Where Have all the Breakthroughs Gone?

In 2022 alone, universities poured more than $91 billion (yes, billion with a B) into research funding. Every so often you’ll hear about a novel treatment or revolutionary polymer poised to change an industry or medical outlook — but more often novel technologies slide quietly into oblivion.

While the Bayh-Dole Act of 1980 has significantly contributed to advancing university intellectual property commercialization — by overturning the law that required any invention resulting from federal funds to automatically become government property —  the percentage of new businesses started in the United States that result from university technologies is still very low.  Colloquially, this left behind IP falls into “The Valley of Death.”

Since Bayh-Dole, more than 4,000 companies have been created out of successful University tech transfer. But according to the Association of University Technology Managers (AUTM), the leading non-profit representing the interests of university tech transfer professionals, only 3.5% of the 495,000+ inventions disclosed from Universities since 1996 have resulted in new startup creation. Successful licensure has increased but the ecosystem isn’t fully benefiting from the federal resources being poured into research and development.

So, where do those inventions go?

Routes to the Valley of Death

Private Party

The federal contribution to research and development efforts at universities is well documented and accounts for the largest share of overall R&D funding. But the impact of private industry in the academic sphere has been steadily increasing over the past decades. The State of U.S. Science and Engineering 2022 report from The National Science Board “shows that between 2012 and 2021 academic research and development (R&D) funded by businesses grew faster than academic R&D funded by the federal government, although federal funding still makes up the largest overall share.”

Industry-funded research, however noble it may be,  is ultimately motivated by market competition. The National Science Board’s report states that “the U.S. business sector funds (or pays for) most R&D, and nearly all (98%) of the business sector's R&D funding supports R&D performance by businesses.” As such, the resulting IP creates major advantages for existing private companies rather than new entities and net new opportunities in the marketplace.

Sometimes private industry does acquire federally-funded research with not-so-nice intentions. This is known as “Catch and Kill.”

Catch and Kill

While the pipeline between industry and university TCO has grown and strengthened dramatically since 1980, the reality is that established industry often has a vested interest in squashing new inventions. Many researchers understand the paradigm of catch and kill that behooves the largest industry players. If an innovation threatens to damage an existing revenue stream, corporations will snap up the IP and keep it locked away — preventing it from both damaging their existing lines of business but also stopping it from creating any meaningful impact in the real world.

Even without nefarious intentions, organizations that license IP often fail to commercialize it because of the time and effort required to integrate IP into their existing businesses — that brings us to “Sit and Wait.”

Sit and Wait

The huge strides made after the Bayh-Dole act and the increasing efforts of Technology Commercialization Offices (TCO) have helped to massively increase the amount of university intellectual property that makes it to the licensing stage. Excitement around this progress makes it easy to forget that licensing is not the end goal — commercialization is. As we’ll cover in the next article, researchers typically sacrifice control over the fate of their intellectual property once a license is executed.  Finishing the work required to create a market-ready solution from institution-derived research is not trivial (or cheap) and many times the acquiring entities cannot complete that work for any number of reasons. It’s all too common to hear about a potentially-revolutionary technology sitting in the hands of a licenser for years with no movement. For this reason, it’s becoming increasingly common for universities to pursue IP clawback.  

If a researcher can avoid these common pitfalls on the way to market, they must then decide on the correct path to commercialization for their technology as well as their personal goals. In the next article, we’ll discuss which paths are available to researchers who want to bring institutional intellectual property to market.