In Almanac April 2, 1996, the reengineering of the University's Center for Technology Transfer was outlined. Below is a progress report on the Center's efforts to help achieve the goals and objectives of Penn's Agenda for Excellence and its administrative restructuring plan.

The New World of Technology Transfer

Prudence and diligence are required in structuring and managing academicindustry relationships. Academe is interested in the creation of knowledge for knowledge's sake, freedom to publish and collaborate, and open and honest discourse of ideas. Industry is interested in productdriven R&D, knowledge for profit, confidentiality, and limited discourse. Both academe and industry are interested in development and utilization of knowledge as the basis of new products and services for the public good.

The Center for Technology Transfer (CTT) is charged with managing the University's intellectual property assets. CTT's recent reengineering, recruitment of a new team of professionals, commitment to provide quality research support services to faculty, and new strategy have resulted in a dramatic increase in technology development and commercialization activities. Faculty have responded positively to the new strategy of turning research results into research dollars in the shortterm and generating income from fees, patent reimbursements, equity, and royalties in the longterm. Yeartodate, invention disclosures are up 29%, licenses/options are up 175%, industry-sponsored research agreements are up 70% in number and 3% in funding, and material transfer agreements are up 100%.

CTT strives to preserve Penn's traditional academic values, serve a faculty increasingly interested in industry collaborations, commercialize technology, and recognize the needs of industry partners investing in our embryonic discoveries.

The technology transfer world is changing dramatically. Large companies continue to merge and realign to better exploit their marketing and distribution assets. Aside from preestablished research relationships, large companies are increasingly not interested in embryonic technology licensing opportunities from universities. However, CTT will continue to offer fundamental discoveries to large companies to attract their research sponsorship and to seek their interest in strategic alliances.

Targeting the 'Start-Up' Phase

Increasingly CTT is likely to license technology to entrepreneurial, developmentstage companies. In many cases, these start up ventures will be "virtual" organizations focusing on technology development and supporting research at Penn. Anticipating this situation, CTT has recently hired a Licensing Director with responsibility for StartUp Business Development, Vincent di Felice.

Licensing embryonic technologies to entrepreneurial ventures requires the support and active participation of the faculty. Licensing to these startups, in which faculty play a founding role, presents complex challenges related to conflict of interest and commitment. Penn has in place wellconceived and established policies, guidelines, and practices to effectively manage conflicts of interest and related academic freedom and collegiality issues.

More problematic, however, in such situations is the academic tradition of freely sharing materials and information. The concern seems to be that if materials are received from Penn researchers who are involved with entrepreneurial ventures in which they can have a founding role, then any inventions that result from the use of shared materials will belong to "the investigators' company." Penn intellectual property technology commercialization licenses reserve for Penn and its researchers the right to use licensed technology for educational and research purposes. Licenses do not obligate Penn to offer future Penn discoveries or improvements, other than those made as part of a company-sponsored research agreement, to a licensee. Further, Penn has no obligation to a licensee for inventions made by its faculty or by researchers at collaborating institutions using materials related to the license unless the new invention could not have been made without the direct use of such materials provided by Penn.

In the life sciences, this means that any biological material that is used to simply demonstrate a concept or provide a vehicle to demonstrate a concept does not result in an obligation to the licensee or research sponsor. In this case, the researcher receiving the material is free to independently commercialize resulting inventions.

In the case where a shared biological material (e.g., antibody, clone, cell line, plasmid, peptide, vector) becomes an integral part of a discovery or an element necessary in achieving an invention, Penn is obligated to license the discovery to the material provider or research sponsor. Though this limits the academic freedom of the researcher, this situation is no different from what they are experiencing when they request and use biological materials from companies or other institutions who have licensed that material to a third party.

In Case of Conflict

Increasing professional jealousy and competition among researchers has led to a heightened degree of secrecy by researchers seeking to maintain their competitive position with respect to publications, grants, contracts, tenure, and scientific recognition. In addition, in situations in which universities and researchers have stock in a company where research results can affect stock price/value some researchers may be unwilling to be collegial have their ideas and materials contribute to someone else's financial gain.

Penn's Patent Policy permits faculty with equity in startup ventures to conduct sponsored research supported by the venture. Obviously, faculty must disclose such relationships to the Conflict of Interest Standing Committee (COISC). The COISC reviews such matters and makes recommendations to the Vice Provost for Research on how real and perceived conflicts (time commitment, financial interest, scientific integrity, and educational mission) can be managed. Penn's Patent Policy prohibits faculty from having a fiduciary role in startup ventures based on Penn-licensed technology or from being an officer or member of the Board of Directors if the company is sponsoring research at Penn in the investigator's laboratory. Faculty, however, may be members of Scientific Advisory Boards.

A common misunderstanding or misconception is that because a startup company is founded around a faculty member's technology, that company is "Dr. X's company." In fact, Penn policy prohibits Penn researchers from having a management position with fiduciary or decision making responsibility in a licensee in which the researcher has stock and receives sponsored research.

In summary, commercializing University discoveries through both established and developmentstage organizations promotes the tripart research/teaching/service mission of the University. Commercialization requires the support of faculty investigators. Industry collaborations promote academic productivity. Penn has fair and reasonable policies, guidelines, and practices to manage industry university technology commercialization relationships and the real and perceived conflicts of interest such relationships create.

-- Louis P. Berneman, Managing Director, Center for Technology Transfer


Volume 43 Number 21
February 11, 1997

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