Innovation and Technology Transfer in Universities

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					          Innovation and Technology Transfer
                    in Universities
                                   by Steven B. Sample
                              University of Southern California

                    Remarks made at the California Public Affairs Forum
                    of the California Council on Science and Technology,
                    Stanford Research Institute, Menlo Park, California,
                                      December 3, 2001

i am delighted to be here today                   As all of you here well know, technology
as we focus on technology transfer, an            transfer is a sophisticated and often com-
endeavor which could have an enormous             plex process. It needs significant resources
impact on our lives in the 21st century.          and infrastructure to make it work well.
Because we in California are leading this
effort, we have a unique opportunity to help      We in the academy need to refine and
set the agenda for technology transfer            enhance the entire process whereby tech-
nationally.                                       nology is transferred from universities to
                                                  the commercial sector. We need to set up a
Since the passage of the Bayh-Dole Act            technology-transfer infrastructure in our
some 20 years ago, universities have cer-         universities that recognizes the realities of
tainly made progress in streamlining the          the business world. We need an infrastruc-
tech-transfer process. But we still have a        ture that will do more than simply procure a
very long way to go. I don’t believe most         patent and look for someone to license it to.
universities are making the commitment
necessary to succeed in technology transfer.      A tech-transfer center at a university must
That is the subject of my remarks today –         review and evaluate the basic research
what precisely does such a commitment             being done by faculty, develop innovative
entail, and why do universities need to           applications for new technologies, explore
make it?                                          the viability of markets, evaluate the com-
petition, oversee intellectual property con-         straints with which it must contend. In
cerns, procure investment capital if needed,         other words, the value of a particular tech-
develop corporate relationships, and utilize         nology depends on the context in which it
the entire process as a learning experience          exists.
for students.
                                                     I believe universities too often assume that
The tech-transfer apparatus at a university          a new technology in and of itself will pro-
must be flexible – able to adapt to different         vide the necessary push to market. Nothing
businesses and business conditions. It must          could be further from the truth. As a practic-
develop ties to business that go beyond a            ing inventor myself, I agree with Thomas
one-patent-at-a-time relationship. Univer-           Edison that successful inventions are 1 per-
sities especially need to develop long-term          cent inspiration and 99 percent perspira-
relationships with businesses – relationships        tion.
that foster a continuous stream of technol-
ogy transfer. This approach will also allow          Some studies have shown that 60 percent of
faculty to remain focused on research, free-         a product’s value is added during the appli-
ing them from direct involvement in the              cation stage, and only 12 percent at the
tech-transfer process for which most of              basic research stage. Much of technology
them have little time, skill, or interest.           transfer involves working at this application
                                                     stage – finding applications unforeseen by
Technology transfer centers on our cam-              the researchers who originally developed
puses must be able to keep pace with the             the technology.
high rate of change in the profit-seeking
sector. That rate of change was illustrated          For example, researchers at NASA’s Jet
by a recent survey of Silicon Valley CEOs            Propulsion Laboratory invented a circuit
that revealed that 60 percent of the high-           board for space applications with unique
tech items they manufacture today did not            properties – it could be subjected to high
exist 10 months ago.                                 temperatures on one side, freezing tempera-
                                                     tures on the other, and still function electri-
To be effective, a campus-based tech-                cally. The researchers tried to market this
transfer center cannot simply broker a con-          circuit board on the basis of its thermal
nection between university researchers and           properties, but could find no takers. But the
business; rather, it must add value to the           Technology Transfer Center at USC’s
technology developed by the researchers. It          School of Engineering, which is also a
must make the technology more attractive to          regional commercialization center for
business.                                            NASA, discovered that something else
                                                     about this circuit board was capable of creat-
We cannot lose sight of the fact that the            ing commercial interest – it was the lightest
value of a particular technology is affected         circuit board ever made. The researchers
by the perceived uses that can be made of it,        initially didn’t care about weight, but the
the perceived need for it, and the social con-       marketplace did.

We need to incorporate technology transfer            medical Engineering. The institute was
as part of the basic mission of the university.       established three years ago through a $113-
We need to integrate it with the rest of what         million gift to USC from biomedical entre-
we do.                                                preneur Alfred Mann. We believe the
                                                      Alfred Mann Institute (or AMI, as it is
Unfortunately, at most universities technol-          known) is unique, a model for the way tech
ogy transfer has been relegated to the                transfer should be done. It provides a real
periphery of the academic enterprise. Uni-            bridge between university research and
versities see it as a derivative process – they       industry. It truly recognizes and under-
assume all the real work takes place at the           stands the needs of business, and it works to
level of the academic researcher. Tech                add value to the technology produced by
transfer is now an ancillary activity, often          faculty at USC.
located in offices of technology licensing
that are usually understaffed and under-              AMI resulted from Al Mann’s vision that
funded, and that act more as gatekeepers              much of the technology developed at uni-
than facilitators.                                    versities is sitting on the shelf because of a
                                                      lack of resources in the tech-transfer
We can’t ignore the fundamental impor-                process. Mr. Mann wanted to create an
tance of technology transfer. The promi-              organization that would move biomedical
nence of technology in modern life is a new           technology more quickly from the research
element in the history of civilization. It is         laboratory to patients.
one of the primary forces shaping the evolu-
tion of our society.                                  AMI focuses not only on research, but on
                                                      product development as well. The institute
Moreover, science and technology over the             assembles a whole product development
past 60 years have become, and continue to            package. AMI enables a commercial partner
become, more and more tightly fused.                  to obtain a license not just for a technology,
Their relationship has become more                    but for a manufacturable product, with AMI
dynamic, their boundaries more fluid. Sci-             retaining ownership of the intellectual
ence often gives rise to new technology, and          property.
technology is often used to advance science.
The nature of technology itself has changed           The staff at AMI can do everything from
also; its reach, if anything is more wide-            specific research to product testing. They
spread than in the past. It is more adaptable         can build a high-quality prototype, do the
and has many more applications.                       initial clinical trials, and find a commercial
                                                      partner – either with an existing business or
I’ve sketched a general outline of effective          through the creation of a startup. They can
technology transfer at universities. But              make whatever arrangement with business
what form might that outline take in real             they choose in order to more quickly get a
life? One such incarnation has been created           product to market. AMI can tap resources
at USC – the Alfred Mann Institute for Bio-           throughout USC, as well as outside the uni-

versity when that will help it achieve its              in less than a day. AMI also recognizes the
basic mission of technology transfer.                   academic mission of the university and does
                                                        not impose burdensome restrictions on
AMI seeks out promising biomedical tech-                publication of research findings.
nology within USC and studies it for com-
mercial viability. What’s the demand for this           Consider the case of research conducted at
technology? Can it hope to receive FDA                  USC which has been funded by the
approval? Will health insurance companies               National Institutes of Health. NIH stipu-
be willing to pay for the use of the technol-           lates as part of the funding agreement that
ogy in treating patients? How does it stack             the researcher must give preference to
up against competitors? How strong will the             small businesses during the tech transfer
patent position be for this technology?                 process. But small businesses generally lack
                                                        the human and financial resources to carry
An example of the technology that AMI is                out the procedures which are necessary to
developing is three-dimensional, high-reso-             get FDA approval, which in turn is neces-
lution ultrasound tomography for breast                 sary in order to get the product to market.
cancer screening. AMI is also developing
implantable neural stimulators – both for               For a given medical device, the FDA wants
therapeutic purposes and for functional                 full specifications for the device, full test
restoration. In addition, the institute is              results, a hazard analysis, a failure analysis,
working on a noninvasive cardiac output                 and great amounts of other information.
monitor, along with five other projects.                 The researcher has produced none of this,
                                                        because it is unrelated to his basic research
AMI employs product development engi-                   project. In fact, he is probably unaware of
neers who know what it takes to develop a               the FDA requirements.
product in a regulated industry. They help
the researcher move the technology to a                 As a result, a small business must in effect
successful product in the shortest time pos-            re-create the entire research project in order
sible. AMI manages all of the practical                 to meet FDA requirements. That’s a
details never addressed in the research proj-           process that can take years. This puts a
ect itself – all of the details that universities       tremendous strain on the company, some-
have traditionally never dealt with in the              times forcing it out of business altogether or
tech transfer process.                                  forcing it to give up the project. But AMI
                                                        will do all of the work necessary to turn a
And here’s another thing that AMI does                  new technology into a commercially viable
which is particularly important – the insti-            product and to get FDA approval for it.
tute can give funding to science and engi-
neering faculty to help them complete their             The royalties from licenses or equity
research, without all of the red tape associ-           income which AMI receives are split four
ated with government or foundation fund-                ways: to the inventor, to AMI to reinvest, to
ing. The institute can approve such funding             USC, and to Al Mann’s foundation.

In its brief existence, AMI has not yet taken        Moreover, each university must look care-
any of its projects to market. It has about          fully at its surrounding community to deter-
eight projects underway at the moment.               mine how well the economy of the region
AMI has set a goal of developing 20 projects         matches up with the strengths of the uni-
simultaneously and bringing 65 to 75 per-            versity. Stanford University, for example,
cent of its projects to market.                      has had an outstanding symbiotic relation-
                                                     ship with its surrounding community for
The institute also offers a valuable real-           decades.
world educational experience for USC grad-
uate students and postdocs. Some are actu-           At USC we have made it a priority to build
ally supported directly by AMI and do their          on the strengths of the region in which we
theses on AMI projects. Faculty members              are located. Los Angeles and Southern Cali-
from many departments and schools at USC             fornia enjoy a very diverse economy. But
are already working at and with AMI.                 there are two areas in which the technologi-
                                                     cal strength of Southern California matches
To enhance its effectiveness, AMI has a              up especially well with the strengths of
unique status within the university. It is a         USC and other research universities in
separate, nonprofit corporation affiliated             Southern California. That is in the areas of
with USC and operating on our campus.                biomedical technology and communica-
USC faculty and administrators form half of          tions.
AMI’s board of directors, while Mr. Mann’s
foundation names the other half. AMI’s               Almost everyone would agree that Califor-
$100-million endowment gives it a signifi-            nia in its entirety is the world center of the
cant measure of independence. This allows            biomedical technology industry. But most
the institute the flexibility of looking across       people would say intuitively that Northern
the entire university – from the medical             California dominates over Southern Califor-
school to the engineering school – in search         nia in this field. However, as counterintu-
of promising new technologies.                       itive as it may be, exactly the opposite is
As we all recognize, technology transfer at a
university cannot be successful without              When I say Southern California, I do not
strong support from the top. It must be a            mean simply Los Angeles, or even the com-
university-wide mandate. Universities can            bination of Orange County and Los Angeles
and should do more to instill a climate on           County. Rather, I mean all of Southern Cali-
campus which will enhance their ability to           fornia, from San Diego to Santa Barbara.
do tech transfer. That approach begins with          When this region is considered as a whole, it
the university’s top leadership. If the presi-       turns out that there are more biomedical
dent and the provost aren’t enthusiastically         companies, more employees in those bio-
supportive, tech transfer will never take            medical companies, and more academic
hold.                                                biomedical researchers in Southern Califor-
                                                     nia than there are in Northern California. In

addition, more biomedical research grants            USC is a leading player, and perhaps the
are awarded to universities in the southern          leading player, in communications-related
part of the state than in the northern. South-       research. Included within its portfolio in
ern California may well be the dominant              this field are:
area in the world for biomedical technology
                                                     •   The Annenberg School for Communica-
today, and it will probably remain so during
                                                         tion, which offers a full array of under
the years ahead.
                                                         graduate and graduate degrees in the
                                                         communications professions.
It also is easy to see why Southern Califor-
                                                     •   The Annenberg Center for Communica-
nia is so dominant in the area of biomedical
                                                         tion, which supports advanced research
technology when one considers the extraor-
                                                         into the convergence of content and
dinary array of top-flight research institu-
                                                         technology. It was created through a
tions in the area. These institutions include
                                                         $120-million gift from Ambassador and
USC, UCLA, Caltech, UC Irvine, UC San
                                                         Mrs. Walter Annenberg in 1993.
Diego, UC Santa Barbara, the Salk Insti-
                                                     •   The Information Sciences Institute,
tute, and the Scripps Research Institute.
                                                         which has been developing advanced
That is quite a formidable lineup, with a
                                                         computer and communication technolo-
strong overall record of effective technology
                                                         gies for over a quarter century.
                                                     •   The Integrated Media Systems Center,
                                                         which is the National Science Founda-
One of the most exciting plans currently
                                                         tion’s engineering research center for
underway in Southern California relating to
                                                         multimedia research.
biomedical technology calls for the devel-
                                                     •   The Institute for Creative Technolo-
opment of a biomedical research park adja-
                                                         gies, a national center of excellence for
cent to USC’s Health Sciences campus. If
                                                         research in virtual reality and computer
these plans are successful, we will have a
                                                         simulation. Created through a $50-
110-acre research park occupied by compa-
                                                         mil lion grant from the Department of
nies which are exploiting technologies
                                                         the Army, it brings together the enter-
developed at USC, UCLA, Caltech, and
                                                         tainment industry, the computer game
other research universities.
                                                         community, the military, and academia
                                                         to advance the use of virtual-reality
Southern California is also the world leader
                                                         technology for instruction and training.
in the field of communications, which
                                                     •   The Center for Entertainment Technol-
includes not only conventional forms of
                                                         ogy in our highly regarded School of
communication, but motion pictures and
television as well. The communications
industry in Southern California surpasses
                                                     Most of these centers have active tech-
that of any other region in the world, prima-
                                                     transfer programs because of the good
rily because of its ability to combine
                                                     match in technological strengths between
advanced technology with creative content.
                                                     the region and the university.

As you can see, I am a strong believer in the        But at the same time we have to get beyond
value of technology transfer. But I also             the idea that commercialization of univer-
believe we must keep tech transfer in per-           sity research is inherently inimical to the
spective. We must see it in the context of           role of the university. The role and function
the ultimate mission of the university.              of universities is evolving within an overall
                                                     tradition. Innovation does not necessarily
As a university president, my primary                mean a break with tradition. Rather, it
responsibility is to articulate and advance          should mean incorporating new approaches
the mission of the university. The principal         within the academic tradition.
social value of a university lies in the rela-
tionship between individual faculty mem-             There is simply too much at stake not to
bers and individual students.                        pursue tech transfer more vigorously, not
                                                     only for what it can do for universities, but
We all know that the values and goals of a           even more important for what it can do for
university are fundamentally different from          society as a whole. It can add new dimen-
those of a profit-seeking business, as well           sions to university research, while at the
they should be. That is, of course, why              same time providing new educational
there is such concern about universities             opportunities for faculty and students.
abandoning their academic integrity in an
effort to court businesses and capitalize on         All of us here have accepted the responsibil-
university research. The more a university           ity of pursuing this new and important
begins to act like a profit-seeking business,         agenda. I want to commend all of you for
the bigger the risk that the relationship            taking on this task, for providing the leader-
between the student and the professor                ship we need. It’s not easy. It’s complicated.
becomes compromised. Chasing profits                  It involves bringing together two disparate
from tech transfer is potentially very corro-        cultures. But I am confident that, given Cali-
sive ethically. That is why we need to have          fornia’s resources and leadership potential,
strong conflict-of-interest safeguards in             technology transfer can and will become a
place, and why we must constantly guard              vital source of renewal for our society.
against undermining the basic purpose of
the academy.