Intellectual Property: New Questions about Academia's Billion-Dollar Baby
Nan Knight

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.