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Special report: University research & patents

Boise State University researcher Juliette Tinker, pictured here in her laboratory in the BSU Science Building, holds a specimen of staph colonies.
Boise State University researcher Juliette Tinker, pictured here in her laboratory in the BSU Science Building, holds a specimen of staph colonies. kgreen@idahostatesman.com

The world should hope Boise State University professor Greg Hampikian strikes it big.

Hampikian, who teaches biology and criminal justice, has developed three chemical compounds he says have shown promise in the laboratory to fight cancer. The drugs are not yet patented and have years of testing and trials before they might receive regulatory approval.

If Boise State chose to pursue a patent for the drugs, and if they were to reach market, Hampikian could split millions in patent licensing agreements with a pharmaceutical company in equal parts with Boise State. Hampikian knows that, like other promising drugs, his compounds face long odds to survive the rigorous testing to come.

“A blockbuster cancer drug would make me a wealthy person,” Hampikian said. “The lottery chance of making money off your invention is so low that we don’t think of it as an income stream. We consider (patenting) as protecting the investments of our university and in our idea.”

After spending thousands on initial filings, Boise State has chosen not to pursue patents on the drugs, though it has filed for patents for two other Hampikian inventions: a miniature pump for use in forensic DNA analysis and a transducer that can generate energy. So Hampikian plans to pay himself to file patents for the cancer drugs, though he will likely need investors to advance them.

Hampikian’s hopes mirror those of researchers at public institutions around the country who want to solve problems, improve society and make money through technology transfer — the licensing of the fruits of laboratory research for commercial use.

Some proponents call tech transfer a big success. In 2002, The Economist magazine said a 1980 U.S. law that authorized technology transfer for federally funded research was “possibly the most inspired piece of legislation to be enacted in America over the past half-century.”

Universities like Boise State, the University of Idaho and Idaho State University, and federal installations like the Idaho National Laboratory, have embraced tech transfer by creating offices to license their work.

But in Idaho at least, tech transfer has so far produced mostly hopes, not business success.

Some technologies, like Hampikian’s cancer drugs, may not win internal institutional support. Even if they do, it is a risky business for a company to obtain a license and put it to work. Licensing technology can take months or years, costing companies time and money — sometimes more than they can bear. Companies seeking exclusive deals may face even more delays and costs.

Once a company receives a license, it may need to invest in years of additional work to make a technology commercially viable.

In addition, some researchers oppose having their work sold for someone else’s profit. They complain that chasing corporate money from licensing deals and research partnerships corrupts academia, driving resources away from important work lacking market potential.

And for the most part, license revenue has yet to cover the costs of operating the licensing offices, much less financing classroom learning or repaying the taxpayers who funded the research in the first place.

TECHNOLOGY TRANSFER

Most universities, including Idaho’s three public ones, lose money on tech transfer. A 2013 Brookings Institution report estimated that 84 percent of university tech transfer offices lose money.

The Idaho National Laboratory tech transfer office loses money, too, though it says it will approach the break-even point in 2014.

Hampikian said Idaho universities need a mega deal, such as agreements that brought millions to Cornell University for the Pap smear or to Drexel University for the bar code, to generate interest from potential industry partners.

“All we need is one major blockbuster,” Hampikian said. “We need somebody to get a good licensing agreement for everyone to take us a little more seriously and for the community to see we should throw more investment at tech transfer.”

In other words, they need a Gatorade.

THE GATORADE PARABLE

As told by national TV commercials, a tired and depleted University of Florida football team surged from behind to beat Georgia Tech University 27-12 in the 1967 Orange Bowl thanks to the restorative powers of a high-electrolyte drink. That beverage, developed by Florida medical professor Robert Cade, became the world’s best-selling sports drink. It has been hailed by Florida as proof of the Gators’ prowess on the gridiron as well as in the research lab.

“Naturally,” Cade says in the ads, “we called it Gatorade.”

Possibly because Gatorade's inventors vomited after their first taste of the high-sodium first formula, Florida failed to see its commercial potential. So Cade and his team did what Hampikian hopes to do: They patented and sold their research independently. Only after suing Cade’s group for breaking a disclosure rule did Florida recapture 20 percent of Gatorade’s royalties, about $80 million so far on sales in the billions of dollars. Most universities retain around two-thirds of licensing and royalties revenue.

Florida’s experience with Gatorade became a cautionary tale for universities around the country: Patent your research.

“It’s a lesson for tech transfer,” said Katy Ritter, director of the tech transfer office at Boise State University.

But that office doesn’t have enough money to file for all of the university’s promising technologies, Ritter said. The $100,000 budgeted for patent applications and to pay for maintenance filings for inactive patents went quickly, she said.

“We would love to patent more, but we have to be judicious about what IP we choose to protect because of budget constraints,” she said.

THE BAYH-DOLE ACT

Before 1980, the federal government held rights to all patented research developed with federal funding at universities and national laboratories, including the Idaho National Laboratory.

That research seldom reached the marketplace. Of the 28,000 federally held patents, only 5 percent were licensed to the private sector, according to the Association of University Technology Managers, which tracks university tech transfer activity.

Members of Congress felt the country should have more to show for the billions taxpayers spent on research. Useful inventions should be the seeds sprouting new companies and creating new jobs and stimulating the economy, bringing better products and lifestyles to all, the thinking went.

So Congress passed the Bayh-Dole Act of 1980. The law, named for then-Sen. Birch Bayh, an Indiana Democrat, and Bob Dole, the Kansas Republican who became the GOP’s nominee for president in 1996, shifted patent holder power to institutions from the federal government and established today’s tech-transfer framework. Institutions and their inventors both get a piece of the license revenue, providing an incentive to create and promote technologies that will result in commercial products.

The results of Bayh-Dole were profound.

The number of patents granted annually to U.S. universities surged from about 300 in 1980 to nearly 2,000 by 1996, according to AUTM. Patents licensed to private partners brought in $2.8 billion in revenue to the universities in 2013, an 8 percent increase from 2012, according to AUTM.

Bayh-Dole allows an inventor to license a patent from the university or lab and use the technology to create spin-off companies. A total of 818 spin-offs were founded in 2013 using university patents, according to AUTM, bringing the total in operation since the law’s enactment to 4,206. Those companies generated $22.8 billion in sales in 2013, according to AUTM.

In that 2002 article, The Economist wrote, “More than anything, this single policy measure helped to reverse America’s precipitous slide into industrial irrelevance.”

TECH TRANSFER AND LAND MINES

David Bruemmer was a researcher for a decade at Idaho National Laboratory, where he programmed smarter robots for the Department of Energy, the Army, the Navy, the Air Force and the Defense Advanced Research Projects Agency. Both the Office of Secretary of Defense and DARPA significantly contributed to the $20 million spent on the research.

The robots could be used to map areas and seek out landmines, bombs and other threats. They had to be able to navigate without human operators and without the Global Positioning System, which isn’t always dependable and cannot prevent robots from running into rocks or falling off cliffs

The goal, Bruemmer said, was for robots to function as if they had brains, reacting fluidly to the environment rather than following pre-planned protocols.

INL’s tech-transfer office skillfully handled the expensive and time-consuming applications that yielded 11 patents, freeing Bruemmer to focus on work.

Unlike many patents, Bruemmer’s carried obvious commercial value. Bruemmer said a swath of decision makers, from military officials to members of the Idaho congressional delegation, encouraged him to leave the lab and create a company to begin filling military contracts worth hundreds of millions of dollars. So Bruemmer and some of his team members left the lab in 2011 and started 5D Robotics in Carlsbad, Calif.

“We put all that work in and attempted to follow the guidance and process suggested by the Tech Transfer Office. At first we thought everything would click,” Bruemmer said. “Big contractors were calling such as Northrop Grumman, BAE, QinetiQ, iRobot. It seemed like a host of companies were interested in this software. Unfortunately, the process of providing it to them was not as simple as we would have thought.”

INL balked at giving Bruemmer a licensing agreement for his patents. The months dragged on. Bruemmer’s team found it difficult to conduct business for nearly a year because they did not know when they would get access to the technology. When 5D Robotics did receive an agreement for an undisclosed price, it was a nonexclusive deal. The company’s market advantage was reduced and the team decided to move forward with their own new software solution that used none of the original code.

By law, tech transfer offices must give fair access to patents to all interested parties and select a licensee that is most qualified to bring a technology to market. Bruemmer suspects that fairness of opportunity and the potential of lawsuits was a significant concern for the INL, who wanted to make sure that they did not show Bruemmer’s company special treatment.

5D Robotics operated under its nonexclusive agreement for several years before negotiating an exclusive agreement in November. Bruemmer said he is grateful that the lab’s current tech-transfer team helped him secure exclusive access to the patents but wishes his company had not been slowed by the previous licensing snags.

“There’s no ill will on either side,” Bruemmer said. “From their perspective, they are a government institution, and they have to be careful. From our perspective, it’s hard not to look back with regret on the delay in getting this exclusive license.”

Bruemmer cannot disclose partners, but he said 5D Robotics is working under several contracts to commercialize consumer products, including consumer drones to networked vehicles. The company is also partnering with INL on several projects, new licensing opportunities and a Collaborative Research and Development Agreement, known as a CRADA. Under the CRADA, 5D Robotics will test a system that replaces GPS on the lab’s fleet of buses that is more accurate, reliable and available indoors, Bruemmer said.

Another 5D Robotics project with the lab shoots to improve drone mapping of power lines and other utility-related structures.

Bruemmer said he’s optimistic the tech transfer process is paying off.

“We hope to finally realize the full potential for combining the innovative power of the national lab with the agility and commercialization potential of a small business,” Bruemmer said.

SHIFTING FOCUS AT BSU

Most patent applications filed by the University of Idaho, which boasts the state’s oldest tech-transfer program, are agriculture-related. Starting in 1947, the U of I licensed patents through the nonprofit Idaho Research Foundation, which operated independently. The university opened an in-house tech-transfer office in 2008.

Boise State started patenting university inventions in 2009 but did not open a tech-transfer office until 2013. The office applied to patent one invention in its first year and has steadily grown to 16 patent filings in 2013, said office director Ritter. The office made 22 licensing agreements in 2013, giving those companies, universities and individuals access to the intellectual property for a fee or a percentage of sales for a time. BSU has made 27 license agreements so far in fiscal 2015, Ritter said.

BSU also signed two licensing options in which companies pay for the right to later license the technology.

The two forms of agreements brought in $35,471 in gross license income for the year. The office paid $152,374 in legal fees, which includes the $6,000 to $20,000 cost associated with each patent application.

“I call it a baby tech-transfer office,” Ritter said, “We’re laying the groundwork, trying to get the word out.”

To accomplish the university’s goal of increasing license agreements, Ritter has to persuade faculty to change the way they think about their work.

In academia, you can disprove something works and be considered a success. Academic work doesn’t have to be marketable. A tech-transfer approach asks researchers to consider commercial viability from the onset of a project.

Some faculty resist that change.

“There will always be those faculty that think commercializing results of research is abhorrent,” said Gene Merrell, the University of Idaho’s associate vice president of economic development. “They tend to be the more senior faculty. Younger faculty come in with the idea commercialization is a good thing.”

Part of the problem, Merrell said, is that universities promote professors and determine tenure based on scholarly publications and grant money. Tech transfer activity, such as patent applications and licensing revenue, is an afterthought at most U.S. universities, he said. Merrell and others at the U of I are working to include tech transfer as a promotion metric.

That culture conflict is slowing tech transfer growth, he said.

“When you don’t recognize that value in the person’s performance, they are less inclined to participate, particularly in some cases where they not only don’t get credit, but are penalized,” he said.

The INL struggles with the same conflict, Bruemmer said.

Most researchers at the Lab feel their work should be featured in conferences and publications in efforts to push work into the public sphere to help solve world problems. The tech-transfer mindset requires secrecy and a goal of creating something commercially valuable in hopes of stimulating the economy.

At Boise State, Harold Blackman, associate vice president for research and economic development, said incoming faculty from universities with longstanding and robust tech-transfer offices, such as Stanford University and Arizona State University, are helping to change the culture at Boise State, he said.

“They know what to do,” Blackman said. “It’s part of the way they were trained as opposed to faculty who have been here 15 years who don’t have that orientation. Things are changing.”

To encourage them, Boise State offers the members of research teams a 50 percent cut of net license income, more than most tech transfer offices and more than the 40 percent offered at University of Idaho.

Juliette Tinker, an associate professor of biological sciences at Boise State, received three patents for a staph vaccine for cattle that has since received regulatory approval for limited testing.

Tinker said the tech-transfer office was invaluable in walking her through the application process and in reaching out to industry partners, including a dairy farm in Mountain Home where she is testing the vaccine on 100 cows.

Ritter and her lone office colleague also reach out to businesses they think might be interested in the patents Boise State has to offer.

IDAHO’S LACK OF MEDICAL SCHOOL HURTS

A small group of universities account for most of the license agreement revenue in the U.S., according to the Brookings Institution. Five percent of reporting universities (eight universities) took in half of all licensing income for 2012, and the top 10 percent of earners took in 70 percent of all revenue, a Brookings report said.

Only 37 universities have reached the top 20 in licensing revenue between 2002 and 2012, and almost all have medical schools. Idaho doesn’t.

The U of I tech-transfer office helped launch one company that plans to use a university patent for orthopedics.

Jamie Hass developed the technology for using nano springs in orthopedic joints in 2012 while working on her Ph.D. in the U of I Physics Department. The university filed for and holds the issued patent.

Nano springs are microscopic glass coils that help an orthopedic device bind to bone.

After she graduated, Hass started MJ3 Industries in Cataldo, near Coeur d’Alene, and is negotiating to secure an exclusive patent license agreement from the university.

She was a finalist for the Idaho Technology Council’s Early Stage Technology Innovation Award in 2011.

The company is still in the testing phase and will need tens of millions of dollars and more than five years to bring the technology to market, Hass said. If the first of three clinical studies is successful, Hass said, she will likely sell the company — and the licensing agreement — to a larger company.

In addition to paying for and taking care of the patent filings, the university tech-transfer office provided business counseling and connections to patent attorneys, Hass said.

“I relied on tech transfer,” she said. “Certainly, some things were frustrating, but they want to go where I want to go, and that really helps our relationship.”

INDUSTRY TAPS THE IVORY TOWER

In March, a Boise startup named Bio Inspired Technologies released computer chips that its CEO, Terry Gafron, says will put his company on the forefront of the growing drone industry.

The chips, which mimic human brain structure, can learn, remember and react to a changing environment as drones perform search-and-rescue or attack missions or other tasks.

The chip, called the Neurobit, is built on a patent developed in a Boise State lab. Bio Inspired Technologies struck an exclusive, 15-year license agreement with the university and will pay the university royalties on Neurobit sales as well as other products and a second generation of chips already designed.

Gafron said his team of three full-time employees and three part-timers could create its own drone-learning technology, but that would be expensive and time-consuming. Licensing BSU’s patent allows Bio Inspired Technologies to be first to market.

He plans to hire 30 to 40 employees to expand chip manufacturing in the next two years.

“This is a no-brainer for us,” he said. “By working with the university, we leverage their capital, their professors, their clean room, their equipment. That makes it easier, quicker and more cost effective to get a product into the market.”

Gafron said he negotiated for three months with Ritter, who he said hustled to get a deal done.

“No way in hell we could do this 15 years ago,” Gafron said. “The thinking was different. Universities were isolated, bureaucratic balls that you couldn’t push if your life depended on it. But the economy is changing. Our thoughts about how we can partner to create jobs are changing.”

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