Tweaking Technology Transfer

October 5, 2010

The system by which American universities make the fruits of federally funded research available to the public is fundamentally working -- but it could use some fixing up, the National Research Council said in a report released Monday.

The report, "Managing University Intellectual Property in the Public Interest," resulted from a two-year review by a panel of university leaders, researchers, corporate representatives, and others convened by the NRC. It comes amid significant debate and discussion (among members of Congress, the Obama administration, experts on enterpreneurship and others) about the effectiveness of university technology transfer and the 1980 federal law designed to facilitate it, known as the Bayh-Dole Act after its Congressional sponsors.

And it arrives at a time when, as Mark S. Wrighton, the panel's chairman and chancellor of Washington University in St. Louis, says, "our country can benefit enormously from the technological innovation that's taking place" on university campuses, given the economic downturn.

The report's overarching conclusion is that -- despite grumbling from some quarters that bottlenecks in the technology transfer system impede the commercial development of technologies, and from others that the drive for commercial home runs skews the research process -- the current system basically works.

"The system put in place by the Bayh-Dole Act -- that is, university ownership of inventions from publicly funded research and latitude in exercising associated IP rights subject to certain conditions and limitations -- is unquestionably more effective than its predecessor system (government ownership subject to waiver in circumstances that varied from agency to agency) in making research advances available to the public," the report says. And despite the concerns of some faculty groups that the push for commercialization can impede scholarly inquiry, it adds, Bayh-Dole and "the practices of universities have not seriously undermined academic norms of uninhibited inquiry, open communication, or faculty advancement based on scholarly merit."

The panel reviews, and soundly rejects, what it calls the "only proposal for an alternative system to attract interest among observers and critics of the status quo": the idea put forward by analysts at the Ewing Marion Kauffman Foundation last year for a system that would allow faculty members to license their inventions or technologies through independent agents rather than through their own institutions, increasing competition while allowing universities to retain their royalty revenues.

The panel argues that advocates for that approach have not provided evidence that it would be more effective than the current system, and were such evidence to emerge, "other significant practical consequences and policy considerations would have to be considered, such as the potential for conflicts of interest and adverse effects on public accountability," the panel writes.

The system is not perfect, though, the NRC committee concedes. "Proposals to empower faculty and other university-based inventors by giving them ownership or rights to market their inventions independent of university oversight reflect a feeling in some quarters that in the current system of university management, inventor initiative is not sufficiently valued and encouraged," the report states.

The panel suggests a set of recommendations aimed at improving both the effectiveness of university technology transfer operations to their various audiences and the institutions' accountability to the federal government, including:

  • Not approaching technology transfer with the goal of "raising significant revenue for the institution," since "[t]he likelihood of success is small, the probability of disappointed expectations high, and the risk of distorting and narrowing dissemination efforts is great."
  • Pursuing patenting and licensing practices that, "to the greatest extent practicable, maximize the further development, use, and beneficial social impact" of universities' technologies.
  • Creating advisory committees of faculty members, regional businesses and business development agencies to help tech transfer offices develop their practices and strategies, and internal panels to develop policies and mediate disputes over ownership.
  • Developing an "expedited procedure and more standardized terms for licensing university-generated technology to start-up enterprises formed by faculty, staff or students" of an institution.
  • Embracing the Association of University Technology Managers' Nine Points to Consider.
  • Invigorating the federal database (known as iEdison) that is supposed to track federally funded inventions, and making information in it more widely available to "qualified researchers who agree not to disclose the parties to, or terms of, particular agreements."

The Views of Outsiders

External experts on intellectual property and technology transfer generally said they thought the National Research Council panel had accurately captured the overall picture of today's environment, although most had quibbles to various degrees.

Joshua Powers, an associate professor of higher education leadership and chair of the department of educational leadership at Indiana State University, said he agreed with the panel's view that "there are no fundamental flaws in Bayh-Dole (indeed it has accelerated the pace of patenting and licensing) but that attention is needed in some key areas."

Specifically, it is "much easier said than done" for institutions to focus their technology transfer operations on serving the public good than on raising revenues, even though relatively few such offices produce significant funds, Powers said via e-mail. "The pressure on presidents and boards to create new and expanded revenue flows is enormous. Thus the few who have tasted the forbidden wine and the many who have been told it is delicious will be hard to convince otherwise." It would help if the report had offered more advice to colleges on how to focus on technology dissemination for the public good, he said.

Powers also applauded the report's call for strengthening reporting information into and out of iEdison, which was the subject of a highly critical 2002 report by the Government Accountability Office. A strong accountability system is important "to really see linkages between university research and downstream innovation," he wrote. "Interagency Edison in principle should do this, but given the fact that only a select few in government have access to the data, the ability to know what federal funds are getting for their investment through IP is largely impossible."

Jonathan Band, an intellectual property lawyer in Washington, characterized the report as narrowly drawn, given that it ignores the possibility -- favored by advocates for open access -- of research results going more directly "into the public domain, or going into the public domain more quickly than the normal patent term."

"The report seems to acknowledge that by and large, Bayh-Dole hasn't made much money for universities, and the main benefit is the more orderly commercialization of technology than under the previous system of government ownership," Band wrote via e-mail. "But the report doesn't ask whether the commercializing entities receive a benefit that outweighs their contribution, at the expense of the public. In other words, unless the universities succeed in driving a really hard bargain with the commercial entities, Bayh-Dole to some extent subsidizes those entities. In this age of criticism of subsidies/corporate welfare/corporate bailouts, it is fair to ask whether the public should be subsidizing these commercial entities. Is the public getting a full return on its investment? Are there possible mechanisms to make sure that the public gets a better return?"

Arti K. Rai, the Elvin R. Latty Professor of Law at Duke University, who testified at a 2007 Senate hearing on Bayh-Dole, said the report's authors seemed to have avoided more sweeping or dramatic proposals out of a desire to focus on what was practical for universities to do themselves, at a time when Congress appears unlikely to consider legislation to reform Bayh-Dole. "There's an apparent focus on what universities can accomplish through collective action, or what can be done through regulatory mechanisms that don't require legislation," Rai said. "It addresses the realm of the politically possible, and doesn't shake up anything very much."

She described the recommendations that the panel does put forward as good and reasonable ones, many of them drawn from previous proposals.

The members of the NRC committee are:

  • Mark S. Wrighton (chair), chancellor and professor of chemistry, Washington University in St. Louis
  • Mark C. Fishman (vice chair), president and chief executive officer, Novartis Institutes for BioMedical Research
  • Craig A. Alexander, vice president and general counsel, Howard Hughes Medical Institute
  • Margo A. Bagley, professor of law, University of Virginia
  • Wendy H. Baldwin, director, Program on Poverty, Gender, and Youth, the Population Council
  • Alan B. Bennett, executive director, Public Intellectual Property Resource for Agriculture, associate dean for agriculture, University of California, Davis
  • Wesley M. Cohen, Frederick C. Joerg Professor of Business Administration and professor of economics, management, and law; faculty director, Center for Entrepreneurship and Innovation, Duke University Fuqua School of Business
  • Robert Cook-Deegan, director, Center for Genome Ethics, Law, and Policy, Institute for Genome Sciences and Policy, Duke University
  • Mark S. Kamlet, provost and professor of economics and public policy, Carnegie Mellon University
  • Greg Kisor, vice president and portfolio architect, Intellectual Ventures
  • David Korn, vice provost for research, Harvard University
  • Katharine Ku, director, Office of Technology Licensing, Stanford University
  • Edward D. Lazowska, Bill and Melinda Gates Chair in Computer Science and Engineering, University of Washington
  • Marshall C. Phelps Jr., retired corporate vice president for intellectual property policy and strategy, Microsoft Corporation
  • Dorothy K. Robinson, vice president and general counsel, Yale University
  • N. Darius Sankey, managing director, Zone Ventures
  • Jerry G. Thursby, professor of strategic management & Ernest Scheller, Jr. Chair, College of Management, Georgia Institute of Technology
  • Jennifer L. West, Isabel C. Cameron Professor of Bioengineering and director of the Institute of Bioscience and Bioengineering, Rice University

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