Value of University Licenses on Patents Exceeded $1-Billion in 2000, Survey Finds By GOLDIE BLUMENSTYK
American colleges and universities and the inventors who work at them collected more than $1-billion in royalties, created 368 spin-off companies, and filed for 8,534 U.S. patents in the 2000 fiscal year, according to the latest licensing survey by the Association of University Technology Managers.
The royalty figure is 40 percent higher than the $641-million reported in the 1999 fiscal year. But a good portion of the increase is attributable to several giant one-time infusions of income to colleges and universities. The biggest was the $200-million that Genentech Inc. agreed to pay to the University of California at San Francisco in November 1999 to settle a patent-infringement lawsuit. (See an article from The Chronicle, December 3, 1999.) A few institutions also saw big gains during 1999-2000 because they cashed in equity they had received from companies as payment for the right to use their inventions.
The number of licenses and options executed -- 3,606 -- was nearly 9 percent higher than in the previous year. The licenses, or options to license, give companies the right to use university inventions in return for royalty payments -- usually based on sales of the product that uses the invention, equity in the company, or some combination of both.
Universities also appeared to be filing patents on inventions a bit more aggressively. In 1999, survey respondents said they had received disclosures of 10,052 inventions and filed for 7,612 U.S. patents. In the 2000 fiscal year, the number of invention disclosures was only slightly higher -- 10,802 -- but the number of patents filed increased by 10 percent.
The association's survey for 2000 included responses from 142 colleges and universities in the United States, including all but a few that rank highest in research spending. Year-to-year comparisons are inexact, however, because the same institutions do not participate in the survey every year. Also, as the report notes, the varied missions and circumstances of participating institutions often affect the way each chooses to turn their patented ideas into drugs, telecommunications tools, and other products. The top royalty earner was the University of California system, with $261.5-million (including the Genentech money), followed by Columbia University, with $138.5-million. A good percentage of Columbia's money came from a now-expired patent on a widely used technique in manufacturing drugs.
In the third spot was a newcomer to the upper rankings of the survey, Dartmouth College, which reported income of more than $67-million. Alla Kan, director of Dartmouth's licensing office, said that virtually all of the money came when the institution cashed in its equity in a biotechnology company called Medarex, which was founded in 1989 with some technology licensed from Dartmouth. Medarex compensated Dartmouth with equity.
A similar cash-out gave a bump to the Massachusetts Institute of Technology, which reported just over $30-million in royalty income, nearly double its figure for 1999. MIT realized about $14-million of the 2000 figure when it sold a portion of its stake in Akamai Technologies, a company founded by professors from the institution. MIT gained an additional $36-million in 2001, when it sold the rest of its stake.
Georgetown University also appeared in the top 10 in royalty earners, for the first time, with $26-million. Virtually of that came as a lump-sum payment from the makers of the anti-allergy drug Allegra. A Georgetown professor helped to develop the drug.
The number of institutions reporting big-figure royalty amounts was larger in 2000 than in the 1999 fiscal year; 14 respondents reported royalty earnings in excess of $20-million. In 1999, only eight did. Nineteen institutions reported earnings of more than $10-million, versus 14 in 1999.
Overall, however, many institutions still aren't getting rich on royalties. Just under half of the respondents reported receiving less than $1-million in royalties; and 90 reported royalties of less than $2-million.
The spike in start-ups -- a 25-percent increase over the 275 reported in 1999 -- was also notable. But seven institutions accounted for nearly one-third of them: MIT (with 33) the UC System (with 26), the California Institute of Technology (with 14) , the University of Minnesota system (with 11) and the Universities of Utah and Virginia (10 each).
"It's a copycat phenomenon" for MIT, said Lita Nelson, director of the licensing office there. "Start-ups have become almost the expectation."
Robert MacWright, director of the UVa Patent Foundation, said the increase there reflects a new policy to favor licenses to faculty start-ups whenever possible. The goal is to help develop a biopharmaceutical industry in the Charlottesville area -- two thirds of UVa's inventions come from its medical research -- and to satisfy professors who are becoming increasingly interested in seeing their research commercialized through companies in which they play a role.
The patent foundation has also created a for-profit subsidiary, Spinner Technologies Inc., which will provide services and low-cost research space to start-up companies in return for equity in the new companies.
To obtain ordering and price information for copies of the "AUTM Licensing Survey, FY 2000" summary and full report, write to AUTM Headquarters, 60 Revere Drive, Suite 500, Northbrook, Ill., 60062, or visit the association's Web site, at http://www.autm.net