BANKING ON BRAINS; Upstate cities stand to benefit when colleges like RPI and UAlbany bring in money by licensing intellectual property

TROY - When Rensselaer Polytechnic Institute launched its Office of Technology Commercialization a decade ago, about $60,000 in license revenue was brought in that first year from companies that wanted rights to the school's laboratory innovations.

This year, the figure is $1 million, said Chuck Rancourt, director of the office.

RPI, like so many other universities, has seen revenue from its intellectual property grow as it patents and markets the most promising breakthroughs. A recent study sponsored by the National Science Foundation found the number of licenses and options entered into by universities nationwide nearly doubled to 4,200 in 2005 from about 2,200 10 years earlier.

A report by Innovation Associates, a Reston, Va.-based consultant, said gross license income from universities in 2005 totaled $1.6 billion.

While most university transfer offices operate in the red - including RPI's, said Ron Kudla, executive director of the school's Office of Intellectual Property, Technology Transfer and New Ventures, "our first objective ... is to commercialize that intellectual property for the benefit of the public and support research at the university."

RPI, the University at Albany and other upstate schools are leading a new wave of economic development that could revitalize New York's old industrial cities, some say.

"Because technology is such an indigenous resource in upstate New York, this is the easiest, most reliable way to make economic development" happen, said Richard Honen, a partner in the Albany office of intellectual property law firm Phillips Lytle LLP. "It is the cheapest way of doing economic development. It's easier to grow something than buy it."

RPI already had much of the infrastructure in place to encourage technology commercialization. Its incubator, launched in 1980, has graduated more than 250 companies, with 83 percent surviving for at least five years, said Michael Tentnowski, director of the Rensselaer Incubator Program.

"About 3,000 jobs have been created," he said. The companies have annual revenue of $500 million.

In 1981, RPI launched a technology park, where startups could move when they outgrew the incubator. BullEx Digital Safety, which originated in an RPI classroom, now has its headquarters at Rensselaer Technology Park in North Greenbush and a plant in Menands. The company offers virtual training in the operation of fire extinguishers.

Not all innovations stay in the area.

When Mark Wentland, a professor of chemistry and chemical biology at RPI, discovered a group of substances that held promise as a treatment for cocaine addiction, he worked with the school's Office of Technology Commercialization to find a pharmaceutical company that would license it and take it through the necessary clinical trials to commercialization.

The six-year process resulted in a license to Alkermes Inc., a Cambridge, Mass.-based biotechnology company.

Wentland's research had been supported with more than $2.4 million in National Institutes of Health funding. The Bayh-Dole Act of 1980 gives RPI and other universities the title to innovations developed with federal funds.

Finding a company willing to license technology can be a challenge.

"What's the definition of a hot academic technology?" asked Ashley Stevens, who heads Boston University's technology transfer office, during a talk last week in Albany. He answered his own question: "One that two companies are interested in."

Given the limited customer base, placing a value on a license can be difficult. Stevens was in the Capital Region to describe a range of approaches that can be used in drawing up a license agreement. His visit was sponsored by Bioconnex, a local biotechnology network.

"Academic technologies are generally very early-stage," he said, requiring further development before being commercialized.

At UAlbany, meanwhile, licensing revenue took a dip this year when patents on a lightning-detection network that was developed there expired, said Lynn Videka, the school's vice president for research.

But UAlbany's College of Nanoscale Science and Engineering has developed a new model for commercializing intellectual property, one that Alain Kaloyeros, vice president and chief administrative officer of the NanoCollege, thinks makes more sense.

"It's tough for us to measure commercialization success by license revenue," he said. "In many cases, a company comes in and puts tens of millions of dollars on the table upfront.

"We've moved the licensing step to the beginning of the relationship," he said.

Students, faculty and scientists from individual companies conduct the research, and the university and the companies share the rights to the technology that results.

"The relationship has evolved from funder-fundee to equal partners," he said. The NanoCollege and its partners, including IBM Corp., jointly developed technology that produced more than 100 patents and another 250 patent applications in 2006, Kaloyeros said.

He estimates the breakthroughs are worth the equivalent of $15 million to $20 million in licensing revenue annually to the school. That's about 10 percent to 15 percent of the NanoCollege's annual budget.

UAlbany is constructing a massive addition to the NanoCollege's Fuller Road campus that will house the research headquarters of International Sematech. That project will attract hundreds of additional researchers.

"The model we have here - the technology transfer commercialization model we have - we own the facilities and equipment. We hire the engineers, technicians and support staff. Sematech ... has no assets to sell here," Kaloyeros said.

And he thinks the emphasis on startups is misplaced.

"A lot of people feel instead of investing in major corporations, we should grow our own," he said. "You're seeing a lot of our homegrown companies are either being moved out or bought out. Rupprecht & Patashnick - the company totally vanished in the region," he said, referring to the East Greenbush maker of high-tech air monitoring devices, which was acquired in April 2005 and shut down last month.

"The primary necessary step is to have as anchor tenants these major corporations that have a significant research and development presence in the region," Kaloyeros said. "With the federal funding outlook so challenging, (and) all these new innovative ways of funding research - the sky's the limit."

Eric Anderson can be reached at 454-5323 or by e-mail at eanderson@timesunion.com