Intellectual property issues limit university research

Sept. 21, 2006
Colleges must slake their thirst for royalties as intellectual property issues limit industry-backed university research, according to Chemical Processing's Editor at Large Mike Spear.

Around the time I was completing my industry-sponsored research degree in the early 1970s, the University of Florida was settling a lawsuit with the creators (researchers at the university) and producers of the Gatorade sports drink over the rights to its formula. That settlement has since brought the university more than $80 million in royalties — while my research into centrifugal filtration has, shall we say, been rather less fruitful to either university or industry.

But had I actually stumbled on the secret of scaling-up centrifuges from a basic knowledge of filter cake compressibility (some PhD research really was at the cutting edge even then), it would have promptly been put into the public domain under the agreement at the time between my U.K. university and the sponsoring organization of process equipment manufacturers.

Perhaps it was a more innocent time. Companies then were content to fund research in the expectation that, if successful, it would benefit industry as a whole, while universities were content to take industry’s pound or dollar without too many strings attached from either side. (Admittedly my own project was not quite as altruistic — my experimental research rig was available for companies to hire on occasion.) But times certainly have changed, not only in the U.K. but even more so in the U.S.

Some in U.S. industry would point to the 1980 Bayh-Dole Act as a turning point in relations between industry and academia. That act allowed universities to patent and license the results of federally funded research, effectively granting them the intellectual property (IP) without having to go through interminable negotiations with the sponsoring agency. Nothing wrong in that, one might say, especially as government at the time had only ever managed to commercialize one in twenty of the 30,000 or more patents in federal hands. Plus, any royalties accruing to the university were to be shared with the inventor and then used for education and research.

Indeed, so successful has the act been in its original intention, that — in echoes of Gatorade — it has brought riches galore to some schools, particularly in the life sciences arena. In 2004, U.S. universities reportedly earned $1.39 billion in licensing revenue and applied for more than 10,000 new patents. This windfall has spawned the belief among many in academia that the same advantages conferred on them by Bayh-Dole should be rolled out in their dealings with industry. The result, inevitably, has been a lengthening of the time taken to negotiate research contracts between companies and colleges. This, in turn, is leading many firms to take their research projects to countries where IP is not such an issue.

At least all sides of the debate recognize that there is now a problem here. Under the auspices of the National Academies’ Government-University-Industry Research Roundtable (GUIRR), representatives of all three links in the chain have been working over the past few years to “re-engineer the university-industry partnership,” to improve on current IP practices. The next stage in their work is the new three-year University-Industry Demonstration Partnership (UDIP), the first project of which is to develop a survey-type negotiating tool — dubbed Turbo-Negotiator — that will help separate collaboration negotiation from contentious licensing negotiations.

According to Tyler Thompson, research partnership leader with Dow Chemical, Midland, Mich., and the company’s UDIP representative, “company-sponsored projects are different from government-funded projects. The rights and terms that may be fair for an uninvolved company seeking to license government-sponsored results are not fair for a sponsoring company seeking to protect its research investment.”

He notes the overwhelming majority of university royalty revenues come from work in the life sciences. “Different industry sectors must be treated differently,” he stresses. “This affects reasonable royalty rates and how long it takes to make a decision. The amount [of royalties] from physical sciences and engineering is very small. So, in their relations with mature manufacturing industries, universities should focus their efforts on attracting research funding with very favorable IP terms, and give up on the idea of hitting the Gatorade bonanza.”

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