Introducing the Free Market into University Technology Transfer Services

by Melba Kurman

Introducing the Free Market into University Technology Transfer ServicesAn effective university technology transfer model should take advantage of lessons learned from the current process, tap into the power of the free market, use today’s internet technologies, and enlist emerging open innovation paradigms. The good news is that drastic change to today’s university tech transfer process may not be necessary. Let’s call this proposed model the “Plan B” approach since it introduces a second, alternative path to invention commercialization that would complement, rather than replace, the work of the university TTO. This proposed model would maintain the core of today’s university tech transfer model, but would take advantage of the power of the free market, capture the long tail of invention licensing, and make use of open innovation licensing paradigms.

In the Plan B approach, universities would give their TTO first right of refusal for new inventions, remaining the first step in the university commercialization process. Within a specified time frame, the TTO would choose one of two options: commit to managing an invention or formally turn down the opportunity and would hand the reins over to the inventor. If the TTO declined, faculty would be offered the chance to manage the invention themselves, or would be permitted to enlist third party commercial agents. The selected agent would work on comission only and would assume the costs associated with getting an invention ready for market such as patent, marketing and prototyping expenses. In essence, the agent would fully step into the role ordinarily played by the university TTO. Regardless of the TTO’s decision, the university would still retain title to the invention.

Unlike the the controversial model offered by the Kauffman Foundation last year, in this model, the university TTO would continue to co-exist with faculty-led, third party commercialization efforts. By adding a second alternative pathway to technology transfer, there would be no reason for hardworking, under resourced university TTOs to struggle under the avalanche of inventions they simply do not have time or resources to work on. The Plan B approach would make it clear to university administrators that each languishing unpatented and unlicensed invention represents a real and marked opportunity cost to the university and inventors. As a result, the university would strongly encourage the university TTO to share its workload with inventors and third party agents, especially since the commercial agents would assume all costs and get paid on commission. Rather than continuing to store thousands of unpatented and unlicensed inventions in a central university tech transfer office, commercial agents would get a crack at finding a use for the thousands of inventions the TTO does not have the time to fully focus on.

Agents could write their own license terms as long as they agreed to the single university-mandated condition, royalty distribution. Agents would receive a third of they distributed royalties for any license they execute; the inventor and the university would receive the remaining 2/3s. The university would continue to receive a third of distributed royalties, regardless of whether the invention was executed by the university TTO, by the inventor, or by a third party commercial agent.

To prevent aging inventions from dying a silent death in the university TTO, after two or three years of disclosure, universities would place all unpatented, unlicensed inventions into the public domain. Regardless of who was managing the commercialization process, all unpatented, unlicensed inventions would be handled the same way, by being released into the public domain. If businesses or tinkerers wanted to use the technology, they could sign an optional, click-thru, non-exclusive variant of a Creative Commons license. The motivation to do this small bit of paperwork would be that this license would bind neither the university nor the licensee; instead, its purpose would be to release the university from indemnity and provide verification that the university gave up title, therefore will not sue over IP issues.

The great thing about the Plan B approach is that it addresses the backlog of unpatented, unlicensed inventions that comprise the majority of most university IP portfolios. The university still gets first chance to cherry pick the inventions it considers the most valuable. Since the university receives royalty payments regardless of whether their TTO or a third party agent made the deal, universities have nothing to lose by opening up their tech transfer process to third parties, especially on inventions the university TTO does not have the time and money to develop.

In summary, here’s how this proposed model would work.

  1. Faculty and student inventors would disclose their invention online to the university-provided tech transfer office. To accurately capture the technology and ease the TTO workload, inventors would describe and post their own inventions.
  2. All disclosed inventions and materials would be immediately publicly available in a database that anybody could search and browse.
  3. The university TTO would first assess the invention. They would exercise the first right of refusal within a specified time period of 2-3 few months (some universities already do this; Stanford is a good example).
  4. If the university TTO decides that it lacks sufficient resources or subject expertise to effectively patent and market the invention, then the TTO would formally hand the reins over to inventor to manage the commercialization process.
  5. The inventor would now be at the helm of the commercialization process. Key point: even if the university TTO elected not to manage the commercialization process, the university would continue to retain title to any future patent or copyright.
  6. The inventor would now have a few choices: do nothing (this is why the initial disclosure should publicly posted online), pursue a patent and license on her own, or select a third party, commercial agent. This is where the free market would come in.
  7. If the inventor were to select a commercial agent, the agent would work on a commission model to manage the commercialization process. Key point: Commercial agents would have to agree to the university’s royalty payment scheme as a condition of accepting the job. Therefore, if a license were to be successfully executed by an agent, the university and the inventor would still receive 1/3 apiece. The agent would take the remaining 1/3 as commission.
  8. If neither the university TTO, nor the commercialization agent chose to pursue a patent and license for an invention, two years after the initial public disclosure of the invention, all unpatented, unlicensed inventions would go into the public domain. The invention would now be available via a simple, non-exclusive license that would release the university from indemnity and verify the university gave up title and will not sue for patent rights.
  9. To increase transparency, hence accountability, all inventions in the public database would be clearly flagged as to their status, the name of the selected commercialization agent, and the time lapsed since the invention was first publicly disclosed.

Everybody benefits. Of course there remain countless details to be worked out. Future Tech Transfer 2.0 blog posts will delve into the potential benefits and risks of adding commercial agents to the university technology transfer process. I will provide further details of the processes underlying the model, licensing schemes for public domain inventions, and how to put the long tail of licensing to work.


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Melba KurmanMelba Kurman writes and speaks about innovative tech transfer from university research labs to the commercial marketplace. Melba is the president of Triple Helix Innovation, a consulting firm dedicated to improving innovation partnerships between companies and universities.

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  1. It is true that some technologies langusih because of understaffed technology transfer offices or lack of experience of university technology transfer staff. However, the vast majority of university technologies languish because they are solutions in search of a problem. Federal funding for university research mostly supports generation of new knowledge. The faculty reward system reinfoces this pursuit. Not all new knowledge is useful for products or leads to commercial innovations. Nonetheless, universities patent new faculty findings, largely because they do not understand corporate needs or because of pressure from faculty who equate a patent with a publication. A free-agent system will not overcome these problems and may not result in a significant improvement in university licensing. More productive univesity technology transfer may require changing the funding system and how faculty are rewarded for their work.

  2. Hi Melba

    Great post. I’ve been wrestling with these issues as Tech Transfer professional for a few years now. And I think that your presepective is strongly aligned with our practice at the University of Leeds – where I think we can demonstrate a real ROI due to this approach.

    I outlined the ‘Knowledge Transfer 2.0’ approach that lies behind this in a post at http://brianmccaul.jiscinvolve.org/wp/2009/08/21/%E2%80%98knowledge-transfer-20%E2%80%99-6-ways-that-kt-has-to-change/

    The posts a bit old now from 2009 but did attract some attention in Tech Transfer Tactics etc. But I’m busy working it up to-date in more detail

    I’d love to discuss this further with you.

    Best
    Brian

  3. Much of this approach exists in the UK.

    Here at Cambridge, inventors can request that the University assigns IP to them, provided that the terms of the research funding allow this to happen. If they commercialise succesfully (either with or without an agent)then a portion of the revenue comes back to the University.

    With regard to technology going into the public domain, the University of Glasgow has a newly launched iniative by whcih IP that they don’t view as being commercially valuable is made available for free. The conditions require that the licensee actively expolits the IP, that the UK economy benefits from the deal in some way and that the University is credited for any success.
    http://www.gla.ac.uk/businessandindustry/technology/

  4. Christopher T. Hill

    Nothing much new here. This is how TT works in most US universities now and is essentially the model embodied in the Bayh Dole Act’s provisions.

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