Big Office On Campus
by Brian Caterino
REVENUE GENERATED BY patents has become big business for
cash-strapped universities. According to the annual survey
by the Association of University Technology Managers, American
Universities received more than $641 million in royalties
and filed 7,612 patent applications in the 1999 fiscal year,
while the number of patent applications was up almost 17 percent,
the increase in royalties was only about 10 percent, considerably
less than in past years. Patents developed by researchers
and licensed to companies for commercial development include
medicines, such as the anti-cancer drug taxol, biotechnology
processes, scientific and medical devices and Internet tools,
including search engines such as Lycos and Google.
Patent licensing has grown exponentially from insignificant
levels to major importance over the past 30 years. Stanford
University has one of the nation’s largest patent offices.
The Office of Technology Licensing began in 1970 as a pilot
project with one scientist and only $55,000 in revenue from
3 patents. By 1995 it had 20 scientists, who managed over
1100 inventions had a budget of $2.3 million, and brought
in over $44 million in royalties. Royalty revenues rose to
a high of $61 million in academic year 1997-1998. The office’s
1998-1999 report lists over 200 new inventions, concentrated
in medical technology, computing and internet technologies.
Among Stanford’s celebrated patents was the joint discovery
by University of California researcher Herbert Boyer and Stanford
scientist Stanley Cohen of recombinant DNA technologies in
1974. They were the first to insert a strand of foreign DNA
into a bacterium. From their achievement, scientists have
inserted the genes that code for insulin manufacture into
the bacterium e. coli, making it a source of inexpensive insulin.
Boyer and Cohen’s work continues to a be a major source of
licensing agreements and royalties.
Stanford’s research has been particularly lucrative since
1980, when Congress passed the 1980 Bayh-Dole Act, giving
universities the rights to inventions from government-sponsored
research, and giving inventors a share of income derived from
patents. Almost overnight the act doubled the number of Stanford’s
scientific patents. While 15 percent of royalties covers administrative
expenses, Stanford distributes the rest among inventors, departments
and schools. In academic year 1998-1999, inventors received
$6.4 million, departments $7.4 million and schools $7.5 million.
The school of medicine alone received $5.6 million in patent
revenues that year.
Stanford’s patent office acts both as a marketing agency
and as facilitator of scientific enterprise. The office oversees
marketing its patented products, as well as the legal and
administrative aspects of patents and licenses. To this end,
it hires staff with marketing experience to work with scientists,
attorneys and government. The office works to resolve difficulties
in getting inventions off the ground, and provides incentives
to encourage the process. For example, the office provides
seed money to develop prototypes for projects that may have
licensing potential, but which seem risky because they are
at an early stage of development. As a result, the office
has marketed innovative licensing agreements to scientific
enterprises which have found academic licensing cumbersome.
A trend at Stanford is the funding of start-up companies
to market and license technologies. In 1998-1999 Stanford
licensed 24 start-up companies. Perhaps the most well known
of these is Lycos.
Dependence on license royalties, however, has risks. Revenues
may suffer when patent agreements expire. The lucrative Boyer-Cohen
patent, for example, will expire in 2004. However, judging
from the trends, by then Stanford’s patent office will have
added the arrows of many new patents to its quiver.
