In fiscal year 2012, the federal government invested more than $40 billion for research and development at universities across the country, accounting for 61% of total higher education R&D. Out of 655 universities receiving federal funding, University of Washington ranked 4th, receiving over $1.1 billion and Washington State University ranked 68th with $336 million, reports the National Science Foundation. Starting in 1980, under the Bayh-Dole Act, universities began to aggressively patent and retain title to federally-funded inventions and derive revenues from successful licensing and commercialization activity. Currently, both UW and WSU utilize federal funding to pursue commercialization of products developed by their researchers, and to support academic and industry collaborations throughout the state.
With so much public money spent on higher education R&D, some question the effectiveness of Washington universities’ technology transfer and commercialization programs. While UW and WSU each have commercialization success stories to tout, both schools are engaged in a continual effort to maximize the commercial potential of discoveries and manage the sometimes thorny disputes which arise around ownership of intellectual property.
From the Laboratory to the Marketplace
A 2012 report issued by the Washington Clean Technology Alliance defined technology transfer as “the process by which research, knowledge, and technology move from the laboratory to the marketplace and society.”
- Impact and Innovation Report, a collaboration by UW and WSU
Egils Milbergs, a former Deputy Assistant Secretary of Technology at the U.S. Department of Commerce, was charged with implementing the Bayh-Dole Act and more recently served as Executive Director of Washington Economic Development Commission.
Milbergs said that university technology commercialization is integral to Washington State’s economic development; however, the path success is neither smooth nor linear.
There are at least two “valleys of death” that projects must overcome, according to Milbergs. The first valley is when a research project reveals a result of potential value but lack resources for prototype development to demonstrate technical and economic merit. The second valley is funding an entrepreneurial team and business model to scale up and bring the product to market. Projects in the life sciences, medical and health care field, must also navigate a difficult and multi-step regulatory approval process. Technology transfer and commercialization programs must be funded and effective for pipeline products to escape both “valleys of death,” Milbergs added.
Commercialization at Washington Universities
Washington State University
The WSU Office of Commercialization works with many departments and academic programs to help license technologies and launch businesses in fields such as food safety and preservation, nutrition, agriculture, animal health, hydrogen fueling stations, and lithium battery safety. According to Anson Fatland, WSU Associate Vice President of Economic Development and External Affairs, examples of successful startups include:
- M3 Biotechnology: Originated from the WSU Department of Integrative Physiology and Neuroscience, it develops compounds to treat cognitive function in patients with Alzheimer’s, Parkinson’s, Age-Related Dementia, Stroke, and other brain-related impairments.
- Cosmic Crisp: WSU’s Department of Horticulture has worked to develop a new breed of apple with initial trees to be released to growers in 2017.
- Food Chain Safety: WSU’s Department Biological Systems Engineering research contributed to developing new microwave-based sterilization and pasteurization process for foods.
Fatland said that no one number could capture all the outcomes of a successful commercialization program. “We look at several metrics, which include but are not limited to, number of invention disclosures, patents filed and issued, number of companies started, number of licenses, money from licensing…number of partners engaged, capital raised, [and] jobs formed.” He said that WSU doesn’t “necessarily think that metrics around number of startups or number of licenses for example, tell a compelling story. Let’s take a look at the number of faculty working with our office, the number of students engaged in entrepreneurial activities. Let’s talk about jobs created, let’s talk about the tax contributions to our state.”
WSU President Elson S. Floyd recently wrote that WSU would be restructuring commercialization activities by adding market intelligence, competitive landscape analyses and entrepreneurial services, and implementing a competitive early-stage commercialization fund. Glenn D. Prestwich, a University of Utah expert in commercialization with more than nine life sciences startups under his belt, was recently hired by WSU as their new Chancellor’s Distinguished Visiting Professor. Prestwich plans to bring more life-saving innovations and transformative research from WSU to the marketplace.
University of Washington
In order to provide access to needed capital, the UW teamed up with private sector allies in 2012 to launch the W Fund, an early-stage venture pool that aims to invest approximately $20 million in promising start-ups spun out of UW and other research institutions across the state.
The UW Center for Commercialization (C4C) launched a record 17 startups in fiscal year 2013, ranking them among top five universities for commercialization. One of the startups, LumiSands, originated from research of UW graduate students seeking to develop a cheaper and more eco-friendly LED light bulb.
- UW spin-out LumiSands is developing silicon nanoparticles as an eco-friendly alternative for rare-earth phosphors in LED light bulbs
According to Linden Rhoads, Vice Provost of the UW C4C, UW signed a record 18 startups for FY 2014 and anticipates that “July will be amazing and FY 2015 will be an incredible year because we’ll probably spin out five to six companies in the first couple months.”
Rhoads also noted that current UW successes rank them first in the nation for licensing agreements signed, and also first for the number of discrete technologies under license, all while being 15th for patent expenditures. Rhoads said that this speaks to C4C’s economic efficiency. Rhoads added, “Among the more impressive indicators is that we’ve doubled the number of patents we file every year over the last five years” while maintaining the same budget.
Greg Gottesman, Managing Director at Madrona Venture Group, who sits on the W Fund Board of Directors, said Madrona has invested in several UW startups. He said it is “exciting to partner with technology and science research that is at its best, and with a good team, so much can happen.” He said Rhoads’ leadership “changed the culture to make it so that professors, students, and other researchers can think of startups as an option.”
Rhoads noted that people “are working very hard to finalize a number of licenses before [June 30th, the end of the fiscal year]”. She said, “In FY 2013, UW was again number one for the number of licenses signed – that’s of every university in the country – and number three for the number of spin-outs.”
It was recently announced that Rhoads is stepping down from her position as Vice Provost and serving as executive director for commercialization until the end of 2014, when she will return to the private sector. Her successor is electrical engineering professor Vikram Jandhyala, who has experience in the electronic design software industry.
Some Challenges and Skepticism For UW Tech Transfer Program
There is little doubt that the Bayh-Dole Act has changed the technological landscape of Washington state. It has spurred growth in university patents, private sector investment, start-up activity and fostered the development of regional innovation clusters, particularly in life sciences, biotech and health care.
However the implementation of Bayh-Dole is not without its controversies. Concerns have been raised about the distortion of academic incentives: the pursuit of profit at the expense of the free exchange of ideas and open scientific discovery. The productivity and outcomes of university technology commercialization are also under scrutiny.
Gerald Barnett, Former Director of the UW Seattle Research Technology Enterprise Initiative (2008-2011), described the 17 startups for FY13 touted by UW C4C as a “Potemkin village” of loose accounting.
According to Barnett, “Of these [17 startups] only four can be verified as UW startups created in FY13. Eight total companies for calendar 2012– but that is fewer than the ten on average started at UW in 2006-08.” He further noted that there was “only one startup (unnamed) in the first six months of 2013,…[which] is on track for two total for calendar 2013. It would appear that UW is launching more like five startups per year–about half the number of 2006-08, while spending two times more money to do it.”
Rhoads responded, “Every single one of our startups can evidence itself to be the real deal and can meet the Association of University Technology Managers (AUTM) standards.” AUTM promotes technology transfer and commercialization between universities and private industry. Barnett still worries because “The data AUTM has is supplied by UW and is not audited by AUTM.”
Barnett claims that the UW C4C stopped conducting comprehensive annual performance reporting in 2009. Prior to that, the tech transfer program produced a substantive annual report detailing expenditures, income, and other metrics.
He says he’s concerned about what he sees as an overall trajectory of declining accountability. “C4C is created, stops publishing reports, removes past annual reports from its web site, cancels faculty oversight meetings for years, announces information through Xconomy and GeekWire rather than UW News & Information services, produces reports of activity that do not hold up.”
Faculty Concern
Susan Astley, Professor of Epidemiology and Pediatrics, and Director of Washington State FAS Diagnostic & Prevention Network, has firsthand experience watching her ideas move from the laboratory to the marketplace. Professor Astley developed a system for diagnosing Fetal Alcohol Spectrum Disorders (FASD) through photographic analysis software that screens facial features. She also helped create a faculty Special Committee on Intellectual Property and Commercialization
Astley cited faculty concerns associated with academic freedom and IP ownership. Astley’s medical software was never intended to be a big money maker. She distributes it worldwide at cost, but says she feels lucky that she was given sufficient flexibility over her intellectual property to manage it in the way she envisioned. She stated that UW does “not have IP policy that has moved into the 21st century”, which means that it is “time to roll up our sleeves and start rewriting IP policy.”
Moving Forward
Technology transfer and commercialization has clear potential to benefit universities, businesses, industries, communities, consumers, and the Washington economy through new products, partnerships and collaborations. Emerging and new commercialization projects at UW and WSU could further contribute to Washington’s already impressive rankings in some key national indicators: third in per capita venture capital investment; fourth in R&D funding; and fifth in science and engineering patent leadership.
But to maximize benefits over the long term, Barnett suggests taking commercialization out of the equation and stressing the technology transfer function to better foster creative potential and skill development in students, faculty, and other researchers on university campuses.
Former Washington State Senator Jim Kastama (D – 25th), who chaired the Senate Economic Development, Trade and Innovation Committee and served on the Senate Higher Education & Workforce Development Committee, said “commercialization works and is an important part of research at a university.” He acknowledged that “universities… sometimes struggle to get those ideas into the marketplace.” He also cautioned university administrators and faculty not to proceed with the intention of making a fast profit. “University folks don’t always understand the business world and sometimes have an unrealistic view of how much money they can make from their inventions.”
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