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The Black Hole

We need to fix tech transfer at universities

Why should universities continue to own and profit from publicly funded work? If the public pays for it, why shouldn’t the public own it?


I’m stepping away this week from my ongoing series on how to improve federally-supported translational research programs to broach a sensitive topic that is long overdue for discussion. University tech transfer is broken, and its purpose and structure need to be re-thought.

Of course, my criticisms are not of ALL tech transfer offices at all universities. I have not dealt with many of them, and there is huge variability between institutions; however, I have interacted with quite a few, and I see a dysfunctional administrative pattern play out time and time again with regard to sponsored research agreements with industry and between academic institutions.

The problem is that universities receive public dollars to support academic pursuits, yet are under the impression that they own the research discoveries coming out of their academic labs. They are not wrong. In the United States the government has given ownership of public research to the parent institutions where that research takes place; the same is true of many Canadian universities. I can understand the economic driver of this: we incentivize universities to invest in public research programs by allowing them to profit from the products of this work. The problem is that instead of using public funds to complement existing infrastructure support, many academic institutions are cutting financial support of their own research programs and allowing public monies to support the work entirely: why pay out-of-pocket when someone else is willing to foot the bill? This social contract remains mostly intact so long as the research institution provides the infrastructure that allows their academic labs to operate, but that infrastructure is increasingly being subsidized by rising indirect rates. The “indirect” is akin to a tax on top of the dollar amount of the grant and is paid out to the university directly; it is built into the academic grant that the investigators themselves prepare, submit, and receive based on the promise of their research programs. Beside branding, it is less and less clear what added value the institution is providing here. As this trend continues I think it’s fair to ask: why should universities continue to own and profit from publicly funded work? In other words, if the public pays for it, why shouldn’t the public own it?

It gets worse. In the absence of university support for research programs, many academic labs are turning elsewhere for research funds. There is only so much public money to go around, and it is not nearly enough to support our current academic infrastructure. We are fortunate in Canada, the United States and much of Europe to have a strong private sector that can more than make up the gaps in funding. Like public grants, private funding aims to develop research programs benefiting their interests. Also like public grants, they target the intersection where private and investigator interests align. However, unlike governmental funding, the funds given by a private company to an academic researcher also come with an expectation of ownership. The trouble arises when the university is unwilling to fund the work but is also unwilling to cede ownership of the resulting invention. (As an aside, this is not unlike the longstanding debate on open access to scientific papers).

The tech transfer offices at academic institutions are the gatekeepers of these contracts, and the expectation from these offices is that the private company will pay for the work, the academic will do the work, and the university will own the work. It doesn’t make much sense when put in black and white, and makes just as little sense in real life. I’ve had this conversation countless times from both the receiving and contracting sides. Every time it took about a year and a half to resolve, and every time it had one of the same two outcomes: either the funding party ends up owning the intellectual property (IP) or the funding party walks away from the deal.

Now, I can understand universities not wanting to become contract research organizations (CROs) – although one can argue that is exactly what they are, as government grants are funded contracts to specifically develop a targeted scope of work – but it is not the same thing. The CRO business model is entirely dependent on private financing to perform specific scopes of work. The university theoretically exists to support its academic faculty and free them from being reliant on these relationships by providing them the resources to pursue open-ended research questions. Even then, academic institutions are very particular about which scientists they hire and the type of work they are willing to finance (which is why being granted tenure is such a big deal), but in this model they should of course retain ownership of the resulting work. Even though substantial public funds are used to build and maintain the institution, I can accept the argument that those funds were given to provide universities the ability to execute on this mission. Even when their investigators are permitted to seek additional separate/directed public financing in the form of public grants to do targeted work in an area of specific public interest (above their institutionally-granted allowance), I can understand the institution retaining some claim on the IP alongside the public because they are providing the infrastructure to enable this work, which is effectively considered an extension of this work by their faculty. But when the university pulls back research funding entirely and expects financial support of “its own” scientists to come entirely from public grants or private contracts, and then “double dips” – detracting from these grants’ operating expenses to support the indirect costs of maintaining the research lab, then ownership of the resulting IP should pass to the funding parties.

The status quo can be justified by federal funding agencies: they are mostly incentivized to prioritize the creation of new knowledge first, and ownership of resulting IP second. Private organizations work the other way around. From the point of view of a private company, a new discovery/technology that they have paid for, but which they are not entitled to use; or that can be licensed or sold to a competitor, is arguably worse that not funding the discovery at all. As academic institutions become more reliant on private funding to support their research programs, existing operational philosophies will need to be rethought. Thankfully, the new model is also an old and trusted one: whoever pays for the work should own it.

Jonathan Thon
Jonathan Thon is a serial entrepreneur and founding CEO of STRM.BIO. Before STRM.BIO Dr. Thon founded Stellular Bio where he served as CEO and chief scientific officer. Before Stellular Bio, Dr. Thon was an assistant professor at Harvard Medical School.
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  1. Darrell Robinson / March 13, 2019 at 16:59

    Great article. I think that even if university research projects are paid or sponsored by public funding, a problem is that the project work is performed or university grounds and using university-owned equipment.

    If the work was performed at a non-university affiliated or owned work site and paid for by public funds then the benefits of that work would go directly to the public.

    Also, there seem to be very few laws and regulations that classify and direct new-found university technology to the people who need it, which is most patients. However, according to patent law there are situations and regulations where the US Government can take the work of a research project (medical or non-medical) and use it to gain an advantage in a situation (ex: during war).

    For the medical arena of university technology transfer, there are organizations such as Universitied Allied for Essential Medicines (UAEM) that are lobbying and pushing universities to participate had follow their Global Access Licensing Framework which will make those medical research and technologu breakthroughs accessible and affordable for people all around the world to improve global healthcare.