Technology  November 29, 2013

Tech-transfer offices harvest innovations for marketplace

Commercialization often isn’t on university researchers’ minds. The reasons can be many.

For one thing, spawning startup companies isn’t what most faculty members were hired for. Often, they’re doing science for the sake of science, simply pursuing better understanding of a process or topic. And even if one does wind up with a marketable discovery or invention, the potential rewards of starting a business don’t always outweigh the risks when the alternative is a secure, tenured faculty position with a high salary.

Davona Douglass, director of the University of Wyoming’s technology transfer office, said there isn’t a lot that anyone can do to get a professor who wants to focus solely on academia to start thinking more entrepreneurially. And that’s OK in many instances. Of course, money never hurts. That’s why at Wyoming, 60 percent of royalty and licensing revenue generated from university-owned technologies and patents goes back to the researchers, a rate that is among the highest in the nation.

“That’s important to me as the director of the tech transfer office is having that incentive for sure,” Douglass said.

To be sure, technology transfer at Wyoming and other universities is far more intricate that simply throwing money at faculty to encourage their participation. But gaining buy-in from researchers is crucial to the success of the process. Technology transfer is important to universities because it can be a significant revenue generator for some as well as a major marketing tool, helping to showcase a school’s successes.

“We really need to rely on the interest of the faculty,´ said Kate Tallman, interim associate vice president of technology transfer at the University of Colorado. “If they are not interested in starting a company necessarily, what we need to do is find someone they can work with who is going to be willing to bridge that gap.”

Luckily for many tech-transfer offices, more and more researchers are giving thought to the entrepreneurial side of things, whether it’s creating a startup themselves or at least facilitating the use of their technology for a startup or existing business’ product. Part of the reason is that research funding is getting harder to come by, while government grant programs like Small Business Innovation Research and Small Business Technology Transfer encourage collaboration between businesses and research institutions. Another reason is the fact that some tech transfer offices are relatively young and are just now starting to really gain traction.

Path to commercialization

The path to commercialization can be complex but it’s similar no matter where you go, say tech transfer officials.

It all starts when researchers turn in invention disclosures to the schools they’re working for. Since universities own the intellectual property rights to discoveries made by paid researchers, the disclosures are required. The number of disclosures varies by school. CU’s tech transfer office – which serves its Boulder, Denver, Colorado Springs and Anschutz campuses – receives 200-250 per year. At Colorado State the number is 100 or so, while at Colorado School of Mines it’s about 33 per year.

From there it’s a matter of sifting through those to find out which have a technology that is marketable as a product or new company, as well as deciding how to protect the intellectual property through patenting, a major function of tech transfer offices along with negotiating licensing agreements. Often, researchers will have an idea about a discovery or invention’s marketability when they present their disclosure.

“There are a wide range of (researchers) who are interested in those processes and some who are less so,´ said Todd Headley, president of CSU’s tech transfer office, who adds that the number of faculty participating in the tech transfer process at CSU has doubled or tripled during the past five or six years.

Will Vaughan — who like Douglass at Wyoming is the sole employee in the tech transfer office at the Colorado School of Mines — said Mines is in a bit of a unique situation because nearly half of its research funding comes from industry, meaning inventions and discoveries there are often a little further down the path to commercialization.

“Our professors have probably worked with industry before and are probably thinking along the lines of how can I apply this to market,” Vaughan said.

Established relationships between professors and the business world are an important bridge toward commercialization, and can be built in various ways. But universities also market other discoveries where no such relationships exist.

While the schools catalog their discoveries on their websites for the perusal of those interested, they also maintain networks of advisors and entrepreneurs who they tap into to help guide an invention toward commercialization. All of the schools maintain their own networks as well as contracting with outside agencies like the Boulder-based Innovation Center for the Rockies, which has agreements with CU, CSU, Wyoming and Mines among others.

“It’s good to have a diversity of channels for forming these kinds of relationships,” CU’s Tallman said.

The ICR has 1,500 resumes of advisers on file that it sifts through to create a specialized group of 5-10 for a particular technology. Often, some combination of those advisers wind up being the ones licensing the technology or launching a startup, whether on their own or in conjunction with a professor.

Vaughan estimates that out of 100 invention disclosures, maybe two or three are worthy of becoming a startup. At the ICR, 13 startups have been formed over the past seven years, with two more in the works. That’s out of about 150 projects the organization has been handed from schools to work on.

Tim Bour, executive director of the ICR, said the projects ICR receives are generally ones where the school has decided to acquire a patent and a faculty member has expressed interest in working toward commercialization.

“(Schools) tend to give us higher-potential projects, all other things being equal,” Bour said.

Revenue generation

Tech transfer at CU, systemwide, yields about eight to 10 startups and 30 to 50 license agreements per year, Tallman said. The amount of revenue that all adds up to can vary dramatically, often depending on a few “home run” licenses to make big bucks. Two years ago, CU pulled in $30 million in licensing revenue. Last year the figure was $16 million. This year it will be about $5 million.

CSU yields five or six startups spun off from university inventions per year, and averages $1 million to $2 million in annual licensing revenue.

At Mines, where the tech transfer office is only about five years old, there have been 12 startups spun off over that period.

For Wyoming — where Douglass is also tasked with offering intellectual property services like patent searching and trademark searching to anyone in the state for free — the number of startups numbers fewer than five per year.

At Wyoming, where 60 percent of the licensing revenue goes back to researchers, 20 percent goes to the university fund other further research efforts and 20 percent goes to fund the tech transfer office.

The split at CU is 50-25-25. At CSU, it’s 35-25-40. And at Mines, the inventor and tech transfer office split the first $30,000 in revenue. After that, the researcher receives 35 percent, the school’s general fund gets 35 percent, and the department or center that helped fund the research gets 30 percent.

Identifying where that revenue will come from each year is tricky, which is another reason tech transfer offices don’t want to leave any stone unturned. Sometimes the technology that looks like marketing gold turns out to be a dud, while something unsuspecting can take off. The fact that the tech-transfer process can be years in the making only adds more complexity.

CSU’s Headley said, “Things we’re working on now are probably not going to be on the market until years from now.”

Commercialization often isn’t on university researchers’ minds. The reasons can be many.

For one thing, spawning startup companies isn’t what most faculty members were hired for. Often, they’re doing science for the sake of science, simply pursuing better understanding of a process or topic. And even if one does wind up with a marketable discovery or invention, the potential rewards of starting a business don’t always outweigh the risks when the alternative is a secure, tenured faculty position with a high salary.

Davona Douglass, director of the University of Wyoming’s technology transfer office, said there isn’t a lot that anyone can do…

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