Meera Nair

Universities and Commercialization (or Peanut Butter II)

In Posts on October 9, 2010 at 1:07 pm

A few weeks ago I wrote about a Statistics Canada report concerning commercialization of research in universities. The report was vague and began with the implication that a university’s capacity for creativity and innovation can be judged by its intellectual property holdings. Meaning, the number of patents and copyrights to its name. Earlier this week, Doug Lederman for Inside Higher Education described a report by the National Research Council (United States) concerning the merits of technology transfers between academia and industry. The prepublication version of the report is freely available here.

The report is titled Managing University Intellectual Property in the Public Interest and uses the passage of the Bayh-Dole Act* in 1980 as its starting point. This Act paved the way for American universities to take ownership of the intellectual property which arose from publicly funded research, for the express purpose of facilitating commercial development and licensing of the work. The practice prior to Bayh-Dole placed ownership in the hands of the funding agencies and commercial development of university research was infrequent.

American universities were given broad latitude in how they facilitated commercialization, but were held to some conditions including that they:
i) give preference in licensing to small businesses, with special consideration to those that develop and manufacture domestically.
ii) provide a royalty-free paid-up license for government use of inventions.
iii) share royalties with the faculty inventors and devote any remaining income to research and education.
As the report states: “Congress sought to protect important public interests rather than leave them entirely to the discretion of inventors or their institutions (p.21).”

The conditions that accompanied Bayh-Dole were consistent with the utilitarian slant of the American justification for intellectual property as a whole. Article One, Section Eight, Clause Eight of the United States Constitutions allowed Congress “To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.” From that, in 1790, stemmed the first American copyright and patent laws.

Interestingly so, while early American copyright law followed closely in the model of its British forbears, this emulation did not extend to the system of patenting. In The Democratization of Invention: Patents and Copyrights in American Economic Development (2005), B. Zorina Khan speaks of the unusually democratic underpinnings of the American patenting system: “The creators of supposedly heroic inventions were lauded in the European nations; inventors and innovators of all classes were universally celebrated in the United States (p.2).” Indeed, the British were quite dismissive of the American system, until the Crystal Palace Exhibition of 1851 where it became evident that the former colony had outshone the former masters.

With this historical snippet in mind, one aspect of the NRC report is curious. The committee staunchly rejected a call to permit individual faculty members to license their work independently – without using the university as an intermediary – while still allowing the university’s share of royalties. A criticism of the current model is that university industrial liaison office staff do not understand the application as well as the original inventor, and therefore have inadequate knowledge of the market potential. The rebuttal is given: “there is no systematically collected evidence that inventors have knowledge and skills superior to those of technology transfer personnel (p.58).” Nevertheless, it seems odd that a nation which prides itself on competition, and has seen the value of it, should disallow introducing competition for the innovative thinking that arises on its campuses.

[Aside: Khan points out the speed with which the United States raised its standard of living, and that it did so by relying on the ingenuity of its population and facilitating the widespread dissemination of that ingenuity.]

Granted, the NRC report makes continued reference to public well-being throughout its report and there is a risk that if decisions are made entirely by private individuals, the outcome may be concentrated in private hands. But conditions could be imposed – perhaps a partial repayment of the labour and facilities used up to that point? Or, if a faculty member is so inclined, he or she could choose to publish the initial findings through Creative Commons’ licensing with conditions placed upon how their work may be exploited. Interested third parties will come to them, and then negotiations can begin. The possibilities for widespread dissemination are much broader if every option is on the table. And options are needed, because the status quo looks unpalatable.

As the modest Canadian data illustrates, and the extensive American data supports, few universities enjoy healthy profits from their UILO offices. It is not enough to have a good idea. A number of stars have to align: the sheer slogging it takes to succeed, the need for commitment from all parties, and a clear understanding of both the realities of the market and the realities of research. The report devotes some space to the less-than-ideal dialogue between academia and industry (p.55-57); it brought to mind my prior experiences of hand-holding researchers through the shift from the orderly ivory tower to market mayhem.

Opening up the means of transfer of knowledge does not imply a reduced role for university administration. Oversight is even more important, particularly to raise the profile of what the private sector will miss. From the opening pages:

Universities have a lengthy track record of providing dynamic environments for generating new ideas and spurring innovation, and for moving advances in knowledge and technology into the commercial stream where they can be put to work for the public good. These endeavors collectively are referred to as “technology transfer.” … universities arguably have an obligation to organize themselves effectively to facilitate the transition of knowledge into practice (p.16).

The term, technology transfer, has multiple meanings. The report gives eight definitions including: development of skills/education of students; publication in academic literature; personal interactions amongst scientists, scholars, and users; entrepreneurial activity of university staff (without involving proprietary IP); and licensing of intellectual property. Yet, it is the last item “that is more often discussed, measured, quantified, and debated than the other mechanisms combined (p.17-18).”

While the report further supports this trend, it provides a comprehensive look at the last 30 years of commercialization in the United States.

More to come another day…

*Bayh-Dole Act of 1980 (P.L. 96-517, the Patent and Trademark Act Amendments of 1980)

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