What the university doing research was built for

[update 9/2/2016. I’ve rebuilt the middle section of this article to do a better job with the numbers. I built a little model in Excel and have included snapshots from it in the text. Once the model is in better shape–I want to show more realistic scaling of costs as the volume of inventions, patents, and licenses goes up as well as account for expiration of patents and licenses–I will post it in a file that folks can download and mess with.–Gerald]

Let’s imagine the most minimal university patent licensing office.  Let’s say, just one licensing person, with no assistance.  A reasonable, utterly low-ball salary for this person might be $70k, with benefits at 25% or so, making the total cost around $85k.  Throw in office expenses such as travel, communications, software, and the like, and call it $100k a year. This is about as cheap as one can make it.

Now there’s the problem of the patenting budget. One doesn’t have to have such a budget, of course. When I started in tech transfer, back in 1990 or so, folks were still using th’ auld way, which meant that one shopped inventions to industry under a cloak of confidentiality before making a decision whether to file a patent application. Industry, then, essentially chose what inventions ought to be patented. Once there was at least one industry partner willing to take a patent license, then an application would be filed, and proceeds from the license would pay the patenting costs.  When a licensing office got a big hit license, however, the practice changed, and some patent applications would be filed “speculatively”–meaning, without any licensee in hand ready to pay the cost of the patent application. This also meant something much more fundamental–that the patent was being obtained without anyone in the industry choosing it. Right there is a substantial change in practice. It is the difference between holding a pen and a pen knife. One is a minor opportunity, the other a minor threat.

In the administrative swarming that has taken place around university technology licensing, offices moved to adopt this speculative approach, even when they didn’t have a huge licensing stream, on the argument that this is what the leading offices were doing–and look at the huge revenues they were receiving as a result. Of course, it was all backwards, because the huge revenues came first, and practice changed to take advantage of the extra money. Those coming along later, starting their own licensing offices to get in on the gold rush, then emulated the changed practice, as if the changed practice was the reason for the big money. If these new entrants wanted to follow the actual model in place, they would wait to start their office after they got a big hit deal. Instead, by starting before that deal, they dig a deeper hole of unrecovered expenses, pushing back the break-even point by years and years.But no matter.   One imitates what one wants to imitate, and disregards the rest.  And what folks wanted to imitate was filing patent applications without industry partners who agreed that there should be a patent, and that they were willing to license the patent, and pay for the license, and like that.  University administrations gobbled this up as a potential new source of revenue and began allocating budgets for patenting, so their licensing operations could be more like, say, Stanford’s, because (apparently) the more you spend in anticipation of something, the more quickly you will get it. It’s just that the timing of big-hit quality inventions does not depend on whether you have a glossy annual report of last year’s technology transfer awards ceremony.

The arrival of the provisional patent application in 1996 added to this change in practice. Now a patent application could be filed that was little more than a research manuscript with a cover sheet, all for $75, rather than the cost of $10k for a full utility application drafted by a patent attorney. Not only that, but for only a tiny amount of money, one gets to count a patent application first as a provisional, and then a second time a year later as a full utility application, and if one is going gung-ho about it, a third time if one files a PCT application. Talk about a rapid rise in patent applications to pad out those metrics of “success.”

Filing patent applications “on speculation” also has another effect. It allows a university to take ownership of inventions where under its policies it may otherwise release any claim. Rather than having to consider the cost of the patent application together with industry interest in seeing a patent on the invention, a university licensing office can simply file a manuscript provisional–without, even, any claims–and postpone for a year any action on the matter, as if the policy that indicates that for a university to retain its claim of ownership, a patent application has to be filed timely, is satisfied by such a provisional application. Hardly. So universities started filing provisional patent applications without either a review by industry or a review by the university–so the claim of ownership became established without either industry indicating a willingness to license or the university establishing that the invention was one conducive to a commercialization effort–especially an effort that expected a single company to invest the resources necessary to make a commercial product, in exchange for a monopoly position in the marketplace.

All this is roundabout to the point that one doesn’t have to have a patenting budget to operate the minimal licensing office, but the practice these days is to have one. A patenting budget would add, easily, another $100k to $1m to one’s budget. So let’s leave that aside for now.

Now let’s say we start a new office. How long can we expect until it breaks even? First, it will have to get some inventions to manage, file some patent applications, and get some license agreements signed with companies. But that does not get one to much royalty income–that comes from sales of product, and those sales come after a product has been developed that incorporates the invention, and the payments for those sales may come a year or more after the sales have actually been made, while payments work their way from the point of sale back through the distribution channel to the OEM licensee. From the time an invention disclosure shows up to a patent issuing can be three to four years. Often an industry licensee won’t take a license (unless it is feeling very speculative or good natured) until it sees that meaningful claims are going to be allowed. From the time of license to time a product is on the market can easily be another two years–and much longer if the invention pertains to biotech or pharma. Add another year for payments to come back around to the university licensor, and we are talking six years minimum before there’s meaningful royalty income. That means, out of the box, a new licensing office will have accumulated expenses of over a half million dollars before it can start to work toward break even.

For most any deal, 6 years to payment of royalties on commercial sales. 

We can now ask, just what sort of income can one expect from university patent licensing? A facile answer is, of course, lots and lots of money. Every invention a winner.  All it takes is having the right person, a really exceptionally gifted person, doing all the work, and at ridiculously low wages. But there are also reasonable answers. We can look at the figures that characterize Stanford’s licensing experience.

At Stanford, Kathy Ku runs one of the smartest university licensing shops in the country, nay, world. There, in the heart of a technology metropolis and the largest venture capital community in the world, with about $12b of extramural funding over 36 years, Stanford handled 6,400 inventions, or about $2 million in funding per invention. For that time, Ku provides the following results (see p. 22):

3 inventions earned over $50m each
16 earned $5m to $50m
53 earned $1m to $5m
287 earned $100k to $1m

Ku reports that 80% of inventions were not licensed, but of those that were, 90% covered their patenting costs (which might be, then, about $15k of income each). It would be pretty typical in any exclusive license to ask for enough to cover the patenting costs up front as part of the transaction. Still, that leaves over 5,000 inventions at Stanford that did not get licensed, either because they never got patented (and therefore did not require the extra overhead of licensing in order to be practiced) or got patented and nothing else happened to them. If we add everything up, Stanford licensed about 6% of its invention inventory for a reasonable income. Note that at $1m cumulative, an invention is earning $50k a year on average for the 20 year life of the patent. At $100k cumulative, that’s just $5k a year. Not really a big hit in either case, but positive cash flow, at least. If royalties track commercial sales, it’s hard to see how any invention earning less than $50k a year has been “commercialized.” Yes, some patents could be licensed royalty-free–and that might well be a good thing–but most university licensing operations would blench at the thought of doing so.

If one wants to make up the most minimalist expenses of a university licensing office–$100k/year–(without dealing with patenting expenses and without paying anything out to inventors to spread around the university as administrative slush), then one has to come up with a mix of licenses earning that money.  If one goes with $100k cumulative inventions, then one is looking for 20 deals earning $5k each per year. Aiming for a $1m cumulative deal gets one $50k a year (for 20 years), and one only needs just two deals going to get to $100k/year of income. Of course, finding a $2m cumulative invention is just the ticket, as one then needs only a single license earning $100k per year to cover 20 years of office expenditures and for a bare-minimum office to be considered break-even regardless of what happens with any other invention held in the portfolio. One moderately nice deal can obscure–and completely swamp out–the impact of any other activities of the licensing office, both the good and the bad.

But we are not quite done, however. To account for payments to inventors, we need to times things by 1.5–we need $150k/yr to pay out $50k to inventors and still have $100k left to cover office expenses. To add in a minimal $100k/yr patent budget, add another $150k/yr in licensing revenue (remember $50k goes to the inventors). It appears, then, that we need about $6m cumulative in deals to break even–(150+150) x 20). (We are ignoring many niceties–net present values, inflation in legal costs, raises for the staff, risk, deal lag to payment, patent maintenance fees, taking patenting costs ahead of sharing royalties with inventors, requiring upfront payments and milestone payments, taking equity instead of payments, effort differential between new business and legacy, increasing opacity of information systems with volume …. And we are not considering any disruptions–lawsuits, breaches of contract, deals failing, your licensing officer quitting, none of that. Imagine a perfect world first–then work back to reality. But let’s leave the details and the cleverness for later variations.)

Need deals worth $6m cumulative to break even on $150k in expenses plus sharing royalties with inventors–in a perfectish world

Now imagine that you are at a smallish university, with say $100m a year in extramural research funding–a Syracuse or San Diego State or Notre Dame or Maine. (NSF lists about 140 universities that have annual extramural research budgets of $100m or more–and hundreds with less). At Stanford, they receive an invention disclosure for about $2m in extramural research. That’s just a gross rule of thumb, and it does not appear to be linear with funding at lower levels, but it’s a start. At $100m a year of funding, one might see 50 invention disclosures a year, and in my experience (having worked at a barely $100m/year campus) likely fewer than that. Consider Stanford’s numbers–a likely upper bound–and one might expect about 1% of these inventions to be each worth cumulative $1m or more (72 out of 6400). That is, one invention every two years might pay $50k or more per year, five years or more out, if one is in the middle of Silicon Valley with a research reputation and licensing office the size of Stanford’s. (And if the lag from license to first payment gets longer than about three years, the total deal length will drop below twenty years–another complication!) Licensing offices not in Silicon Valley at an elite research university can expect more time between $50k/yr deals. The bigger problem, though, is how to pick just the right invention to manage, so that that special snowflake invention–1 out of 100 inventions every two years gets promptly patented, licensed, and the licensee pays happily for 20 years.

At a $100m research university:

1 invention every 2 years might be a $1m cumulative deal

Let’s say, just for imagination’s sake, that one builds a portfolio of $1m cumulative deals–or $50k a year, for 20 years, per deal. (In practice, one will have a mix: $70k a year for 15 years, or $120k a year for 5 years. And mostly $20k for one or two years and then nothing. And really, it takes time to get a deal and more time for a company to pay anything based on sales. And of course, one could get a “big hit” that covers everything.) But say one is wildly prescient and can pick a modest $1m cumulative winner every time. Even then, it will take six such $50k/yr deals to get to break even on current operational expenses, if one pays out 1/3 of royalties to inventors and the office pays its patenting bills. That means 12 years of work, on average to get to positive cash flow.

Estimated time to a $6m cumulative portfolio is 12 years for a small university licensing shop following a plan rather than getting lucky

Here is a model spreadsheet with some figures.

Dollar figures are in thousands. Inventors get paid 33% rather than a true 1/3. And there are plenty of unrealistic assumptions at play here. But most are outer bounds in favor of success. The office stays at one person, who never gets a raise, and somehow can take care of the expanding work load–maybe that works for four or five years. The office spends $100k per year on patent work. That $100k has to cover new patent applications as well as maintenance fees on issued patents–so over time, there will be less money available for new applications. If a patent comes in at $10k, then there’s max room for filing 10 patents a year at the start. With maintenance fees piling up, that’s going to go down. So the maximum selectivity for filing patents on inventions is .2, and it’s down hill from there. The big research universities might file on a third to half of their disclosed inventions–selectivity of .3 to .5–and often have to beg bigger patent budgets to do that, unless they have a big hit deal.

As it is, there is net positive annual cash flow in year 12. And at year 21, when the first years’ patents are expiring, the operation is still a half million dollars down on total net. The first deals will expire, and new deals will replace them–and the office will be perpetually in the red. Inventors will make money, attorneys will make money, companies may well profit, but the university itself will be down a half million to make this licensing engine work.

In the meanwhile, there’s now over a million dollars of unrecovered past operating expenses because it’s taken twelve years to land 6 happy deals. At year 12, one has got 6 deals paying royalties sufficient to cover the barest operating costs, and that means that the only ones benefiting from the operation are the inventors, the patent attorneys and the licensing officer. There’s nothing left to go to support research or education.  And one has got 594 inventions that have done next to nothing, worse and worse for the 114 patents that were paid for and never licensed.  So the only “return on investment” for the poor taxpayers who did not know they were merely mules of speculation is whatever benefit they derive from the six products being–barely–sold. It’s a pretty remote benefit to use investment vocabulary.

This is an upper bound.  If one licenses at Stanford’s rates, from the get-go, and picks only the winners, and has no other expenses, and the university does not expect a share of that income and allocates everything to the inventors and the licensing operation, then one is at break even in maybe twelve years. And one never pays down the last of the accumulated expenses. Success is getting from over a million in the hole to about half a million. So either there’s a big hit deal in the mix or a lot less patenting or more smaller deals that pay off.

Run this same model with only a $50k patent budget, and positive cash flow comes in 11 years and the program is in the black by year 18, with the prospect of generating perhaps half a million per year thereafter. Here’s the table:

For this model to work, we have to find $1m cumulative deals at 8x to 10x Stanford’s rate. And we haven’t accounted for lags between license and commercialization, which can shorten the number of years generating a royalty from a given license. (The patent will expire in 20 years, and the licensee will pay royalties on sales for 20 years minus the lag before sales start). Licensing operations can front-load income–especially licensing to recover patenting costs, and getting an early start on royalties. That can reduce the depth of the total deficit but not the total amount. It’s unrealistic that an office can acquire five patents a year for $50k total patent budget and deal with continuations in part, divisionals, and maintenance fees. And it’s also unrealistic that a single licensing officer can deal with even 300 or 400 inventions while looking at 50 new ones each year and at the same time trying to deal with 15 patent applications in process at any given time and deal with contracts, checks to inventors, legal bills, answering phones, and the like. In the big picture, the likelihood that a licensing office at a small research university can get to break-even depends on austerity, luck, or fantasy.

There has to be bigger licenses and/or more of them than a baseline of $100m a year in research expenditures can generate. Of course, the world is not uniform, and a faculty investigator can invent something valuable without any extramural support whatsoever, and an institution with $50m in research can have one amazingly productive engineering or chemistry lab that produces 20 or 30 inventions per year all on its ownsome. The reality, though, is that this sort of institutional break even comes about when a university is operating with an annual research budget of over $200m.

In 2008 I did a study of 99 university licensing offices–the top ones reporting in AUTM’s difficult-to-deal with licensing survey (so not Columbia, among others). I looked at each office’s staff levels and estimated salary/benefits/operating costs based on AUTM’s salary survey for each kind of position. There were all sorts of difficulties–was legal counsel on staff in the office, or paid from another budget? was the new ventures unit part of the office or off by itself being entrepreneurial? Was the office off campus paying lease rates for its space, or on campus and getting its space at no charge? I wanted to get a rough estimate of operating costs, and university licensing offices do not publish this information.

It was also difficult to separate institutional break even, which is what we are imagining here, from operational break even–that is, when the amount of money allocated from licensing income to the licensing office exceeds its cumulative expenditures. Operational break even is a function of university policies on the handling of money. If there’s a more generous sharing with inventors, then it will require more income for the office to cover its costs.  If the university allocates only 15% and not 20% or 40% of licensing revenue to the office as its basic budget, and allocates more to its college and department administrators, then again it will take longer to get to operational break even. If the university allocates money for speculative patent filings, then there will be a lot more expenditure to recover. And of course, we are imagining just one person doing all the work, with no clerical support. Add a staff–a director, a licensing officer, a secretary/receptionist, and a bookkeeper/manager–and we are talking a lot more expenditure to recover. Indeed, a university can arrange it so that while the licensing office is making net income for the institution as a whole, it appears each year to be losing money, and so can get beat upon from everyone who doesn’t get the situation and just wants more, more, more. If the university allocates only 15% of licensing revenue to the licensing office’s operating budget, then one needs 7x the income.

As you hire for a team of specialists, an IP office gets expensive quickly–a four person team can easily run a $750K annual budget of salaries, benefits, patenting, travel, and operating expenditures. That would mean $5m in annual revenues to cover costs at 15% of income, which requires a lot of those 1% happy outcome deals–100 or so–meaning you might expect to go through 10,000 inventions to break even. If you are at a university with $100m a year in research expenditures, then at 50 inventions a year it will be a long, long time before you have seen enough inventions that a process approach is going to work. In reality, the process approach described above simply won’t work. An office at any staffing size working at Stanford’s level of activity in a $100m research environment will not break even on the licensing of the inventions it sees as a matter of volume of inventions and effort. Either it gets lucky, or it gets subsidized from funds other than its own licensing income–and either of these approaches are, in fact, reasonable and workable alternatives to developing a patent licensing office for the purpose of making money by handling a comprehensive portfolio of inventions, as one might encounter with a compulsory invention ownership regime.

I found that even considering licensing income without adjusting for payments to inventors–that is, treating payments to inventors as part of university income, as if it were an allocation rather than an expense, the offices that did the best financially were the ones that were over 20 years old, or were at institutions with substantially more extramural research support than $200m. About 40% of offices in operation for over 20 years were running at an estimated 3 to 1 return on expenses, which when taking into account paying out inventors’ shares and dealing with administrative claims on licensing income suggests these offices are also operationally at break even or better, and because they have been around for a while, may indeed have recovered their past expenditures. For offices under 20 years, the figure at 3 to 1 return was closer to 20%.

Slicing the data a different way, about 50% of offices in universities with more than $200m in extramural research were at operational break even, but only 14% (5 of 37) between $100m and $200m in extramural funding had reached that level. I would expect that for the hundreds of universities below $100m in annual research funding, it is largely impossible to break even unless the licensing office is started with a “big hit” deal–over $100K/year. Even then, the office is likely only to be at break even for the life of that deal, which may be much shorter than the life of the patent right, since it depends on the life of the product, and the patentable feature in the product, not the term of the patent or the license. It is highly unlikely that a licensing office can simply replace one “big hit” deal with another, even using the proceeds of the first deal to staff up and work through more and more of the little pile of inventions a university receives from its own personnel.

Even at the University of Washington, which started its licensing office after it already had a “big hit” invention in hand (actually, at the Washington Research Foundation), it has run its operation, and depicted a large portion of its apparent success, on this invention, which for technical reasons (an extended interference proceeding) has enjoyed a longer than 17-year patent run. The patent is expiring next year, but in all that time–over thirty years from disclosure to patent expiration–UW has not found any invention to replace the $10m to $40m per year earned by this one set of inventions, even though UW has spent on the order of $100m over the past five years alone trying to do so, mostly by hoping to flip startup companies. Over these thirty years, UW’s patent licensing program has been depicted as successful, largely on the strength of the size of the office, the number of patents issued, and the total licensing income, when almost everything about the program has depended on the success of one family of inventions that provided the resources for the build-out of the office. And indeed, the office has been a kind of success. But not the “what have you done for me lately?” kind of success; not the “we are doing this well with a lot of the inventions we handle” kind of success.

It appears that there is some sort of inflection point in the economics of a university licensing office that is tracked by extramural funding moving from $100m and $200m. Beyond $200m, there appears to be enough of a flow of inventions that an office can staff for working the inventions to get to the five or ten inventions that collectively will anchor financial break-even. If there’s a nice deal every 2000 or so inventions and one can get 100 to 200 or more inventions  disclosed per year, then there’s a chance one gets a really happy deal–a $5m cumulative or better–invention every decade or two, and that along with some more ordinary but happy arrangements is enough to make a patent portfolio start to look “successful.” Below $200m and this does not happen by process. The volume just isn’t there. The opportunities are not there. No amount of diligence or structural changes or policy demands is going to change the outcome.

All this leads back to the role of luck and purposes other than making money. As for luck, this is not merely randomness that happens to indifferent people, for better or worse. It is a matter of being open to possibility, to be afield from the expected, to have a great deal of goodwill, and a lot of friends and would-be friends happy to see you succeed. For such luck, the really happy deals tend to find you rather than that you so order and command the world that they are caught in your snares. Much of university involvement in inventions was based on just such an environment, including voluntary ownership decisions, the use of external agents, and faculty decisions about what to seek to patent. That is, universities were highly selective about what they would take under management, or even have a financial interest in based on provision of significant resources. Rather than demand to see everything, they wanted to see the stuff that faculty most wanted them to support, and to benefit from. There is nothing so sweet as to have someone bring a clearly valuable discovery forward because they want the university to benefit along with them. And there is nothing so antagonistic as a policy that demands ownership of everything that may be in the slightest valuable so it can be pawed over by administrators hunting for something lucrative and holding the rest hostage while they scrounge.

In other words, universities were lucky with patent licensing by design, by relying on faculty selectivity to point out inventions worth considering support for, for matching those inventions to institutional mission and capabilities, and for having a clear idea of the relationships and outcomes that might be gained from becoming involved in patent management. Contrast that with the present, where university administrators apparently believe it is trendy to demand ownership of everything, comprehensively, up front, non-selectively, to be held and processed and databased and sorted through for anything saleable. And by “everything” I mean much more than inventions that may be or are patentable–universities are claiming ownership of know how, show how, expertise, scholarship, everything that isn’t “traditional academic or artistic work.” So, even ownership of course materials when the course is “on-line” rather than “face to face”–because apparently on-line is “not traditional” and never will be.

What does this mean for the school with the smaller research budget–under $100m?

First, don’t adopt the model that appears to be in play at the big research universities. It is not your model, and it never will be. Large research universities have a volume of inventions to deal in that you will never have. Imitation of their policies will not change this fact. If you don’t have 100 inventions or more a year and are not nestled into the heart of a top-ten technology and investment area of the country, it is not your model of operation. Many of the programs that have made a splash for themselves in promoting their successes were built after they had program income, not before, in the hopes of it.   Imitating what you think you see is bad enough. If you are going to imitate anything, imitate the big universities before they got rich from their one or two (or three) really big deals over the past thirty years. Get their policies from the 1970s and 60s. That’s where you are.

Second, think about your opportunities for luck rather than place your trust in volume and process. As a small institution, you can be very selective, you can be flexible, you can be responsive.  You don’t have to process hundreds of inventions a year to find which ones are worth selling off and which ones worth holding hostage. You surely should not try to get more inventions to manage, just to compare yourself with larger institutions or to make it appear you are “making progress.” You can work with one or two inventions, as they are offered, and build relationships. For that, you don’t need either a licensing office or even a patent policy.

Luck does not particularly favor the formalities of a patent policy or a licensing office with invention reporting forms and template contracts. Luck favors goodwill, visibility, friends in remote and unexpected places, companies that want to see you succeed, and people who recognize the value of reciprocity. If you are prepared, luck favors you with opportunities. This is a tough lesson for the command and control types who believe that institutional controls and processes are the key drivers of financial return. Sure, there is a role for the factory model. It is just not commonly useful in independent discovery seeking transformational innovation. In fact, the factory model is entirely useless at the earliest stages of creative work. It is worse than useless–the factory model is damaging, as it introduces order and fixes architectures before the creative process has developed its theme. It’s like taking over children’s play while they are just getting going and turning it into “organized” sport, with winners and losers and whatnot, rather than participating in the positive samadhi of play. For that bit of imposed, recognizable order–the loss of joy, of diversity, of freedom.

A university can build a realistic, financially successful, ethically grounded invention support program on luck and goodwill rather than policy, process, monopoly, consistency, and bureaucracy. Not only that, but universities have done so for a century. Even technology transfer programs, complete with administrators, can be build on luck and goodwill, on curiosity and offers of support rather than on duty, demand, and hard-nosed business dealings. The route to a great relationship does not always pass through bullying behaviors, paranoia, and massive institutional policy checklists. In fact, no. One may extract money from a relationship formed in such a way, and lots of it, but using IP positions as a threat, rather than as an opportunity undermines a university’s identity, the very fabric of its social role, its public goodwill. What’s worse is that some university licensing offices were built on just such a program of luck and goodwill along with effort and financial support–and they turned out to also be very successful financially. What makes it worse is that others, in choosing what to imitate, pick the love of money, the financial success, rather than the commitment to luck, goodwill, effort, and offering some financial support. They end up with policy dictating institutional ownership, bureaucratic process, service to petty authority–everything that’s wrong with service to creative folks in the midst of wild discovery and the be-wild-er-ment of unknown shores.

This leads, finally, to a different rationale for having a university IP office: service to the public, to scholarship, to the people who make things. One could justify an IP office, a technology transfer program, even a licensing operation, on a basis other than seeking windfall profits. One can base it on service to the creative class community, both within and external to a university. One could take ownership of inventions to not make a dime on their licensing, but to ensure access and manage quality control, and have a part to play in setting standards and getting things to work. One could even be paid by industry competitors so that they all have access and no one of them gains a monopoly on the rest. One could delight in creating platform technologies, and commons, and interoperability–the stuff that innovation early on thrives upon to gain critical mass, and to explore possible variations, and to position itself for sustained adoption and use. In such an office, one would take on inventions not because they appeared to be lucrative, but because they matched office capabilities to serve the creative community.  Some such inventions may well be lucrative, too, but “commercial potential” would not be relevant. “Value to industry” might be–if by that value is meant “access” to inventions, data, expertise, training.

A university can make $100K holding a workshop on a discovery or invention with 50 people paying $2K. That’s a 6% event in the Stanford metrics. Do that workshop once a year for 10 years, updating it each year, and one has a $1m cumulative asset. That’s a 1% event in the Stanford metrics. How many workshops can one do in a year worth $2K to an industry scientist or manager, in which they walk away with new information as well as a royalty-free non-exclusive license to a set of patents, as well as new working relationships with the faculty, staff, and students who know the inventions as well as anyone in the world?

A university doing research has way more to teach than it does to license for big bucks. The invention gives rise to a workshop, not a patent, as the intangible asset that carries the public value. The role of the IP office then is to attach the value of a research finding to an intangible asset best able to carry that value. Once a decade, that may be a patent. Every third Thursday, it may be a workshop, or a course, or a consulting arrangement. That’s because universities are in the business of teaching what they know, much more than they are in the business of excluding others from practice to share a buck with wealthy speculator buddies. The dunderheaded thing is to demand that a patent be made to carry the value of a discovery even when it is entirely ill-suited to the role, just because some administrator has got a bee in the pants for making money on patent licensing. A university generally–of any size–has way more to offer non-exclusively, as a service, with associated instruction and support, than it has to set up a monopoly power play. And it has way more to gain, financially, if one wants to look at “bottom lines”–it is just that the money does not all show up against a patent license, but is spread across an array of relationships–workshops, donations, research contracts, affiliate program memberships, to name just a few. At least it is a different perspective on how to make money.  $15K to file a patent, or $15K to put on a really fine two-day workshop on what’s just been discovered, invented, built, or composed?

Of course, one can always have a patent policy that recommends that university inventors find an invention management agent and share any proceeds with the university, based on a review of circumstances that shows that others in the university have played a role in supporting the invention in out of the ordinary ways. That also does not require staffing up one’s own licensing office and it allows inventors to choose among various agents that might help them do what they wish to do with their inventions–which may be to create new products, but also may be to make sure everyone has access. For providing access, some agents are better than others. For providing access, presently, the major university licensing shops are often among the worst, but everything points to the thought that they really should be the best, the very best, the role that they have forgotten or never knew, what the university doing research was built for.