Licensing deals helping schools boost bottom lines

Scientific advancements in local university laboratories are breaking through in the marketplace at the fastest pace since the recession.
The University of Rhode Island, claims income from technology licensing and royalties doubled from fiscal 2011 to 2012, while Brown University’s commercialization income jumped 67 percent during the same period of time.
Both were dwarfed in licensing prowess by the University of Massachusetts, where commercialization income rose 48 percent during the fiscal and academic year that ended in June to $53.9 million, the second-highest total in the school’s history.
At the end of 2011, UMass ranked 14th nationally in commercialization income and second in New England behind only the Massachusetts Institute of Technology, according to a survey from the Association of University Technology Managers. (The survey doesn’t count the spike in UMass revenue in the first half of this year.)
As the economy sagged and states cut higher education funding, many schools looked to leverage the innovations in their labs as a way to boost their bottom lines while stimulating their local economies.
Nationally, the number of startups, patent applications, patents issued and faculty disclosures of potential commercial innovations all increased at American universities from 2010 to 2011, according to the Association of University Technology Managers survey. Commercialization income rose 2.6 percent nationally on an annual basis.
At local universities, technology-commercialization offices have been bolstered and reorganized to work with researchers and maximize the market potential of promising innovations.
At URI, for example, the school created a separate nonprofit to manage intellectual property and pursue commercialization opportunities.
Whether those new efforts are stimulating new activity or the economy is simply coming to life is difficult to tell.
Either way, the results have been encouraging.
“There has been an uptick in the economy and more products are being sold with royalties,” said Katherine Gordon, managing director of the Brown University Technology Ventures Office. “We have doubled up our efforts to do deals and to work with our researchers on exploring entrepreneurial potential.”
Over the last three academic years, Brown has seen its commercialization income jump from $502,100, to $962,200 to $1,592,300. The jump in income tracks a rising enthusiasm for commercializing university research seen in the number of patent applications from Brown, which jumped from 43 in the 2009-2010 school year, to 72 in the 2010-2011 school year and 98 in 2011-2012.
“We want to stimulate entrepreneurship,” Gordon said. “Our goal is to get the research translated into products because the products benefit the economy, other researchers and consumers. Some technologies are risky and they may not work, but it is a life cycle.”
Universities have a few different ways to generate income from faculty research, which becomes the school’s intellectual property under the 1980 Bayh-Dole Act regulating work involving federal funding.
The fastest way to get an innovation to market is to engage an existing company interested in the technology to license it for a fee or royalties of future sales.
For ideas with a longer, riskier or uncertain path to commercialization, universities can found their own startup, either with the researcher who pioneered the breakthrough or an outside entrepreneur. In these cases, the schools usually take an equity position in the startup.
How eager scientists are in becoming entrepreneurs often determines whether a startup will happen and commercialization offices now work actively with academics considering the jump.
Still, even with the economy picking up, a relatively small number of all the new ideas that come out of labs ever form the basis for a new company.
At Brown, there have been six startups formed in the last three years (four of them in 2010-2011,) out of 156 ideas researchers disclosed to the school for potential commercialization.
At UMass over the same period, there were 491 commercial technologies identified and only five startups formed (three of them in 2011-2012 and none in 2010-2011.)
Following the broader economy, medical and life sciences technologies make up a large chunk of the research being taken into the market, with computer and physical sciences also generating commercialization projects.
The three UMass startups formed in the 2011-2012 academic year were based on nutraceuticals, software for sorting large amounts of data and medical-diagnostic tools that use terawaves.
In the 2008-2009 school year, the only other year UMass made more licensing income than this past year, $30 million of the $72.1 million in total licensing revenue came from a single deal with drugmaker Merck for an antibody used to treat hospital infections. At Brown, Gordon points to Microtissues Inc., a startup based on technology for growing 3-D cell cultures, as an example of the great commercialization potential in academic research.
Brown professor Jeffrey Morgan developed the technology out of a personal need for a better way of growing cells and, when he found one, decided to try to bring it to other researchers.
Compared with UMass and other large public research universities, URI’s licensing income has lagged behind other schools across the country.
The 2011-2012 school year was the first the school’s licensing revenue exceeded commercialization expenses for filing patents, legal counsel and managing intellectual property.
As state funding for higher education has dwindled since the recession, URI identified commercialization income as an important alternative revenue stream.
“We changed some policies at URI in fiscal 2012 that are [now] much more beneficial to inventors in the college that makes this part of the operation much more valuable for faculty than in the past,” said URI Vice President for Research and Economic Development Peter Alfonso. Alfonso last week could not give specific figures for URI’s licensing and royalty income for fiscal years 2011-2012.
The most significant change was creating the University of Rhode Island Research Foundation, an affiliated 501(c)3 nonprofit that handles all of the school’s commercialization efforts.
A little more than a year ago, URI hired James Patel to run the foundation, marking the first time the school has had an administrator exclusively focused on research commercialization.
Alfonso said that in addition to having Patel focused on commercialization, the foundation operates much more quickly and aggressively as an independent nonprofit than the university can itself.
“As a public institution we are somewhat constrained by state rules when we try to work with the private sector. We are much more quick and nimble when we operate out of the private nonprofit,” Alfonso said. “The foundation allows us to craft better deals for companies through the licensing route. We can make it much more attractive.” •

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