Monetizing Intellectual Property at Universities- Part 2

Traditional Model and its Limitations

The traditional model, of universities assuming ownership over patentable technology created under their policies, and then licensing it out to the highest bidders in the market, has not managed to yield the best results due to: 

• Fixed royalties 
• Relatively narrow portfolios of licensable patents
• The cost of supporting technology transfer operations between universities and the relevant industry

The Shift Towards Startups

A widely cited Brookings study in 2013 suggested that universities nurture their own startups to effectively utilize patents created by university members. However, this direct startup mode may face other constraints like the amount of stake a university may hold in each startup, the extent of control over decision-making that the university can actually exercise, and the further elusiveness of balancing a university’s public responsibility with its quest to realize returns from investing in its own startups.

The Dilemma of Patents and Trade Secrets

Following recent reports of Waym seeking up to $2.6 billion dollars for an alleged theft of a trade secret by a current Uber employee, universities and their incubated startups are becoming more aware of the additional implications of how they choose to guard their IP. 

While the earlier trend has been to instantly file for patents, often during the initial development stages of new technology, this trend of patenting is being re-examined. During the open-source wave, when research groups at universities were keen on ensuring advancement through collaboration - and more importantly, universal access - active enforcement of patents had taken a back-seat. 

Instead, what most patent-holders chose to do, like the Computer Research Group at Berkeley (creators of FreeBSD), was to patent (and copyright) their software inventions, and license it out to the public under a General Public License - whose current versions are now better known as the licensing terms for the Linux kernel.

The Role of Universities in Managing Startups

At the university level, the sheer number of members involved in advising and mentoring startups, and their lack of an exclusive contract with any single startup (or industry collaborator) is often the largest obstacle to keeping a secret. 

Unlike the more formal confidentiality agreements entered into during external accelerator programs and funding rounds, the confidentiality agreements between universities and their startups are practically non-existent. 

This could stem from either a misunderstanding of the role of the university in managing the startup, a sometimes misplaced commitment to continuing collaborative research, or an eagerness of part of the startup founders and their mentors to “pitch” to prospective investors and acquirers. 

Which works perfectly while selling an idea that the company has patented / copyrighted (with or without university involvement), but completely muddles the plot when the company is sitting on a gold mine which it hasn’t yet decided how to protect and monetize in the future.

The Way Forward

Not all monetizable IP is born out of concentrated efforts at research and development. The ideas for some of today’s well-known brands were formulated through class projects, pet projects of students, or university start-up competitions. 

A few, like Stubhub and Trulia were created almost entirely by students, while others, like Coursera, were almost entirely the efforts of professors. And in each case, universities have been involved to a different degree in encouraging the founders to pursue their idea, in forming and incubating a startup, and in managing and attempting to monetize the resulting IP.

Conclusion

Universities play a crucial role in managing startups and protecting intellectual property. The traditional model of patent licensing has its limitations, and there's a shift towards nurturing startups within universities. However, this comes with its own set of challenges. 

The dilemma of patents and trade secrets is also a significant concern. Universities need to strike a balance between collaboration and protecting valuable IP. The way forward lies in recognizing that not all monetizable IP comes from formal R&D, and universities can play a significant role in encouraging and incubating startups.