Earlier this year, 15 top U.S. universities joined forces to launch a one-stop shop where corporations and startups can discover and license patents.
Working in concert, Brown, Caltech, Columbia, Cornell, Harvard, the University of Illinois, Michigan, Northwestern, Penn, Princeton, SUNY Binghamton, UC Berkeley, UCLA, the University of Southern California and Yale formed The University Technology Licensing Program LLC (UTLP) to create a centralized pool of licensable IP.
The UTLP arrives as more higher education institutions are beefing up their investment in the entrepreneurial pipeline to help more students launch startups after graduation. In some instances, schools serve as accelerators, providing students with resources and helping them connect with VCs to find seed funding.
To get a better look at the new program and more insight into the university-to-startup pipeline, we spoke to:
- Jennifer Dyer, executive director, USC Stevens Center for Innovation
- Orin Herskowitz, senior vice president of Intellectual Property and Tech Transfer, Columbia University
- Marc De Leeuw, partner, Sullivan & Cromwell LLP
The UTLP initiative seems to be more focused on licensing IP to existing companies, rather than accelerating university startups.
Orin Herskowitz: The UTLP effort is really much more about licensing to the somewhat broken interface between universities and very large companies in the tech space when it comes to licensing intellectual property. But I know USC and Columbia and many of our peers, especially over the last three to seven years, have pivoted in a massive way to helping our faculty students fulfill their entrepreneurial dreams and launch startups around this exciting university technology.
The word “broken” jumped out at me. Historically, what has the problem been?
Orin Herskowitz: Universities have traditionally been a source of amazing, life-saving and life-improving inventions, for decades. There’s been a ton of new drugs and medical devices, cybersecurity improvements, and search engines, like Google, that have come out of universities over the years, that were federally funded and developed in the labs, and then licensed to either a startup or the industry. And that’s been great. At least over the last couple of decades, that interface has worked really, really well in some fields, but less well in others. So, in the life sciences, in energy, in advanced materials, in those industries, a lot of the time, these innovations that end up having a huge impact on society are based really on one or two or three core eureka moments. There’s like one or two patents that underlie an enormous new cancer drug, for instance.
In the tech space though, it’s a very different dynamic because, a lot of the time, these inventions are incredibly important and they do launch a whole new generation of products and services, but the problem is that a new device, like an iPhone, or a piece of software, might rely on dozens or even hundreds of innovations from across many different universities, as opposed to just one or two.
Obviously not every breakthrough necessitates the launch of a startup. I assume that the vast majority of these things that are coming would make the most sense to work with existing companies.
Jennifer Dyer: We’ve all had this renewed focus on innovation within the university and really helping our students and faculty that want to start companies, launch those companies. If you look at the space, helping educate our students that launching a company in a high-tech space may mean that they have to go out and acquire 100 different licenses, so maybe it doesn’t make sense. We’re going to be doing nonexclusive licensing, and it doesn’t preclude anyone from moving forward with this technology. This is probably the first pool for nonstandard essential patents in the high-tech space, which makes it somewhat unique. Because if you look back, most of the pools have been around standard essential patents.
The question of exclusivity is an interesting one. You wouldn’t grant exclusive rights for the right fee?
Jennifer Dyer: Well, that is our intent. We really want this to be an open marketplace. It’s also an industry where it’s very rare that they even want an exclusive, to be honest with you. Our intent is to make them very broadly available to anybody who’s interested. I don’t know, we haven’t really discussed, if Google came along and said, “We want patent exclusively and we’re going to pay you a lot of money,” and if it’s even still available exclusively at that point in time, would we be willing to do it? I don’t know. That’s not why this was formed, but I don’t know that we’ve precluded it. I would be surprised, personally, if it were to happen though.
How does the organization determine price for a patent?
Marc De Leeuw: The effort is really going to be market-driven. We have some experience with licensing and seeing what companies will pay for individual and multiple patents. Orin mentioned pools. We’ve obviously seen a lot of pools in operation. But we’ve spent a lot of time with our expert assistants, looking through these patents, getting a sense, and when we then, ultimately, go to market, we’re going to have some views about how valuable the portfolios that we would offer [would be].
And startups get a fixed discount?
Marc De Leeuw: We don’t have a fixed price yet for any of the portfolios; we think it’s really going to be market-driven. We definitely want to be giving startup companies, companies that either don’t have revenue or have relatively small revenues, a better arrangement.
How much has the relationship between universities and the startup world changed in the past five to 10 years? How much more aggressively are universities playing a role in helping serve almost as an incubator or accelerator for small companies?
Orin Herskowitz: I run the Tech Transfer Office at Columbia — fundamentally, that’s what my job is. But, 20 years ago, that meant I would have spent 100% of my time, with my team, reviewing faculty and student invention reports, filing patents, and then trying to license those patents to companies. I would guess that I spent 80% of my time working on trying to create a culture and a community of commercialization and entrepreneurship at Columbia and in New York City and New York state, at this point,
Jennifer Dyer: I think the universities have realized that their Tech Transfer Offices, which are more and more becoming centers for innovation and not just technology commercialization, are important, they’re helping the university forge these relationships on many different levels with industry. I think that’s a very important role that we’re playing. We all have programs. We all are also, in some ways, the epicenter of the effort at our universities. But if I look at USC, every one of our major schools has its own entrepreneurship and education program for its students and their own programs that they run. Our School of Business, for example, has a venture fund, and it’s students that actually manage that venture fund. They are training students to be VCs.
Orin Herskowitz: The collaborative spirit you’re seeing in UTLP — I think people from outside the university world often think of us as being a competitor. While we are competitors for things like U.S. News and World Report rankings, and attracting and retaining the best faculty and things like that, we are incredibly collaborative around trying to get our innovations out of the lab and into the market.
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