Unlocking innovation: CEOs are learning how to better tap university R & D. The results could be powerful

Chief Executive, The, June, 2005 by Rebecca Fannin

At IBM, which spends some $5 billion annually on R & D, university research is supported in numerous ways--through student fellowships, grants to students and faculty, and donations of equipment for faculty-led research groups doing work that is strategic to the corporation. IBM also has faculty working part time at its Almaden Research Center.

Some IBMers also teach part-time at campuses. Such close links give IBM an edge in recruiting the brightest Ph.D.s from the top engineering and computer science departments, says Williams at the IBM Almaden research labs.

With a research division of nearly 3,000 people in eight labs around the world and a record for the most patents in the U.S.--3,277 last year, according to IFI Claims Patent Services--IBM doesn't need to depend upon universities for research, he says. But the links to academia help with "general progress in research," which keeps IBM linked in to basic research developments that originate in its own walls.

Two research programs IBM sponsors are CITRIS with Berkeley (see sidebar, page 43) and a nanotechnology project with Stanford University, called Spintronics, where about 30 professors, graduate students and IBM scientists are working on ways to magnetize electrons to improve the performance of computers. That could be as important as the transistor 50 years ago. "Invention is no longer enough," says Williams. "One has to add business insight and make it useful and bring it to market. This is innovation." And the U.S. needs more of that kind of innovation if it is to remain ahead of ambitious challengers around the world.

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While other options exist, the most direct way to gain access to technologies developed on university campuses is to license them.

Some 3,000 universities, including leading business and engineering schools such as MIT. Harvard and Stanford, have an office dedicated to technology licensing. Their job is to facilitate movement of lab inventions to the marketplace. The programs vary, but there are some basic guiding principles.

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First and foremost, the university owns the intellectual property to the product or technology developed on campus. The licensing and technology office typically files for a patent after combing through dozens of inventions. At Harvard, the licensing office "receives reports on about 150 inventions each year, but we only file patents on about 40 percent of them," says Erik Halvorsen, director of business development at Harvard's Office for Technology and Trademark Licensing. "We license about 65 percent of those, and about one in 10 of those is successful." Those successes include two large biotech companies in Cambridge, Mass., Millennium Pharmaceuticals and a spin-out group from Genzyme, says Halvorsen. Novartis is also making use of licensing at Harvard, most recently with a treatment for multiple sclerosis.

Most leading research universities also maintain the right to publish news of any technological or scientific advance, typically in an academic or scientific journal. "Corporate managers need to be aware that we are an academic institution and not a business," says Lita Nelsen, director of the MIT Technology Licensing Office. In other words, universities will not delay publishing breakthrough research so that a company can make a splash with a commercial launch. Nelson has had to explain the competing priorities to irritated corporate representatives. "It takes a while for them to get over it the first time regarding the university policies, what they can do and what they can't do," says Nelson, who manages some 170 patents at the 30-employee office. Among her successes: a bladder cancer detection product for Matritech, a hip replacement compound for Zimmer and a Bristol-Myers Squibb medical imaging product called Cardiolite, which has generated more than $20 million in royalties for joint sponsors MIT and Harvard.