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The Free Agency of Ideas

May 4, 2012

WASHINGTON -- A professional basketball player who wakes up one morning at the end of his contract and decides to “take his talents to South Beach” is free to do so.

But if you’re a researcher, unless you’re a faculty member at the University of Miami, the chance that you can take your federally funded “talents” -- whether they take the shape of a new kind of drug, a mobile phone technology, or some other innovation -- to a commercialization office in South Beach is somewhat unlikely.

The free agency of ideas is limited.

But two U.S. senators, Jerry Moran of Kansas and Mark Warner of Virginia, have introduced a bill that would, among other provisions, change the rules governing federally funded university research by giving faculty members the authority to find new avenues to commercialize their ideas outside of their home institution. The policy, which originated with the Ewing Marion Kauffman Foundation and gained prominence in 2010, would allow researchers who think they have an idea with commercial potential to take it to any university's technology licensing office or outside licensing partner. Foundation representatives say the change would help commercialize more ideas and bring these ideas to the market more quickly.

“Why would faculty, who have an opportunity to publish anywhere they choose, not also have the opportunity to work with support from outside the university to facilitate moving science to market?” wrote Lesa Mitchell, the Kauffman Foundation’s vice president for advancing innovation, in an e-mail interview.

But opponents of the policy, including the national association that represents technology licensing officials and two of the major research university associations, say the policy would upset a system that works well. They argue that the barriers to commercialization that do exist wouldn’t be addressed by the proposed policy.

Despite significant opposition from universities, the Kauffman Foundation's persistence in pushing the "free agency" proposal, along with several other efforts to reform the commercialization process, are of a broader changer in higher education over the last 30 years. Faculty members, once primarily responsible for generating new knowledge, are also now expected to take an active role in bringing their ideas to market, a role once filled by industry. Because of this change, others have begun to question whether focusing so much attention on commercializing research might be bad for universities – who until only a few decades ago mostly stayed out of corporate affairs – and the market.

Is Change Needed?

The current rules governing university technology licensing originated with the 1980 Bayh-Dole Act, which gave universities control over intellectual property developed through federally funded research. The law created an incentive for universities to commercialize research and led most colleges to set up technology licensing offices.

In the ensuing years, these licensing offices led to the commercialization of many everyday products such as Google, which came out of Stanford’s research labs. Some of these have provided financial windfalls for researchers and the universities. But for every Google (which made Stanford more than $300 million), there are a handful of commercialized products that end up costing universities more than they make. As a result, there is great variety in the quality and success of technology licensing offices, with even some technology-oriented institutions such as Virginia Tech losing money on the endeavor.

The Kauffman Foundation says there are many more ideas waiting to be commercialized. Proponents of the “free agency” model, as it is called, say the current setup of technology licensing offices is inefficient and inhibits ideas from coming to market.

Kauffman officials say technology licensing offices are understaffed and slow to evaluate ideas, and when they do get around to them, they are often unable to devote sufficient time to commercializing them. “This monopolistic model has evolved into a major impediment,” wrote Mitchell and Robert E. Litan, vice president for research at Kauffman, in a 2010 paper in the Harvard Business Review. “Inventive faculty members are hostage to their [technology licensing office], regardless of its efficiency or contacts. Moreover, because many TLOs are short-staffed, professors must queue up to get proper attention for their inventions.”

Technology licensing officers disagree with that characterization, and have come out en masse against the proposal. For the most part, they say, technology licensing offices are doing a good job finding potential innovations in research labs and bringing them through a complicated process to market.

They say the process moves slowly because it is inherently complicated. “I question why Kauffman keeps saying the process is suboptimal,” said Katharine Ku, director of Stanford University’s Office of Technology Licensing, adding that because of the diversity of research being commercialized, there is no way to know what would constitute optimal efficiency. “Why does it take a whole day to negotiate a car? Is that optimal? I don’t know if a faster deal is a better deal.”

Researchers face barriers that have nothing to do with technology licensing offices. One of the major impediments, they said, is that there is little funding for ideas that might have success in the market but aren’t immediately attractive to corporate partners or venture capitalists. Letting faculty members shop their ideas around won’t necessarily change that.

The Association of University Technology Managers has raised numerous logistical concerns about the “free agent” policy, such as how faculty members will find commercial partners. If a researcher decides to commercialize his or her idea through another university’s technology transfer office, they ask, who decides what stake each party has?

Technology licensing officials also note that the Kauffman proposal rests more on a theory than an actual model. “There is no evidence that anyone has that this would work, and there’s a great deal of evidence that it won’t work,” said Lita Nelsen, director of the Massachusetts Institute of Technology’s Technology Licensing Office.

Even technology licensing offices that would probably benefit from the proposed policy -- those with mature, efficient, large operations and deep ties to venture capital and companies, such as those at Stanford and MIT and the Wisconsin Alumni Research Foundation -- object to the proposal. Their main charge is to handle technology transfer for their own researchers, not to solicit the best ideas across the country. “We have enough of a challenge dealing with our own faculty members,” Ku said.

Licensing officials also note that they don’t think distant university licensing offices and outside licensers would be as effective at identifying research with commercial potential as a researcher's home institution. AUTM and others said a major strength to university commercialization offices is that they can work closely with faculty members to secure funding even before an idea has broad market appeal. “The point at which you are getting the first invention disclosure of fundamental patent is too early for prime time; it isn’t something that’s ready to go,” Nelsen said.

Laura Schoppe, president of Fuentek, a consulting company in North Carolina that works with university technology licensing offices to commercialize research, and whose company would likely benefit from the bill's passage, said she opposes the policy because of the logistical problems it creates. "Good or bad, there are some serious implementation questions that have not been addressed," she said. Schoppe also sits on AUTM's governing board.

Faculty perspectives on the efficiency of the current setup run the gamut, with many saying it works fine and others saying there are significant impediments to brining ideas to market. But few said it was directly the fault of the licensing offices themselves.

Jacob W. VanLandingham, a researcher at Florida State University who is in the commercialization process for a potential medication to treat concussions concussion, sees the Kauffman proposal as a double-edged sword. He said he wouldn’t mind taking his idea two and a half hours down the road to the licensing office at the University of Florida, which likely has better connections to the venture capital industry by nature of its maturity, as well as biotechnology incubator spaces that could help with bringing the idea through trials. At the same time, as a native of the Tallahassee area, he said he wants his research to be commercialized locally to help improve the area’s economy.

He said clinical trials mandated by the federal government are likely what will delay him in bringing his idea to the market.

Steven W. McLaughlin, a professor of electrical and computer engineering at the Georgia Institute of Technology who is in the process of commercializing technology that would help secure financial transactions conducted by mobile phones, said he has generally been pleased with how quickly he has moved through his university's licensing process.

He noted that the speed might be partly attributable to the space he is working in, which is a hot space right now that investors and his university's technology licensing officers are watching closely. Also, he said, unlike medical research, his technology does not have to go through complicated drug trials, so its much easier and less expensive to develop the technology to a place where people might be willing to invest in it.

The Right Questions?

While the policy focus surrounding commercialization has generally been on ways to reform the Bayh-Dole Act to bring more research to the market more quickly, a handful of researchers and policy thinkers have begun to wonder whether the fundamental premise needs to be rethought. Maybe, they say, it’s not really universities job to commercialize the research.

Joshua Powers, a professor at Indiana State University who researches academic entrepreneurship, said there are legitimate questions about whether the growth of proprietary science at the university level has hindered the sharing of knowledge and ultimately innovation at the commercial level. For-profit pursuits by faculty members at nonprofit institutions also raise conflict of interest questions, as well as questions about competing demands on faculty members’ time and the allocation of resources toward university pursuits that might not have commercial potential but are still worthwhile.

He sees the pursuit of commercial deals as having the potential to hinder universities’ original purpose – to generate and share knowledge that might be used by others. “I generally think we should give it away for free,” he said of intellectual property. “The likelihood that an institution would land something great is fairly small. At the bottom line, when it is out there, society is benefitting.”

James K. Woodell, director of innovation and technology policy for the Association of Public and Land-Grant Universities, which opposes the policy and is working with AUTM on developing new language for the bill, said universities need to do a better job explaining why, exactly, they get involved in commercializing research. “My number one recommendation is that universities have a clear policy about why they’re doing tech transfer,” he said. “We as a society spend a lot of time building up tech transfer. What we know is that the costs of managing intellectual property are big. Even if you get a couple wins, it might not make up for the costs. What is it going to mean to actually be successful?"

 

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