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Licensing and Patenting

March 1, 2005

More-concentrated funding of select sectors and an emphasis on later-stage technologies are also dominant trends in the world of intellectual property and licensing. At many of the nation’s leading research universities and institutes, licensing deals with industry have grown fewer in number and more conservative in nature. Industry doesn’t seem to be as interested in fundamental breakthrough technologies in areas such as nanotech; instead it favors more short-term and less risky technologies that are closer to commercialization and have clear markets and customers, says Katharine Ku, director of Stanford University’s technology licensing office.

Over the past two years, companies licensing technology from universities have begun to favor later-stage deals involving technologies that are far enough along to be deemed marketable. And small companies are buying—or in the case of university spinoffs, teaming with academia to create—a larger proportion of intellectual property relative to larger corporations. Even at Caltech, one of the world’s leading centers of technology and research, “we’ve had to be more creative about where to raise money for early-stage spinout companies,” says Rich Wolf, director of the Caltech technology licensing office.

But there is hope that these trends are beginning to turn around. “This is a cyclical thing,” says MIT’s Lita Nelsen, who has worked in technology licensing since 1986. “We are beginning to see more folks realize there’s not much money in late-stage deals, so let’s look at early stage.” In particular, Nelsen has noticed a dramatically increased interest in technologies, even early-stage ones, related to security. “The rumor mill says that on the West Coast, they’re funding anything with ‘security’ in it,” she says. “Anything from detecting bombs to hacking computers.” And though many such technologies, such as new kinds of computer-virus detectors, are scheduled for deployment in the next year, others are part of longer-term projects to develop more-sensitive biohazard detectors and intelligent sensor networks.

It’s not only areas of technology that are being funded unequally; it’s also institutions. While perennial powerhouses like the University of California system, MIT, and Stanford are doing quite well in the tech licensing realm, other schools, even some large state schools, still fight to generate revenue. For example, the University of Texas at Austin is actively trying to spin off more companies, rather than licensing technologies to existing companies. “We are aggressively doing startups,” says Neil Iscoe, director of the University of Texas’s office of technology licensing. “We have to change our approach to get more things out,” he adds. “How do you market a disruptive technology? You do it through a startup.”

And overall, say some, it seems both companies and universities are developing a more realistic view of which technologies are useful and what they’re worth. “During the bubble years…university licensing people thought that any idea at all was worth mega- or giga-bucks. In fact, we have an easier time to work with academics now, since reality has set in,” says Hewlett-Packard’s Williams. That means academics should be able to focus more on science and getting new technologies to the state at which companies can develop and market them.

Technology Review editors Gregory T. Huang, Corie Lok, and David Rotman contributed to this report.

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