Open innovation lies at the root of university technology transfer. The fundamental expectation in moving technology from basic research to industry requires that companies accept incoming technology. As soon as one is up against the “not invented here” syndrome, one is dealing with open innovation issues. The challenge for university technology transfer is that in its biotech-centric dominant model, one typically wants the “open” bit to happen only long enough for a company to become a commercialization partner. The rest of the license contract is often written to ensure that the company treats the licensed IP as if “closed”–that is, the license will pay attention to diligence to create a product and market for product, and to sublicensing to ensure stuff is not just given away or cross licensed or dedicated to a standard without “fair compensation”. That is, university technology transfer patent licensing *relies* on open models, but its general practices then *discourage* it when it comes to licensee exploitation of rights. A glimmer of hope lies in the way in which start up deals are structured around equity rather than royalties. Here’s hoping for a time when there are exits!
Open innovation is way more than a theory. In fact, if there is a limitation to Henry Chesbrough’s work at this point, it is that there’s such an overwhelming body of available information, it’s really, really difficult to assemble it and create a decent theory that accommodates the full range of what is happening. It’s a real transformation going on, and it has been at least since IBM unbundled software from its mainframes in 1969. Open source, the internet, open documents, creative commons, and the public side of the human genome project are all instances–really huge big hairy instances. We now need folks in the scholarly community to spend a lot more time working the directions Henry Chesbrough is pointing out and a lot less time counting patents and licenses and income clustered around a biotech model that has been mostly business as usual since the mid 90s.
Open innovation can be seen in the internet–which is a whole truckfull of university-generated technologies that have become mission critical infrastructure–not just software and standards, but also the hardware and firmware. Open source software is but a subset of this activity. It extends into emerging standards for new media such as open document standards. That Adobe Reader works because there’s an open standard people can use. Computer and other information technology hardware works the same way. There is a huge activity within the industry in cross-licensing and standards development. It’s often very political, with a lot riding on outcomes, and it is in the standards development that a lot of market position is won or lost. Creative Commons makes open processes operational across a host of media assets. Science Commons aims to extend these approaches into the realm of collaborative research. The activity is already there–Science Commons can play a pivotal role in developing ways to make exchanges routine across copyright and patent rights, against various jurisdictional controls (such as those on information, like HIPAA for health sciences).
We can see open innovation at work in the human genome project and the bioinformatics industry that is springing up around it. The effort is reflected in the NIH Guidelines on access to tools, in the way in which disease assays are managed within the lab medicine community, in new organizations like the Biobricks Foundation for “open wetware” and in the deposit requirements for data and materials in support of publications in biomedical areas. This isn’t theory–this is on the ground practice tied to insights into how research is conducted and the norms of access, interoperability, and ability to modify that are essential to advancing research goals.
Open models build infrastructure, and infrastructure in turn creates market opportunities. It may be that in university technology transfer fixation on using patent rights to pop company lids open for just long enough to insert a product-development control point, they are missing what is going on all around them. The transformations in energy and transportation and communications that we are looking at now are fundamentally infrastructure transformations. The universities that play in these arenas will learn to be really, really smart about how they contribute to infrastructure. Your environmental technology invention to clean oil from beach sand is not going to be licensed exclusively to some start up who will sue the City of Santa Barbara for infringement if some oil rig off shore springs a leak. You will have to reserve a whole lot more rights than you are doing now in your routine biotech patent licenses. That 9th point to consider will really matter–and the moment you reserve more than non-profit research use, you are deep into open innovation venture mechanics. Before there will be product licensing opportunities in these areas, universities will have to support infrastructure development.
What doesn’t work for university technology transfer offices is their apparent reticence to unfixate for even moments on seeking royalty-bearing patent licenses to produce product. Open innovation here doesn’t work (other than for that tupperware moment to burp the company IP lid) because university technology transfer is a lagging edge activity. Tech transfer offices hold onto a narrow model of the technology world that has generated a handful of “hits” over 25 years and for the most part squandered a ton of opportunities to put university work into play much more modestly (from the point of income) and much more valuably (from the point of relationship building, contribution to infrastructure, and even capture of value). When was the last time your tech transfer office dedicated patents to a standard? Agreed to a no-cost cross license? Licensed a pool of patents for no charge in order to create a market for other inventions to come? When was the last time your annual report billed your work as a “rainmaking” activity, creating huge benefit for others rather than just for your own institution and licensing program? Yeah, I know. This goes to 11. http://www.youtube.com/watch?v=d54UU-fPIsY
The good news is that open innovation is a way to address that artifact of marketing patents for product called the funding gap, creates a wide range of intangible assets that are even sweeter and juicier than the typical patent license (which we all know covers patenting costs and then dies, or at least goes into a cocoon to emerge as a wickedly beautiful asset play). The tough love news is that university tech transfer offices will have to build out additional capabilities and infrastructure to handle open innovation in emerging areas of science and technology. It just ain’t going to happen like it’s 1983 all over again. The new windows of speculative investment learn from what has gone down already. Don’t expect the same deals to resurface. We don’t have the same IPO market, and we have new venture and angel players, and we are looking at whole new industries that have to consider their competitive environments. As von Hippel points out, we’ll have to figure out where the points of innovation uptake are going to be in these new (for university tech transfer) value chains, and hit these with our best efforts–which to start may be to create tools, testbeds, and standards. Much of what we need now from universities will never hit a product stage but will be crucial to build the competitive infrastructures of the future.