At the time, we engaged in a lot of congratulatory back-slapping about how cool we were to realize that TCOs were run like a business and therefore should report to a businessperson and not to the touchy/feel-y academic side of the university where you spend all your time wading around in political BS. My Powerpoints from ~2002 are littered with slides on this topic. How embarrassing!
Now that we've reported to this same gentleman for over 10 years and I have had the opportunity to meet administrators from other universities around the country, I think I have some different thoughts on why our boss has been such an asset to our efforts and why so many TCOs are stymied by their administration. It isn't so much about being a "businessperson", but more about whether they have a basic functional literacy about how technology commercialization works.
If the administrator your TCO reports doesn't know some of these basic things, it would behoove the TCO and university to find someone more engaged to fill the role. So, here's a handy list. I'm sure there are other things that can be added to the list, but these are basic knowledge items. Call it the cultural literacy of technology commercialization. If you don't know these facts, you cannot even engage in an intelligent conversation about university technology commercialization (at least in the biomedical arena). Or maybe I should say...you can engage in an intelligent conversation on the topic, but not with anyone who actually knows what they are talking about.
- Although universities have lots of technology, they can only commercialize that which they can patent. - I hear too many ignorant discussions focus on the "technology" or the "science" that a faculty member has and ignore what can be actually be protected by a patent. There are ways to commercialize technologies without patents, but that is an expert-level activity that usually doesn't work very well.
- To be patentable, an idea doesn't have to just be "new"....it also has to be "non-obvious". - Too much talk about what is "new". "New" is very easy to achieve if you're willing to have a narrow enough patent. Instead, tell me what you've done is truly innovative and an inventive leap into new human knowledge.
- A US patent costs ~$25K. International patents cost orders of magnitude more. - It's not uncommon for international patents to cost $250K-$500K. That is a lot of money. The boss of the TCO should be aware of the magnitude of this large cash commitment when a faculty member is complaining that the TCO isn't pursuing "worldwide" patent protection.
- "Start-ups" are nothing but licenses to very young companies. - Even though the folks in the TCO sometimes do locate an entrepreneur to work with a technology, it is problematic to say that the TCO "started the company". For a start-up to be successful, it needs to be an independent company looking out for its own interests. The TCO just happens to be doing a license with the company when it is very young and has no money so much pay its licensing fees with stock. The line between "license to existing company" (yawn) and "F-ING START-UP, BABY!!!" (cue popping of champagne corks) is very fine.
- The commercial and investment sectors can be very skittish about new technology. - Too often I hear administrators talk about the environment for licensing new technology as if it is a pendulum: "It'll come back in a few years." That is simply not true. What happens is that fundamentally new technology will come down the pipe and industry/investors will make the same euphoric technology acquisition mistakes that they've made in the past. BUT...nothing will make them suddenly more gullible about licensing early technology in well-trodden industries like pharmaceuticals or medical devices. They're smart folks who learn from their past mistakes!
- That start-ups are generally not a good thing to prioritize if you want your TCO to make lots of money. - Start-ups are risky -- much riskier than licenses to existing companies -- and while it is probably unfair, both the entrepreneurs and the investor (especially the investors) want the TCO to accept less financial upside in a start-up. Usually this takes the form of a much lower than "normal" royalty rate.
- Licenses are complicated and can take a long time to negotiate. - As I mentioned in this post, licenses can easily take 6+ months to negotiate. It also takes two to tango, so the licensee is just as responsible for any delays as the TCO.
- Most university-stage technologies aren't commercially valuable. - This is probably the biggest one. We had an intern in our office for the summer and she analyzed the technologies that our office had "passed on" for the last ~15 years. There wasn't one single invention that you could really say, "Wow, you guys blew it on that one. That technology ended up looking pretty HOT!". The truth is that even the most fascinating university-stage science is still very far removed from commercial applications and that there are many non-scientific factors (e.g. patents, business plans, execution, etc.) that could prevent the invention from being lucrative.
And, if you're running a TCO and your boss doesn't know these things, feel free to suggest that I think they're unqualified to supervise a TCO. I guess they could take issue with my "facts", but they would be wrong.
- Dean Stell
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