THE UNIVERSITY OF CALIFORNIA'S
RELATIONSHIPS WITH INDUSTRY
IN RESEARCH AND TECHNOLOGY TRANSFER
Progress Report - January 1998
INCREASING THE VALUE OF UC'S INVESTMENT IN RESEARCH
1. President's Retreat
The President's Retreat on the University of California's Relationships with Industry in Research and Technology Transfer was an internal meeting held in January 1997 that provided an opportunity for senior University management and faculty leaders, with input from a number of selected industry representatives, to thoughtfully and candidly assess current UC interactions with industry. The Primary objective of the Retreat was to consider changes in programs, policy or structure that could improve research and technology transfer relationships with industry while supporting the University's mission and core values. A major point raised consistently throughout the retreat was that the University must take a strong position of encouraging research partnerships with industry and the University must become less risk-averse in these relationships. There was also agreement that the University should exercise more flexibility in taking into consideration differences among scientific disciplines and among industry sectors. In general, it was agreed that the University should take steps to become more user-friendly to industry, and less complicated to work with. At the same time, there was strong consensus that teaching, disseminating information, and the search for new knowledge should underlie all University interactions with industry. Proceedings from the Retreat have been published and are being used as a resource throughout the system to continue internal conversations on the issues raised at the Retreat.
2. President's Industry-University Cooperative Research Program
President Atkinson's Industry-University Cooperative Research Program (IUCRP) creates new systemwide matching grant programs to increase research interactions and technology transfer at the level of individual University researchers and California businesses. Its central goals are to advance research and training, to bring new discoveries into the marketplace for the public good, and to enhance the California economy.
The IUCRP is a formal planning and development process focused on a broad spectrum of fields in science and engineering. It provides mechanisms to identify synergistic opportunities and needs in industry and at the University which might fruitfully be addressed by industry-University cooperation and partnerships. The Program expands private sector funding for UC research and training. At the same time, it helps California's promising young businesses leverage limited R&D resources at a time of cyclical and diluted financial investment. They also train the next generation workforce needed by California's knowledge-based businesses.
The IUCRP has launched a systemwide program for biotechnology research (BioSTAR). Proposals for additional programs in semiconductor manufacturing and multimedia are in the final stages of review. Other fields currently under consideration include communications, and medical informatics, among others. The IUCRP is scheduled to raise at least $40 million in new funding from the State, California industries, and the University.
3. New Patent Policy
On October 1, 1997, the President issued a new University of California Patent Policy. This policy is the product of several years of consultation, debate and discussion within the University community and is directly responsive to concerns raised by faculty that the policy should: i) establish the inventor's share of royalties at a rate that provides sufficient reward and incentive for faculty participation in the technology transfer program; ii) provide a direct research allocation from royalty income to provide further incentive for faculty participation and to support research; and iii) simplify the royalty distribution formula for ease of understanding and administration. One important feature of the new policy is a royalty distribution formula which for the first time designates a special 15% allocation of royalties from each invention expressly to support research at the home campus of the inventor. In addition, based upon widespread faculty dissatisfaction with the reward and incentives provided by the April 1990 Patent Policy royalty distribution formula, the President retroactively rescinded that policy.
4. Placement of Clinical Trials at UC
In 1996, the University provided campuses with greater authority and issued flexible intellectual property rights guidance to support the expedited placement of clinical studies (drug and device testing) at UC medical schools and campuses. This guidance empowers campuses to provide a wide range of patent rights to companies consistent with the intellectual contribution of UC clinical study investigators to the conception and development of the study protocol, and with the interest of these investigators in sharing in the value of any resulting inventions.
The faculty and other researchers at University medical schools and other health-related research facilities, through their hospital and clinic affiliations and their access to diverse patient populations, commonly conduct such testing of new pharmaceutical and medical device products involving human patients. Drug and device testing provides a means by which University faculty, either directly or indirectly, can gain knowledge that increases their teaching skills and effectiveness. Such investigations also create a valuable point of contact between the academic and private research communities by which appropriate and valuable public service can be provided by the University in support of the development of new products for the general public good. Further, income provided for such studies is an integral part of the financial health of the University medical centers.
5. Successful Campus and Faculty-Centered Licensing Programs
In March, 1994, the Ad Hoc Technology Transfer Advisory Committee advised the University to restructure its technology licensing program to tailor it to fit the circumstances of the individual campuses and Laboratories. The aim was to bring the technology transfer and licensing functions closer to the inventor and to the academic enterprise. Since that time, the Office of the President has assisted campuses in establishing their own technology transfer programs suitable to their own needs and goals.
Effective July 1, 1996, the San Francisco campus was authorized to establish its own campus-based technology licensing operation. In October 1994, an agreement was signed with UC San Diego that established a fully independent program on that campus. In that same month, an agreement was signed with UC Irvine that enabled the campus to assume responsibility for the marketing and licensing of inventions that are related to the development of research collaborations with private industry or that enjoy a market that is served by local Orange County companies. The Berkeley and Los Angeles campuses and UC's three DOE Laboratories have operated their own programs for some time. Policy and legal support, as well as technology transfer infrastructure services continue to be provided by the Office of the President to all campus-based technology transfer offices.
The Office of the President, through the Office of Technology Transfer, continues to successfully market and license University technologies in order to bring results of University research promptly to the marketplace for the public benefit. In FY 1996-97, the University entered 131 license agreements, 40 option agreements, nearly 2000 secrecy agreements, and received over $77,700,000 in revenues. For at least the past several years, the University of California has managed the most successful university technology transfer program in the nation according to surveys conducted by the Association of University Technology Managers (AUTM).
6. Equity Participation in New Companies
Allowing the University to realize the full value of its technology, new University policy for the first time supports the acceptance of equity in a company under certain circumstances when licensing University technologies. The combination of developmental costs and risk, and uncertainty as to the potential value of an early-stage University technology, occasionally make it difficult for the University to identify a licensee possessing both the requisite capabilities and willingness to assume such financial risks. Small or startup companies may find it particularly difficult to commit significant cash outlays for both developmental and licensing costs. In February 1996, the President issued the University Policy on Accepting Equity when Licensing University Technology, which permits the acceptance of equity in a company as partial consideration for receiving a license and establishes the parameters for entering into such arrangements. Today the University holds equity in 20 companies as a result of its licensing activities.
RESPONSIVENESS TO INDUSTRY
7. Industry Advisory Groups
A University-wide President's Engineering Advisory Council was chartered to advise the President on engineering education and research, on developments in industry and their implications for engineering education, on university-industry relations, and generally on issues of importance for engineering and industry as they relate to the economy of the State and the nation. This Council consists of 17 leaders of high technology companies based in California. They have met twice in 1997, and the initial focus of this group has been to assess the high technology industry labor shortage and to recommend that the University actively address this need.
The Industry-University Cooperative Research Program is guided by the President's Board of Research and Economic Development, currently comprised of eight industry members, primarily CEO's of California companies and eight ex-officio UC members. The purpose of this Board is: i) to provide long-range perspective on research, manpower, and training opportunities and needs in California; ii) to advise on how the University might best address those opportunities and needs in a manner that advances the mission of the University and strengthens the state economy; iii) for individual members, to advise and assist within their fields of expertise; and iv) to advise the President on the development of the Industry-University Cooperative Research Program.
8. President on Statewide Chamber of Commerce
President Atkinson has been elected to serve on the California Chamber of Commerce Board of Directors. The Board approves major actions of the Chamber on such items as legislative policy, ballot measure position, and overall work of the Chamber. The California Chamber of Commerce is a principal arena through which business, industry, and agriculture take positive action to enhance California's economic and employment climate. The Chamber has over 10,000 members that reach out to a half million businesses.
INCREASING THE EFFICIENCY OF OUR INTERACTIONS WITH INDUSTRY
9. Relationships with Individual Firms: Genentech, a Case Example
Sometimes the University develops differences with individual firms that require some active attention and troubleshooting to smooth the relationship. For example, although relationships between UC and Genentech have worked well in some areas, they have been problematic in the areas of rights to intellectual property arising from Genentech-sponsored research, and related litigation. Since the appointment of a new President at Genentech, UC has made efforts to improve the relationship between the two organizations. Now each party has appointed a "single point of contact" individual who will serve as an institutional liaison between the parties. Efforts are underway to increase the understanding of each of the parties of the principles, interests, organization and personnel of the other. These efforts have been formalized in a Memorandum of Understanding to ensure the mutual success of the broad research and technology transfer interests of both parties. This approach to problem-solving with an individual company may serve as a model with others.
10. Partnership with the Community of Science (COS)
The University has established a systemwide relationship with the Community of Science, a World Wide Web-based information resource company, to provide an opportunity for UC campuses and Laboratories to participate voluntarily and non-exclusively in the portfolio of COS research and technology transfer support services. Under the systemwide agreement, each UC site may, at discount cost: i) access the largest research funding opportunities database in the nation; ii) receive regular electronic alerts about new funding opportunities tailored to individual faculty members' areas of scientific interest; iii) build an expertise database comprised of profiles of its faculty members' scientific areas of interest to be made available to their academic and industry colleagues across the nation for research collaboration purposes; iv) search comparable expertise databases at other research institutions for potential research collaborations; and v) obtain a number of administrative support services, including on-line access to Patents Citation database, the Federal Register, and the Commerce Business Daily. In 1997, nine UC sites elected to participate in this UC/COS partnership arrangement.
11. Relationships with California Marketing Order Advisory Boards, Councils and Commissions, and the California Department of Food and Agriculture
The University has enjoyed a long-term research relationship with various commodity groups in California, representing the various state agricultural industry interests. There are over 100 commodity organizations with different governing guidelines and lines of authority operating in the State. The negotiation of intellectual property issues between the University and these sponsors has been historically problematic, given their varying levels of interest and concern about becoming involved in commercialization activities for inventions resulting from their research funding.
The University, the CDFA, and the California Commodity Committee (CCC) formed an ad hoc working group to address a number of issues of mutual concern among those organizations. As a result, the University has reached agreement on model intellectual property provisions with the Executive Committee of the CCC on behalf of all its Boards. This is expected to shorten negotiation time significantly and improve overall research relationships between the University and the CCC and its member industry Boards.