer is not mandatory. "Technology
transfer offices like ours provide a service,"
notes UCTech's Thomas. "Those within the
university can choose to use our services or not.
Although they are not free to go off and commercialize
an innovation on their own, they're perfectly
entitled to simply publish the results of their
work in academic journals without participating
in technology transfers."
For most researchers, however, the satisfaction
of seeing their ideas and innovations developed
into useful and beneficial technologies, forging
ongoing and productive relationships with industry,
and, in some cases, realizing both personal and
financial gains, have kept more philosophical
questions about IP ownership to a minimum.
Nan Knight is a freelance science writer and
editor whose credits include Smithsonian exhibits,
Discovery Channel Web sites, and a wide range
of publications on radiation in medicine.
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