Iowa’s Public Universities Court Industry Research With Low-Cost Licenses

Iowa’s two public research universities are the latest to adopt policies aimed at attracting more industry-financed research by promising the sponsors simple—and low-cost—terms to license any inventions that result from the work.

Under the new policies, companies that sponsor research at the University of Iowa or Iowa State University and that pay an extra $15,000 fee upfront can receive exclusive rights to commercialize research results without paying additional licensing fees.

The sponsors must also pay the universities’ full overhead costs. In the event the invention becomes a blockbuster, with net sales worth more than $20-million, a 1-percent royalty fee would kick in.

“Certainty is one of the things that companies really prize,” said the University of Iowa’s vice president for research and economic development, Daniel Reed, and the new option for sponsors provides that. Mr. Reed recently returned to academe after a stint as a high-level executive at Microsoft. About 8 percent of the university’s more than $400-million in sponsored research comes from companies.

Iowa State, where industrial funds account for about 13 percent of its $360-million in research spending, hopes its new policy will help it to attract more support from companies. “They get this package. They understand it,” said David Oliver, interim vice president for research and economic development there.

Both officials said they hoped the policy would also help them bring in more money to cover overhead costs. Now many companies and other research sponsors negotiate to pay lower overhead rates.

The Iowa universities said they had modeled their policies on programs already in effect at the University of Minnesota and other institutions.

Although such policies create the possibility that companies could take advantage of the university or the professors doing the work, Mr. Oliver said there are some safeguards. For one, all parties, including the researchers, must agree to undertake the research under the new policy. Otherwise, other terms (which typically give companies royalty-free nonexclusive rights and an option to negotiate for an exclusive) would come into play.

It’s still possible that a company could walk away with the commercialization rights to a big hit for a mere $15,000, but Mr. Oliver said that if history was any guide, that’s not likely. Most of the university’s biggest commercialization successes have come from research financed by federal grants or other sources,  he said: “This is not something that is going to be a money loser.”

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