What’s not perhaps so obvious is how much variation and structure there is in the third flavor of technology transfer, from lab to application. We have four venues for this work: independent inventors, industry labs, government labs, and university labs. These are arenas can be very different in how they go about research and where they are in any pathway from discovery to application. An industry lab might be deeply steeped in market realities, and use that as its inspiration to go into the science, as part of a long range plan that might be ten to twenty years out. A university lab, by contrast, might be focused on advancing a discipline-defined issue, such as testing a theory involving the origin of stars.
One simplistic assumption in most university descriptions of this third flavor in university technology transfer is that it all starts with an invention in research, and from there moves to an assessment of commercial potential in the context of existing markets (the little linear model). Indeed, one can treat all research inventions this way. It is possible. It just isn’t necessary, or particularly effective, to do so.
Even the idea of “commercial potential” is narrowly drawn. One sense is “the potential to create a profitable product”. Product is interesting to patent licensors, because product means sales, and sales means a royalty base, and royalty base means parasitic heaven. The tick finds a vein. But commercialization also can mean use by companies internally to improve commercial efficiencies or to gain a functional advantage, without any need or interest in selling product to others. It’s tougher to establish a royalty base on cost savings. Yet further, a really important commercial use is as a platform or standard. The potential of a standard to transform commercial opportunities, but not itself a product. Here, inventions are contributed to define a common set of resources on which future competition will take place.
Consider the role of universities as a critical source of platform resources. One can make a good argument that treating university research originated inventions primarily as potential products as a significant barrier to the development of new technology platforms. In this view, university patenting behaviors are responsible for the failure of nanotechnology to establish workable platforms.
There are three other areas in which universities may contribute to the broader community available technologies. The first is to use patent positions to attract investment to start ups. This kind of work pulls investment but it appears that a lot of the time, the resulting investment develops a different technology. We saw that with the Sonicare toothbrush. The core technology was developed at the University of Washington, and involved the use of ultrasound. The product that emerged developed without the ultrasound bit (note, it’s not the Ultrasonic toothbrush). So a neat product comes on the market, but it’s not the one the university research invented the technology for. One might say the university technology was used to create conditions favorable to the creation of another technology. I suppose that is a practical application of an invention, but it is not practically applying it!
While using patent rights to attract investment is perfectly natural, there is a side-effect folks don’t tend to report. That is, when an invention is licensed exclusively to a startup, and the fact of the license is used to raise money to recruit management and engineers that then build some other product, then the original invention, although patented and licensed, *sits on the sidelines*! It doesn’t get developed, and worse, it is not available to be developed. It gets used as an inventive shield, as a puff intangible asset, and it keeps others off anything that might be competitive with the technology that is being developed. So much for the number of licenses as a proxy of practical application. My experience is that half of the companies I’ve seen start around a university invention made their way on something else.
In thinking about Bayh-Dole–I’m sorry, can’t help it–it’s sort of odd that the mandate there is to use the patent system to promote use of the research inventions, but start up mechanics being what they are, one ends up using the patent system to attract investment that promotes the use of things other than the research inventions. It is a natural thing, but it drives patent licensors nuts, not because they care about Bayh-Dole, but because they really want the royalties that come with developing a commercial product within the scope of their license.
They really want to use Bayh-Dole to claim that they have to make royalties! That somehow Bayh-Dole requires some sort of “fair consideration” or “return on taxpayer investment”. Of course, not true at all. Despite this, patent licensing folk may work really hard to force diligence provisions. That horses up the apparent risk of working with universities (meddling, forcing business decisions, raising prospect of disputes). This in turn encourages design-around. Patent licensors know all this, of course, so they horse it up even more. No wonder negotiations are a pit.
The second use for research inventions is as artifacts. Artifacts are also useful in furthering research. They illustrate work product, they serve as sketches for what is possible. They live ephemeral lives. They teach what not to do. They frame problems. They point to what might be cool. They are the demo for more research.
There needs to be a ready source of artifacts moving into broader circulation. Artifacts are the silt of the river of research knowledge. Without the silt, all the nice platform beaches go away, and with them the firepits of product and safe harbors of standards. Perhaps it’s clear that filing patents on artifacts just because they are inventions, or because someone in a company might want to mess with it for a few months, doesn’t make a whole lot of sense. But if everything has to look like a possible product, then, well, guess you gotta do what you gotta do.
The third aspect to research originated inventions, and that is as a research and development tool. We’ll get to that next.