Tech Transfer: The Ties That Bind
Did you know that the lack of an IPO window, depressed market conditions and a downturn in venture financing affect not only companies but also universities? That’s because so many academic institutions are tied to the fortunes of companies, both small and large, through their technology transfer agreements.
When venture financing is off, the number of new start-ups falls and the number of young firms going out of business increases. That fact alone translates to fewer new tech transfer agreements – and therefore less cash coming in from licensing fees. And, when money is tight, established companies may well cut back on sponsored research programs, again resulting in less money flowing into universities. Moreover, many universities and non-profit institutions take an equity stake in the companies with which they hold agreements: In a bear market, it becomes difficult if not impossible to liquidate those holdings, which results in a decrease in income, as well.
All of these events took place in 2002, according to the Association of University Technology Managers (AUTM), which just published its licensing survey for 2002.
The AUTM Licensing Survey: FY 2002 found that reporting institutions received $20 million from the sale of equity in licensees in 2002, down from $114 million in fiscal year 2001 – and it attributed this drop to the lack of IPOs and depressed stock market conditions in 2002.
Moreover, reporting institutions received about $248 million in research funding linked to license/option agreements in 2002, down 5.8% from the previous year.
As well, while overall tech transfer agreements were up by about 15% from the previous year, agreements with start-up companies were down, as were those with large firms (companies with more than 500 employees).
These data are based on responses from AUTM’s members in educational and other nonprofit research organizations in the U.S. and Canada. As such, the 12th annual survey provides a comprehensive overview of technology transfer – and how it’s grown in size and importance over the last few decades.
Enabled by the Bayh-Dole Act of 1980, which encouraged universities and non-profit research institutions to patent their inventions resulting from federally funded research and to license the intellectual property to commercial concerns for development, technology transfer has taken firm root in the academic community. Before Bayh-Dole, only a few institutions had established tech transfer programs, but by now even the smallest colleges and universities have gotten into the tech transfer game, according to AUTM.
The survey is chock full of statistics, including the following:
§ 212 institutions reported total research expenditures of about $37 billion in 2002, an increase of roughly $5.3 billion from the previous year. $23.1 billion, or 62.5%, was funded by federal government sources, up 15.8% from 2001. In contrast, a mere $3 billion was funded by industrial sources, up 6.8% from the previous year. The remainder came from state and local government sources, foundations, individuals and the institution itself.
§ New U.S. patent applications filed by 216 institutions rose 13.6% in 2002, for a total of 7,741. In 2001, 195 institutions filed 6,812 new patent applications.
§ 219 institutions reported that they received 3,673 U.S. patents issued in 2002, a decrease of 1.3% from the previous year, which itself was down relative to fiscal year 2000.
§ 219 respondents reported that they executed 4,673 licenses and options in 2002, up 15.2% from the previous year.
§ Most of the responses (97.3%) also indicated the size of the company receiving the license or option. Here, the survey found that 14.6% of the licenses were with companies that were established specifically to develop the licensed technology, down from 16.5% the previous year. Moreover, 54.1% of the agreements were with existing small companies, up from 50.1% in 2001. And 31.8% of the licenses and options were with large companies, down from 33.4% in 2001.
If you’d like to dig a little deeper into the survey results, visit AUTM’s website, where you can read the survey summary or order the full report.
By Jennifer Van Brunt
originally published 12/11/2003