Michael Odza

In order to understand why the aloof ivory tower of academia is bending toward the unruly marketplace--that is, why universities have added technology transfer and economic development to the better established missions of education and research- -it's necessary to look back 18 years to a law known as the Bayh-Dole Act. But to put the Act in proper perspective, we must look back a bit further--to the birth myths of the university.

One account says two universities were founded simultaneously, on contrasting principles. One group of medieval monks, isolated from the plague-ridden rest of society in their high stone tower, possibly in Salamanca, Spain, decided they could support their scholarly works by imparting what they knew to healthy (and, need we say, wealthy) students. However, another account suggests that universities also have a parallel tradition of serving the society in which they are embedded more directly. This story holds that a group of ambitious merchants, possibly in Cambridge, England, believing that education would help them in their worldly pursuits, set out to hire some expert tutors. These two models--one based on research, with teaching as a way to pay for it, and the other based on learning, apparently for its utility--persisted almost unchanged and usually separate until midway through the 20th century. In this light, technology transfer is part of a long tradition of response to changes in society's needs.

Even the industrial revolution had little immediate effect on the university's divided identity. Formal academic technology transfer really began with the spread of scientific agricultural practices through the land-grant university system. With the notable exception of the Massachusetts Institute of Technology, guided by industrialist Vannevar Bush, most of academia resisted the messy charms of real-world problems. However, when World War II arrived, the governments of Germany, England, Canada, and the United States turned to their universities for the technologies to win the war. Famously, MIT's Radiation Laboratory contributed to anti-aircraft gun control, radar, and electronics, while Columbia physicists such as I.I. Rabi, George Pegram, Enrico Fermi, and John Dunning served the war effort through the Manhattan Project. So when Bush prepared his famous plan for the future of research in the United States, Science: The Endless Frontier (Washington: U.S. Government Printing Office, 1945), it was only after academicians had descended patriotically from the ivory tower to dirty their hands in designing the new weapons of war--and had succeeded, spectacularly.

What followed, of course, were 30-plus glorious years of steadily rising, indeed seemingly endlessly expanding federal funding for research back in the ivory tower, in an isolation welcomed by both society and the academy. (Of course, the purity was partial, at best. Military funding of university research soared. However, contemporary fears that federal funding would lead to federal control have an interesting parallel today in fears that industrial funding leads to industrial control.)

This decision to add research to the traditional academic mission of education was the first academic revolution, so designated by Christopher Jencks and David Riesman in The Academic Revolution (Garden City, N.Y.: Doubleday, 1968). The second academic revolution (the title of a forthcoming book by Henry Etzkowitz, SUNY Purchase), codified by Bayh-Dole and still in progress, was initiated as part of the controversial attempt to forge a national industrial policy in response to the innovations and manufacturing competition from Germany and Japan.

Could society do anything to save U.S. industry, after the cutbacks by the great central corporate research labs? Internal funding of corporate research fluctuates not in accordance with the need for new products 10 or more years out, but with sales, or worse, in accordance with the value Wall Street places on cost-saving vs. investment at any given moment. Partly as a result of the cutbacks and the short- term focus, and partly as a result of the increasing technology intensity of all industries, even in the very best cases -- IBM, Merck, Du Pont, Bell Labs, GE, 3M--companies discovered that they could not invent everything they needed themselves.

According to Jim Turner, long-time staffer at the House Science Committee, such large companies were the main focus of attention in 1979 and 1980. They complained that federal bureaucracy made it difficult to develop civilian or commercial applications of inventions made under federal (usually military) contracts. But Howard Bremer of the Wisconsin Alumni Research Foundation, the late Roger Ditzel of the University of California, and several others saw an opportunity to extend the law to universities and other non-profits and small businesses also conducting research with federal funding. The Commerce Department's Norman Latker helped mightily by publishing a study revealing that of 30,000 federally owned patents, almost none had been commercialized.

President Carter signed the Bayh-Dole Act (Public Law 96-517) in December 1980. Its main function was to standardize previously disjointed federal policy. It reaffirmed that ownership and control of patents derived from federally funded research belonged to the performing institution, not to the sponsoring federal agency. Bayh-Dole took the decision about commercialization out of federal hands, insulating the process from political interference, and incidentally helped start the shrinking of federal government. With later amendments, it allowed non-profits to offer exclusive licenses, which provided the incentive for the venture capital industry to invest in unproven university technology, and it required the institutions to share proceeds with the inventors. Clarification of title helped give companies the confidence to make investments in unproven technologies.

The results have been dramatic. A trickle of university patents, 200 in 1980, has turned into a flood -- now more than 3,000 applications a year. Universities' share of the total U.S. patents issued rose from a fraction of a percent to 3 percent, and much more in certain classes of advanced technology. In 1980 only a handful of major universities had the resources to fight the bureaucracy for months or years to get each invention waiver. Now more than 250 belong to the professional society, the Association of University Technology Managers (AUTM), and according to AUTM's most recent survey, more than 100 have at least 10 active licenses of inventions, meaning that companies are vigorously pursuing commercialization. Overall, 166 institutions reported nearly 13,000 active licenses, a number rising by 1,000 or more every year. More than 1,900 new companies have been formed since 1980 -- nearly 250 in 1996 alone, the most recent year surveyed.

While most licenses are for relatively modest improvements or components of products, some of them have helped transform our society in ways the sponsors, Sens. Birch Bayh and Bob Dole, probably never imagined. Within the technology transfer community, the most famous invention to date is the technique for recombinant DNA, or gene splicing, patented in 1980 by Stanley Cohen and Herbert Boyer of Stanford University and the University of California-San Francisco, respectively. Although it is difficult to separate history's contingencies from causes, it is striking that the biotechnology industry really got going after Niels Reimers, the founder of Stanford's licensing office, designed the non-exclusive licensing program for what turned out to be one of the essential tools of the industry. The Cohen-Boyer patent went on to garner more than 300 licensees and to return hundreds of millions of dollars to the institutions and the inventors.

Only three years later, Columbia obtained a patent on the co-transformation process, which extended recombination to enable the delivery of specific genes into mammalian cells. It has been used to develop numerous pharmaceuticals, including tissue plasminogen activator (t-PA), which can prevent damage from heart attacks; erythropoietin (EPO), which stimulates red blood cell production for AIDS and kidney dialysis patients; colony stimulating factor, which stimulates white blood cells; and factor VIII, for other blood deficiencies. Co-transformation's nearly 30 licenses and more than 200 other active licenses have now propelled Columbia to the top of the tech transfer charts. Indeed, Columbia, which ranked 23rd in total sponsored research in 1996, ranked first among private universities and second only to the University of California multi-campus system in net licensing revenue, with $62.1 million.

It's important to remember how universities use such income. First, it helps defray the multi-million-dollar cost of obtaining patent protection for all promising inventions (often years before royalties, if any, begin to flow). Office expenses for managing the process take another (smaller) chunk. The bulk is divided among the inventors and the institution, which may choose to invest in risky but promising research by younger investigators, pay for early-stage validation of technology, or contribute to the general fund of the department and/or school.

For all the success of technology transfer, or perhaps because of it, problems loom. Probably no more than 5 percent to 10 percent of faculty are inventors, even at leading research universities. While their numbers are likely to increase as multimedia and software spread through the humanities faculties, many faculty may still object to the financial success, industry ties, or even utilitarian bent of their entrepreneurial colleagues.

Ironically, large companies, which once ignored university inventions (and never did do much with their own federally funded inventions), are now pushing proposals in Washington to require universities to license research tools non-exclusively, or to return the licensing of life-saving drugs to the government. Etzkowitz observes that companies, having learned the lessons both of continuous innovation and brutal cost control, now say they "want to encourage the free flow of knowledge from academia to industry, intending 'free flow' to mean both 'without impediment' and 'without cost.'"

Yet these are problems of success. The fundamental truth confirmed by the success of the Bayh-Dole Act is that early-stage technology needs the security of law, the potential for reward, and the active promotional and negotiating skills of the technology-transfer professional to attract investment from the private sector. Remember that old saw, "if you invent a better mousetrap, the world will beat a path to your door?" It's still not true.

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Related links...

National Technology Transfer Center

Council on Governmental Relations, an association of leading research universities

Technology Transfer Legislative History

R&D Magazine

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MICHAEL ODZA is a consultant and publisher of Technology Access Report, a newsletter for technology transfer professionals, and of Intellectual Property Advice, for researchers.