IP Finance is delighted to bring you this piece from our friend Suleman Ali (Holly IP), which touches on a sensitive topic:
Are Commercial Pressures Undermining the Ethics of
University Tech Transfer Offices? 
The Bayh-Dole Act of 1980 made it possible for US
universities to benefit financially from government funded research. It allowed universities to own the patents
that resulted from their research, rather than having to assign them to the
government. Since then many US
universities have done well in commercialising their research. The Association of University Technology
Managers (AUTM) in the US reports that last year US universities and research
institutes executed 5,130 licenses, formed 705 start-ups, filed 22,750 US patent
applications and made $2.6billion from licensing income. UK universities have also done well from
commercialising research, making £61 million in licensing income in 2010/11. Most would agree that commercialising
university research is beneficial for the economy of a country, and in
particular helps the increasingly important hi-tech industries.
The hub of the system is the university tech transfer
office. Such offices are now well
established in many top universities, and are finding their feet in the less
prestigious universities. However tech
transfer offices have a difficult task. They
have to persuade academics to commercialise their research, educating and
pushing the reluctant ones and keeping in check the powerful and pushy ones. They have to defend the university’s
interests when collaborations are set up, and are sometimes accused of being
too aggressive in doing so. Most importantly they have to decide on which research they’re going to
commercialise. That is usually based on
two main factors, patentability and commercial worth. Patentability is complex, but usually possible
to decide on -- but assessing commercial
worth can be close to impossible, and inevitably tech transfer offices get it
wrong a lot of the time. That means many university patents are never licensed
or commercialised in any way as a commercial partner is never found. 
A recent article in Nature highlights the phenomena of universities looking to Patent Assertion Entities
(PAEs) to monetise their unlicensed patents.
The article quotes a figure of only 5% of patents being licensed at most
universities, which means that a lot of university resources are going into
filing and maintaining patent applications which are never going to give any
return by the usual means of commercialisation.
PAEs are controversial because they do not develop the technologies
covered by the patents they control.
Instead they make money by asserting their patents against companies
using the technologies, and thus are seen by some as a burden on innovative
companies. A report in the Stanford
Technology Law Review last year alleges that one of the most high profile PAEs, Intellectual Ventures, has
relationships with 400 universities around the world and has signed deals with
50 of them. It’s clear that many
universities have no qualms about monetising their patent cases through PAEs.
Questions can be asked about the do’s and don’ts of
commercialising publically funded research.
While it seems acceptable for tech transfer offices to license or sell
patent to companies that are going to develop the relevant technology, is it
equally acceptable for them to monetise their patents through PAEs? US universities are aware of the issues
raised by turning to PAEs. A memo that
resulted from a meeting of top US universities in 2006 says ‘universities would better serve the public interest
by ensuring appropriate use of their technology by requiring their licensees to
operate under a business model that encourages commercialization and does not
rely primarily on threats of infringement litigation to generate revenue’.
One wonders about the long term consequences on university
research now that the option to license to PAEs is available. Academics are under increasing pressure to
focus their research on areas which will have commercial interest. While it could be argued this harms blue-sky
thinking it would still lead to innovative, and hopefully round-breaking,
work. However the PAE model relies on
having patents that cover what is being done by companies. That may cause academics and tech transfer
offices to simply focus on producing patents that PAEs would be interested in
having.
Perhaps now is the time for broader questions to be asked
about how publicly funded research should be used. Governments seem increasingly in favour of
open innovation, where the results of university research should be freely
available to all, allowing as many organisations as possible to benefit from
it. Allowing PAEs to license and assert
patents resulting from university research seems a backward step in that
process, hurting not only the most innovative sectors of the economy, but
arguably also being detrimental to university research itself.