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It should have been a restful few days as the faculty of MIT’s famous Media Lab arrived at the Maryland shore last July for their annual retreat. But the brainstorming and rejuvenation session-including meetings aboard a Chesapeake Bay sailing schooner-soon ran into turbulent waters. The issue: whether impending changes in the lab’s intellectual property (IP) rules could destroy the facility’s special character.

The financial realities of the new economy, it seems, are catching up with one of the world’s eminent centers of digital research. Since its 1985 formation, the Media Lab has followed an unusual model: Corporations pay for a sponsorship (current requirements involve contributing at least $200,000 annually for three years or longer) and in return get free licensing rights to any technology developed. That arrangement has succeeded brilliantly in making the lab a model of academic-industrial collaboration (more than 90 percent of its $30 million budget comes from industry). But it has also meant that lab members can find it more difficult to profit from their own innovations than some MIT colleagues.

The problem goes beyond money to the core of the lab’s educational mission and its ability to attract and retain top-flight talent. “What’s happening is that the new economy is rewriting the rules of how people decide what to do with their lives, all the way back into how they go to college or whether they are going to be a professor,” says Media Lab associate professor Ted Selker. Proactive institutions, he argues, must revisit their deals with faculty and students to match these societal changes, “because the consequences of not doing that is in fact no less than the loss of the best and the brightest people entering and staying at these institutions.”

At MIT, as at many other universities, most researchers get one-third of the licensing royalties from their inventions. Things are different at the Media Lab, though, where staff members receive two-thirds of any royalties-if a non-sponsoring company licenses the technology. The hitch is that the lab’s sponsors, among them many leading corporations, have free and open access to any lab inventions. It is this twist in IP policy that can make it difficult for lab staffers to turn a hot new technology into a royalty-earning success.

The Media Lab does have its share of startups: witness high-flying E Ink, a leader in developing electronic paper, which formed in 1997 with funding from some lab sponsors. Other Media Lab backers, though, frown on such ventures. Often, they’re not as worried about missing out on key technology as they are about losing the chance to work with the very creative people who drew them to the lab in the first place.

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