Tech Transfer 101: It’s A Better World with University Technology

Fred Reinhart

The Association of University Technology Managers (AUTM) is a nonprofit organization dedicated to bringing research to life by supporting and enhancing academic tech transfer. With more than 3,200 members from more than 300 universities, research institutions and teaching hospitals around the world, AUTM provides works to provide educational opportunities, professional development, partnering and advocacy for its members. Each year AUTM meets for an annual meeting, and this year that annual meeting is currently under way in San Diego, California.

As I have done a number of times in the past, I recently had the opportunity to go on the record with AUTM President Fred Reinhart, who by the time you read this very well may be the Immediate Past President of AUTM. Reinhart will soon transfer his office and responsibilities to President-Elect, David Winwood.

What follows is the finale of my exclusive exit interview with Reinhart. To begin reading from the beginning please see Exit Interview: A Conversation with Outgoing AUTM President Fred Reinhart.

QUINN: You know, let’s talk about that for one second too because there is this common misperception, even by people who you would think know better, that when you have a patent there’s no need to have a license. That everything that could possibly be needed in order to understand the innovation is right there in the patent and that’s just not true. A patent is a document that is frozen in time as of the moment that you file it and innovation is something that is never frozen in time. You constantly are working on it; you’re constantly improving it. So when you get a patent on something that you filed four or five years ago or, in some cases, maybe 10 years ago or more you’ve learned all kinds of stuff along the way that are — that is new, that maybe you filed other patents on, maybe you didn’t because maybe they were small incremental improvements that weren’t enough of an advance but they’re still kept secret and valuable. You license the whole package. You license all of the information. You license the entire innovation; you don’t just license a patent. Sure the patent is the piece that’s out there, that’s the piece people focus on, but you license innovation and knowledge.

REINHART: And the key element of that package is the university researcher.

QUINN: Right.

REINHART: A researcher that can work with the company, either informally or formally going forward, or one of the best forms of tech transfer I’ve ever seen is where a license concluded, one of the inventors on the patent that was licensed is a grad student and that grad student is hired by the company that took the license and boy, that’s the way it can really move things forward. It’s just a wonderful system when that happens.

QUINN: And I think this is a perfect example. The criticism that’s out there that passes for informed and thoughtful criticism is just so misinformed and fundamentally doesn’t understand the industry or what’s at stake and it’s dangerous. I don’t know what you do about it and it seems just — I keep saying ridiculous. I don’t know what a different word would be, but I don’t know how you could think that something as complicated as innovation, which by its very definition has to be something that’s new on some level, and something as complicated as patent law is as an entire body, you weave those two things together and Joe average just thinks that they understand this innately and they can have an informed opinion based on a 15-second sound bite. It just doesn’t work that way.

REINHART: Yeah, maybe I shouldn’t target Brookings again but they came out last year with a statement half of which was true and that is university tech transfer offices don’t always operate in the black and a lot of them don’t. If you do fully costed, fully expensed then it’s hard for them to operate in the black and so the solution proposed was to do more startups and then you’ll make money. Well, that’s laughable because startups are really a loss leader for universities. They take a lot of effort, a lot of hand-holding and they often can’t pay their bills. You don’t strangle them by asking for upfront monies or even early monies. You might have equity in them that’s never liquid or maybe it’s liquid in 10 years and it’s just such a long haul and the idea that university startups will, as important as they are, that they’re going to pay for tech transfer office operations or to make TTOs be more “profitable” is absurd because we all know that people who have done startups that those are not revenue-generating. They’re critically important for economic development. When they succeed it’s marvelous for the state that they’re in and there are leading edge, highly competitive operations that can be game changers and they’re so important for an innovating society but they don’t make money for universities. So to say —

QUINN: No, not as long as they’re in the startup phase they don’t, right?

REINHART: Right. And a lot of university startups tend to be much more viable than your average startup but they still, you know, have a long road to go.

QUINN: That strikes me as also rather odd that somebody would say that and the statistics on new businesses are pretty well-established I think, aren’t they? Isn’t it half of them don’t exist after one year and then 90% of them don’t see their fifth anniversary?

REINHART: I don’t know the exact statistic, but I do know that university startups have maybe higher than a 50% viability over five or 10 years. It’s really remarkable —

QUINN: Which is much higher than your normal business average.

REINHART: Yeah.

QUINN: But still, you would think that somebody that is just casually observing the news would understand that startups are money drains, not money producers because why else would you constantly need to seek investors? You seek investors because you don’t have the revenue to keep the business going, you know?

REINHART: Right.

QUINN: But it’s not to say you shouldn’t do it, you should do it. That’s a big part of what this whole circle of innovation is about, right, it’s about on the one level figuring out can we do it, advancing science, very speculative stuff that would be too speculative for the private sector to even ever contemplate doing so the federal government funds that. When it starts to show some promise you move forward, you try and protect it, then you try and license it. Sometimes you will start a startup to pursue it. If the startup succeeds, great. It’s great for the location. It’s great for the local community. Startups can succeed and sometimes they succeed in a very big way and all along the way there’s tremendous learning opportunities both for the people in the labs, the graduate students, as you mentioned, who might get hired, the graduate students or professors who might start the businesses and in many universities they loop in engineering students and business students to help them on business plans and in engineering, the day to day kind of stuff that is necessary in order for the business to succeed. So this is a virtuous circle of innovation that has at its core an educational component that enhances the economic development of a region. You know, to think that this is a bad thing just boggles my mind.

REINHART: I couldn’t agree more.

QUINN: So, I mean, you know —

REINHART: It just seems like people have just decided that they want to look for a target and look for a flaw in the system and certainly, we can always improve the way we do this and I think universities are constantly evolving the way they approach things but you don’t want to tinker with it, you know, without having a good reason to do so and a really solid understanding of what the result and consequences might be.

QUINN: I agree. I think given the enormous success defined by the number of startups, the amount of money contributed to the GDP, the number of lifesaving, life changing innovations, the burden should be enormously high on the other side and for whatever reason the burden seems to be year after year on the side of Bayh-Dole and tech transfer to justify this enormous success, which is just nuts. I don’t get it.

REINHART: I don’t get it either.

QUINN: It seems to me that we’re spending an awful lot of time in America trying to become like Europe and Europe seems anymore to be spending an awful lot of time trying to become like America in a lot of ways, not all ways but in a lot of ways, and it’s like whoa, could somebody take a step back and notice what’s going on here? The third world countries that you were talking about before that are really trying to do this right are coming to people like AUTM and others and hiring consultants and saying hey, we want to do this right, tell us how to do this right within our own cultural norms and they adopt something that fits for them.

REINHART: And I think AUTM has had a good two-pronged strategy. We’re collecting quantitative data and facts and have our annual Licensing Activity Survey, which is an incredible resource to look at and you can analyze many years of longitudinal data and come up with all kinds of interesting analyses. So we hit the quantitative pretty well. We’ve got the quantitative down but the qualitative is actually the most important and the way we’ve handled that is with our incredible Better World Report which just hit 500 stories and if you don’t like numbers or you want evidence that university tech transfer makes a better world just look at those stories in the Better World Report because they’re heartwarming, you know, they’re just inspiring and it just amazes me that people, I mean, some of the critics tend to just overlook that. I don’t know what they are after— they’re just discounting it for some strange reason. I guess it doesn’t fit the narrative that they wish to impose on everybody.

QUINN: I think that that is exactly right. You put your finger right on it. I, like everybody else, have my beliefs. I try and look at new evidence and change my mind where it’s appropriate and I would invite anybody who is on the fence about Bayh-Dole to look at those things that you just talked about, the Better World Report, look at all the statistics, look at university technologies. We did, you know, we do articles, as you know, about university technologies periodically and weave it into our normal coverage and there was an article recently, one of these mainstream business publications talked about how medical research is really drying up in America and we’re like, are you kidding me? We just went and looked at announcements, just announcements from universities on one day, on one given day, and I think it was September of this year, all of the things that were announced that were significant breakthroughs that could lead to significant medical advances and it’s like really? How could you possibly say medical research is drying up in America? You know, I think that not only is there just this desire to see things undone but there really is a desire to have facts be a certain way. Some of these verifiably false claims seems to be lies, at the very least the people making these claims are doing extremely shoddy research to the point where it is willful blindness. I just don’t know how you could think that there’s not tremendous cutting edge research going on in universities across the country. We look and we find it. It’s out there. It’s easy to find if you care to find it. It’s not like you guys are trying to hide it.

REINHART: Yes, we need more scholarship and it’s best for AUTM and its members that this scholarship go on outside of AUTM, and be undertaken by people who are recognized as quality researchers and do peer reviewed publications Then when those come out we’re going to look at that and if they’re objective and supportable and it suggests that some changes would be warranted then great, but let’s have it be real research that is scientifically sound. We’d like to see more of that kind of thing going on.

QUINN: I agree. Amen to that. Well, I really appreciate you taking the time to chat with me.

REINHART: Good. And we appreciate the forum that you’ve created. It’s great, it’s thought-provoking and we appreciate the opportunity, I appreciate the opportunity to talk and give some thoughts about the big picture and what the future is going to look like.

QUINN: No problem. I appreciate you taking the time and we’ll talk soon.

REINHART: Okay. Thanks, Gene.

QUINN: Thanks, Fred.