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Almost
lost in the extended and combative budget
discussions of the 2007 Virginia General Assembly
sessions is a 180-degree turn in direction on
intellectual property (IP) and technology
commercialization policies at state colleges and
universities. The Commonwealth has tried for decades
to herd all institutions into common approval
procedures, conflict-of-interest rules, sponsored
research, disclosures and licensing agreements. Now
each institution is to develop its own new policies
to govern IP after a legislative compromise struck
on bills introduced by Sen. Frank W. Wagner,
R-Virginia Beach, and Del. John A. Cosgrove,
R-Chesapeake.
The
goal is to boost the return on public investments in
research and development, including new products and
services to meet challenges in health, housing,
transportation and energy, and to reap the jobs that
go with them. After all, the next Gatorade, Internet
search engine, drug discovery or alternate fuel
could be just around the corner.
Federal
IP reforms in the 1980s anchored a lot of those
expectations at the state university level. A little
bit of letting go by the state a quarter-century
later could help realize those expectations. The
State Council on Higher Education in Virginia (SCHEV)
actually is relieved of its charge to create
guidelines for all. As institutions proceed, each
will report its policies to the Assembly’s Joint
Commission on Technology & Science.
What
institutions report will be a far cry from
Virginia’s traditional hidebound approach to
intellectual property management. A 2003 report from
the Secretary of Technology, the Center for
Innovative Technology (CIT) and the Virginia
Research and Technology Advisory Commission (VRTAC)
to the General Assembly, for example, exposed a
Commonwealth stuck in an overly rigid system that
couldn’t acknowledge, much less accommodate,
differences in institutional experience and
achievements, in technological fields of inquiry, in
market opportunities or in competitive realities.
University inventions or discoveries that used state
funds, for example, were considered the property of
the Commonwealth with ownership lodged in the
universities. By law, titles to IP could be
transferred only to CIT, to a non-profit foundation
established for the benefit of a university or to
other entities upon the personal approval of the
Governor.
Recommendations
to adjust the IP management system attempted to
streamline the process. 2000 and 2002 reports of the
advisory Virginia Research and Technology Advisory
Commission (VRTAC) still reflected the hope that
more standard rules, procedures and contracts would
boost research in state universities, raise the
importance of R&D overall and stimulate more
commercialization activity. But VRTAC also
recommended that the Governor delegate IP
responsibilities down through boards of visitors to
university presidents and other designated officers,
who could be more responsive.
Process
reforms do help. The record of the last two decades
shows, however, that turning university IP into
big-buck returns remains extremely difficult. Not
many universities have succeeded at a high level. A
few millions of dollars a year from IP activities,
not tens of millions a year, is the norm. New
pressures such as uncertainties in public funding
and rapidly increasing operating costs have not been
positive forces.
But
two university researchers are providing some
interesting new guidelines on how to encourage more
IP successes and avoid some traditional pitfalls.
Their recent paper, entitled "The Effectiveness
of University Technology Transfer: Lessons Learned
from Quantitative and Qualitative Research in the
U.S. and the U.K.," could offer some help to
Virginia universities "as the phenomenon of
university technology transfer goes global and the
competition for ideas, resources and licensing
revenues accelerates...."
First,
suggest Phillip H. Phan of Rensselaer Polytechnic
Institute in Troy, N.Y. and Donald S. Siegel of the
University of California-Irvine, many of the
technology transfer mechanisms universities use --
licensing agreements with private companies,
corporate or science research parks, incubator
programs and start-up incentives for faculty members
-- just aren’t designed or administered very well.
Second, academic reward systems don’t necessarily
value commercialization of new knowledge. Third,
entrepreneurship remains foreign to many faculty
members and students. Fourth, tech transfer offices
don’t always possess the private-sector savvy to
negotiate and coordinate complex licensing
agreements and sponsored research activities. Such
offices often are risk-adverse. Fifth, they don’t
work will smaller companies as well as they do with
large corporations.
But
Professors Phan and Siegel also offer some very
positive observations and conclusions. They
highlight studies that show the quantity and quality
of university discoveries drive successful tech
transfer. So do the quality of the faculty and the
ability of the university to take an equity position
in a start-up company in lieu of licensing royalty
fees. The professors, therefore, recommend that
university administrators think more strategically,
not just about intellectual property rights and
rewards, but about the appropriate environment for
those activities to thrive. They suggest individual
universities make strategic choices about their
technological emphasis and the commercial
opportunities, propensities and competition in those
fields, then organize around what they choose.
The
study points out that, although licensing and
sponsored research generate revenue streams in the
short-term, equity from start-ups can yield larger
returns in the long-term. But it concludes that
understanding the cross functional processes, the
information flows, the material flows and the risk
flows in "the value chain of technology
transfer" is often beyond the capability of
technology transfer offices. More training for tech
transfer officers is critical, the professors
conclude, but so are more radical changes. Switching
from standard compensation to incentive compensation
for technology licensing officers is one suggestion.
Another is to keep inside those activities of the
tech transfer office that the office is best
equipped to handle, but to partner with others
outside the university for technical, legal and
management expertise where needed.
Phan
and Siegel even report on evidence that suggests
shifting royalty distribution formulas more in favor
of faculty members "would elicit more invention
disclosures and greater efficiency in tech
transfer." Consider a 75 percent share of IP
royalties to faculty members instead of 33 percent.
Modifying the promotion and tenure guidelines for
faculty to place a more positive weight on tech
transfer activities is another suggestion. "(T)he
consistency and congruency of organizational design,
incentive systems, information process capacity, and
organization-wide values matter a great deal in
technology transfer success and new venture
creation," write Drs. Phan and Siegel.
That’s
why Virginia colleges and universities are now being
asked to weigh their unique norms, standards and
values as well as their policies and incentive
systems for research, intellectual property
management and technology commercialization. Each in
the long-term has the potential to contribute to the
best practices of another.
--
June 26, 2006
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