Technology transfer,
in theory and practice

Richard Nelson

There is no such thing as "technology transfer"--or at least no single thing. Rather, different disciplines have given birth to different models for university research structures to interact with industry. The lion's share of fundamental research in the United States is done in universities; some of it is done in governmental labs, and a small fraction is done in industry, generally in only a few companies. It benefits all parties for knowledge to pass from one sector to another, but a simple model of linear transfer from basic research to commercial applications is inadequate to account for the complex interplay of interests involved.

One pattern, arising after the Morrill Land-Grant Acts in the mid-19th century, is direct federal and state support for portions of the university system specifically working on problems bearing on agriculture. At experimentation stations affiliated with land- grant universities, faculty members worked on diseases of wheat plants, appropriate ways to fertilize and feed crops, and similar questions; parts of the university were thus dedicated, by intent and by funding, to the farming community and related industries such as pesticides and food processing. A number of engineering schools, too, have offices directly concerned with solving problems for local industry.

In a different model, individuals or groups at universities perform basic research to understand particular phenomena, then publish an article about that understanding; after reading this public information, companies are able to better design products. Since the 1930s, for example, a considerable amount of university research has allowed the aerodynamics industry to benefit from new knowledge about the shapes and behavior of propellers. The biomedical research community and the pharmaceutical industry have had the same type of relationship; until recently, universities had little to do with the direct creation of new pharmaceuticals, but quite a bit to do with the understanding of biochemistry and diseases.

Another entirely different model for collaboration involves clinical trials. University medical schools have been the place where most pharmaceuticals are tested and tried. This relationship may be associated with the development of new techniques of dealing with patients, or with the attempt to develop new medical devices, but these trials generally take place in an entirely different part of the medical school than the research departments. The relationship model associated with biotechnology--the model most commonly touted in the press--appears when university researchers themselves develop an embryonic medical device or technique that involves them immediately with industry (either existing firms or their own new startups).

Basic and applied and public and private
There is a widespread belief among laypersons--though much of the scientific community has also picked it up by osmosis--that basic and applied research are essentially different and separate; in other words, that most research aimed at fundamental understanding proceeds with little notion of what practical problems the research might eliminate. In reality, except for a few cases like Maxwell's work on electromagnetism, proceeding with only the vaguest idea of what it might be used for, basic research has never been divorced from applications. The scientists who developed the theory of thermodynamics, or the whole spectrum of work in medical schools and biology departments, have had good ideas about the applications of their fundamental understanding. This has been known for a long time, but the knowledge tends to be repressed. The late Donald Stokes's wonderful book Pasteur's Quadrant (Washington, DC: Brookings Institution Press, 1997) makes a compelling case that a great deal of fundamental scientific work is also clearly targeted at particular problems and occurs after a basic technological breakthrough has occurred, rather than the other way around. The development of the transistor at Bell Laboratories in the late 1940s is a good example: William Shockley, one of the primary inventors, then spent about a year trying to understand it, then wrote Electrons and Holes in Semiconductors (NY: Van Nostrand, 1950), which revolutionized solid-state physics and won him the Nobel Prize.

Universities and companies differ in important respects, particularly their approach to the public or privatized character of knowledge. As a general rule, firms do not share the academic tradition of publishing results and sharing both information and materials with colleagues. There are important exceptions, however, in fields where corporate labs have to keep up with the frontiers of knowledge by employing the people actually working on those frontiers. Scientists in the large pharmaceutical companies, or the great diversified electronic companies like AT&T, IBM, and General Electric, have one a considerable amount of publishing, as have scientists in the new biotechnology firms (with careful screening for patentable material early in the process). By and large, though, publication comes from only a small fraction of the industry research enterprise. In addition, over the last 15 or 20 years, industry funding of university research has cut down on the extent to which researchers publish their work freely. Scandals involving direct suppression of findings have occurred and need to be guarded against, though they are rare.

The Ford Foundation reported a few years ago about university-industry contractual relationships placing strict constraints on publication, including industry pre-clearance. Unfortunately, this study did not go on to distinguish between terms different universities agree to in contracts. Columbia does not sign contracts involving prohibition of publication, although lesser restrictions (e.g. delay) are permitted. This is also the case with Harvard, Yale, Stanford, the University of California system, and others; at present, the premier research universities are doing a good job protecting the ability of scientists to publish, but policies differ greatly depending on the partnership model, the discipline, and the relation of a university to local industry. Confidentiality is important, for example, in a state university's engineering school working closely with a local furniture industry; in the absence of widespread interest in a field, publication isn't important. On the other hand, people at the same engineering school working on semiconductor technology, with significant finance from large companies, are likely to fight for the ability to publish their results even though the companies will want privileged access to the findings, because it is absolutely essential for the scientific community at large to know about developments in semiconductors.

Policy change and philosophical implications
The Bayh-Dole Act of 1980 represented a sea change in attitude and emphasis in this whole arena. Before Bayh-Dole, only a few major universities were actively engaged in patenting and licensing; more (including Columbia, until the mid-1970s) merely allowed individual faculty members to patent, or even discouraged patenting, as Columbia did in the health field. Culturally and in policy, universities placed inventions in the public domain. Bayh-Dole changed this philosophy dramatically, especially with the rise of biotechnology. In the 1970s it was unclear what aspects of biotechnology would and would not be patentable; now, what's coming right out of medical schools is directly feeding into patentable, potentially profitable products and processes used by companies. In engineering schools, which had always been patenting, Bayh-Dole produced quantitative rather than qualitative change.

Universities, of course, are not monolithic; they are also congeries of separate schools and departments. The changes evoked by Bayh-Dole and by the development of technology transfer offices provide an occasion to re-examine the nature and mission of the university itself. The typical American university, we should remember, is not the Ivies, which have traditionally stood relatively aloof from the mission of fomenting economic development, but the large state universities, which have always been involved in local industry, agriculture, and engineering. With Bayh-Dole, this mission has been highlighted and, to some extent, hyped, but it has always been present. In the modern research university, two conceptions are intermingled, and to some extent at odds: the ancient notion of unified human knowledge, of the university as a community of connected scholars and students, vs. former University of California president Clark Kerr's idea of a "multiversity" reflecting the progressive specialization of disciplines. Presidents and provosts have the important role of fighting to preserve the idea of the community of scholars against fragmentation.

An important and controversial consequence of technology transfer is the notion that universities ought to engage in establishing intellectual property rights and reaping income from licensing inventions. Most of a university is not directly affected by this process; Bayh-Dole has brought little or no change to the fields of physics, astronomy, evolutionary biology, the social sciences, or the humanities. Inventing at any university is concentrated in a small number of fields, such as medicine, engineering, chemistry, and telecommunications, but the funds from licenses (at least here at Columbia) are allocated proportionately to the department where the inventor or inventors reside, to the school, and to the university as a whole. It is not at all clear that patent-holding departments are delighted to give a fraction of what they earn to the history department; there is a natural tension between revenue-producing departments and university administrators who decide on the allocation schemes. Yet the prestige of a university like Columbia, viewed as an entire intellectual community, benefits revenue-producing departments by facilitating the recruitment of the most able researchers in their fields. Those departments have an incentive to help the institution as a whole, because the strength of the whole in turn strengthens its parts.

Though entities such as Columbia Innovation Enterprise bring about some organizational convergence, technology transfer remains a set of discrete processes. It is by no means certain that these processes are converging into a single "win/win proposition," as the rhetoric behind Bayh-Dole presumes. Divergent interests inside and outside the university have a stake in the division of the pies. Industry in general needs a university's research, and companies want the patent; in some arrangements there are no broader interests arguing against one company having it. But a non-trivial fraction of the things universities are now licensing would previously have been put into the public domain. What a university's own patents and licenses do is to force companies to pay for techniques and material they are used to having access to for free. The large pharmaceutical companies, in particular, have begun to complain vociferously that since they and the public pay for this research through taxes given to the university, it is not fair for them to pay again for access. On the other hand, the university's position is that this is an appropriate way to finance research, through a "user charge." Tension also appears within industry: between biotech-firm specialists wishing to pick up exclusive licenses on university-generated technology, which they can in turn use to develop products they can license to large pharmaceutical firms, and those large firms, who would just as soon keep the technology in the public domain. It is no surprise that technology transfer is generating brisk business for another profession as well: attorneys who conduct intellectual-property litigation.

By and large, universities like Columbia have avoided a one-shoe-fits-all philosophy, recognizing the diversity of mechanisms involved. There are officials elsewhere who emphasize strictly proprietary concerns ahead of the mission to generate public knowledge, narrowly interpreting the language of Bayh-Dole regarding the university's role in economic development; that way, I believe, lies trouble. But as long as policies accommodate these differences and universities continue to recognize that their raison d'etre is contributing knowledge to the public, the research community can balance public and private interests, to everyone's ultimate advantage.

Related links:

  • The Bayh-Dole Act, Council on Governmental Relations

  • Stanford University Office of Technology Licensing

  • Richard R. Nelson (Columbia Law School)

  • "The Land Grant System of Education in the United States," Ohio State

  • "The Land-Grant Mission for the 21st Century," Auburn

    RICHARD NELSON, Ph.D., is George Blumenthal Professor at Columbia's School of International and Public Affairs, professor at Columbia Law School, and professor at Columbia Graduate School of Business.