The economy might be hiccupping toward an uncertain fate, but one of the engines of innovation is still hitting on all cylinders. Technological advances emerging from the nation’s universities are finding their way into industry at a pace that has hardly slackened in the last year. Institutions of higher learning do not cite patenting as a primary goal; top priority still goes to research and teaching. But license fees from existing patents, particularly in biotechnology, are generating hundreds of millions of dollars that universities often plow back into research.
While the business world at large is coming to its senses after the Internet hysteria of the past five years, the economics of university licensing seems to rest on more enduring verities. The first is that true technological advances are economically valuable. Another, more specific, truth is that new drugs that cure disease-or new ways to find or make these drugs-are worth a lot of money. Finally, despite the glamour of entrepreneurship, the big money for a university usually comes from patents licensed to large, established companies-not startups. With a few high-profile exceptions (most notably at MIT and Stanford, and in the University of California system), university research spawns relatively few spinoff companies.
The “Campus Patenting” chart (in PDF version) gives a glimpse of which U.S. universities are most productive in technological invention. The data, provided exclusively to Technology Review by CHI Research of Haddon Heights, NJ, establish a metric (called technological strength) that quantifies the power of a school’s patent portfolio. Another table (in PDF version) has a more mercenary flavor. Here we show how much money leading research universities are reaping from licenses on the patents they own; these statistics were compiled by the nonprofit Association of University Technology Managers.
For those universities interested in maximizing licensing income, the lesson plan is simple: biotech blockbusters. Chart-topping Columbia University illustrates the point. Columbia hit the jackpot with the 1983 patent by Richard Axel on a method for inserting DNA into cells-a procedure at the heart of the production of several of today’s bestselling biotech drugs, including plasminogen activator, which if administered early can lessen the damage inflicted by a heart attack. Indeed, about 80 percent of Columbia’s licensing revenue comes from fees paid to the university by pharmaceutical companies for three technologies, according to Scot Hamilton, senior director of Science and Technology Ventures-the university’s technology transfer organization.
Biotech rules at other campuses, too. Two-thirds of the $74 million in licensing revenues flowing into the University of California system comes from patents issued to the University of California, San Francisco, School of Medicine; only about $8 million of the total arises from patents issued to the system’s flagship Berkeley campus, according to William Hoskins, director of the Office of Technology Licensing at Berkeley. For third-ranked Florida State University, virtually all of its $57 million in licensing revenues comes from a patent by chemist Robert Holton on a method to produce the tumor-fighting chemical paclitaxel-marketed by Bristol-Myers Squibb as Taxol, the world’s top-selling anticancer drug.
And the lion’s share of Yale University’s $40-plus million in licensing income comes from an anti-retroviral drug called stavudine, which is marketed under the brand name Zerit by Bristol-Myers Squibb and is one constituent of the anti-AIDS drug “cocktail.” Subtract the Zerit income from its portfolio and Yale’s license revenue shrinks to about $15 million, according to E. Jonathan Soderstrom, managing director of Yale’s Office of Cooperative Research.
While much of the action is at the elite private schools, several public universities have made patents and technology transfer a big part of their strategies. The University of California, with its nine campuses and almost $2 billion research budget, tops the field in technological strength and comes in second only to Columbia in licensing income. And the granddaddy of university technology transfer is far from the technology-frenzied coasts. The University of Wisconsin-Madison has been licensing patents from its research since 1925, when dairy scientist Harry Steenbock discovered an irradiation process that could activate vitamin D in milk, notes Bryan Renk, director of patents and licensing at the Wisconsin Alumni Research Foundation, which handles the school’s patent and license affairs. “Licensing is a big-hit game,” says Renk, adding that Wisconsin has produced a blockbuster “just about every decade.” Another Midwestern public university is rising fast in the licensing sweepstakes as well: Michigan State University. The school owes most of last year’s $24 million in revenue to patents awarded to researcher Barnett Rosenberg for the anticancer drugs cisplatin and carboplatin, which have dramatically lowered the mortality rate for patients with testicular cancer and offer hope for improved treatment of ovarian and cervical cancer.
Driven in part by the prospect of dramatic licensing revenues, many universities are cultivating a culture of entrepreneurship. No wonder, then, that campus technology transfer offices are finding themselves an important stop on the tour when schools hire new research talent. “We are heavily involved in faculty recruiting,” says Yale’s Soderstrom. Renk says the same is becoming true at Michigan State. “New faculty are more entrepreneurial,” he says. “They come interview the technology transfer officers and ask how well funded and well staffed we are.” That way, prospective faculty can get a read on the level of institutional support they will receive to move their inventions out of the lab and into practical use.
A university’s success in patent licensing depends on a number of factors. Columbia’s Hamilton attributes his school’s success in part to a creative faculty that is willing to disclose its inventions to a technology transfer office. One immutable circumstance: location. Hamilton says New York City’s business-friendly environment has been a boon to spinoffs. “We’re not so cloistered here-the faculty tend to be more worldly, and we find that there is less prejudice” against commercializing the fruits of research, Hamilton says.
While they work to make things as easy as possible, even the most successful patent-licensing universities view income as a happy by-product. “Our main goal is to provide a service to the faculty-to help them get their ideas out into practical use,” says John Ritter, director of the Office of Technology Licensing and Intellectual Property at Princeton University. “If we get a revenue stream, that’s gravy.”
But it’s a gravy train that more and more universities are signing up for.