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tech transfer
Creating the Next Industrial Revolution

Easy spoken and articulate, Dr. Donald F. Smith, takes a reconnaissance-level view of technology transfer. “My office doesn’t deal with the formal tech transfer process. It deals with the system around it,” he said as he searched for a marker. “We’re trying to help generate the next industrial revolution,” he continued, still searching. “Steel made Pittsburgh, arguably, the largest industrial giant of any city in the world. Steel is much smaller these days and technology is the new materials. My office’s responsibility is to work with the community to create the conditions in which we can do more research, transfer that research to companies in the region and then create an environment that is conducive to attracting the talent, the capital and the leadership for those companies to grow and prosper.”


Having found a marker, Smith, who is Director of The University Partnership, went to the whiteboard to sketch a castle and tower (presumably ivory). “We need dollars to go into the universities,” he said as he drew dollars signs and squiggly arrows shooting over the wall toward the tower. “So they can have the best faculty doing the best research, attracting the best grad students and producing the best graduates,” he said while drawing a colony of little amoeboid shapes around the tower. “So we focus on how we can augment resources for the universities.” He reinforced the lines around the castle wall. “We need to have an efficient tech transfer operation.” He loosed a volley of smoothly curved arrows arcing out from the castle. “But if you want the technologies to stay in the region, you have to have an environment that’s conducive for them to land in.” Beneath the tips of the outbound arrows he sketched a conglomeration of catawampus rectangles to represent the commercial sector. “So you have to have capitalists - experienced entrepreneurs - who know how to take a technology and make it into a company,” he said while punctuating the private sector with dots in the middle of the boxes. “You have to have a business climate that’s conducive to success.”


Smith’s high-altitude take on the technology transfer/community development landscape serves as a refreshingly simple summary of an otherwise complex system of science, technology, scholarship, creativity, law, government and commerce. At first blush the idea of technology transfer is deceptively simple: brilliant university professors invent stuff; the university sells the stuff; and everybody gets rich - professors, colleagues and universities alike. As usua,l however, reality is not so simple.


Carnegie Mellon University’s, Director of Enterprise Creation, Dr. Rob Lowe takes a cautious view of unrealistic expectations about technology transfer. “One of the things we try to impress upon people is that technology transfer isn’t simply about having a great idea, raising venture capital and then making money on it,” he said. “It’s more complicated than that, starting with deciding on the right development vehicle, which then shapes your financing strategy.” To that end, in addition to his tech transfer duties, Lowe also serves as CEO of CMU spin-out, Wellspring Worldwide, a software and consulting firm that specializes in technology transfer.


Fair-haired spin-child of Carnegie Mellon University, Plextronics is an example of a technology that screamed for its own company to grow in. “When we were looking to spin the technology out of CMU, we asked ourselves whether it would be better to license it or create a company,” Plextronics CEO, Andy Hannah, said. “When we looked at the technology, we found that we could develop multiple products around it. Although that meant higher risk, there were also greater opportunities to generate high value down the road.”


A Little History

Irrespective of the means of commercialization, by law the burden of moving federally funded technology from the hallowed halls of academia to the humdrum floors of industry falls to the universities and government laboratories that create, and subsequently own, the intellectual property. Although technology transfer is a relatively new concept, it is based upon two ancient government powers: 1) the power to collect and redistribute tax revenues for the common good and; 2) the power to grant limited monopoly rights for the purpose of promoting commerce.


Since the late eighteenth century, however, the phenomenon of invention has taken a more prominent role in economic development than ever before.


In 1787, the founders saw fit to ensconce the idea of time-restricted monopolies in the Constitution, which authorized the government “To promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries.” Three years later, Congress formalized the broad power proclaimed in the Constitution by passing an act to promote the progress of useful Arts (sic), more commonly known as The Patent Act of 1790.


Throughout the early nineteenth century, the success of the Patent Act can only be called triumphant. Then in 1862, in the shadow of the Civil War, Congress passed the Morrill Land Grant Act, thereby establishing the land grant universities, all of which were tasked with enabling agriculture, mining and military training. At that point, the Republic had two essential rudiments of today’s technology transfer efforts: First, the Patent Act for protecting innovative ideas, and second, the Morrill Act, for funding universities to dream the ideas up.


During the twentieth century, the United States federal government, in a series of efforts to ensure public health and safety, took an increasingly large role in funding scientific research and technology development. Following World War II, the trend intensified with the creation of such agencies as the Department of Defense, The National Institutes of Health, the National Science Foundation, the Department of Energy and others, each of which had a considerable appetite for research. Starting at $138 million in 1936, federally funded academic research rose to $16 billion by 1996. The result of this trend was a surfeit of government-owned technology: Owned by everybody and, due to the ill-defined nature of intellectual property ownership and protection, frequently commercialized by nobody. A consequent disinclination by private business to engage in government-sponsored research with uncertain profit potential led to a perceived stalemate in technology development during the 1970s. Toward the end of that decade, economic stagnation colluded with emerging foreign competition to give a wake-up call to Congress that the United States was losing its competitive supremacy.


In response to this looming crisis of failing competition, beginning in 1980, Congress began to liberate research and invention from the clutches of government ownership by methodically dismantling obstacles to the commercialization of federally funded inventions. The first step was passage of the Stevenson-Wydler Technology Innovation Act of 1980, which mandated that federal agencies actively disseminate and apply research information. The next law, passed in the same year, was the University and Small Business Procedures Act of 1980. The law was the work of Senators Birch Bayh and Robert Dole, and is today known famously as the Bayh-Dole Act. Bayh-Dole’s objectives were multifold: First, the legislation was designed to streamline the twenty-odd sets of negotiating procedures and intellectual property ownership policies set by numerous government agencies. Next, because contention about intellectual property ownership had frequently served to impede smooth deal-flows, Bayh-Dole took patent ownership out of the hands of government agencies and assigned it to the contracting universities and small businesses that performed the research. Finally, in return for the intellectual property rights, the act also obligated university and small business patent owners to actively commercialize inventions at market value.


In 1982, Stevenson-Wydler and Bayh-Dole were bolstered by the Small Business Innovation Development Act, which established the renowned system of SBIR grants. The Act mandated that, in addition to simply allowing patent ownership for small businesses, federal agencies were obligated to allocate a portion of their research budgets to them. The SBIR system was an obvious compromise to a long-standing argument that assigning too much research to large corporations tended to concentrate both technological and economic power in the hands of a few decision makers, resulting in reduced competition - just the situation from which the nation had extricated itself in the early twentieth century, by means of anti-trust legislation.For the rest of the decade, a long series of laws further facilitated the transfer of government research and technology properties from universities and government laboratories to the private sector.


The disciplinary genesis of technology transfer may be found a century ago at the University of California, where an inventor named Frederick Gardner Cottrell reasoned that the electrostatic precipitator he had developed in 1907 could not realize its full commercial potential without additional funding. Absent an instrument for patenting university research, Gardener asked the Smithsonian Institution to form a legal entity capable of protecting his invention. Disinclined to engage in the enterprise of patent administration, the Smithsonian board of regents turned Cottrell away. Thereafter, in 1912, with the assistance of the sympathetic Smithsonian regent and future President of the United States, William Howard Taft, Cottrell established a non-profit corporation called simply, The Research Corporation. After protecting Cottrell’s technology, The Research Corporation went on to serve many of the nation’s research universities in the mundane tasks of evaluating, developing, patenting and licensing faculty inventions for sixty-odd years, until the current system took root in the 1970s and blossomed in the 1980s and 90s.


Tech Transfer in Pittsburgh

Although Pittsburgh’s academic scientists have been inventing things for decades, formal technology transfer programs are relatively new. CMU set up its office in 1993; Pitt in 1996. The University Partnership, a joint effort commissioned by the leaders of Pitt and CMU was founded five years ago. Since then, the Partnership has been responsible for the creation of such economic development organizations as the Pittsburgh Digital Greenhouse, the Pittsburgh Life Sciences Greenhouse, the Robotics Foundry and the Technology Collaborative.


The Partnership’s Don Smith points out that today, “Pittsburgh’s research universities receive about one billion dollars of sponsored research per year, the bulk predominately federal. The economic numbers tell us you generate between 28 and 30 jobs for each million dollars in research, which would mean that between 28,000 and 30,000 jobs are supported by that billion dollars in research each year.”


According to University of Pittsburgh’s Dr. Marc Malandro, Associate Vice Chancellor for Technology Transfer and Commercialization, in 2004, nationwide, Pitt ranked in the top ten in the number of startup companies spun out from university inventions.


Robert Wooldridge, Director of the Center for Technology Transfer at Carnegie Mellon University, speaks with pride about the university’s technology transfer performance. “If you think about the number of startups per research dollar, and normalize for campus size, Carnegie Mellon is really a creator of an enormous number of startups,” Wooldridge said. “Based on data from the 2003 Association of University Technology Managers’ survey, normalized by research dollars, Carnegie Mellon has more active startups than a host of the nation’s largest research universities.”


On the government laboratory side, Pittsburgh’s National Energy Technology Laboratory (NETL), has been the subject of recent national acclaim for its technology transfer efforts. In February, the Federal Laboratory Consortium named the lab’s director, Carl O. Bauer, Laboratory Director of the Year for Technology Transfer. Chosen from some 700 federal laboratories across the country, Bauer claims the award is a testament to the organization he directs. “It’s really the people doing the research and the technology managers working as a team with our partners, the local universities and the companies that work with us. They all own this award,” Bauer said.


Jerry Bortman, an independent technology transfer consultant, works for both Pitt’s First Link program and the federal government’s Aberdeen Proving Ground, Business Development Office. First Link connects federal labs, companies and universities to advanced technologies for first responders. The Aberdeen Business Development Office connects industry and academia with the R&D laboratories and testing facilities at Aberdeen. Bortman believes that university and government laboratory technologies represent important opportunities for savvy entrepreneurs. “Most companies are unaware that there are developed technologies available for licensing from the federal laboratories,” he said. “Sometimes there are bureaucratic obstacles. If you have a person in the middle, like me, your chances of success are increased,” he continued. “And, the best part is that our services are free because the government pays for them.”


Given the range of technologies subject to research, development and transfer, it is perhaps not surprising that individual experiences with the tech transfer process vary from case to case.


Plextronics’ Hannah describes his experience with the technology transfer process at both CMU and Northwestern University as highly positive. “We completed our deal with CMU between July and August, 2003,” he said. “The Northwestern negotiation took longer, only because we didn’t know each other as well as we needed to establish a working relationship.”


On the other side of the coin, Dr. Dan Bolton, Head of New Technologies at Bayer MaterialScience stressed the need for greater understanding between academia and the corporate sector. “The hardest part of the relationship is figuring out who owns the idea in the end,” he said. “While we negotiate ownership on a case-by-case basis, we prefer to avoid additional licensing following project completion. This scenario helps us to bring applications to market more quickly.”


Bolton says his company has never been dissatisfied with a university project. Bayer has provided fellowship endowments, international internships and other support for Pitt, CMU, Penn State, Duquesne and other universities. Bolton sees promise for universities and companies to jointly address the practical market issues facing technology transfer and new product development. “I think it works best when corporations, universities, government agencies and startup companies work together to utilize their respective strengths to create a partnership.”


On the university side, Pitt’s Malandro foresees significant change in future tech transfer relations. “The current license agreement and university/industry interaction work in today’s setting,” he said. “However, I believe both sides need to work toward developing a mutually beneficial new relationship structure in the future if we are to ensure that the best research becomes products that will benefit society. It needs to happen, for the benefit of both sides.”


University/industry relationships notwithstanding, the economic and educational opportunities associated with technology transfer appear to be considerable. Nonetheless, both Pitt’s Malandro and CMU’s Wooldridge are quick to point out that despite legendary successes like Lycos, McKesson and Medrad, the vast majority of university inventions are not financial blockbusters. Each cited his university’s annual crop of graduates, as well as thousands of research papers, professor/grad student collaborations, corporate-sponsored research projects, professor consulting relationships, fellowships, internships and inter-university collaborations as the most fundamental form of technology transfer.


However, as a matter of regional economic development, with two world-class research universities performing at the top of the technology transfer field, Pittsburgh’s most urgent problem is not how to come up with more inventions, but how to keep their long-term economic benefits here, where the inventions were born - surely a matter of systematic planning, teamwork, diligence, and tenacity.


Hmm. Sounds a lot like making steel. This could be revolutionary.


This article first appeared as a TEQ cover story.

© Copyright 2007, Thomas P. Imerito / dba Science Communications

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©2009 Science Communications
thomas@science-communications.com