In Search of Technology Transfer Best Practices: A Conversation with UC Davis Chancellor Linda Katehi

By Gene Quinn
May 9, 2010

Linda Katehi, Chancellor of the Univeristy of California (Davis)

Last week while at the 2010 BIO International Convention, I attended the Tech Transfer Symposium, which was held on Tuesday, May 4, 2010 at the Hyatt Regency Ballroom at McCormick Place. I had previously arranged an interview with Linda Katehi, Chancellor of the University of California (Davis), a transcript of that conversation appears below. At the outset of the Tech Transfer Symposium Katehi gave an introductory presentation on technology transfer that lead into a panel discussion.  As an Electrical Engineer, Professor and now Chancellor in the UC system, Katehi has a lot of experience with technology transfer, and for those Universities struggling to figure out how to license out technology in a successful manner they could learn an awful lot from Katehi. Her presentation and the time I spent thereafter with her continued to facilitate my understanding of why some Universities succeed and others fail.

Katehi also has some interesting suggestions regarding what the Patent Office could do to help Universities, both in speeding up the patent process and in keeping costs lower.  I learned a lot from speaking with Katehi, which supplemented my knowledge based on my experiences at Syracuse University.  What I am continually piecing together suggests that there is no great surprise why most Universities do not do a better job with respect to technology transfer.  There are things that are clearly considered best practices in the private sector that seem to elude Universities for the most part.  The University of California system seems to be out in front and trying to bring the best practices of the private sector into Universities.  It is no wonder they do a better job than most with technology transfer.

Given that my interview with Katehi picked up on some of the things she said during her presentation allow me to summarize the key points of her presentation at the BIO Convention.  The image below, taken from her power point presentation, shows what Katehi called the Continuum of Innovation as it currently exists. The University engages in basic research, moving on into translational research, before turning the innovation over to start-up companies. It is in this hand-off period that there is much risk and uncertainty because, as we all know, start-ups frequently fail do to a variety of different reasons.

The current way research and innovation is handled by many Universities is not particularly likely to lead to success because, as Katehi explains, companies become involved too late in the process and Universities do not get the market input that is essential prior to decided what basic research to translate into innovations.

Additionally, Katehi explains, many Universities do not properly invest in technology transfer and instead see technology transfer as a vehicle to return funds quickly, rather than viewing the licensing out of University innovations as a long term endeavor. As we discussed during our interview, and as she spoke about during her presentation, it is not helpful to have a short-term horizon.  She explained:

Universities find it very difficult to be successful in technology transfer because I believe they have adopted business models that have not been sustainable.  It is very costly for an institute to go and file for patents and yet there are not very clear feedback loops that bring back to institutions to sustain these operations.  So Universities quickly find it extremely expensive to sustain their own tech transfer offices, and they are under extreme pressure to produce funding early as opposed to making investments toward those activities and seeing those investments as long term.

Katehi concludes that a new model is required, which is illustrated by the image below, also from her power point presentation.

In this model there is a public/private collaboration specifically around that area of translational research, and assistance to start-ups from incubators and innovation centers. She summarizes her suggestions for the future as follows:

  • Develop a National Framework for Translational Research
  • Create Design-Build Innovation Centers
  • Understand the Innovation Ecosystem and Develop Sustainable Business Model
  • Consider Quasi-Open Innovation Models
  • Expand Public-Private Collaborations to Fund Translational Research

During my interview with her she also stressed the need for Universities to see the tech transfer cycle as a relationship, which is why the University of California system has decentralized its tech transfer offices and return that function to the various campuses.  Local relationships that see the University in partnership with industry can and will lead to more University technologies advancing from the basic research stage out into industry, while making it more likely for industry to succeed, thereby returning funds to the University to continue the cycle.

Below is my conversation with Linda Katehi, Chancellor of the University of California (Davis).

Quinn:  Thank you for taking the time to talk to me Chancellor, I really appreciate that.  There were a few things in the session that came up that I wanted to follow up with you if I could.  One of the things that we were just talking about was trying to get the basic research forward to a point where it attracts companies willing to take over…

K: Right

Quinn:  And it seems to me that are tech transfer offices and universities fall down, and there are some universities that seem to do it very well.   I was wondering if you had a feel for what is the right process or what advice would you give to the universities who are trying and struggling?

K:  Well, two things, two pieces of advice I would say, number 1 you need to view this as a long-term investment not as a near term return.  And so when you walk into this type of relationship with an industry, whether it’s a start up or a bigger company, you need to remember that licensing IP is a way of creating that relationship, solidifying it and then maybe an investment that may bring a lot of money later, either directly because of the product or indirectly because of the success of the individuals involved.  So viewing this as a long-term investment is the right thing to do and Universities know about long-term investments.  Second is developing tech transfer offices that have a business model that is sustainable.  Meaning that you have a feedback loop so some return of the investment that will help the offices continue.   And if they are successful they can grow if they are not successful then you know you have to remove them or do something else with that.  But the one thing that has really driven the Universities into trying to get near-term outcomes from these licenses is that they are setting large organizations, large infrastructures and then they realize that creating IP and sustaining the IP is very expensive.  And they don’t have any way to cover that expense.

Quinn:  I’ve also noticed that some Universities seems to have within their own tech transfer department, a business model that is almost set up to fail.

K: Yes.

Quinn: In that there’s just not enough emphasis placed on moving the technology out into the industry.  Where as I’ve heard of Universities where they really place burdens on the tech transfer person, essentially saying “you must justify your salary” and that kind of defeats the long term view of it.

K: Yes.  So the way they do it is that they create an office that has to show immediate return.

Quinn: Yes.

K: And then they have to show that this return is so immediate that they can cover the salaries as opposed to when we’re doing development.  So that’s what I’m saying that the tech transfer office have to be reconsidered as participating in long-term investment.  If you look, we have offices for development for fundraising, and with fundraising a lot of efforts are long term.  We create relationships hoping that in 20 years the individual will become successful.  We have staff in development offices that work with students not because the students will have money to give them immediately after they graduate but because students will become successful alumni and eventually will give.  And we need to take the same approach to tech transfer.  When looking at start-ups we should not see that as the end goal.  We  should see it as the beginning of a relationship and when they develop the relationship, even that given start up may not be successful, but if the owner goes off to do other things then eventually they will provide funds to the institution because of the good relationship.

Quinn: Yes,  and another thing you were talking about that seems to be valuing not from a monetary stand point but from a, I’m not even sure how you referred to it, but it was sort of like a systemic value to the university participating in terms of an undefined successes, or maybe not undefined but hard to define?

K: Yes, so what I meant is that we should have tech transfer offices for specific reasons, for specific outcomes and the outcomes are not always monetary.  Tech transfer efforts should be in place to be able to create relationships, sustain relationships and eventually bring money but not necessarily immediately. The examples that I gave tech transfer was critical to be able to create research relationships within the execution and the companies, or to be able to create a basic research environment that was eventually supported by industry.  It will not necessarily be direct return money wise to anybody specifically but it allowed, it created the foundations of this industry, was able to come to campus and then do all of these other wonderful things.

Quinn: It’s a cultural thing almost it seems.

K: Yes, it is.

Quinn: How do you value that?  Or if somebody were more on the side of trying to put number values or certain other valuations on what this means to the University as a whole, how would you quantify what that cultural development and cultivation means to the University?

K:  Well it is very important.  In my mind the importance of a technology transfer office is in relation to the relationships that are developed with industry, in relations to sustaining those relationships because in reality they provide value to organizations that need this value, which is knowledge, it could be products, it could be services, it could be anything in between.  Obviously a lot of times they by themselves create and sustain an environment of entrepreneurship.  These are critical to a university and sometimes may have nothing to do with money because we want to train the work force to become entrepreneurial, so IP becomes a critical component in that regard and, therefore, the process of developing and licensing becomes part of it so it becomes part of education.  We want to have a strong and stable environment for research.  Having the tech transfer office can only allow this environment to happen and eventually there will be money.  But we have lost the other 2 components.  We only focus on money and then we forget that there are other components to the mission of a tech transfer office.

Quinn: You’ve talked about relationships a number of times here.  Is that why the UC System decentralized tech transfer?

K:  Yes, because relationships are very local.  The central office realized that they need to allow the campuses to develop their own relationships because that was the only meaningful way of doing it.

Quinn:  The other thing that I wanted to talk to you about is it seems to me that a university which has multiple schools; medical schools, law schools, business schools has within it’s midst’s the ability to provide hands on training to a lot folks involved and almost act in maybe a for credit way as a consultant.  It seems to me that from the basic research to commercialization one of the challenges is figuring out which possible avenue that this technology could go down may wind up being the most valuable.  And with looking at that process you may be able to give the researchers some keys and say “OK, maybe we should be going down this path.”  What is your take on a multi disciplinary approach from a university looping in all kinds of different schools or the tech transfer goal of getting university technologies out into the market?

K:  That’s why we call it an ecosystem, because it is not just a linear process it involves many constituencies on campus and outside.  Students and faculty and staff are constituencies.  The various disciplines are constituencies.  The outside businesses or industry, even the cities are your constituencies or the region will be your constituency.  It’s a very complex and multi-dimensional process, so the University really needs to work as the broker in that regard.  Because it’s so complicated, we need to provide an environment and a process with it which can guide the individual investigators on which directions to take.  And a lot of times it’s a third dynamic as well.  You start taking one direction and along the way you decide that you have to do something else.

Quinn: I have this sense and it’s totally anecdotal, that it seems like the younger researchers and maybe those who are unfunded are the ones who seem more interested in participating in a meaningful way with the tech transfer, and some of them see it as a way to fund their own future research.  Is that what you see?

K: Yes.  That is true.  Its the new generation of investigators that see the multiplicity of the funding sources out there and so for them, private funding, whether it comes from business or a private donor, is equally good and equally important to funding that comes from the federal government.  They are not wedded too much to the federal government to really provide what they need and they are more entrepreneurial.  In that regard we see their own faculty in a multi-dimensional way so its not just to teach and research but also to participate in this other economical development and how you allow this very abstract and very basic knowledge to translate into something very specific and very useful.  And that for them is very important.

Quinn:  Now I know you’ve only been at UC for 9 months.

K: 9 months, yes.

Quinn:  This may not be a fair question, but in my dealings in CA, and I go out there with some frequency, it seems like its almost a totally different world from the business standpoint as compared to the East Coast, where its very closed and there’s a number of people that are doing business that are maybe not close-minded, but very guarded.  Out in CA it seems as if every body is much more open and interested in entrepreneurship. Do you think that that impacts the UC System and your institution in particular?

K: Absolutely, in fact first of all I would like to say that the state of California, because the demographics, is so different and so much more vibrant than any other state that I’ve been in and I’ve lived in.  So that is a tremendous asset in terms of creating an environment where people become innovative.   At the same time, for the UC System, the UC System can be a lot more successful because it has 10 institutions, 6 of them are top institutions in the US.  But I don’t believe that that wealth of knowledge is really translated into as many products and services as it could have been.

Quinn: OK, well that’s interesting because it seems to me that the UC System is one of the models that others should follow.  What would you see as one or two of the specific areas where the UC System could improve?

K:  Well,we have 5 medical centers and there is a lot of basic and translational research.  It’s amazing what is happening, but I don’t see all of this coming out at the other end.  And so we could have been a lot more effective, a lot less bureaucratic, a lot more vibrant and lean and aggressive in trying to do this.  There is a lot of possibility for improvement in that regard but I think we need to rethink, we need to reinvent the way we do this.  It’s not just about doing a little bit here and a little bit there, that ecosystem has to be rethought and that’s why I always speak about reform.  We need to go through substantial reform and if we manage to do this well, especially in California, I think we can make a break through.

Quinn: There’s one other thought that came to mind.  What I hear you saying is there is a  defuse center of knowledge that maybe isn’t being assetized and monetized as well as it could be.

K:  Yes.

Quinn: It would be a situation where a forward thinking company and not all companies do this but they would perhaps take advantage of it or do an IP audit to figure out what they’re missing.

K: Absolutely.

Quinn:  Is this something that…

K: Yes the audit I don’t know how much.  I like it because the audit shows one transaction, you do it and you’re done with it and then.

Quinn:  Oh, no, no.  I thinking more of where IP attorneys would come in and look at what you’re doing and…

K:  Ah, yes, we’re talking about the process.

Quinn:  Yes the process.

K:  That’s where I’m going to when I speak about public/private at the early stage where people who have the knowledge and interest come and make an assessment.   They assess and they look at the landscape intellectually speaking.  Considering there are 10 institutions they can even do it in a way that gives them an economy of scale.

Quinn: Yes.

K: And they could bundle together, that’s what we’re trying to do with the Department of Commerce.  To tell them what’s the point of going for one patent individually and then cutting the cost of one patent instead of having many in the same area together as a bundle.  Because then the research the discovery that they’re doing in the department of commerce and the PTO can be the same.  You don’t need to do 5 different independent discoveries for 5 similar things.  A lot of patents are in areas and they are interrelated and every time there is a whole new wave of patents there is new discovery with a different examiner and that’s why the cost is very high.  So somebody could come and bundle them and then send them.

Quinn:  I see where you’re going.  I like that a lot.  Almost as if the examiner could come out to your place.

K:  Or they can do it intellectually.  You can have one examiner to look at the bundle and do the same one discovery and then place them accordingly.  And then I was thinking “How about companies coming to get licenses like that in a bundle instead of going through this and this and going through negotiations once?”  That’s why those long-term relationships are critical.

Quinn: Even if a patent examiner were able to come and look at what’s going on and give you an idea of “This is based on the prior art.  What I think realistically you could anticipate…”

K: Yes.

Quinn: Then you could anticipate whether or not that’s worth pursuing and then you could also get a patent relatively quickly on that and if there is interest in the market it would get into the market place much quicker.

K:  Or the companies could do that.  I don’t know whether the PTO will take that but companies could have similar people who can come and make this assessment and say “Yes, I see 10 different ideas that can be patented in X area and 50 different ideas in the Y area and those may be between UC Davis and UC Berkley and UC San Diego and UC Santa Barbara and then put them in groups and then send them out all at the same time.  It’s going to be a lot faster, it’s going to be a lot lower in cost and a lot more effective.

Quinn: OK. Great, Thank you very much for taking the time I appreciate it.

K: Thank you so much, Thank you.  There are a lot of possibilities we just have to think that way.

The Author

Gene Quinn

Gene Quinn is a Patent Attorney and Editor and President & CEO ofIPWatchdog, Inc.. Gene founded IPWatchdog.com in 1999. Gene is also a principal lecturer in the PLI Patent Bar Review Course and Of Counsel to the law firm of Berenato & White, LLC. Gene’s specialty is in the area of strategic patent consulting, patent application drafting and patent prosecution. He consults with attorneys facing peculiar procedural issues at the Patent Office, advises investors and executives on patent law changes and pending litigation matters, and works with start-up businesses throughout the United States and around the world, primarily dealing with software and computer related innovations. is admitted to practice law in New Hampshire, is a Registered Patent Attorney and is also admitted to practice before the United States Court of Appeals for the Federal Circuit. CLICK HERE to send Gene a message.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

Discuss this

There are currently 2 Comments comments.

  1. john white May 11, 2010 8:02 am

    Excellent reporting. The TTO model that has existed has really struggled to produce the “fruit” everyone envisioned. Those that have succeeded are, by far, the exception and not the rule. New approaches that capture the energy of those who have it, i.e., entrepreneurial and motivated, and harness that energy will be the way of the future. Time is of the essence in these early phases for those who participate. So, while a University might think longer term, for those in the system, in the long term, as a famous economist once observed, “we’re all dead”. Long term has little meaning, and is likely a negative, for a 20 something post-doc. Two elements need to be in place so that: 1) Over time the system will slowly flourish, creating jobs and opportunity; and, 2) a near term model must be in-place, with sufficient incentives to maintain the energy, to enable the long term model to work.

  2. Gene Quinn May 11, 2010 1:59 pm

    John-

    I agree for the most part. The one luxury a University has is that as an institution they can have a much longer horizon than most. What Katehi was talking about really was the rethinking of demanding up front payments to license out technologies. So many start-up companies are going to fail as it is. They will never emerge from “the Valley of Death.” So when a University holds on to its technology unless there are up front payments that skews the cycle, puts burdens on start-ups when they need help and doesn’t fuel the job growth and economic development potential envisioned by Bayh-Dole.

    I really get the sense that she is very in tune with the need for balance between the 20 somethings in the lab (who want to fund themselves and their labs, and who have an entrepreneurial bent) and the start-up companies who need to partner with a University to work together to have the maximum chance to succeed and navigate the Valley of Death to the other side. Through this type of cooperation it reaps benefits for the private sector and then for the University. Too many Universities demand money up front and they can’t license out or if they do the company is not in as good a position to succeed moving forward, which defeats the purpose.

    This is a delicate balance, but there are advantages to the approach when done correctly. The University gets to leverage the knowledge of the private sector to learn where they should be investing and what will be most attractive.

    I think the UC system is way ahead of the curve. The fact that they have decentralized and realize that tech transfer is about developing local relationships suggests they have figured out what is most important to a cooperative joint venture. They are adopting real world business models that have a chance to succeed, which puts them light years ahead of most other universities. With the critical US government funding through Bayh-Dole and a good back end approach that should create the slow cook flourishing while providing capital necessary to get there.

    -Gene