Improving the Commercialization of University Inventions

Arundeep Pradhan and I agree on the fundamental issue: Our economy and our society need more innovation, and universities are a rich source. We just disagree on the best way to maximize their potential.

The core of that disagreement is about the value and role of university "technology licensing offices" (TLOs). Pradhan—who is president of the Association of University Technology Managers, essentially the TLO trade association—thinks the system is working just fine, according to his recent column. I think it could be improved through more competition.

Universities are supposed to be, and mostly are, "marketplaces of ideas." But when it comes to inventions developed by their faculty, there is only one avenue available. TLOs typically assert total control over which innovations can reach the market, in what form, and how fast. In the Harvard Business Review article that Pradhan criticizes, my co-author and I proposed some modest steps to expand the avenues to commercialization. For instance, why not allow faculty members to test the waters by approaching TLOs at other schools? Or better yet, let them use independent licensing agents who may have more expertise in the inventor's technology of choice? The net result—something we believe that Pradhan wants (or should want) no less than we—would be more inventions moving more quickly to market, thereby benefiting society, the university, and the inventors.

Opportunity Cost

Pradhan argues that TLOs are doing a good enough job on their own. But the statistics he cites do not prove that. This is a classic case of opportunity cost. Who knows what products and technologies we aren't getting, but that might see the light of day, if university inventors had more choices available to them? To what extent, because of the singular TLO pathway to market, are we paying higher prices than necessary for the innovations that do make it?

Pradhan's other major objection is procedural. He asserts that, because universities' missions are to serve their faculty, it would be "inappropriate" for their TLOs to handle technology licensing from faculty elsewhere. Why so? Universities exist to produce and disseminate knowledge, while their TLOs are supposed to accelerate its commercialization. It shouldn't matter where an idea was hatched; if it's good, universities should be first in line to help it into the marketplace. Similarly, if it's good, finding financing will be no problem; the TLO's sole control can't be justified on that basis either.

We can't let pass Pradhan's claim that we somehow oppose or want to change the Bayh-Dole Act. To the contrary, we recognize—and have praised many times in the past—the important role that Bayh-Dole played in fueling the entrepreneurial economy of the last 30 years. Indeed, if we may risk being immodest, we believe that no single person or institution has done more to publicize the great good of Bayh-Dole than we at the Kauffman Foundation. Far from seeking to gut Bayh-Dole, we want to make it better. And it would be better, we think, if the federal government required universities receiving research grants to allow faculty inventors the right to choose their licensing agent. The object should be the most rapid and cost-effective commercialization possible, and that end will be furthered by more competition, not less.

Universities are an important source for the entrepreneurs that America desperately needs. Now is the time to think expansively, to build deltas. Just as deltas connect great rivers to the sea through a network of channels, university innovation should be able to find the marketplace through a variety of paths.