Alma mater as the mother of invention
"It'll never fly, Orville." Niels Reimers, Howard Bremer, Dianne Thilly, or Lawrence Gilbert would not have liked to hear such talk. Each of these individuals -- from Stanford University, the Wisconsin Alumni Research Foundation (WARF), the Massachusetts Institute of Technology (MIT), and Boston University (BU), respectively -- is a university patent administrator or patent attorney. They live in the complex world of patent licensing, royalty payments, and the sale of university-sponsored inventions to industry.
Patent administrators see themselves on the cutting edge of improving America's economic competitive position with the rest of the world. They seek to transfer a university's research to society in the form of tangible goods, in comparison with the institution's traditional products -- graduate students and research publications.
Their function can best be described as specialized midwives for delivering inventions from various departments of their universities into the practical, and money- making, world of business.
Nationwide, colleges and universities obtain annual revenue of more than $1 billion from their licensing agreements on inventions and patents. Stanford's share of earning from royalties on sales of licensed inventions are today running at more than $600,000 a year. MIT has experienced years in which annual revenue topped $1 million. Though top dollar honors may vary from institution to institution each year, the California state university system, when combined, surpasses all others.
The standard skills for these administrators include familiarity with the technical languages of the sciences and many branches of engineering as well as knowledge of the intricacies of patent law and royalty payments.
Niels Niemers of Stanford describes patent-licensing methods as "an entrepreneurial approach. Often an invention does not sell itself, even if we and the inventor explain the invention [to an interested company] in fairly reasonable details, and set out the license terms. . . . Having a patent doesn't guarantee a license."
Nor, it can be added, does it guarantee revenue to justify and pay for the research. Mr. Reimers explains:
"Long experience indicates that however good an invention is, usually it needs a champion inside the target corporation. . . . A great deal depends on contact with the right people at the right level.
"There is far more benefit to Stanford than income from licensing inventions. Quite often, when we contact a company for the first time, they realize the amountof technology in their field which we are developing. They may not be able to take up the particular invention we offer them, but they become interested in other opportunities for interaction with Stanford."
Like record companies that push numerous recordings that lose money in the hope of finding one that one will become a "monster" hit and more than pay for all the losers, universities sponsor basic research that may lead to possible inventions knowing that many will not earn the money it cost to discover them. They hop for a marketable patent that pays off -- like MIT's royalites from penicillin or WARF's vitamin D.
The distribution of royalties earned by an invention varies from university to university, but all recognize the right of the inventor to share in the profits (if there are any, Mr. Gilbert emphasizes). MIT, for example, pays 15 percent of net revenue after costs are recouped to the inventor with the remainder going into a universitywide fund.
Gilbert cites a number of factors for a successful patent licensing program at a university:
* The school must be large.
* It should have a medical center attachd to it. A medical center alone will account for over $20 million annually in research funds to the university and will provide an area of research that has proved to turn out marketable products.
* It must be strong technologically, especially in instrumentation, where the likelihood of a patent-license spinoff is greater. (MIT will spend $40 million to $50 million a year in such research).
* It must have the resources to be patient. IT takes anywhere from three to 10 years for an invention to reach the marketplace.