A few days ago I sat down to work on a curriculum for innovation and found myself distracted by the outline of a book-length treatment of the development of university “technology transfer.” I emerged a few hours later with a sketch of the idea. I will post things here, in twelve segments. Yeah, for the days of Christmas. Partridges in pear trees and all that.
1. The great experiment
In 1912 Frederick Cottrell creates The Research Corporation, “an experiment in public administration of patent rights.” University inventors assign rights to Research Corporation, which works with industry to develop the inventions and uses royalties to fund research nationwide. University of Wisconsin faculty copy the model a decade later with the Wisconsin Alumni Research Foundation, which plays to faculty inventors’ institutional affiliation. The WARF model was then copied by many other universities. By the 1960s, there were two main approaches, one involving Research Corporation and the other using institutionally affiliated research foundations. The key to Cottrell’s approach is independent, cooperative, national invention management, coupled with double selectivity of inventions. Most of Cottrell’s insight is now lost amid bureaucratic rationalization of institutional self-interest.
In 1905, Frederick Cottrell at the University of California invents the electrostatic precipitator to remove soot from industrial smoke. With support from his faculty colleagues and with industry encouragement, Cottrell files patents and works out how to make his invention a practical reality. Cottrell finds no resources available to faculty inventors and sets out to do something about it. In 1912, he creates The Research Corporation, one of the first public corporations in the country. Cottrell publishes an account of his thinking in The Journal of Industrial and Engineering Chemistry, calling The Research Corporation “an experiment in public administration of patent rights.”
Here is Cottrell’s idea: Research Corporation would take over management of most of Cottrell’s patents, license the electrostatic precipitator to industry, and use the royalty income to support scientific research nationally, with primary funding managed by the Smithsonian Institution. Cottrell decided against relying on the University of California to manage the patents (my emphasis):
By the time the work had thus reached a self-supporting basis, its significance was felt to have broadened to a degree which made its control by a local institution such as a single University inexpedient; the fullest success of such a movement is inevitably conditioned upon its being most broadly representative of the common interest of those whose cooperation and support it aspires to secure.
Cottrell’s insight with regard to the relationship between common interest, cooperation, and success is perhaps the most important element of his experiment.
Research Corporation would receive inventions from anyone—university faculty, independent inventors, companies who “incidentally develop” patents—and manage the introduction of the underlying inventions into production and use. The primary concern of university faculty was how to deal with the problem of monopolies in new technology. By itself, a patent has the potential to create such a monopoly. Releasing inventions freely to everyone, however, sometimes removes incentives for companies to invest in the effort to create new products. Research Corporation was created as an interface between academic values and commercial interests. In doing so, Cottrell maps out the approach that will be used for the next seventy years, until the passage of the Bayh-Dole Act.
The idea of Research Corporation was innovative in multiple ways. First, Reserch Corporation represented a new way to manage university-originated inventions. Second, it was a novel use of the corporation structure. Third, Research Corporation managed the scholarly norms of faculty and their institutions while working to introduce their inventions into broader use. Fourth, Cottrell created a method to provide research funding to faculty, when the government was not in the business of funding university research and industry did so only irregularly.
Research Corporation was, all in all, a successful experiment. A decade later, faculty at the University of Wisconsin create the Wisconsin Alumni Research Foundation, following Cottrell’s model but returning all proceeds after expenses back to the University of Wisconsin. This variation reveals the first step in the provincial interest in patent revenues by each university. Rather than distributing research funds to worthy projects throughout the country, WARF kept all money local. Other universities quickly followed either the Cottrell model or the WARF model. Those that followed Cottrell recommended that faculty inventors work with Research Corporation. Those that followed WARF created their own research foundations—Purdue, Washington State, and Kansas State among them. In both cases, faculty assigned their inventions voluntarily to a patent management organization rather than to their universities The patent management organization then handled patenting, licensing to industry, and any royalty income, dividing the income among the inventors, their universities, and itself.
If university faculty invent, the research foundation approach provided a balance of professional support without the university itself getting caught up in commercial dealings, playing favorites, and creating liability for itself.
The reality, however, is that only a handful of inventions eventually created the revenue that allowed these research foundations to take in additional inventions for management and support research activity nationally. There never has been a method by which each patentable invention is developed into a commercial product. Historically, the commercial usage rate of patented inventions is about 5%, or 1 in 20. For inventions made by university faculty in basic research, separated from industry and working in problems that industry might not be interested in, the rate might be expected to be even lower.
In the past century, there have been many, many, many more inventions than those that ever become commercial products or even receive general usage in industry. The secret to Cottrell’s approach was that both faculty inventors and the research foundation were selective. Faculty only proposed inventions that they thought had public utility—not merely anything that might be patentable. The research foundation, similarly, was not obligated to take under management every invention that was submitted to it. This double selectivity allowed research foundations to focus on their areas of expertise and industry contacts, and work only with those faculty inventors who desired to see their work become broadly useful to the public. Cottrell’s insight was that national, independent, cooperative double selectivity leads to successful management of faculty-originated inventions.
These lessons taught by Cottrell’s experiment, sadly, have not been learned, as university administrators now generally treat patent rights in research findings as a ticket to institutional financial windfalls. In doing so, they have destroyed much of the cooperation that Cottrell’s vision relied upon. In its place, bureaucrats have tried to introduce systems that rely on brute force, on increasing compulsion, on finding the right charismatic leader, on reorganization, on more systematization and regulation, on spending ever more money. All these are hallmarks of a failed idea of what to do and how to do it.
There is a role even for administrators in dealing with faculty-originated inventions. Beyond all else, that role now entails undoing the rationalizations that hold in place the failed system. Undoing, for an administrator, takes courage, clarity, and determination. But that’s what is needed, and that is what will begin to rebuild American university research productivity.