July 1, 2013

Newco corralling new IP

UCLA is trying a new approach to licensing its IP, using an external 501(c)(3). The plan is stirring up considerable controversy.

At the May 15, the UC Regents voted to create an external nonprofit corporation, tentatively called “Newco.” Here are some key excerpts from the board agenda:
The primary mission of Newco and its Board will be to: (i) improve UCLA’s rate of invention disclosures per year; (ii) increase UCLA’s volume of patent applications per year; (iii) increase the overall flow of licensing royalties back to UCLA; and (iv) better position UCLA to win large, multi-year ISR contracts. This improved performance will not only benefit UCLA, but the surrounding community and the public at large.

In comparison to its peers at other universities, UCLA OIP-ISR has historically underperformed in the areas of technology transfer and ISR. UCLA believes this underperformance has not been caused by a lack of productivity among UCLA faculty or a deficiency in UCLA scholarship, but rather due to deficiencies in the current process of managing IP and ISR at UCLA.
Last week, the plan inspired a breathless exposé in a publication I’d never heard of, the East Bay Express. The opening excerpts:
June 26, 2013

Public Research for Private Gain UC Regents recently approved a new corporate entity that will likely give a group of well-connected businesspeople control over how academic research is used.By Darwin BondGraham

In a unanimous vote last month, the Regents of the University of California created a corporate entity that, if spread to all UC campuses as some regents envision, promises to further privatize scientific research produced by taxpayer-funded laboratories.
There are so many problems with the article, it’s hard to know where to start. The new plan would change what patents get filed and licensed for the UCLA medical center. It won’t be privatizing the research: the same research will be done, and it would still be licensed to firms.

The UC has been licensing IP to businesses for decades. Patents get licensed because it generates money, because it gets the technology into society’s hands, and because (after Bayh-Dole) it’s the law. Without Herb Boyer of UCSF (and Stan Cohen of Stanford) and their famous patent, there would be no recombinant DNA, no gene splicing, no Genentech.

The new plan for UCLA will decide differently which patents to prosecute (file) and license. An unpaid external board — the volunteer directors of Newco — will decide which ones to pursue and which ones not to. In the whole pipeline of developing and commercializing university research, the plan only changes the final few steps. (As far as I can tell, it doesn’t change the pricing of licenses nor the allocation of royalties to inventors and places within the university).

The exposé suggests that the plan parallels the University of Washington’s “Center for Commercialization,” but I can’t get enough info on either one to tell for sure. Certainly other schools have tried drastic measures in hopes of making their tech transfer more entrepreneurial.

I’m not sure what’s wrong with UCLA. According to the UC tech transfer FY2011-2012 annual report, Berkeley (no surprise) leads the pack, but by various measures UCLA, UCSD and UCSF all seem to be comparable. In some years, UCR does much better than some of the other UC campuses — perhaps owing to its century-long history as an agricultural research station.

However, in looking into the proposal, the proponents point to a March 2011 study “An Ecosystem for Entrepreneurs at UCLA,” written by the oft-cited Bill Ouchi, who in recent years has focused his efforts on changing troubled organizations. Based on 17 universities and benchmarking against 16 universities, UCLA was neither the best nor the worse. It holds up Columbia as a role model, because it can generate $154 million in licensing income off research expenditures of $604 million. In terms of license revenue per research dollar, Columbia is 9x as effective as UCLA.

Some of the plan seems unrealistic: it calls for “setting the national standard in technology transfer” : not everyone can be above average, not even at Lake Wobegon High. Private schools are inherently less bureaucratic and (best case) more entrepreneurial. Regressing to the mean of UC ratios is probably more realistic than matching Columbia’s results (assuming Columbia has topped the customary pillars of tech licensing — MIT and Stanford).

Still, as an experiment it seems like a worthwhile one. The plan calls for a performance evaluation after two years and every five years thereafter. It would be worth trying this experiment elsewhere (e.g. with Berkeley or UCSD’s engineering school) but not making it UC-wide for all colleges until it has passed at least two outside evaluations.


Unknown said...

Most university-developed technologies do not fit with corporate needs. A small percentage of inventions from any university are licensed are few generate significant income. Technology transfer performance is directly related to the volume of inventions disclosed which in turn is related to the size of the research budget. Program's such as UCLA's have been tried elsewhere without any measurable impact

Joel West said...

But actually the point of the UCLA system is to focus on the ones that do meet corporate needs. If you can only file patents on half of your disclosures, patent the ones that firms might be interested in — because they usually won't commercialize something without a patent.