Some Lessons Learned

Here are some things I’ve learned over the years working in university technology transfer:

University technology transfer is fundamentally instruction–“a classroom for companies.”

Technology transfer is a matter of instruction, opportunity, and goodwill. It is not a system that can be run as a machine, to be attended to only when there’s a problem. It is not a matter of  a confused “sales funnel”–treating a huge input of “inventions” as if they were the prospective customers, to be whittled down to a few “success stories.” And it is not a matter of “investment.” The university is not “investing” in inventions for a “return on investment.” These are buzzword formulas that technology transfer folks repeat to rationalize why they do so little with what their university policy demands that they own.

Instruction is aligned with a university’s core mission. No cultural change is needed. No-one questions whether a university should be teaching what its people have discovered. No-one questions whether a university should charge tuition for such instruction (“tuition” means, after all, “a payment for instruction”). Make income from new technology workshops part of the royalty-sharing policy. Now we’re talking alignment of inventor interests with university programs. If university extension can pay for teaching services on top of regular salary, well so can new technology workshops. And why isn’t university extension, then, supporting such workshops in the first place?

IP Policy

Most university IP policies are garbled messes.

I have read through hundreds–it seems countless–university IP policies. Old ones, new ones, ones that climb on rocks. University IP policies used to be clear, short, and direct. State a few principles, delegate to a committee to make recommendations based on review of circumstances, and get on with it. One could disagree with a policy, but one also had the luxury of debating a clear statement of the approach. Now most university IP policies are pompous, contradictory, inconsistent, illogical, irresponsible, clueless, and grasping. Where before policies typically limited university administrative claims and emphasized equitable sharing when university resources were used in ways that conventionally gave rise to a claim of interest in patentable inventions, now university IP policies claim most everything–exceeding even the claims made by corporations.

Sadly, most university IP policies are premised on the idea that administrators get to interpret the policy however they wish–that the policy constrains inventors but not administrators. In the end, policy requirements stick not because they are legally binding, not because they are reasonable, not because they document mutual agreements–but rather, because university administrators have access at whim to $200K of legal budget to enforce their interpretations of policy, and most faculty inventors and others don’t have that kind of money. Not to mention the threat that administrators can make to an inventor’s reputation, job, and career.

So I might revise my statement above in two rather different ways: 1) most university IP policies end up as forms of administrative racketeering, conspiring to deny inventors their constitutional rights, threatening inventors’ reputations and livelihoods, taking shortcuts that don’t hold up; 2) most IP transactions involving university IP policy still operate on a voluntary basis, despite all the bombast in university IP policies–most IP that’s claimed goes unreported and uncontested, and the arrangements that do get made are done because people decide to do them, not out of duty and not because of administrative threats.

The double monopoly model–demanding to own everything, and then dedicating the institution to seeking exclusive licensees–is a rotten approach.

With the dual monopoly approach, noise to signal ratio soars, research opportunities are suppressed, inventors become combative, and licensing offices get hung up in processing rather than specializing and focusing. It’s an impossible model to operate with and sounds good only to the clueless and the power-hungry. Fixating on exclusive licensing might sound good in theory (at least to some), but it ends up creating special access to university research for speculative monopolists. A find thing if one wants to run a technology casino. Hardly what Vannevar Bush envisioned.

The idea of institutional ownership of anything of “value” or anything an administrator might label an “invention” is, essentially, a claim that innovation best takes place when a bureaucrat’s thumb is in every pie.

The overhead of institutional ownership and contracting is huge. Delays, contract poison pills, inflexible (and frequently uninformed) legal review, incompetent drafting, inexperience in negotiating–all these things make university ownership of research assets problematic. The argument is not that university administrators are better at managing things than inventors are. The argument is that, in general, university administrators are not better at managing any specific thing than the inventors or anyone else in the world an inventor might choose to work with. All the more true for authors, for software developers, for data collectors, for people who can run workshops that teach new developments.

It’s nonsense that innovation only or best happens with bureaucrats around. But a lot of university administrators think (wrongly) that their livelihoods depend on turning the university into an invention plantation.

University IP policies and licensing practices fixated on pharma/biotech and have never been permitted to explore other areas of practice.

Even before Bayh-Dole, and even before Cohen-Boyer, universities were most concerned about medical patenting. Medical faculty at leading universities opposed patenting. Harvard in policy offered to provide financial assistance to anyone fighting a medical patent. How things have changed. But the mindset that assumes a singular patent and an exclusive license is particular to a class of pharma/biomedical developments. It is suited to venture backed companies in these areas. But not much else.

Rather than creating IP programs directed at different areas of industry and innovation practices, university administrators have forced underground most other practice areas. I know because I lived in that underground for portions of my licensing career–even with a supportive vice provost for research. AUTM folks were particularly coarse–“software is a special case”; “it only works for software”; “it’s not established practice”; “it’s not in the AUTM Practice Manual that way.” They didn’t want to see that their practice–what was in their educational materials as how technology transfer “worked” was the special, narrow, limited case.

University administrators hate explanation and hate the use of judgment. So rather than create the problem of an invention that might straddle pharma and engineering, and thus could move out through either (or both) of two very different approaches, administrators feel the need to choose one approach (always biotech) over the other, administrators created a different problem of how to force everything else into a practice only barely adequate for public support of pharma/biotech (and even there defied the practices of the Cohen-Boyer, Axel, and Hall biotech inventions, which were licensed non-exclusively to industry).

Bayh-Dole

The Bayh-Dole Act has been misrepresented by university administrators and by AUTM for decades.

Bayh-Dole is not a vesting statute; by giving universities the right in a federal funding agreement to “elect to retain title” to inventions made with federal support that the universities have acquired ownership of, Bayh-Dole did not mean “take title.” There never was a right of first refusal, a presumption of title, a restriction on assignment by inventors to any other but the university. But university IP policies and guidance documents routinely still play on the ambiguity in “elect to retain title”–making it sound like there is a federal law that gives universities the right to take ownership of subject inventions without following the conventions of common law and federal patent law with regard to ownership of patentable inventions.

Bayh-Dole furthermore gives no mandate to universities to “commercialize” inventions. There is no requirement that a licensee to a patent on a subject invention must be required to make and sell commercial product. The object of Bayh-Dole is “practical application”–in short, that federally supported technology gets used by American industry, in support of American workers, and especially in small companies, and with “free enterprise” and “free competition” without messing with research anywhere–one would think, then, a preference for non-exclusive access by most every American company and university, at least for research and for internal uses.

Bayh-Dole has its defects, but the biggest defect was that it was designed to be open to exploitation–no public reporting of impact; convoluted march-in procedures that have never worked, have never protected the public; failure to protect the rights of inventors with regard to demands by university administrators (even while protecting those same rights for subcontractors). The result has been that Bayh-Dole was used to destroy the private, diverse, specialized, selective invention support infrastructure that Bayh-Dole was passed so that federally supported inventions could benefit from. In its place we now have a bureaucratic engine that turns research assets into FOIL technology–fragmented ownership, institutionally licensed.

There’s little public data to support the claims that university licensing programs are effective, that Bayh-Dole is a roaring success, or that university science is a wellspring of economic vitality.

It appears–it’s a matter of bits of evidences, since real data is suppressed–that university licensing is operating with worse productivity than the federal government was in 1980–and the federal government wasn’t even trying to “commercialize.” The government’s rate (so it was claimed) was about 5%. Universities and their foundations (so it was claimed) were at closer to 30%. Now university licensing may be at 0.5% a factor of 10 worse across many, many more technologies. The downturn is due in part to claiming ownership of more new technology than is appropriate (or legal, or workable), but it’s also due to fixation on an exclusive licensing model that fails almost everywhere except some parts of biotech and for startups, and most of the startups (it appears) are of the form of shell companies set up to compete for SBIR/STTR funds (and subcontract as much as possible back to the universities) and to compete for state economic development funds–all against the interests of legitimate small businesses. It’s called “institutional capture”: “by denying existing small businesses access to sources of funding, we increase the likelihood that the companies we create will be viewed as important contributors to the regional economy and taken as signs of the importance of our research spending, for which we beg for more money.”

AUTM metrics from its annual licensing survey are defective, unaudited, and misleading. Universities with joint inventions each count the invention. Universities who license to the same startup both count the startup. AUTM’s numbers are inflated–but because inflated numbers are convenient to a rhetoric about growth, AUTM folks roll on and academics with less sense of what’s going on use AUTM figures at face value to create all sorts of nonsense commentary about “university licensing.” AUTM does not ask for, and no university reports the core metrics that the standard patent rights clause authorized by Bayh-Dole identifies–for each subject invention, its status, date of first commercial sale or use, and royalties received. And Bayh-Dole–one of its many clever defects–makes federal reporting of such information agency-optional, and makes any such reports exempt from public disclosure. So we just don’t know. The University of California at one point recently estimated that only 1 in 200 inventions at UC made it to a commercial product–and even then, no indication if those inventions were subject inventions or whether the products were profitable or even on the market for any length of time.

University administrators have created hefty technology licensing engines that work, primarily, to ensure work for university administrators and patent attorneys. No wonder so many in the patent community speak well of the importance of university technology transfer–it pays for their vacations. As with casino economics, there may be winners and there will be losers among the patrons, but the house always expects to make money. University technology transfer is now–with a few exceptions–set up to make sure the house wins, no matter what happens to any given technology. All one needs for financial success is a big hit deal once a decade. For the rest of the time, it’s a matter of making a show of it to keep the office staffed up and lots of work spread around.

Strategies

There are diverse ways to deploy university intellectual property.

One can:

waive ownership (keep the institution out of it)

assert rights (play the troll–threaten after folks already use stuff)

share technology (especially tools that a lab uses and lets others use)

transfer technology (teach what one can’t practice directly–applications, say)

exclude others (for an exclusive license, perhaps for the money)

squander it all (be a dick, be incompetent, be overwhelmed, be a pig and get slaughtered)

Most university licensing practices are built, now, around Exclusion and because that’s such a crappy approach for most university research assets, they end up with patent rights that after a decade come to have value by Assertion–trolling industry, with the rationalization that “too bad, companies have to pay up” rather than with the apology of “we are sorry we didn’t find you sooner–here’s a free confirmatory license and a paid-up parking pass, we’d like you to come out for a visit to the lab.” If universities don’t discover Assertion, then they would rather Squander than do anything else. They rarely Waive–and only then when there’s no apparent value (they have been known to sue later if there was indeed value), and only then after they have attached strings (reserved rights, payment of patenting costs, indemnification, no further use of university resources, etc.); they refuse to go non-exclusive (and admit defeat); and they almost never are willing to offer a royalty-free, non-exclusive license in the wild (except under duress, to a research sponsor).

Think about it–university patent administrators, having spent $15K on obtaining a patent they have never licensed, would rather not license it and eat the cost than to license it to all for free and eat the cost. One of these choices reflects a public benefit at some institutional expense. The other reflects the denial of a public benefit at some institutional expense. Which choice ought folks be making? The rationale to deny is that to offer patent rights for free is a “race to the bottom” that teaches companies that universities are pansies and can’t “charge market rates.” But that rationale is like thinking dogs learn how to behave because you kick them, not that they learn how to be mean or how to avoid you by getting demonstrated on. What companies learn is that university patent administrators are dicks. What those within companies who have advocated for research relationships with universities learn is that university patent administrators don’t respect their efforts.

The proper foundation for university IP management starts with a willingness to waive everything that institutional ownership does not show a clear advantage for, share tools and use exclusive publication or product rights only in a prior or parallel context of sharing, and be willing to transfer (even assign) rights in stuff that the university has no business owning and no foreseeable future use for. Owning and exclusively licensing  patents should be relatively rare events. Once every five years. Once a decade.

The initial point for building relationships is the transfer project, not the patent.

University technology transfer is fundamentally instruction, not licensing. Non-IP intangible assets (NIPIA) may serve just as well as a starting point, as may copyrights. Most important, however, is recognizing that most research relationships focus on the work, the knowledge, the assistance, and not on the formal intellectual property. The IP may be there, of course, but folks who aim to make things don’t want the IP first–they want the practice, the prototype, the good stuff, and once they have it, of course, they don’t want to be sued for having it or using it, and don’t want to be shaken down or surprised by patent claims. If the goal is goodwill or even if the goal is money, the way a university gets there is not by focusing on patent rights, which comes off mostly as an implied threat. Leading with a patent right is like waving a gun around in a supermarket. Most people scatter. The ones that remain–the ones that want the gun–aren’t usually the ones that a university’s researchers benefit from knowing.

We started projects based on the assets they had–NIPIA, copyright, a trademark, perhaps–the project became a social discipline, an agreement among participants to pool what they had to make access to combined work easier for others. In such projects, the relationship mattered more than the bits that flowed back and forth through it. And people funded these projects through those relationships–subscription, membership, delivery, customization, sale–because they wanted what the project developed (software, data, practices, insights, expertise, willingness to help, leadership, forums, students to hire, updates, improvements, responsiveness to suggestions, a seat at the table for new work). IP moved through those relationships, too, but it was not necessarily that visible, or played to spike the money the university might received. People pay because they want to–like in a nice restaurant–not because the waiters carry guns.

While a patent may create the intangible asset of a license, which might lead to money (or loss of money!–universities don’t report their losses, or expenses, or even their net, when they report their licensing “income”)–a project may create much more in the way of intangible assets–NIPIA: network externalities, channels for future assets, flow of ideas back to the project, opportunities for students to be hired in their area of expertise, broad experience in working across a given industry, central role to mediate among competitors, leadership. Projects are much more powerful tools for building relationships between university labs and industry, and are highly compatible with university academic values, where patents and especially exclusive licenses and adopting “commercialization” and speculative “return on investment” vocabulary are generally not.

 

***

Start with instruction. Use workshops and projects rather than patents as the primary intangible asset from which to build relationships. Find and help the technical folk most ready to learn how to use new research findings, whether at companies, universities, foundations, governments, or independent. These are the foundations of an effective university IP management practice. From these defaults, opportunity is created, new intangible assets (with “value”) are created, and the university will have many ways to participate in the benefits that flow back from these efforts.

This isn’t pie-in-the-sky theory. We did this for over a decade. It’s just that this narrative doesn’t suit the standard exposition of owning everything, hobnobbing with wealthy investors, licensing exclusively, and needing more and more money to file patents on sketchier and sketchier stuff. Oh, and we made millions of dollars a year–from companies that wanted to pay for what we were doing for them.

This entry was posted in Technology Transfer. Bookmark the permalink.