Universities — especially highly ranked ones such as Princeton University — are certainly havens for the pursuit of curiosity and discovery-based research. Yet at the same time they are in competition to draw the best faculty members, students, and postdocs, a percentage of whom see themselves as future entrepreneurs.
By supporting technology transfer and licensing, therefore, the university broadens the experience of those who may see their future in startups or other businesses. “It is important to recognize their importance and priority as well as people who may do research that is purely in advancing knowledge,” says A. J. Stewart Smith, dean for research at Princeton University. “We want to not neglect the idea of practical discoveries and their benefits,” says Smith, who emphasizes that the prime goal of technology transfer is not making money for the university.
“We are not just an ivory tower trying to train clones of faculty,” says Smith. “We want to have people from Princeton contributing in every possible way. Taking applications of research and commercializing them is an important goal for us.”
What paved the way for universities to be involved in the pragmatics of linking research and business was the University and Small Business Patent Procedures Act of 1980, known informally as the Bayh-Dole Act after the two senators who co-sponsored it. Among other things, this act gave universities, small businesses, and nonprofits in the United States control over their inventions and other intellectual property that resulted from government funding.
Before the Bayh-Dole Act, the government held the patents for any research it funded, which essentially made the patents useless. “Companies were not willing to take on long-term risk because they had no significant protection,” says Smith.
The government itself had no incentive to commercialize these patents and in any case didn’t have the administrative capability to do so, says John Ritter, Princeton’s director of technology licensing. “It’s hard work to find licensees; they don’t come running to you,” he says, “and it takes a lot of money in legal costs to protect a patent.”
A flagrant example of the patent issues corrected by Bayh-Dohl, suggests Smith, is what happened to a technology created in the late 1950s or early 1960s by a colleague of his at Brookhaven National Laboratory. He got a patent on superconducting magnetically levitated trains in which a magnetic field in a semiconductor holds the train car above the track; this enables the train to travel at over 300 miles per hour because it meets no resistance except from the air.
The Chinese took advantage of this technology, which no one in the United States was willing to touch due to patent-protection issues, and today they have a levitated train in Shanghai that goes from the airport into town. “China is in the lead; it took this knowledge,” says Smith, “when we could have been selling it to them.”
To remedy situations like this, the new act transferred ownership of intellectual property to university and national laboratories and nonprofit organizations funded by the government and small businesses, with implied obligations for these new patent holders. “In return it is their job to protect the technology and bring it to the attention of possible licensees, and if at all possible to bring it to the marketplace for the benefit of society and the economy,” says Smith.
For universities, Bayh-Dole has been a boon because of all the discoveries that come out of basic science, even though the university’s research policy does not encourage working toward particular applications. “The kind of research we pursue has to be a search for new knowledge, the training of new scientists, and a benefit to society,” says Smith. “It is not a policy that has people doing research searching for applications to produce profits for the university and for the inventors.”
Although some universities have tried a more commercial approach, it has not been very successful. “It is not an effective way of doing business,” says Smith. “The time scales are so long, and the patents that you start are very unpredictable, and there is a low probability that anyone is going to make a lot of money.”
When technologies and inventions appear to have commercial applications, Ritter has to sift through the invention disclosures he receives — which last year amounted to more than 100 — to try to understand which ones are worth protecting. “When he turns one down, he is making a pretty important decision,” says Smith, his boss. “He has to evaluate promise and they are all low probability.”
In evaluating a particular invention, Ritter uses two criteria. The first is patentability. To determine the second, commercial viability, Ritter seeks feedback on the technology from businesses. But even then it’s something of a judgment call. “Even with all the experience we have and all the work we put into triaging inventions, it is still an inexact science, so we do the best we can,” says Ritter.
If the university decides not to file a patent, it will return the rights to the faculty members who invented it.
Yet even when the university does decide to step in, and in the end does very well by an invention, it takes a long time for something to become profitable, notes Smith. For example, the university began a collaboration with Eli Lilly in the 1980s based on a compound that one of its professors, Edward Taylor, had originally studied because of its unique shape. The result of the collaboration was the drug Alimta, approved in 2004 for treatment of certain kinds of lung cancer.
Of course the development process is risky, and failure is always a possibility. But the university’s licensing agreements ensure that it will receives royalties based on sales when something is successful, and when something big like Alimta comes along, the upside revenue-wise can be huge. In fact the university’s proceeds from Alimta financed the huge new chemistry building that opened in 2010.
A more recent technology, produced in Princeton’s electric engineering and physics departments, is a cost-effective way to read single strands of DNA. A postdoc at the university was interested in starting a company based on this technology, and the university worked with him to develop a licensing agreement. Starting as a one-person company in 2003, Han Cao had to raise capital and develop the technology into a product, and only now is his company, Bio-Nano Genomics in San Diego, starting to sell the technology.
Another long-term collaboration has been with Universal Display Corporation in Ewing, which licensed a technology developed by Princeton’s electrical engineering department for organic light-emitting devices, a technology now incorporated into the Samsung Galaxy phone. The collaboration began when an investor who had heard of the technology and was interested in doing a startup around it approached the university to license it.
Ritter’s department is juggling not only current invention disclosures but ones from previous years. “It is an additive situation in that the ones you get last year don’t go away,” he says. “We’re still working hard on finding potential licensee collaborators.”
Even once a technology has been licensed, it may become clear that it is not going to make it. Says Smith about Ritter: “He has to decide how the promise of ultimate viability evolves with time. Some things take decades.”
Ritter’s department works not only with faculty researchers at Princeton, but also with attorneys who help the university protect inventions created within its walls, and with companies with whom it is negotiating various types of agreements.
When Ritter’s department gets a new invention disclosure, he sits down with the faculty member and together they envision how that technology is going to be transferred into a product. Then they identify companies that might have an interest in licensing the invention. These companies may already be known to Ritter’s office or may be the product of an Internet search.
Ritter does sometimes face challenges when approaching companies to assess their interest in developing some sort of collaboration. “The biggest challenge is ‘It was not invented here,’” he says. “A lot of companies are working on their own developments, and it may be difficult to find a champion within the company.”
The second difficulty grows out of the reality that the inventions the university is offering for licensing are very early-stage technologies. “They are usually on the order of 8 or 10-plus years before the technology is turned into a product,” says Ritter. “You have to find a company that has the long-term vision and commitment to put in the resources that are necessary.”
Where it can, the university tries to help mitigate some of the risks of licensing an early-stage technology. One approach it takes is to reinvest some proceeds from royalties to help faculty members move forward with particular technologies. “We have annual calls for proposals from faculty members where a modest amount of money, typically $100,000, would get them a significant step along a path to reduce risk or understand it,” says Smith.
This type of funding started six or seven years ago when Ritter submitted a proposal to New Jersey’s Commission on Science and Technology that got funded and was matched by the university. “It lasted three years, then came the budget crunch and the state money went away,” says Smith. “But it was so important to us and we were starting to bear fruit from own technologies that we used our own funds to sustain it.”
People who have inventions that are not quite ready use these funds in a variety of ways. “They may be interested in building a prototype, getting small animal data, or doing whatever they think might make the technology more attractive to bring investment to it,” says Ritter. “This might draw in either a startup company or an existing company looking for something that has been further developed,” says Ritter.
Proposals for this funding are vetted by a review committee that includes faculty as well as venture capitalists who are able to provide a perspective on whether the technology will generate commercial interest if it succeeds.
Another source of funding is available for transformative technologies that don’t necessarily have a commercial application — from the $25 million endowment created by Google chairman Eric Schmidt, Princeton Class of 1976, and his wife for the invention, development, and utilization of cutting-edge technology that has the capacity to transform research in the natural sciences and engineering. “Eric realizes that new technology usually has unexpected applications, and this stuff is hard to get government funding for,” says Smith.
From this pot of money came a $700,000 grant for a new study involving graphene and topological insulators that could lead to faster electronics, and within a year the researcher had a $5 million grant from the Defense Advanced Research Projects Agency.
Another project it has funded is a way to measure blood sugar without invading the body; it uses infrared lasers to look at emissions from the skin and can measure very low concentrations of molecules in the air. The researchers are now working to make this technology both precise and accurate.
These grants fill a gap left by government, which 30 to 40 years ago used to significantly fund science, says Smith. But today the acceptance rate for grant proposals is lower than 20 percent. The process for securing funds is also lengthy and cumbersome, and the requirements and approval procedures have reduced the attractiveness of the government as a funding source. “By the time they get the money, if they get the money, it would often be too late,” says Smith.
Another issue is the government’s apparent disinterest in potentially outstanding but very risky ideas. “A government peer review panel is focused on risk,” says Smith. “They often fund the incremental rather than the transformative because it is less risky. In the charter for our fund, we expect some to fail, not because of blunders but because nature is unkind.”
About 5 to 8 percent of the university’s sponsored research comes from companies. Ritter and Smith would like to see that increase. “They need something that they see can lead to a bottom line,” says Smith. “Some companies are more willing than others to take risks with early-stage research.” Partnering through research collaborations with companies’ internal scientists sometimes works well, he says.
Ewing-based Universal Display funded several years of research, collaborating with Princeton researchers to develop a technology licensed from the university.
Whereas big companies in the United States used to be unparalleled in their support for research, Stewart sees the corporate culture reducing that support in favor of current profits. He points, for example, to the past when companies that were almost monopolies were able to devote some of their profits to research through operations like Bell Labs. “Now with five to six companies competing, it is harder for one to put away earnings rather than put them in the balance sheet to show profits,” he says. “There is definitely a reduction of the early-stage research that produced the laser at Bell Labs.”
Lasers, he adds, are another piece of basic science that had huge implications, even though early on it was viewed as a cute toy. “Without the laser our society would be very different,” says Smith, “but nobody thought they could do anything with it when it was invented.”
Universities do face a potential problem as they tread the line between pure research and commercial applications. The issue is the degree to which faculty members can be involved in companies without interfering with their university responsibilities.
Because the university is primarily an educational institution, it has clear guidelines on this matter. First of all, faculty members may not be executives. “It is more likely that students or postdocs take over and a faculty member participates in a level compliant with policy,” says Smith. “The university allows one day a week of consulting, but not running the company.”
Faculty members can have a financial stake in the company as long as they are not spending more than the allowed amount of effort in supporting the company and are not in an executive role. Also, adds Ritter, in cases where a faculty member has a financial interest, the licensing agreement has to be negotiated with another person from the company.
The university’s policies ensure that it fulfills its appropriate role. “There is a continuum from curiosity and discovery-based research at one end to development and improvement of prototypes of products that can be sold in the marketplace,” says Smith. “Universities are at one end of that spectrum, the mass market companies at the other end.”
The source for many products that have revolutionized our world or have the potential to do so in the future come from the pursuit of basic knowledge, and Smith points to a few biggies:
First, the transistor, which was discovered by people trying to understand the mechanical nature of materials. With the realization that it could be used to amplify and switch electronic signals and electrical power came its role as the fundamental building block of modern electronic devices.
Second, the Internet. When high-energy particle physicists around the world needed a way of posting and exchanging data and reports, they came up with another transformational invention, the Internet.
Third, particle accelerators, created by scientists who wanted to understand the universe, have resulted in the creation of better radiation therapy devices.
Fourth, synchrotron light sources, built by particle physicists who wanted to produce high-energy electron beams to collide with matter to understand its fundamental structure, emit radiation that, while an annoyance to physicists, has become the lifeblood of material science and structural biologists.
One important application that Ritter helped commercialize involves a better way to image lungs.Previously, this could only be done with x-rays, which were not all that effective. “To image a lung with x-rays is very hard,” says Ritter. “You are looking at material and trying to infer the gaps.”
Then a colleague of his who had a back injury realized, while having an MRI done, how the nuclear physics he was doing could produce polarized helium, an isotope that could maintain magnetism for a long time. If the helium atoms would stay in the lungs long enough, the physicist imagined, then the material lit up would not be body tissue but wherever the helium atoms were.
Today a small company in North Carolina is developing this technology. “It can show exactly the amount of lung that has air in it; and when you breathe, the efficiency of different parts,” says Ritter. “If there are bad spots, it can tell the surgeon which part of the lung to cut out.” Although the technology has not yet been approved by the Food and Drug Administration, Ritter thinks the agency should be able to quickly answer the safety question.
Ritter grew up in Waldwick, in Bergen County, where his father was a truck driver and his mother a homemaker. He studied ceramic engineering at Rutgers University, graduating in 1985. He then earned a master of business administration at Fairleigh Dickinson and a law degree at Rutgers.
After several years in sales and marketing with materials companies in Kentucky and New York, he came back to Rutgers in 1991 to work in technology transfer and came to Princeton in 1996.
Smith grew up in Victoria, British Columbia. Both his parents had emigrated from Scotland, but they met in Vancouver. His father was the equivalent of a commissioner for the Securities and Exchange Commission, handling stock compliance for the province of British Columbia. His mother was a paralegal.
For Smith, his interest in science “was the thing to do in those days,” he says. “World War II was over, and all kinds of discoveries were going on. You’d hear about radar, nuclear energy, and astronomy.”
When he got to the University of British Columbia, though, it was a toss-up as to whether he would major in German or physics, but physics won out and he graduated in 1959 with a degree in physics and mathematics.
Smith earned his doctorate in particle physics at Princeton, and after a postdoctoral position in Hamburg, returned to Princeton as faculty. He never left except for four years at Stanford running an experiment in high-energy particle physics.
From 1990 to 1998 Smith was chair of the physics department. Then he was asked to build up an organization to manage research at the university. The various components of research were fragmented when he started in 2006 as the university’s first dean for research.
Smith’s responsibilities also include properly regulating the university’s $200 million in grants and contracts, from supporting and reviewing proposals to ensuring that money is spent appropriately. He is also delegated by the president of the university to manage the $100 million contract from the Department of Energy with the Princeton Plasma Physics Laboratory. “The director does the science and runs the lab,” says Smith. “I am the person accountable to the Department of Energy to make sure they do it right.”
Smith’s office also supports and advises the faculty committee responsible for ensuring that research with animals, human subjects, and potentially dangerous biological agents is managed according to government regulations. He also manages the group that seeks funding from corporations and foundations.
Smith will serve as dean for research through this June, at which point he will become vice president for the Princeton Plasma Physics Laboratory. His successor will be Pablo Debenedetti, a chemical and biological engineering professor.
One of the most important reasons for the focus on technology transfer is to give faculty the opportunity to reach beyond the ivory tower. “The motivation for doing this is to allow faculty to flap their wings,” says Smith. “It offers an extra dimension than strictly going for curiosity-based research. We want them to be sensitive and have their eyes open for applications.”
It also has to do with drawing in the very best talent — attracting the best faculty and students to produce knowledge and train new minds. “We are competing to get the best people and steal them from other universities and stop other universities from stealing them from us,” says Ritter. “It is the American way.”