On Technology Transfer Metrics, 3: Money

Universities don’t track their transfers, the federal government does not track university transfers, and professional organizations and nonprofits do not track university transfers. Law firms don’t track university transfers. Venture capital firms don’t track university transfers. Pretty much anyone who has something to gain from the activity is not also tracking transfer activity for outcomes. There’s no public reporting, no public oversight, no place for public involvement–even though, presumptively, all this university technology transfer effort is supposed to be for the public benefit. Apparently, the public will best benefit from institutional actions if the public is excluded from the processes and everything is kept secret. Makes one wonder, at least.

The AUTM licensing survey is useless for tracking technology transfer–even if one wanted just to know whether any technology was actually being transferred. The AUTM survey does not consider the transfer of technology (but rather only patents, licenses, money, and startups). Outcomes–actual transfers–are not tracked. AUTM also does not track adverse consequences–faculty giving up university work in disgust, bitter fights among research team members over royalty shares, companies pulling out of affiliates programs or dropping consortium memberships, companies refusing to adopt a new “technology” because of the university’s patent position.

The AUTM licensing survey is useless in another way. I spent nearly two decades in university licensing. I never used the “data” we had to collect to supply to AUTM for its survey. We had to keep two sets of records–one set to supply to AUTM and one set for ourselves. It’s not that the numbers in the two sets were different–the records tracked different things. AUTM wanted to know how much we spent on patenting. We wanted to know how much we were spending and not getting reimbursed. To get reimbursed meant that someone else–multiple companies, say–were paying for acquisition of technology.

More generally, the primary–if not only–thing that senior administrators care about with regard to “technology transfer” is net income. “How much money are you making that we get?” That’s it. That’s the primary metric. If a university patent licensing office hit it big–talking millions a year from a patent license–the best thing of all to do would be to shut down the licensing office altogether until the licensee stopped paying, and then start things up again. But no, university administrators can’t do that because they are so fixated on money that they think if they got one amazing deal, then by converting everything over to a bureaucratic, managed system of patenting and licensing, then they will make even more money. It is a sort of gambling addiction. And it’s not even “I got lucky at blackjack so now I’ll start counting cards and make a system of winning.” It’s more like “I got lucky at blackjack so now I’ll start stealing systematically from neighbors’ garages to get enough money so I can be lucky again and again and then I’ll pay them all back.”

Everything else about the AUTM licensing survey is tied to making a case for how much work is involved in technology transfer and therefore a continuing need for more money to finance that work. Think about it. AUTM represents the licensing managers, not the universities involved–even though many universities pay for the personal memberships of their technology transfer personnel (and their annual conference and their regional conferences and their educational conferences). Why would AUTM collect data that might run against growing technology transfer offices bigger and bigger?

So why don’t universities–not through their licensing operations–track the licensing activity independently? In part, it’s because non-licensing administrators have a similar problem with metrics. University administrators want money from licensing–“a new source of revenue,” and want reputation–and so want to avoid bad press. They accept whatever gets claimed as necessary to make money, even if it isn’t so. Thus they accept patenting as necessary to make money, when it isn’t. They accept default exclusive licensing as necessary, when it isn’t. They accept compulsory invention ownership policies, when compulsion isn’t necessary to making money. It’s all very strange. Classic university-hosted inventions spun into commercial products were voluntarily disclosed, non-exclusively licensed, and some not patented. We’re talking electrostatic precipitator, insulin, vitamin D in milk, warfarin, gene splicing, X-windows, and SPICE.

We might ask, then, why doesn’t the federal government track licensing operations, even for inventions made in federally funded work? Bayh-Dole has all the apparatus in place for such tracking, but then–it turns out–Bayh-Dole makes the tracking optional for federal agencies. They don’t have to request reports of invention utilization. They don’t have to follow up to audit any of the information provided. There are no consequences for universities if they lie or report negligently–the only problem is if they don’t produce a requested report. Nothing in the report apparently matters a lick. And Bayh-Dole does one further thing–it makes all those reports a government secret. That’s part of its long-standing battle with FOIA law, which arguably Bayh-Dole violates rather than amends. So all those mindless, potentially inaccurate reports, which ought to be the basis to trigger *thousands* of march-in procedures per year per agency, end up being more bureaucratic trash produced in the name of public benefit, innovation, and commercial development.

The federal agencies don’t want to chase down actual outcomes any more than universities or licensing officers do–unless the outcomes are “success stories.” They like the run up of patents as a sign of research “innovation” and “potential” for public benefit. They like the idea that it’s up to the “private sector” to take up such inventions and “develop” them into products “for the public benefit.” For that, patents and patent monopoly pricing and delays in access and favoritism and bureaucracy are all just part of the big bargain that’s necessary for federal research dollars to result in public benefit. The federal policy is that all these things are necessary. The purpose then of federal policy is to make these things necessary. If it turned out these things were not necessary, well that would make federal policy makers look bad, wouldn’t it?

The emphasis on money is itself distorted by the idea of licensing. Money–if, like Han Solo, is what you need–comes through a number of channels. Licensing is just one of these. There’s tuition and other fees for instruction. Donations. Consulting and collaborative services. Research services. Sale of products (research tools, assays, laboratory mice, and the like). And of course, there is saving money to have more money–eliminating wasteful expenditures, improving ways of doing things, stopping the doing of things. When “technology transfer” becomes, in practice, making all things run through payment for a license, then things go weird. To be able to license, one must assert an ownership position that carries with it the right to exclude or refuse access or refuse delivery.

Now the subtle–but crucial point–in an action to transfer technology, even where there’s a license, the license does not have to carry any financial value. You might charge for your services in transferring technology but not for the license itself. You might, say, invite companies to attend a two-day workshop in which your key personnel teach the new invention, explain its technological context, demonstrate the key experimental or prototyping setups, and point out directions for development and application. For the workshop, companies pay $2,500 a person. And they leave with a royalty-free non-exclusive license to the university-hosted invention. If they want, they can sign up for a year’s continuing education, which includes consulting with the research team, getting updates about their development work, and confirming licenses to anything else. Let’s see. 50 people show up for the workshop. That’s $125,000. Costs $25,000. Net $100,000, and 50 companies walk away with trained access to a new technology. That sounds like *great* technology transfer. A year’s continuing education might be another $2,500, plus a no-charge annual workshop on progress. That means another easy $100,000 a year–and more if the technology becomes important and the university’s lab central in a developing network of users. Toss in $20,000 in patenting costs, if one must, and it’s still plenty of money by university technology transfer standards. It’s just not money coming in via *patent licensing*, even if there’s a patentable invention involved.

MIT used a similar approach with X-windows. MIT made X-windows available open source. Anyone could get a copy of the code from anyone else. MIT charged $400 to make a copy of X-windows on tape (yes, that long ago). People paid for the tape rather than beg a copy from another company that had already paid. Why? They wanted the current canonical version, not some earlier version. They wanted to deal with the source–MIT–and not depend on some other company to supply them with their copy. And how about this–they were fine supporting MIT’s distribution, to make sure it continued and MIT personnel continued to work on the code, keeping their version the standard version.

We did a similar thing at the University of Washington. We had a code distribution available for under $5,000 (depending on what code slices one wanted). We could do the deal and distribute the code (we had internet by then) in an hour or so. At one point, a company purchasing department told us that they were a bit disappointed. Why? we asked. Well, they said, we get credit for how fast we do purchase transactions, and we wish this one had been for more money, as it would have made us look even better. That’s interesting, no?

Folks don’t bother to track how long it takes to move a lab invention to use, or to commercial use, or to new products. We once had a transfer take place within 24 hours from an open lab in mechanical engineering. They posted their design on line and the next day a local company was selling product to that design. If we had waited to file some patent application and then demanded someone show up to take a license, the transfer would never have happened. As it was, the transfer took place without the mediation of university administrators, without an institutional ownership position, without a formal reporting of an “invention,” without the “assessment” for “commercial potential,” and without any license to count or money to receive based on an interposed need to take a license, no paper startup first. No bureaucratic paraphernalia needed. Instead: a web site with engaged researchers providing new content, an engaged audience, open innovation practices.

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