From University Innovation to the Marketplace
A discussion on university-industry collaboration, fostering and commercializing innovation in Germany and the U.S.
University research is a key component of a nation’s capacity for innovation. Increasingly, research universities are being seen as sources of innovation that can drive economic development, as opposed to institutions created exclusively for scientific discovery and teaching. A recent event at the German Center for Research and Innovation focused on how German and U.S. universities address these competing priorities. Many higher education institutions have developed successful models for fostering and commercializing their innovations, and regional and national governments have established policies to support such efforts.
Despite the global financial crisis, Germany’s economy is characterized by a strong resilience and continues to show strong export performance in the automobile, chemistry, and mechanical engineering industries. Dietmar Harhoff’s presentation provided a historic overview of university-industry collaboration in Germany and the science-based innovation field today. A more deregulated labor market, for example, supports innovative manufacturing, especially in small- and medium-sized enterprises, which are the backbone of the German economy. Increased funding for science, research, and innovation on federal and state levels, in addition, also sparked an evolution of entrepreneurial culture at German universities.
Whereas in the U.S., the Bayh-Dole Act set the framework for legislation dealing with intellectual property arising from federal government-funded research in 1984, Germany changed the institutional set-up in 2002. The 2002 reform abolished the so-called professors’ privilege and universities became owner-managers of the intellectual property derived from their laboratories. New sharing rules – one-third of the gross returns belong to the inventors, while the remainder is split between the institute and the university – were created as well as new state tech transfer and commercialization agencies.
Yet “the Big Bang didn’t happen,” said Harhoff.” “University patenting still didn’t pick up.” Challenges include relatively low venture capital spending (in comparison to other countries), high-speed knowledge turnover, co-opetition among heterogeneous actors, as well as scientific and managerial demands. But Harhoff, who is the Chairman of Germany’s Commission on Research and Innovation (EFI), which advises the German government on its innovation policies, believes that public-private partnerships facilitate technology transfer while ambitious targets for R&D and education budgets will lay the groundwork on a policy level.
The U.S. government’s Bayh-Dole Act of 1984 allows U.S. universities to patent and commercialize federally-funded inventions. Between 1991 and 2010, the act led to 42,765 active licenses, 6,885 startups, and more than 300,000 new jobs. “However, licensing an invention is difficult due to high patent costs ($100-150k per application per country),” said Herskowitz, the VP of Intellectual Property and Tech Transfer for Columbia University as well as Executive Director of Columbia Technology Ventures (CTV). Only one in six inventions gets licensed. Once licensed, just one in ten venture investments becomes a significant hit. In general, the majority of a university’s technology transfer revenue is generated by “blockbusters,” which constitute less than one percent of all licenses and generate more than $1M per year.
Compared to other U.S. universities, Columbia’s revenues are, at approx. $140M / year, at a higher level. Every year, about 300 new inventions result in 70 licenses and options, and about new 15 start-up companies. In the last 19 years, 149 start-ups spun out of Columbia University, of which 19 are still active.
Imke Ehlers-Surur, licensing manager in Memorial Sloan-Kettering Cancer Center’s Office of Technology Development, moderated. Ranjana Kadle, partner at Hodgson Russ LLP, the co-sponsor of this event, served as the introductory speaker.