There is a potential game changer on the way in the US when it comes to technology licensing. That is a movement for 'free agents'. Two US senators, Jerry Moran of Kansas and Mark Warner of Virginia, have introduced a bill that will change the rules governing federally funded university research by giving faculty members the authority to find new avenues to commercialise their ideas outside of their home institutions. If passed, researchers would be able to take their idea to any university technology licensing office or outside licensing partner.

Changing landscape

Most universities that run licensing offices are opposed to the bill. Consider the central role the Office of Technology Licensing (OTL) at Stanford University has played in building California's Silicon Valley, and its alumni who have formed companies such as information technology corporation Hewlett-Packard, computer software company Sun Microsystems, internet corporations Yahoo! and Google, and e-commerce business PayPal. Thanks to the 1980 Bayh-Dole Act, universities gained control over intellectual property developed through federally funded research. The law created an incentive for universities to commercialise research.

Not only did this change the landscape, making commercialisation less risky, it also resulted in most colleges setting up OTLs. Surrounding communities benefited because high-tech companies wanted to locate where innovation was taking place and technology licensing was fostering small company growth. The result: as small companies proved themselves, they were acquired by bigger corporations.

The trend has played itself out, especially in California's Silicon Valley and Boston’s Route 128 corridor. These communities, with their wealth of venture capitalists and angel investors, take advantage of Stanford University and Boston’s Massachusetts Institute of Technology.

“Investors can pop over, keep their hands on the small company and manage it on a part-time basis,” says David L Day, OTL director at the University of Florida Incubator, where he oversees the commercialisation efforts of all the university's technologies. University of Florida has benefited from such a scenario, although on a much smaller scale.

Big fish, little fish

Since profit-making corporations do not invest in basic research, there is an incentive for universities to focus on innovations that can make money for their institutions. Their goal is to put as many new products into play as quickly as possible. That is what University of Florida’s OTL has been trying to do, and with results. Over the past decade, its efforts have resulted in approximately 130 company start-ups, 80 or so of which have become successful.

“We are starting to have measureable success and liquidity events,” says Mr Day. In one case, a company bought a University of Florida start-up for more than $100m. To span more growth, the university recently opened its 'innovation hub' to serve as an umbilical cord between the university and the area’s business community. With most venture capital coming from Boston or San Francisco, however, Mr Day says: “We have to raise the bar higher to be competitive.”

Those in favour of reforming the Bayh-Dole Act stress that it has resulted in universities concentrating too much on commercialisation. Meanwhile, officials from the Ewing Marion Kauffman Foundation claim that university OTLs are generally understaffed and slow to evaluate ideas. They cite the act as “monopolistic” and “a major impediment” to further commercialisation.

Those close to the subject regard technology licensing as inherently complicated. And while many universities lose money on technology licensing, the bigger issue might very well be economic development policy, reflecting as it does the US's need to step up its competitive position in the world economy.