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OCR for page 108
5
Technology Transfer
INTRODUCTION
The goal of technology transfer has always been implicit in
U.S. science policy: Federally funded research should benefit the
public, and such benefit includes the development and transfer of
technologies from public laboratories to the private sector.
Yet what in theory appears to be a simple process of transTat-
ing basic research discoveries into social benefits and commercial
applications is in reality a complex set of interactions involving
many types of people and institutions. Technology transfer in-
volves the flow of information between basic and applied research
and the subsequent transfer of products of research to dispensers
and ultimate users. This chapter examines several of the mech-
anisms that facilitate the exchange of information in technology
transfer and recent developments in relationships among univer-
sities, industries, and government. It also looks at how patent
policies are changing patterns of technology transfer in agricul-
ture.
The Economic Dimension
Technology transfer is propelled by the potential benefits de-
rived from using and adapting a research discovery. Economic
108
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TECHNOLOGY TRANSFER
109
incentives spur people to improve and transfer technology. In-
dustry will not develop and market nor will farmers adopt new
technologies without clear, perceived payoffs. However, improved
technologies are often blamer! for the current huge agricultural
surpluses. Quite the contrary, the causes of surplus agricultural
commodities lie elsewhere.
When adopting new technologies can increase sales and prof-
its by reducing costs, farmers will choose them to improve their
competitive position. In the new global marketplace for agricul-
tural trade, American farmers are competing with other producers
throughout the world. Technological improvements and efficiency
are critical components in this competition. It is clearly in the
public's interest to ensure that the U.S. agricultural research sys-
tem, including the many interconnections that promote technology
transfer in agriculture, are in place and fully operational. National
policies must facilitate the use of new technologies in agriculture.
The seed industry is an example of the interrelation of fund-
ing research, institutional roles, technology transfer, and produc-
tivity. Historically, breeding improvements in openly pollinated
grain crops, as opposed to hybrids, were developed by public
institutions. Breeding programs to locate and incorporate pest re-
sistance and other yield-enhancing traits are a long-term research
investment. New traits from the publicly supported breeding pro-
grams were made openly available to commercial breeders for seed
production. Recently, public funding for this basic breeding work
has been reduced and private companies have become active. Yet
are U.S. farmers prepared to pay the long-term costs of breeding
work in the price of seed? The changing patterns in technol-
ogy development and transfer could lead to loss of productivity
growth in varietal performance, higher food costs, and Toss of
competitiveness in world trade. This then brings us to the issue
of public/private cooperative development and the transfer and
adoption of new technology.
UNIVERSITY, INDUSTRY, AND
GOVERNMENT INTERACTIONS
Challenges to U.S. technological superiority have appeared
across a range of industries. In part, this situation results not
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110
AGRICULTURAL BIOTECHNOLOGY
from a lack of technological expertise but from inadequate tech-
nology transfer and product and process development based on
results of fundamental research. Transferring technology between
academic and industry scientists in the biological sciences used to
occur informally and by chance as scientists conversed at meet-
ings. However, recent breakthroughs in molecular biology and
biotechnology and their potential commercial implications have
led to more formal and aggressive efforts. Technology transfer is
important in the interests of industrial competition. The shift has
been toward the promotion of collaborative research relationships
between publicly supported scientists in universities and federal
laboratories and those in the private sector. Laws such as the
Stevenson-Wydler Technology Innovation Act of 1980 (P.~. 96-
480), the Small Business Innovation Development Act of 1982
(P.~. 97-219), the Federal Technology Transfer Act of 1986 (P.~.
9~502), and recent proposals to liberalize patent policies have
strengthened the emphasis on technology transfer in the nation's
· ~
science agencies.
The Stevenson-Wydler Technology Innovation Act of 1980
designated the U.S. Department of Commerce as a lead agency
for federal technology transfer, with additional support coming
from the National Science Foundation (NSF) and the federal lab-
oratories. Efforts were to be coordinated by a number of offices
and centers for industrial technology, research, and applications.
These were designed to promote the use of results of federally
funded R&D by the private sector as well as state and local gov-
ernments. The Federal Technology Transfer Act of 1986 amended
the Stevenson-WydIer Act by authorizing government-operated
laboratories to enter into cooperative research agreements and
by providing incentives for comrnerciaTizing federal patents. The
Small Business Innovation Development Act strengthened the role
of small, innovative firms in federally funded R&D by requiring
federal agencies with R&D budgets of $100 million or more to set
aside a percentage of their funds to support R&D done by small
businesses.
Universities as well as state and federal agencies are expand-
ing their relationships with the private sector as they explore
ways to increase scientific communication and the flow of tech-
nology. Breakthroughs in biotechnology have greatly shortened
the time between basic discoveries and product development. Op
OCR for page 111
TECHNOLOGY TRANSFER
111
portunities to establish links between basic and applied research
programs, and financier] incentives including consultancies, patent
agreements, and grants and contracts from industry are having a
positive effect on technology transfer. The following section de-
scribes some of these relationships between university and govern-
ment research and industrial development in agricultural biotech-
nology.
Research Relationships in Technology Transfer
With the growth of biotechnology programs in the early 1980s,
universities and industry competed for scientists with skills in
biotechnology research. This competition has led, in part, to new
relationships between university scientists and industry. These
relationships try to address the needs of both groups, and they
survive as long as both benefit. Although most of the university-
industry-government links have counterparts in engineering and
related scientific disciplines, biologists are relatively new to such
collaborative arrangements.
Five general types of alliances are evolving: (1) programs
that are part of general university efforts, which normally include
graduate student training and publication of scientific findings;
(2) projects that have a defined application, which may include a
proprietary interest in achieving certain results; (3) programs that
are directed to commercializing faculty research; (4) programs that
operate outside the university to aid clients; and (5) free-standing
institutes linked to several universities (Government-University-
Industry Research Roundtable, 1986~.
These diverse approaches reflect the fact that universities en-
compass a diverse set of roles and interests. Thus, universities
are evolving and testing a variety of structures for their alliances
with industry. What works for one alliance may not suit another.
Clearly, there is a need for a range of approaches.
Similarly, universities and companies must address problems
of conflicts of interest and ownership of intellectual property in
the context of their relationship. Solutions wit! depend on their
individual situations and needs. It is up to each side to protect its
own interests.
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112
AGRICULTURAL BIOTECHNOLOGY
Most of the mechanisms used to develop mutually beneficial
alliances among universities, industries, and government include
one or more of the following.
CONSULTANCIES
University faculty have traditionally consulted with industry
on an individual basis, contributing expertise in science or to solv-
ing a particular problem. This exchange of information between
academic scientists focusing on basic research and industrial sci-
entists concerned with product development is a major means of
technology transfer. Consultancies are increasingly common, par-
ticularly in biotechnology, as start-up companies and established
chemical and drug houses mount research programs in this area.
In fact, it is difficult to find a prominent university molecular
biologist who does not consult to the biotechnology industry.
There are legal concerns when consultancies are extended to
federal employees. For example, is it proper for an individual on
the federal payroll to serve one person, group, or company to the
exclusion of others? Guidelines on federal employee consultancies
should consider three concerns: conflict of interest, favoritism, and
mutual benefit.
These guidelines govern the current policy of the Agricultural
Research Service (ARS) on consultancies between its scientists
and the private sector. However, the number and scope of current
arrangements are limited. On the other hand, the National Bureau
of Standards (NBS) has long played a primary role as a consultant
to and collaborator with industry. Scientists at the NBS may
consult to industry as representatives of NBS if the subject matter
fails within the bureau's mission. If the expertise required is
not related to their jobs, these scientists may consult as private
individuals. Recently, the National Institutes of Health (NIH) also
instituted flexible policies on consultancies between their scientists
and industry. NTH scientists may use their general knowledge
and expertise to consult for particular individuals, companies,
and institutions. Ongoing NTH research results, however, may
only be disseminated through nonexclusive channels such as open
lectures and conferences. The open policies of NIH and NBS have
encouraged the transfer of technology from government-funded
OCR for page 113
TECHNOLOGY TRANSFER
113
basic research into practical applications that benefit society as
well as their industrial developers.
Consultancies assist scientific advancement beyond the re-
munerative benefits to individuals, corporations, and government
organizations. Consultancies can foster technology transfer, and
when they lead to more formal university-industry-government
agreements or consortia, they usually provide funding and training
opportunities for students and benefit research through interdisci-
plinary research collaborations.
EDUCATION AND TRAINING
Education and training arrangements exist on several levels.
Companies give "student gifts" that pay stipends for undergrad-
uate, graduate, or postdoctoral positions, sometimes to be used
by a university department at its discretion, sometimes earmarked
for an individual professor, or sometimes for training in an area
important to the company. Another type of arrangement is the
"industrial affiliate." Companies send their scientists to universi-
ties as affiliates, to learn about departmental programs, to meet
with faculty and students, to perhaps have access to findings prior
to publication, and to possibly identify promising students as fu-
ture employees. Affiliate programs benefit universities by fostering
consulting arrangements and research contracts and by teaching
universities about the needs, especially student training needs, of
industrial research laboratories. In some cases they also provide
significant funding for stipends and the enhancement or expansion
of graduate programs.
GRANTS AND CONTRACTS
Grants and contracts between universities and industry range
from general grants for basic research to specific contracts for de-
fined projects. The sizes of such grants and contracts vary, ranging
from a few thousand dollars to much larger sums as part of long-
term industry-university arrangements. The smaller contracts
and grants to State Agricultural Experiment Stations (SAESs),
however, can be reasonably significant amounts (see Table 3.5~.
For example, support to the California, Texas, and Florida SAESs
from industry grants and contracts in 1984 totaled $9.0 million,
$6.6 million, and $4.7 million, respectively.
OCR for page 114
114
AGRICULTURAL BIOTECHNOLOGY
A number of large biotechnology grants have recently been
awarded by industries to university research institutes or labora-
tories. Examples include the Hoechst Department of Molecular
Biology at Massachusetts General Hospital, initiated with a $70
million, midyear award, the Dupont-supported Department of Ge-
netics at Harvard Medical School, and Monsanto's $23.5 million,
5-year grant to the Department of Medicine at Washington Uni-
versity. Such large grants promote multidisciplinary work within
departments, a necessary component of biotechnology research.
These arrangements involve more than a simple transfer of funds:
The company and the university must define their roles in the R&D
efforts. This is necessary in order to maintain the integrity of both
academic and industrial values. The former public knowledge,
publication, and peer evaluation- can conflict with the latter-
proprietary knowledge and products. Linkage institutions (dis-
cussed in this chapter) can mediate these potential conflicts and
establish some degree of compatibility between university and in-
dustrial systems. Both partners can gain an appreciation of their
respective values, capabilities, and constraints (Omenn, 1982a).
CONSORTIA AND RESEARCH PARKS
Consortia combine the strengths of several companies with a
university, or alternatively, unite the strengths of several universi-
ties. Consortia serve as centers of excellence, technology transfer,
and training. Industrial research parks, another innovation, can
breed small companies linked to a university. Several state and
local government groups are involved in creating incubator centers
that include expensive facilities and equipment as shared services
to attract biotechnology companies to their area.
TECHNICAL DEVELOPMENT OFFICES
Universities and state and federal government agencies seeking
to promote the development and licensing of patentable inventions
have created programs to encourage technical development. These
programs range from staff to assist scientists filing for patents
to entrepreneurial efforts that control licenses and commercialize
patented inventions. (University and government patenting activ-
ity is discussed in more detail later in this chapter.) Relatively few
resources have been allocated to technology transfer by federal
OCR for page 115
TECHNOLOGY TRANSFER
115
laboratories. The Federal Technology Transfer Act of 1986 should
stimulate efforts in this regard.
ENTREPRENEURIAL COMPANIES
A significant number of scientists leave university or govern-
ment posts to work for companies or to start their own com-
panies. A recent survey revealed that one-third of the founders
of responding biotechnology firms previously had been associated
with universities (Magrath, 1985~. Examples include Agracetus,
BioTechnica, Caigene, Damon Biotech, Integrated Genetics, and
Molecular Genetics. Some faculty work part-time in industry or
have equity ownership.
Alliances Related to Agriculture
Of the many alliances established among universities and cor-
porations, and in some instances government agencies, several
focus on agriculturally related research. The following examples
illustrate the diversity of approaches and the levels of funding
involved in these alliances.
CORNELL UNIVERSITY BIOTECHNOLOGY PROGRAM
The Cornell program began in 1982 with funds from New York
State and a Year commitment from three companies: Union Car-
bide, Eastman Kodak, and General Foods. In 1986, the program
wan designated a Center of Excellence in Biotechnology by the
Army Research Office under the University Research Initiative
Program. This status provided additional financial support. An-
nual support through the program amounted to 10-15 percent of
the total investment in biotechnology research at Cornell, which
was approximately $20 million in 1985.
Cornell faculty compete for funding from the consortia by
submitting research proposals to the biotechnology program. Six
representatives of the university and three from the participat-
ing companies review the proposals, and award grants of about
$50,000 per year. In addition, the program hosts resident indus-
trial scientists at Cornell and sponsors symposia and workshops,
bringing together university researchers, corporate vice presidents,
r
OCR for page 116
116
AGRICULTURAL BIOTECHNOLOGY
and scientists from the sponsoring companies. Central support fa-
cilities, such as for DNA synthesis, protein sequencing, and so
forth, are also operated by the program.
The key feature of the Cornell biotechnology program is its
emphasis on interdisciplinary research. Such research suits the
program's broad agenda: exploration of the molecular aspects
of cell biology and genetics as they apply to agricultural prob-
lems. Topics range from basic research on gene regulation and
manipulation to applied problems such as scaling up cell culture
systems for industrial production. The progra~n's ultimate goals
are to increase agricultural productivity within the next 5-10 years
through improved livestock species, animal vaccines, and plants
resistant to pathogens and environmental stresses, and to use cell
products for special chemicals, toxic waste control, and as sources
of protein.
Another important aspect of the program is an economic de-
velopment committee, which studies product marketing. Cornell
owns all patents on inventions coming out of the biotechnology
program. Participating companies are not guaranteed exclusive
licenses, but once they have acquired a license, they do not pay
royalties to the university. The rationale for this, as well as for
the companies' use of unpatentable information, is that Cornell
receives its share from the companies' initial support.
PITTSBURGH PLATE GLASS/SCRIPPS CLINIC
Pittsburgh Plate Glass (PPG), which has been in the agri-
chemicals business since the early 1940s, entered into a joint ven-
ture in 1985 with the Department of Molecular Biology of the
Research Institute at Scripps Clinic in LJa JolIa, CA. The 15-year
agreement provides $2 million a year for basic biotechnology re-
search in plant science, with annual increases for a total of $50
million. PPG has put up an additional $10 million for a new
building, which belongs to Scripps and houses more than 100 re-
searchers. These researchers will all be employees of Scripps; their
salaries and basic research budgets will be provided by federal
research grants, for which they compete. PPG's money, which
amounts to 10 percent of the department's $20 million operating
budget, will be used to buy new research equipment. In return,
PPG is assigned rights for developing anything patented by Scripps
OCR for page 117
TECHNOLOGY TRANSFER
117
involving agrichemicals, plant species, or microbial strains. PPG
both pays for and decides what to patent. The PPG/Scripps ar-
rangement parallels one established in 1982 between Johnson &
Johnson and the Scripps Department of Molecular Biology for
health-related research.
MICHIGAN BIOTECHNOLOGY INSTITUTE
The Michigan Biotechnology Institute (MBl) is a nonprofit
corporation dedicated to the commercialization of biotechnology
and the development of renewable resource-based business op-
portunities in the Midwest. The institute emphasizes industrial
applications of biological sciences, focusing on research and devel-
opment of new products and processes, technology transfer, and
collaboration among industrial, university, and national laborato-
ries. Specific areas of interest include industrial enzyme technol-
ogy, biomaterials and fermentation technology, and waste treat-
ment biotechnology.
MB! was created in 1983 and initial funding was provided by
the state $6 million through 1987. As of August 1986, MB] had
raised an additional $33 million from private sources and state
loans. The institute employs 50 business and scientific personnel.
The MBI business division handles commercial market anal
ysis, func! raising, patents, contracts for R&D with industry and
government, and the coordination of public relations and edu-
cational programs. The research division consists of a scientific
staff, primarily biologists and engineers, who may hold joint ap-
pointments with Michigan State University or other universities.
There are also adjunct scientists full-time university professors
who work for MB! as consultants or as professors for the train-
ing programs, and project interns and trainees, who are graduate
students and postdoctoral fellows.
MBT's goal is to facilitate interaction between universities and
industry that will lead to economic development. By positioning
itself as a nonprofit corporation between academia and commer-
cial companies, MB] links these two groups. It supports single-
discipline, problem-focused research done in universities, thereby
helping to generate patentable ideas. It then directs this knowI-
edge, through a multidisciplinary approach with an emphasis on
OCR for page 118
118
AGRICULTURAL BIOTECHNOLOGY
R&D and economic analysis, into proprietary processing and prod-
uct application for industry. Industry performs the final task in
the discovery-application~ommercialization scheme by market-
ing products and processes.
NORTH CAROLINA BIOTECHNOLOGY CENTER
This private nonprofit corporation was established in 1981 as
the nation's first state-sponsored initiative in biotechnology. It is
largely funded by the state of North Carolina, which for the 1985-
1987 biennium appropriated $14.2 million to the center. The
center promotes statewide R&D in biotechnology by initiating,
sponsoring, and funding research, university-industry colIabora-
tion, commercial ventures, meetings, and program activities. The
center, located in North Carolina's Research Triangle Park, is not
itself a site for research.
The center encourages research and activities that are multi-
disciplinary and multi-institutional, that lead to university-inclus-
try collaboration and technology transfer, and that will result in
useful products. The center catalyzes interactions among par-
ties involved in biotechnology development, fosters development
of biotechnology industries within the state, funds research fac-
ulty recruitment and facilities development at the universities,
and provides public education about biotechnology. Current pro-
grarns include the Monoclonal Lymphocyte Technology Center,
the Biomolecular Engineering and Materials Application Center,
the Bioelectronics Advisory Committee, the Bioprocess Engineer-
ing Feasibility Study Committee, Visiting Industrial Scientists and
Engineers at North Carolina Universities, the Marine Biotechnol-
ogy Advisory Committee, the Program in Public Information and
Education on Biotechnology, and the Triangle Universities Con-
sortium for Research and Education in Plant Molecular Biology.
In FY85-86, the Competitive Grants Program awarded $833,000
to 44 projects, and the Industrial and University Development
Grants Program awarded $3.8 million for various biotechnology
activities, research, and development statewide.
OCR for page 134
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Representative terms from entire chapter:
public sector
134
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AGRICULTURAL BIOTECHNOLOGY
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TECHNOLOGY TRANSFER
TABLE 5-4 USDA Patent License Activities
135
39
77119
6869
o
101158
24
53 55
185
30
3
45
293
21
186140
89
Activity
Patents issued
Public inquires
Nonexclusive licenses awarded
Exclusive licenses awarded
Annual reports received
(nonexclusive licenses)
Patents transferred to Dept. of Commerce
for exclusive negotiations
1979 1980 1981
19821983 1984 1985
45 46
241 407
40 26
6 14
162
22
39
666
16
17
62
17
a Combined USDA-Agr~cultural Research Service activity.
SOURCE: Coordinator, National Patent Program, USDA, 1985.
Patents and Universities
The following paragraphs describe how two universities dealt
with patenting by establishing their own formal programs. Vari-
ations on the first approach have been used at other universities,
for example, the Purdue University Research Foundation, the Iowa
State University Research Foundation, and the Research Corpo-
ration, which handles patenting and licensing for a number of
· ·
unlversl Ales.
WISCONSIN ALUMNI RESEARCH FOUNDATION
In 1925, nine alumni of the University of Wisconsin formed
the Wisconsin Alumni Research Foundation (WARF). WARF was
and is free of university control. It exists solely to support research
and promote the discoveries of university faculty and students by
underwriting the patenting and licensing process for these inven-
tors.
The university itself holds no patents. Faculty members can
choose between negotiating patents and licenses with commercial
contributors themselves or giving that responsibility to WARF.
Most choose the latter. After more than 50 years with this ar-
rangement, the university Han yet to report a conflict of interest.
Faculty inventors receive 15 percent of the royalties after costs
on patents licensed by WARF; the remainder goes to the Uni-
versity of Wisconsin graduate school to support research projects.
Although the university will not involve itself directly in patent-
ing, it will withhold publishing research results for up to 90 days
136
AGRICULTURAL BIOTECHNOLOGY
to facilitate filing a patent application. However, the university
does not permit an indefinite delay of publication and insists on
the freedom to communicate results a tenable position, for only
individual faculty members or WARF, not the university, can hold
patents.
Two major patents- in terms of income from royalties- have
emerged from the WARF program: a process for irradiating milk
in order to activate vitamin D ($8 million net) and the discov-
ery that led to the commercialization of coumarin (warfarin), an
anticoagulant and rodenticide ($4 million net). In all, 42 income-
producing inventions were assigned to WARF between 1925 and
1975, of which 12 earned more than $100,000 in net royalties. Since
1928, WARF has distributed $100 million earned from royalties
and investments to the University of Wisconsin (Omenn, 1982b).
1
COLUMBIA UNIVERSITY SCIENCE AND
TECHNOLOGY DEVELOPMENT OFFICE
As late as 1981, Columbia University had no policy on patent-
ing. As a result, many technologies developed at the univer-
sity were never exploited. The faculty was in general not en-
trepreneurial, and those who did negotiate deals with private
industry tended to do so independently. This situation created
a subculture of individual arrangements at Columbia that often
put restrictions on research but offered little or no protection of
intellectual property.
To combat these problems the university opened the Science
and Technology Development Office in 1982. Its goals are to
obtain patents on university inventions, license those inventions,
and create a structure for interaction with the private sector that
will feed money back into the university.
The Science and Technology Development Office has a pol-
icy committee that handles conflict of interest questions and an
administrative committee that examines research proposals from
a business standpoint. All proposals are initiated by Columbia
researchers, and the funding company usually has rights to an
exclusive license if a commercial product should result. There
can be no delays imposed on publication the company has 30-60
days to review early drafts. However, Columbia reserves the right
to patent anything, regardless of the funder's recommendations.
TECHNOLOGY TRANSFER
137
This policy relieves the university from pressure to withhold in-
formation (at seminars, for example); however, such a policy also
means the university may rush the patent process and obtain a
patent that may ultimately be indefensible.
The Science and Technology Development Office has a yearly
budget of $540,000. Of this amount, $123,000 goes to legal fees
for filing patents. Companies that receive licenses on patents
must also grant the university the right to approve sublicensing to
other companies. The office is not directly interested in product
development, however.
As of March 1985, the Science and Technology Develop-
ment Office had generated $2 million through investments, not
royalties-which is channeled back into the university to support
research. Although this amount is relatively small, it is the portion
of Columbia's interactions with the private sector that is unbur-
dened by restrictions attached to other kinds of private grants and
gifts. Ideally, the office would have control of all private grants to
the university.
Revenues from Licenses
Reliable data are not available on the license value of patents.
However, it is generally accepted that the average royalty earnings
of patents is low. A sample of patents awarded to 33 technology-
oriented firms showed that 20 percent of the licenses earned less
than $1,000 per year, 40 percent less than $5,000, 60 percent less
than $10,000, and 95 percent less than $100,000 (Roberts, 1982~.
The situation is similar in the public sector. For the 154 NTIS
licenses in eject at the end of 1984, the average annual revenue
was $5,636. As Table 5-3 shows, government revenues from the
NTIS program are expected to grow from $868,000 in FY84 to
$4 million in FY90. (This estimate may prove low, given the
Federal Technology Transfer Act of 1986.) Revenues from licenses
are returned to the U.S. Treasury, with a percentage going to
the inventor. Recently, $40,000 was distributed to 100 inventors.
Maximum payments were $8,000.
However, two biotechnology patents held by Stanford Univer-
sity and the University of California have already generated rev-
enues in excess of $5 million for these institutions. The patents,
issued in 1980, cover a process for making "biologically functional
138
A GRI C UL TURA L BI O TECHNOL O G Y
molecular chimaeras" (recombinant DNA) and products derived
by this process. Currently 81 companies each pay $10,000 annu-
ally to license both the process arid product patents. The uni-
versities also earn royalties ranging from 0.5 to 10.0 percent on
commercial product sales, depending on the type of product being
marketed. Patent revenues, divided equally among the inventors
(S. Cohen and H. Boyer), their departments, and the schools, are
used mainly for research and education at the universities. This
example, outstanding in terms of its financial success, indicates
the payoff potential of biotechnology patents.
Biotechnology Patenting Activity
Approximately 2 percent of recently granted U.S. patents
cover biotechnology inventions (Table 5-5; OMEC International,
1985~. Between 40 and 45 percent of these patents are granted
to foreign individuals or organizations, roughly the same per-
centage as with all patents. About 40 percent of biotechnology
patents are granted to U.S. corporations, and about 18 percent go
to U.S. universities, government, nonprofits, and individuals.
Table 5-6 shows the levels of patenting activity for the 11
U.S. universities that accounted for most biotechnology inventions.
Although biotechnology patents account for about 2 percent of all
patents granted by the United States, for these universities they
vary from 14 percent for Iowa State University to 37 percent for
TABLE 5-5 U. S. Biotechnology Patent Activity (Patents Issued) a
Activity
All patents b
U.S. corporate biotechnology
U.S. university biotechnology
Other U.S. (government, nonprofits, and individuals)
Total U.S.-based
Foreign corporate biotechnology
Other foreign biotechnology
Total foreign
Total biotechnology
1983
400
68
94
562
383
73
456
1,018
1984
72, 149
441
95
127
663
371
80
451
1 114
,
aSOURCE: OMEC International, 1 985 . Biotechnology Patent Digest 4(1 0) :1 50-1 51, unless
otherwise indicated.
6SOURCE: U.S. Commissioner of Patents and Trademarks, 1985. Annual Report Fiscal Year
'84. U.S. Department of Commerce, Patent and Trademark Office. Washington, D.C.
TECHNOLOGY TRANSFER
TABLE 5-6 Number of Biotechnology Patents Granted
to Selected U.S. Universities
139
Patent Recipient
University of California
Massachusetts Institute of Technology
University of Wisconsin (WARF)C
Stanford University
Harvard University
Cornell University
Purdue University (Research Foundation)
University of Illinois
Iowa State University (Research Foundation)
Montana State University
Northwestern University
All other
Total
Biotechnology
Patents u
1983 1984
16
8
3
2
All Patentsh
1984
45
47
16
16
NA
124
14
NA
14
NA
NA
16
6
4
2
2
1 2
2
39
68 95
NOTE: NA = not available.
a OMEC International, 1985. Biotechnology Patent Digest 4( 10): 150- 15 1 .
blPO News 15(4):3, 1985.
Wisconsin Agricultural Research Foundation.
Cornell University Patent and Licensing Office, personal communication, 1985.
the University of Wisconsin (WARF). Thus, biotechnology patents
have become a significant part of patenting activity at universities.
Patenting activity in biotechnology by private firms is an
evolving field, still subject to considerable uncertainty. Publicly
held biotechnology firms frequently address patent issues in their
annual financial reports to stockholders and to the U.S. Securities
and Exchange Commission (Form 10-K). Although biotechnol-
ogy firms have different approaches to protecting their intellectual
property, statements in these reports indicate that these firms seek
patent protection only if they believe the patents will be valid and
enforceable. If this does not seem likely, they try to keep such
technology as trade secrets.
Nonpatented Intellectual Property
Basic research at universities spawns many innovations that
cannot be patented but are valuable intellectual property and
140
A GRI C UL TURA L BI O TECHNOL O G Y
important components of technology transfer. The most amor-
phous components can be termed "know-how" and "show-how,"
intellectual advances and new techniques for research generated
in university laboratories at the cutting edge of a scientific field.
Industry expects this contribution from universities, just as it ex-
pects universities to train researchers to fill industry's laboratories.
Much of industry's impetus to form university-industry partner-
ships, pay university faculty as consultants, and hire prominent
scientists into industrial laboratories comes from its desire to gain
access to "know-how" and "show-how" on new technology. These
university contributions must therefore be recognized under the
rubric of technology transfer.
Other forms of nonpatentable intellectual property are more
tangible and can be licensed or copyrighted. Computer software
developed by the public or private sector can be copyrighted. Im-
portant products of biotechnology research that can be licensed
include specialized cell lines derived from animals, plants, or mi-
crobes that are used for basic research or product development.
Conclusions
Patenting and licensing play a necessary, if limited, role in
advancing technology transfer from the public to the private sector.
Exclusive licensing of government-funded inventions to industry is
particularly important in areas such as biotechnology, because
their commercialization potential will attract the private sector
only if the reward for capital-intensive development is the sole
right to manufacture and sell the product.
In addition, there is evidence that publicly owned patents
serve as "technology building blocks." In a sample of food-related
patents held by the USDA and private parties, USDA patents
were cited proportionately more often in subsequent patent fi~-
ings. Thus, even though federally owned patents may not always
be directly commercialized, they may still contribute to future
innovation (Evenson and Wright, 1980~. The Federal Technology
Transfer Act of 1986 should stimulate patenting and licensing hv
federal laboratories.
v O ~
Limitations of patenting and licensing must not be forgotten,
however. Few inventions produce major commercial wins; hence,
TECHNOLOGY TRANSFER
141
licensing fees in both the public and private sectors produce mod-
est returns. Furthermore, the delay between the award of a license
and the actual practice of a patent can be as Tong as 10 years,
and even though companies pledge funds for development, there
is no guarantee of an eventual product. It is therefore more real-
istic to view the securing of patents and the assigning of licenses
by the public sector as one of several instruments of technology
transfer. Royalties from university or government patenting and
licensing cannot be considered significant sources of revenue for
reinvestment in basic research. However, public sector patenting
has value in spurring innovative research directed toward practical
ends, in promoting technology transfer from the public to private
sector, and in providing supplemental income to research institu-
tions. Currently, universities and government do not always fully
exploit their patents because of poor incentives due to policies on
distributing royalties. Industry's patent experience might offer the
public sector a better model.
Public policy issues pertinent to biotechnology patents center
around two main issues: uncertainty about the scope of protec-
tion provided by patents and the government's role in generating
research results. There have been charges that excessively broad
patents have been issued (Webber, 1984~. If this is true, firms may
be induced into socially undesirable patterns of R&D expenditure,
and prolonged litigation and delays in commercialization can be
expected.
Government and university research appear to lead to biotech-
nology patents in greater proportion to its investment than in other
areas of science and technology. This is consistent with the focus
on basic research by government and university laboratories and
the basic research requirements of biotechnology. Besides raising
the usual concerns over conflict of interest and freedom of research,
this concentration of patenting activity focuses attention on orga-
nized mechanisms for transfer of technology to promote research,
development, and their ultimate benefits for society.
142
AGRICULTURAL BIOTECHNOLOGY
REC OMMENDATIONS
Roles for Universities and Government Agencies
Universities and state and federal agencies are expanding both
the nature and number of their relationships with the private sec-
tor as they explore ways to increase scientific communication and
the flow of technology. The federal government, granting agen-
cies, and public and private universities should encourage interdis-
ciplinary research, partnerships, and new funding arrangements
among universities, government, and industry. The Federal Tech-
nology Transfer Act of 1986 provides new incentives to federal
scientists in this regard. Consultancies, affiliate programs, grants,
consortia, research parks, and other forms of partnership between
the public and private sectors that foster communication and tech-
nology transfer should be promoted. The USDA, SAESs, and CES
should emulate other agencies such as NIH and NBS in forming
innovative affiliations to increase technology transfer.
Cooperative Extension Service
The CES should focus some of its efforts on the transfer of
biotechnology research that will prove adaptable and profitable to
the agricultural community. It should train many of its special-
ists in biotechnology and increase its interactions with the private
sector to keep abreast of new biotechnology valuable to the agri-
cultural community. Furthermore, CES should work to anticipate
and alleviate social and economic impacts that may result from
the application of new biotechnologies. CES should also play a
key role in educating the public about biotechnology.
Patenting and I.icensing
Patenting and licensing play necessary roles in advancing tech-
nology transfer and assuring the commercialization of research re-
sults, especially in capital-intensive fields such as biotechnology.
Patenting and licensing by universities and government agencies
should be encouraged as one of several instruments used to transfer
technology. Universities and government agencies should provide
incentives to their scientists to encourage patenting. Public policy
should encourage state land-grant universities to confer exclusive
TECHNOLOGY TRANSFER
143
license on patents to private companies with the resources, market-
ing, and product interests required to translate these discoveries
into commercial products.
Regulation of Environmental Testing
The government's uncertainty over appropriate regulatory
steps has fueled public controversy over the assessment of pos-
sible environmental risks from genetically engineered agricultural
products. The FoocI and Drug Administration, USDA, and EPA
must formulate, publish, and implement a research and regulatory
program that is based on sound scientific principles. Initially, 5-10
selected, aIready-existing publicly owned field stations should be
available as an option for environmental release testing, profession-
ally managed by an oversight committee of public sector scientists
with expertise in agronomy, ecology, plant pathology, entomology,
microbiology, molecular biosciences, and public health. This in-
terim program should be designed to gain scientific information
and practical experience with field testing and to protect the pub-
lic safety. The current lack of adequate regulatory procedures is
halting progress in applying biotechnologies to agriculture.
SUMMARY
America has traditionally been at the forefront of world agri-
culture. Our capacity to develop and implement new technology,
as well as the bounty of our land and natural resources, are respon-
sible for this. In a modern, changing world these facets resources,
expertise, technology, and application remain of paramount im-
portance.
Biotechnology offers us exciting new avenues to increase agri-
cultural productivity. Its tools, combined with advances in the
science of agricultural systems, can lead to more nutritious food
produced more efficiently. We need this science and technology to
maintain our competitiveness and world leadership.
The strategies for national competitiveness involve many play-
ers. We must increase the emphasis on basic research in our
schools of agriculture and public and private universities. We
must improve the techniques and applications of science. We
must promote these goals by integrating research across disci-
plines and institutions and by assessing projects through peer and
144
A GRICULTUR-Al BIO TECHNOLOGY
merit review. We must train enough research personnel and exten-
sion agents to conduct research and applications of biotechnology
in agriculture. We must encourage technology transfer through
government-university-industry relationships and patenting ac-
tivities. And we must formulate workable guidelines and proce-
dures for environmental testing of biotechnology products. Our
federal and state governments, public and private universities, and
private sector institutions and industries all have important roles
to play in achieving these goals for agriculture.
