Universities’ activity in commercializing academic research continued to increase in the 2010 fiscal year, despite the sour economy. Institutions completed more licensing deals with companies than in the previous year while also forming more start-up companies and filing for more patents, according to newly released data from the Association of University Technology Managers.
In total, the 150 or so institutions responding to the annual survey reported licensing and related revenues of just under $1.8-billion, about the same as in 2009.
The number of United States patents issued to universities in 2010 was up markedly, to 4,109, compared with 3,088 the previous year. But universities had little control over that increase, which may reflect changes at the U.S. Patent and Trademark Office.
By contrast, the notable uptick in the number of start-up companies formed around university-owned intellectual property— 613 in 2010, versus 555 the previous year—came as universities faced increasing political pressure to contribute more to economic development and job growth. Even the White House has taken an interest, with President Obama frequently calling on universities to improve their technology-transfer operations while also pledging, as he did last week in a presidential directive to all federal research agencies to work more closely with universities and business to bolster commercialization of government-financed research.
“Clearly there is a lot of interest in start-ups,” said William Tucker, executive director of the University of California system’s Office of Innovation Alliances and Services. “There is so much overt and covert pressure to do this and we’re moving with that tide.” The University of California system, which reports data for all 10 of its campuses, formed 75 start-up companies in 2010, 28 more than in the previous year.
‘Bridging the Valley of Death’
Traditionally, university start-up companies face a tough path because they are built on early-stage technologies and young companies can have a difficult time attracting the capital they need to develop an idea to a point where it becomes more commercially attractive to investors. That’s what folks in the field call “bridging the valley of death.” But more universities “are figuring out how to fill that gap a little bit,” said Mr. Tucker, by tapping into federal commercialization funds or creating their own internal programs that can provide money to build a prototype or to finance proof-of-concept experiments that wouldn’t be appropriate for an academic lab.
One such venture is the $2-million Ignition Fund created by the University of Texas system in 2007, which officials there credit as a key stimulus for the increase in its spinoff companies. The system formed 33 spinoff companies in 2010, up from 22 the previous year. One of those is a company called FibeRio Technology Corporation, which grew out of research at the University of Texas-Pan American that was advanced with an Ignition grant of $50,000 in 2008. It now sells an innovative machine that “spins” materials into nano-size fibers, like a high-tech cotton-candy maker.
Until recently, the creation of a spinoff was “a tool that was underused” at the university, said Bryan T. Allinson, executive director of technology commercialization for the system.
In theory, universities’ growing use of these “proof of concept” programs should help improve the chances that the increasing number of spinoff companies actually stay in business.
Jack Brittain, vice president for technology-venture development at the University of Utah, where spinoffs have been a high priority, said there’s also a risk in not encouraging them. “If you don’t get them out there for a market test while you make them perfect, you can love them to death,” he said. Utah formed 18 spinoff companies in 2010 and 19 the year before. Mr. Brittain says he’d rather have a 60-percent success rate with more companies than a higher rate with fewer. “You’ve got to accept that you’re going to have failures if you’re going to have successes.”
And sometimes, the successes are hard to predict. The university reported revenue of $37.5-million in 2010, versus $12.4-million in 2009. A big reason for that increase was its sale of three start-up companies, including one called Key2SafeDriving that sells a device that restricts cellphone activity upon ignition and that Mr. Brittain had at one point thought was “dead in the water.”
3 Big Leaders in Revenue
Three institutions accounted for more than a quarter of the total revenue reported: Northwestern University, which reported nearly $180-million in revenue, up nearly $20-million from the previous year; New York University, with $178-million, up $65-million from the previous year; and Columbia University, with $147.2-million, down slightly from its $154.3-million in 2009. (See a related table for more details on the data for the 155 institutions that provided it.)
New York University, which saw the biggest one-year jump in revenue, said three factors drove that increase: a spinoff company that makes a touch-screen technology was sold, and NYU was paid for its ownership stake in the company; the arthritis drug Simponi, based on a university invention, came onto the market; and royalties from several other licenses rose.
The university has been a leader in licensing revenue ever since another NYU-related arthritis drug called Remicade became a big seller, and for several more years at least, it faces no imminent threats to its big-producing patents. “There are no cliffs on the horizon,” said Abram M. Goldfinger, executive director of industrial liaison.
But that so-called patent cliff loomed large for several other institutions. Licensing revenue for the University of Florida fell from about $54-million in 2009 to $29.2-million in 2010 after its patent on a glaucoma drug expired. Revenue at the University of Georgia dropped from $30.5-million to $6.7-million when its patent for the eye-drop product Restasis ran out.
Universities completed a total of 4,735 licenses in 2010, up from 4,624 the previous year, and filed 11,427 applications for new patents, up slightly from the 11,260 in 2009.
The association said it plans to release its report based on the data later in November.
Alex Richards contributed to this article.
