President Obama Orders Acceleration of Technology Transfer

By Gene Quinn
October 28, 2011

With an eye toward creating new jobs and improving the economy, the Obama Administration wants to expand the ability to quickly and efficiently transfer science and engineering breakthroughs from the laboratory to the commercial marketplace.   To accomplish this goal, earlier today the Obama Administration announced two new initiatives to help U.S businesses create jobs and strengthen competitiveness in the global economy.  The new initiatives continue a week long theme where President Obama has showed a willingness to take whatever executive action he feels he can in order to attempt to spur job creation.

This latest set of initiatives will take steps to speed up the transfer of federal research and development from the laboratory to the marketplace, and it will create BusinessUSA, a one-stop, central online platform where small businesses and businesses of all sizes that want to begin or increase exporting can access information about available federal programs without having to waste time navigating the federal bureaucracy.

Is this a good idea?  Yes, I think so.  Will this work in any relevant time frame to create new jobs?  I doubt it.  There is too much work that needs to be done, you cannot mandate the speed of innovation and many universities have a rather myopic view of their role within the technology transfer cycle to suggest that an effort like this will yield any results over the short-term.  It is, however, something that should be undertaken.

So what exactly with the actions of President Obama mean?  Today’s Presidential Memorandum directs all federal agencies with research facilities to accelerate the timeline for placing federally funded innovation into the marketplace in three ways:

  1. It directs agencies to streamline and accelerate the process for private-public research partnerships, small business research and development grants, and university start-up collaborations.
  2. It gives agencies more flexibility to partner with industry, encouraging them to create new partnerships with local communities, support the growth of regional innovation clusters, and share laboratory facilities with local businesses, among others.
  3. It will institute more accountability by directing agencies to develop a five-year plan with concrete goals and metrics to measure progress, including keeping track of how many patents each lab is generating.

Interest in technology transfer was signaled earlier in October when the President’s Jobs Council issued an interim report that suggested what was referred to as “open source innovation,” which would allow researchers to shop their innovations around to any technology transfer office of their choice.  This was not a very well thought out plan because of the thorny ownership issues involved, as well as the fact that it would wreak havoc on the uniformly heralded Bayh-Dole Act, which is responsible for the enormous growth of federally funded researching getting into the marketplace since 1980.  See Jobs Counsel Seeks Open Source Approach to Tech Transfer and Shooting Ourselves in the Foot.  Thankfully, this technology transfer related executive action does not appear to have adopted the suggestions of the Jobs Council.

In order to facilitate this Presidential directive, the United States Patent and Trademark Office (USPTO), in collaboration with the National Science Foundation (NSF), will pilot a program to provide Small Business Innovation Research (SBIR) awardees with comprehensive intellectual property support through the agency’s small business programs and resources.  The Small Business Innovation Research (SBIR) encourages domestic small businesses to engage in Federal Research, Development and Commercialization through a competitive awards-based program that enables small businesses to explore their technological potential and provides the incentive to profit from its commercialization.

“For many small, innovative companies, the ability to grow, hire new employees, and compete effectively in the global marketplace hinges upon securing patent and trademark protection,” said David Kappos, Under Secretary of Commerce for Intellectual Property and Director of the USPTO. “Patents have become increasingly vital to securing the financing and investment needed to build and scale businesses.”

Since the launch of the Small Business Innovation Research Pilot Program earlier this month, USPTO says it has provided educational services through its Global Intellectual Property Academy (GIPA) which will begin offering monthly webinars covering a broad array of IP topics. Aside from mention in a press release, however, there is no information about this SBIR pilot program seemingly available on the USPTO website.

Clearly, the Obama Administration feels that accelerating the timeline to get federally funded research into the hands of the marketplace will help start-ups and small businesses will create new technologies, create new jobs and grow the economy.  This is all well and good, and a more streamlined innovation cycle is certainly laudable, but I can’t help but wonder exactly how this will actually be accomplished.  I worry that politicians desperate to see a stagnant economy grow and add jobs will believe that by waiving a magic wand, virtual or otherwise, usable technology will more quickly get into the hands of start-ups and other job creators.  I just don’t think it is going to happen that way.

I don’t mean to rain on the parade, and I am all in favor of any innovation initiatives that make sense.  I personally think the best way to streamline the innovation cycle would be to adequately fund the Patent Office, thereby allowing them to hire enough examiners to plow through the backlog.  That debate was lost, the Patent Office now has more work and less funding thanks to the America Invents Act.  But even if the USPTO could get proper funding a turn around wouldn’t happen overnight.  Patent examiners would need to be trained and realistically if the USPTO could be run as it should be we would be at least several years away from getting back down to the 18 month average pendency that everyone agrees is the appropriate standard.

The trouble with any initiative isn’t that it is a bad idea, but rather that it will take time.  Expecting a streamlining to occur in the technology transfer sector in any meaningful time frame to assist out of work Americans during this recession/recovery is naive.  To think otherwise is to fail to understand the innovation cycle, and particularly the federally funded innovation cycle.  At best these efforts will lead to a more vigorous recovery once we are already well on the path to recovery.

In May 2010 I interviewed Linda Katehi, the Chancellor of the University of California (Davis).  Katehi is herself an electrical engineer and former professor/researcher who is well acquainted with technology transfer.  Katehi explained to me that 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.  This is a critical problem with university based technology transfer.  Technology transfer offices are under staffed and over worked.  Getting federal funded research out of universities quicker is no great mystery, but it will require magic if technology transfer offices do not receive the level of support necessary to actually carry out the tasks demanded.  You simply cannot say “do it faster” as the President has done and get anywhere without fundamental systemic changes.

Chancellor Katehi explained the current model employed by many, if not most, universities through the Power Point slide below.

It should be immediately recognized, however, that there is no break-out of time on the timeline.  That is because you can never know what time it will take to get federally funded technology to the point where it will be useful for companies.  This is because the federal government funds highly speculative research that would not otherwise be undertaken by the private sector.  This funding of basic science has always been the role of the federal government.

Once a scientific pursuit starts to show promise then additional research is done.  As time progresses this additional research is of a more practical, commercial nature.  Essentially, you must translate basic research into something relevant and useable.  The closer universities can get to usable research the more valuable it is for start-up companies and small businesses.  But when one is licensing federally funded innovation from a university you are not licensing a plug-and-play technology.  You measure in years, perhaps anywhere from 1 to 10 years, the time it will take for the licensee to have a useful commercial product.

If you understand the reality that from basic discovery through translational research to private sector takes a great deal of time you understand the problems facing the Obama Administration relative to speeding up the timeline as they wish to do.  This is not to say that President Obama shouldn’t be doing this.  At first glance this seems like a great initiative.  Having said that, I see no likelihood that the fruits of this endeavor will at all be seen in the economy before Election Day 2012.  I also have doubts that any meaningful or tangible benefit will be felt at any time during a possible Obama second term.  Yes, we need to pursue this path, but this is not a magic bullet.  The pace of scientific discoveries and the translation of those to be useful to the private sector cannot be rushed.  But the technology transfer sector can certainly be improved, streamlined and better staffed in order to achieve the President’s goals.

Breakthroughs in science and engineering create foundations for new industries, new companies, and new jobs.  This is undeniably true.  The question is how do we unleash this engine of growth?  I am in favor of streamlining the technology transfer process, but I believe that it needs to begin from within.  Universities have to revise the view of their appropriate role.  Universities are not supposed to be in the business of technology transfer to make money, but rather to facilitate the development of exciting new innovations while training the next generation of engineers and scientists.  By developing exciting new innovations and then placing them into the private sector the University plays a vital role in the innovation economy.  Under-funding and over-working technology transfer departments is counter-productive.

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 9 Comments comments.

  1. bluez October 28, 2011 5:34 pm

    “I also have doubts that any meaningful or tangible benefit will be felt at any time during a possible Obama second term.”

    this meaningful or tangible benefit will come. the next MS, apple or google is already here

  2. Gene Quinn October 28, 2011 6:17 pm

    bluez-

    I largely agree. Sometimes I worry about how the pendulum seems to have swung against the true innovator, but I do believe the next MS, Apple or Google is already in the works. I just think there is more the government could have been doing.

    This is a good first step and a positive development. I just don’t think it is a silver bullet solution, which makes me at least a little disappointed that things that could work over time and work more immediately are not being pursued. Oh well…

    -Gene

  3. Bruce Burdick October 29, 2011 11:28 am

    I agree with your views on this, Gene, although I am slightly more optimistic. Technology seems to be moving exponentially faster these days, so to the extent this initiative of speeding up SBIR grant approval puts more Government funds into the “Startups Valley of Death”, I am a little more optimistic that Obama might see some short term benefits in job creation. My experience with SBIRs is that they are directed more toward transitional research rather than basic research and are closely watched by companies looking for the next big thing. Because of that, SBIR grants are designed to move the private funding curve (gold line in the Katehi graph) to the left and to raise the right end of the public funding curve (blue line) and thus reduce somewhat the width and depth of the “Startup Valley of Death”. In real terms this means SBIR funds allow concepts to have a greater chance to survive that “Valley of Death”. For many SBIR programs, the proofs of practical value can come quickly, such as in mechanical devices, software or electronics — while in others like medicine or pharmacology, the efficacy trials take a long time. So, increases in SBIR funding for the more quickly vetted concepts seems to me to be among the very best ways to spur job growth. Perhaps the PTO can take some of the revenues from the Fast Track for Fat Cats (pay for priority exam) program to give meaningful funding to this IP assistance to SBIR grantees to speed up their obtaining IP rights and publicity that attract the interest of big business and to offset somewhat the added power the AIA gives non-innovative fat cats.

  4. Website Design Dundee October 29, 2011 11:35 am

    Yay…he does something good… must be a first.

    *hides*

  5. Michael Sharer November 2, 2011 10:03 pm

    Gene’s comments are generally right on target – one can’t just say “do it faster” and expect results. These programs are fine, and need to be done, but are mostly help “at the margins” and are certainly not going to provide any near-term results. But it may be useful to look a bit deeper at the “problem” (or perhaps the perceived problem). There are generally 2 mechanisms to get IP out of universities and federal labs – licensing and start-up creation. Universities have a great deal of control over the licensing process, but are (as mentioned) largely understaffed in this area (in my experience). So likely the most useful solution here would be to help universities/labs become fully staffed – this would help decrease the residence time of new IP and should create more license deals. But there’s also the start-up process, a very important commercialization mechanism, and by and large universities don’t have a great deal of control over this process. This process tends to be rate-limited by the lack of available VERY EARLY stage funding (areas where angels and VCs don’t typically invest). SBIR and STTR grants provide some help here, but frankly not alot, as most of these go to already existing small companies (not start-ups). I have been saying for years that universities need to get more aggressive about early-stage funding and need to stop relying on angels and VCs as the “rate-limiters” for creating their research start-ups. This is not a good match and never has been, as angels and VCs are interested in large, 10X-type returns, and in fairly short time frames (before their large discount rates render future dollars nearly worthless). And given the funding problem, throwing more people at this “mechanism” won’t really help until this is addressed, and this will likely require some type of public-private partnership. Some may argue whether there’s a problem here too, as currently universities produce 1 start-up per $85 million in research expenditures. But many, myself included, feel that this number should be more like 1 start-up per $30-40 million in research. This suggests that a doubling or tripling of the start-up rate is possible, if steps are taken to address specific problems with the process.

  6. Anon November 4, 2011 2:06 pm

    Great post Michael,

    Can you recommend any sources to learn more about this?

  7. Michael Sharer November 7, 2011 10:27 am

    To Anon:

    the short answer is no, not as far as I am aware. This is not really public domain information, but is mostly personal opinion and observation based on 13 years in the research commercialization business.

    The data I cite comes form AUTM.

  8. Bob Lelkes November 23, 2011 2:53 pm

    According to recently published research by Prof. Swamidass of Auburn University (http://works.bepress.com/paulswamidass/22/), the commercialization potential for university spawned start-ups is greater than for licensing to established companies. MIT’s start-up culture is cited as a preeminent example of how to do this. AUTM statistics also seem to indicate that there has been a substantial growth in start-up activity lately.

    With so many talented people out of work who have nothing to lose, this may be the best time ever to create start-ups as a way to get talented people back to work. People who do something they believe in are tremendously motivated. They can move mountains.