factors that foster industry-university cooperation ...06/jelinek...iucrc, june 15, 2006 © mariann...

Factors that Foster Industry-University Cooperation:

Implications for I/UCRCs

June 15, 2006

Mariann Jelinek, Ph.D.The Richard C. Kraemer Professor of Strategy

Mason School of BusinessCollege of William & Mary

© Copyright 2006 Mariann Jelinek, Ph.D., Williamsburg, VA, 23185

IUCRC, JUNE 15, 2006 1© Mariann Jelinek, Williamsburg, VA 23187-8795

Genesis of the Study“UNIVERSITIES AND IP!!@*&^%%!!!!!”“All is Well: Revenues are Up”Acrimony, Misunderstanding, Divergence of Views, Cultures, CriteriaAhistorical, Acontextual, Disjointed and (Often) Evidence-Free DiscussionDespite Importance for Innovation, Each Other

… And It’s Been Like This for Years!

mailto:IP!!@*&^%%


Research Questions:Is there a Problem?Are Particular Universities More/Less Difficult to Deal With?Are Particular Issues More/Less Hot?Can Key Factors for I-U Relationship Success/Failure be Identified?

… A Qualified “Yes”


… A Qualified “Yes”“Qualified” by Institutional, Global Context… by Historical U.S. I-U Relationship… by Actual Outcomes Over Time… by Character of Discovery, Innovation, and Commercialization: the Valley of Death… by Different Cognitive Frameworks for Making Sense of the Complex, Ambiguous Realties of the Parties


The Current Debate: 1

QuickTime™ and aTIFF (Uncompressed) decompressor

are needed to see this picture.



CLASS TITLE:Patents1993

Patents2003

UniversityPatents in1993

UniversityPatents in2003

Index for University Activity, 19

Index for University Activity, 200

Multicellular Living OrganisUnmodified Parts Thereof aProcesses 33 446 4 70 7.349 8.14

Chemistry: Molecular BiologMicrobiology 1498 3174 176 494 7.123 8.07Chemistry: Natural Resins oDerivatives; Peptides or ProLignins or Reaction Product 360 538 38 81 6.4 7.80

TECHNOLOGIES EMPHASIZED IN UTILITY PATENTS ASSIGNED TOALL U.S. COLLEGES AND UNIVERSITIES, UTILITY PATENT GRANTS, 1993 AND 2003

Source: USPTO Data, http://www.uspto.gov/web/offices/ac/ido/oeip/taf/univ/ai/ai.htm

http://www.uspto.gov/web/offices/ac/ido/oeip/taf/univ/ai/ai.htm


What Some Say, in Industry:Horror Stories about Delay: “506 days!”“Public Disclosure Undercuts Patents”Unreasonable Valuations Ignore Risk“We Bought it, We Should Own it!”“What Benefit, if only Published Work?”“Flow-Through” Contract TermsThe Nightmare Scenario: Hold-up Under Threat to Sell to Rivals


What Some Say, in Universities:Horror Stories About Delay“Academic Freedom is the Holy Clause”U’s Should Share Benefits of Big HitsI’s Need to Count Beyond IPNo Nightmare Event, but Some Walk-awayWe’re Not Contract Research Shops: IRS Rev. Proc. Stipulations


Identified Cultural Gap:University Focus: Cooperative Knowledge GenerationAcademic FreedomCommon Info ExchangeStudents, Post Docs Not Quite “Employees”Legal Constraints on Preference for SponsorsScience & Tech Discovery

Industry Focus : Competitive AdvantageProprietary Info to Exploit & ControlInfo as AssetResearch-for-hireDisclosure NormalMarket HazardsSale & Profit


What Others in Industry Say:Sophisticated Project Definition Avoids IP or Invention by U’s, Gets Knowledge Strategic IP Uses a Range of Relations:Sometimes IP Control is Not ImportantSometimes IP Control is Critical: ExclusivitySometimes Foreclosing Others’ Control is Key: Publish it!Know What You’re After & Negotiate for it


What Others in Universities Say:We Want Repeat Industry SponsorshipWe Need Industry Problems, Data, Jobs95% of Knowledge Transfer NOT IPLicense Revenues are Risky, Rare,Volatile, Unpredictable: ROI < 3%We Can Work it Out …


Common Themes:The I-U Relationship Over Time is More Valuable than Any Project or All Revenue:

Leaky Knowledge Flows from U’s AND I’s, tooU’s Need I Knowledge, Problems, DataI’s Need U Knowledge, Perspectives, Breadth“IP and $” Don’t Begin to Tell the Story

Experience HelpsFlexibility HelpsCommunicate Early and Often!… We Can Work it Out


That Valley of Death:

“Good”ScientificIdeas:KnowledgeCreation

Lab ResultsProof of

ConceptPublicationsPatents …

Universities &Federal Labs

Industry:Firms & Users

The Valley of Death – where many “good” science ideas, technologies and new products and processes die

Scale-up, Manufacturing,Exogenous Technology

& Market Risks …

“Good”Market-

DominatingIdeas

Details ofHow to Make & Use

ProprietaryAdvantageProfits

ScientificUncertainty

ScientificRisk

Technical Risk

Engineering Uncertainty

Manufacturing Uncertainty

Market Risk & Uncertainty

Exogenous Risk

& Uncertainty

$ $ x 100


License Revenue Facts: 1No University is Making “Big Bucks” Relative to Research Dollars, Total Budget“Top 5” (often “Top 1 or 2”) > 90%Even at Top Research Schools, TTOs Not Self-Funding, Not Big Revenue Source (ROI < 3%?)Even with All those Patents:

> 5000 Active for California System …Even since 1912Even for Multiple Big, Patenting Universities

Home Runs are Vanishingly Rare


License Revenue Facts: 2US Universities no Longer “the Only Game Around”Offshore Alternatives (Russia, China, India)

Anonymous Online Problems/ SolutionsKnowledge Inherently “Leaky” in Electronic Age

The US Innovation System is Challenged from Well Beyond US I-U Relationships


License Revenue Facts 3:Universities Know ThisAUTM Knows ThisIndustry Knows This …

…So How Come All the Fuss About IP Licenses, Fees, & Revenues?


License Revenue Facts 4:Quantitative Data Bias: Licenses, Revenues, Patents are Easy to CountAUTM, U’s Tasked to Document Results: Like “Teach to the Test?”Industry Thinks in Pure Economic Rationality, Zero-Sum Competitive Terms

But …Both Sides Stand to Lose Without Attention to the Longer-Term Relationship


A Multilevel View of IP

Individual Deal

Particular Technology

Individual Negotiators

Most discussion focuses on single deal(s):-- As if No Other, Ever, Had or Would Occur-- Zero-Sum: What I Win, You Lose-- No Consequences to “Antisocial” Behavior-- No Reputation Effects-- No Ancillary Costs/Benefits



Individual Deal

Industry Context University Context



Even a Cursory Glance Says the Parties Diverge:-- Seek Different Benefits-- Assess Different Criteria-- WILL “Play Another Day”


A Multilevel View of IPBayh-Dole (1981)Formal legal framework

CAFC (1981)

JudicialInterpretation

USPTOApplication examination & patents issued

Historic I-U Links in U.S. national innovation system

Institutional Context


Context of the Deal



What Role for

NSF?


So What? 1I-U Relations in the U.S. have been Highly Productive for Both I and UThey Are (Still) the Envy of the WorldBut there are Signs of Strain, andThe Discourse is Curiously DisjointI/UCRCs can Foster More Realistic Engagement


So What? 2 - A Story For U’s:Play a Volume Game: Simplify, and Let the Sponsorships Flow!Unite with I’s for “Nonexclusive, Royalty-Free”Sponsors’ PreferencesCharge I’s Full Price for ExclusivityLearn to Measure Non-License BenefitsTell Your Story to Influence the Discourse


So What? 3 - A Story For I’s:Get Strategic About IPUnite to get U’s Much Better Support, Better I-U Links -- for Your BenefitGet Sophisticated About Research TasksPlay a Volume Game: Simplify, and Let the Sponsorships Flow!Learn to Measure Non-License BenefitsTell Your Story to Influence the Discourse


So What? 5 - A Role For NSF:Encourage I-U Research SponsorshipAdvocate I-U Research Relationships:Seek Cross-Agency Agreements to Fund I-U Cooperative ResearchKeep the Conversation GoingConsider a Standard, Low % IP Format --for NON Biotechs -- Recognizing How UNLIKELY Big Hits Are


So What? 6 - More on Policy:Advocate Clearer IRS Regs on IP, Prefs to Facilitate I-U Research SponsorshipAdvocate Sharing for Accelerated Innovation: I-U, Federal Labs, tooGet Strategic About:

Knowledge SharingKnowledge GenerationKnowledge Commercialization


NSF’s Stake: I/UCRCsA Non-Competitive Environment for Cross-Industry Sharing has WorkedTechnology Convergence is a PlusEasier Sharing → Better Outcomes for All!Foster Flexibility by Pointing to the Obvious

Home Runs are RareRELATIONSHIPS are More Important

Keep PI’s and Industry TalkingAdvocate, Advocate, Advocate!


Your Comments & Questions?


That Valley of Death:

“Good”ScientificIdeas:KnowledgeCreation

Lab ResultsProof of

ConceptPublicationsPatents …

Universities &Federal Labs

Industry:Firms & Users

The Valley of Death – where many “good” science ideas, technologies and new products and processes die

Scale-up, Manufacturing,Exogenous Technology

& Market Risks …

“Good”Market-

DominatingIdeas

Details ofHow to Make & Use

ProprietaryAdvantageProfits

ScientificUncertainty

ScientificRisk

Technical Risk

Engineering Uncertainty

Manufacturing Uncertainty

Market Risk & Uncertainty

Exogenous Risk

& Uncertainty

$ $ x 100



Individual Deal

Bayh-Dole (1981)Formal legal framework

CAFC (1981)

JudicialInterpretation

USPTOApplication examination & patents issuedIRS Regulations

Historic I-U Links in U.S. national innovation system

Institutional Context




Federal Research Priorities

NSF?

Factors that Foster �Industry-University Cooperation: Implications for I/UCRCs ��June 15, 2006Genesis of the StudyResearch Questions: … A Qualified “Yes”The Current Debate: 1The Current Debate: 2The Current Debate: 3What Some Say, in Industry:What Some Say, in Universities:Identified Cultural Gap:What Others in Industry Say:What Others in Universities Say:Common Themes:That Valley of Death:License Revenue Facts: 1License Revenue Facts: 2License Revenue Facts 3:License Revenue Facts 4:A Multilevel View of IPA Multilevel View of IPA Multilevel View of IPSo What? 1So What? 2 - A Story For U’s:So What? 3 - A Story For I’s:So What? 5 - A Role For NSF:So What? 6 - More on Policy:NSF’s Stake: I/UCRCsYour Comments & Questions?That Valley of Death:A Multilevel View of IP

factors that foster industry-university cooperation ...06/jelinek...iucrc, june 15, 2006 © mariann...

Documents