April 22, 2005

Patents stimulate debates throughout academia

There may be no shortage of great minds and ideas at the University, but there is often a lack of clarity regarding the problem of just who should receive the credit and financial reward for academic work. In the last decade, many changes regarding the management of intellectual properties in universities across the country have been made.

Dr. Joany Chou began working on a post-doctoral degree under Dr. Bernard Roizman at the University in 1983 when she was trying to find a vaccine for the herpes virus. She successfully completed the vaccine eight years later, and went to her supervisor to discuss patenting it. Roizman told Chou that her work was not patentable, but filed a patent application for the vaccine under his own name. The patent was issued a few years later and Roizman became the beneficiary of a healthy stream of royalty payments.

Worried that Chou would discover his deceit and expose his scheme, Roizman forced Chou to resign in 1996. Soon thereafter, Chou learned of the patent and took her former mentor to court. The Federal Circuit Court ruled that Roizman failed in his fiduciary duty to look after the interests of his researcher. This ruling marked a change in the student-professor relationship, giving student researchers greater leverage with which to defend themselves from unscrupulous supervisors.

Graduate students have not been the only ones to assert their intellectual property rights in the past decade. Columbia University faced the expiration of one of its most lucrative patents in autumn of 2000. The work of three Columbia professors, which established a new way of manufacturing biotechnology drugs, had garnered the university nearly $100 million annually in royalties from various biotech companies. As the patent neared expiration 17 years later, the university attempted to modify its original patent enough to qualify for more royalties until 2019.

Widely condemned in both the academic and biotechnology sectors, Columbia has been criticized for behaving in bad faith. Many worry that those universities that aggressively seek patents, usually for early-stage discoveries, have the potential to stifle academic inquiry and openness.

Columbia is not alone in its efforts to spearhead more competitive licensing practices. Patent activity has seen a significant increase at universities in the past decade. Researchers at Stanford University created a page-ranking system that Google adopted in 1996. In exchange, Stanford acquired equity in the company instead of establishing a licensing fee. Stanford's 1.8 million shares of Google are now worth more than $200 million, creating a nice padding for the school's endowment.

According to the Association of University Technology Managers' annual licensing survey, total patent-income for universities in the U.S. increased from $699 million in 1997 to $1.07 billion in 2001. Technology Review ranked the technological strength at American universities in January 2004. The University of Chicago placed 11th for the year with 55 patents, an increase from 1997 when it ranked 17th. Leading the rankings was the University of California system, which boasted 466 patents in 2004.

Alan Thomas, director of the office of technology and intellectual property at the University says that the U of C is realistic about its ability to rank with schools like the University of California. "The data from which the rankings are constructed show that it helps to have a large research base, to have been engaged in tech transfer for a long time, and to be located in a major technology cluster. By national standards, the University meets none of those criteria," Thomas said.

The West coast is well represented in the rankings; Stanford University and Caltech follow the University of California in the technological-strength hierarchy.

Until 1996, the University of Chicago's patents did not surpass $1 million, an insignificant figure in its budget of about $1 billion. Last year, gross revenues from patents reached $9.5 million. Thomas says the net profit of these patents represents a tiny fraction of the University's total budget after the revenues have been distributed.

"Profits per se are difficult to define for our unit, since we share our revenues: 25 percent of our gross is paid to inventors, 10 percent to their research effort, 5 percent to their departments, and 5 percent to their divisions. Between our staff and our heavy investment in patents, it costs around $3 million per year to run our office."

Thomas says that when it comes to licensing and innovation, money is not the University's bottom line. "Money is a way of keeping score but is not the fundamental driver for this activityÂ…Four million children every year benefit from an elementary mathematics curriculum developed at the University. Thousands of lives are being saved through our earlier detection of breast cancer using software for reading mammograms developed at the University."