Friday 20 August 2010

The Technology Transfer Office: Start-Up Help or Hindrance?

The question of how university research is commercialized stands front and centre in most discussions about the impact of policy on innovation. Ever since the tectonic shift brought about by the Bayh-Dole Act in 1980, which enables American universities to own the fruits of federally-funded research, the link between university research and commercial innovation has preoccupied scholars and policymakers alike.

Perhaps the most frustrating aspect of this phenomenon is the search for durable research results and policy prescriptions when there is so much diversity across countries. The risk is that, while presuambly everyone/everywhere is in favour of more innovation and the ability of universities to contribute to this effort, being overly Bayh-Dole-centric may mask the fact that other countries arrange the relationship between government funding, university research and commercialization in materially different ways.

This tension between the search for durable findings amidst the swirl of national diversity came to mind in reading two accounts of a recent article by Audretsch and Aldridge, "Does Policy Influence the Commercialization Route: Evidence from National Institute of Health Funded Scientists," Research Policy June 2010. The two reports are "Audretsch on the Results of the University Research" (Indiana University, School of Public and Environmental Affairs, June 17, 2010) here and "Indiana-U Study Suggests TTO Undercounts Start-Up Activity" (The TechTransfer Blog, June 23, 2010) here (sorry, but when the online service wants to charge $31.50 for a copy of the 6-page article, I will limit myself to these reports).

One outcome of the Bayh-Dole revolution has been the rise of the Technology Transfer Office (TTO) in many universities and research facilities.The gist of the study was to examine how good a proxy TTO acitvity is for determining the commercial success of university research. Focusing on a sample of particularly successful scientists who have received patents for NIH-funded research, the gist of their findings is as follows:
1. 70% assigned their patents to their respective TTOs for further commercialization;

2. 30% elected not to assign at least some of their patents to the TTOs, preferring to seek to commercialize their inventions through so-called "back door" means.

3. As a result, "[s]cientists choosing the backdoor route for commercialization, by not assigning patents to their univeristy to commercialize research, tend to rely on the commercialization mode of starting a new firm ... By contrast, scientists who select the TTO route by assigning their patents to the university tend to rely on the commercialization mode of licensing."

4. Moreover, scientists who choose the backdoor route are more likely to have their work cited in subsequent patent applications, suggesting that perhaps the backdoor route is itself attracting a "better" type of research result than are the TTOs.

5. In any event, TTO data materially understates the commercial activity following out of university research and the link between entrepeneurship and the fruits of government-funded science need to be better understood.
While these are interesting results, I am bit surprised that anyone ever entertained the notion that TTOs are a good proxy for measuring commercialization of government-funded research. Maybe in the U.S. it is indeed an open question--hence the research. However, my own experience in Israel has made it clear for years that, in a "start-up nation" environment, the name of the game for some commercially inclined scientists has long been how to remove your research from the TTO framework.

Indeed, the real struggle is the tension between the claims of the government and the scientists how to divide the share of the commercial fruits of successful innovation. As such, it would not occur to anyone in Israel that its highly acclaimed TTOs are a good proxy. I have only the vaguest notion how this issue plays out in other settings with active government involvement in this area, such as Gemany and Australia. In any event, before we rush too quickly to the realm of policy prescription, we first need to get a much better idea of how the issue plays out in multiple jurisdictions. Only then might we be in a position to offer (or refrain from offering) really meaningful policy proposals.

1 comment:

Jeremy said...

How reliable might the cited percentages be, given that there may be a tendency on the part of scientists to try the backdoor route for patents that look like really good prospects, while opting for a less arduous payday prospect via the TTOs for (i) their less promising output and/or (ii) patents in areas where the TTO has a good track-record and ready-made licensees.