Profit slows tech innovation, report says; Local universities say finding is misguided

BYLINE: Tim Simmons, Staff Writer

The temptation to chase big profits rather than less lucrative, more practical innovations is stunting efforts to transfer technology from university labs to the U.S. marketplace.

That message, bluntly rejected by university officials in the Triangle, was delivered Thursday by the Ewing Marion Kauffman Foundation, a respected nonpartisan group designed to advance entrepreneurship.

The 34-page report applauded the work of university researchers, but said that a "home run" mentality among school officials threatens to impede new technologies.

Tech transfer offices, the report said, have become "the maximizer of revenue streams, rather than the grease in the gears that allowed the system to flourish."

Officials at N.C. State University and the University of North Carolina-Chapel Hill dismissed the findings.

"The opinions of the Kauffman group could hardly be more inaccurate as regards to the technology-transfer structure, mission and mechanisms in place at N.C. State," said Dave Winwood, an associate vice chancellor who oversees technology development at NCSU. "Big hit, home-run licenses are simply not a focus of our daily operations."

Mark Crowell, the associate vice chancellor who oversees technology transfer and economic development at UNC-CH, called parts of the report "naive" and "silly."

The report was presented in Washington at a meeting sponsored by the National Bureau of Economic Research.

Most technology transfer offices on today's campuses were created after 1980, following federal legislation known as the Bayh-Dole Act.

At the time, the economy was shifting away from its industrial base, and policymakers were lookgin for a faster way to commercialize new scientific and technological breakthroughs that were being funded with federal money.

The result was a basic agreement that universities could retain the legal rights to new inventions. That allowed them to profit by selling licensing rights to companies that could use the ideas for new products.

Based on the thinking that most scientists are not business executives, technology transfer offices were given the responsibility of applying for patents, negotiating license agreements and handling paperwork.

The university splits profits with faculty members who invented the idea.

But rather than increasing efficiency, the centralized process has created bottlenecks and throttled the transfer of new ideas, according to the Kauffman Foundation report.

It was this particular finding that seemed to hit a nerve with tech transfer officials.

"Our mission is to make innovations created by the N.C. State research community available for the widest use possible for the public good as rapidly as possible," Winwood said.

Triangle universities profit from those innovations, and the patents and licensing agreements produce about $5 million to $10 million a year. That's a tiny fraction of a large university's overall budget, even though Triangle universities produce dozens of patents and agreements each year.

"If we are in this for the money, you would have to conclude we are failing," Crowell said.

The authors of the report, led by Robert Litan, vice president for research and policy at the foundation, offered several suggestions for increasing the transfer of knowledge to the marketplace.

Faculty could be given the authority to act as "free agents" to hire others to license their inventions, they said. Universities could also work together in groups or across the Internet to promote the transfer of ideas.

The report also suggested that faculty be given 100 percent of any money generated by a commercial success. They could then donate a portion of those proceeds back to the school in a show of loyalty and support.

Winwood and Catherine Innes, director of technology development at UNC-CH, said some of those ideas are already used and others just aren't workable.

"I don't know why," Innes said, "but it doesn't appear the Kauffman researchers actually talked to anyone who works in a tech transfer office."