Madison, Wis. – New technology in any given field has increased exponentially, and successful technology transfer has led to innovative new products and services that impact all of us. Just think of your cell phone, Google, the GPS on your dashboard, or even your favorite Gatorade, which was licensed from the University of Florida in 1973 and has provided over $150 million in royalty to date.
Technologies come from everywhere: individuals; small, medium, or large companies; universities; and government labs. There is no shortage of great ideas, solid research, or motivated inventors. The key is for entrepreneurs and visionary business leaders to understand market needs, then tap into new technologies to create high-value, new products. This process is broadly defined as technology transfer.
License to create and innovate
A license, much like an apartment lease, conveys select rights to use property. However, instead of real property, a license governs rights of intellectual property (IP), including copyrights, trademarks, trade secrets, know how and, of course, patents. Like an apartment owner, the owner of the IP can grant (or restrict) various rights, under IP law, to a licensee. For example, a licensor can grant a licensee the ability to create, manufacture, and sell products that embody the IP.
Technology transfer also takes shape in more subtle ways. Companies can tap into university resources to solve problems and gain a competitive advantage whether or not there is IP conveyed. For example, a printing company in northeast Wisconsin wanted to eliminate a lamination process and replace it with a more efficient spray coat process. I connected them with a polymer chemist at the University of Wisconsin-Green Bay, who had nearly three decades of applied research experience, to help them with the spray coating process.
Innovation, taking an idea all the way to the marketplace, through the use of external resources as described above, while not a new concept, is now gaining wide acceptance. More and more companies are tapping into outside expertise and resources at universities, government labs, and other research entities to leverage and augment their internal capabilities and resources. Such collaborations can provide tremendous value to stakeholders and customers in the form of innovative new products with sustainable competitive advantages through IP. Technology transfer is a mechanism that allows this “open” innovation to occur.
One large source for research, technology and expertise is without doubt our universities. Corporations and the federal government fund most of the research that takes place there. University technology transfer offices manage the resulting IP. They have a process to evaluate the marketability and patentability of the invention disclosures that fall under the university’s IP policy. If an invention looks promising, the technology transfer office invests in protecting, marketing, and hopefully licensing the IP for companies to use.
I use the word hopefully because approximately 90 to 95 percent of technologies disclosed do not end up licensed and used. Licensing fees and royalties are divided according to a university’s IP policy, which usually includes a portion to the inventor(s) and department(s) involved, thus rewarding the behavior to disclose.
Often companies sponsor research at universities and negotiate the option to evaluate and potentially license the resulting IP. In some cases, the company may “own” the IP, but that is generally frowned upon by the technology transfer office and its advisors.
The Bayh-Dole effect
Growth in university technology transfer is related to the passing of the Bayh-Dole Act, adopted in 1980. Bayh-Dole permits those that conduct research using federal grants to elect title and exclusively own the resulting intellectual property providing the basis for universities to own, manage, and license IP.
The federal government also sponsors research for small businesses through its Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STTR) programs. These programs award more than $2.5 billion annually that enables small businesses to fund and conduct innovative R&D efforts in collaboration with private or public sources. Small businesses conducting research under SBIR/STTR programs also enjoy the rights granted through the Bayh-Dole Act.
Non-exclusive licenses may also be an effective means to transfer IP into the hands of the public through new products or services. This is often seen in software technologies where massive investment is not needed to commercialize. However, in many cases, federal funding ends well before a technology is used in new products or services. The ownership afforded by Bayh-Dole provides a foundation for private sector investment to commercialize new products and services where the federal funding leaves off.
When large investments are needed, it usually means that exclusivity must be granted in a license (although the exclusive rights may still be limited to a certain Field of Use or geographic area amongst other things). Exclusivity allows the company or investors to limit competition through intellectual property rights and thus reap the reward and pay back its investment.