Capitalize on state universities’ assets

T. Rao Coca

Sunday, April 28, 2013 | 2:02 a.m.

We are now a knowledge-based economy, and the ultimate engine of economic growth is new technology. The key drivers of technology are our universities and the researchers they employ, and today, perhaps more than ever, the products of the mind are humankind’s most valuable assets.

Of course, it takes money to create new technology, and the universities depend on state and federal grants, which can be cut during tough budget times. However, there is a return on the public’s investment in the form of new technology that can lead to new products and the underlying intellectual property. Because universities are not generally in the business of making goods, they are left with the IP assets, such as patents, and protecting those assets has never been more important to the universities.

In Nevada, UNLV and UNR have developed a host of technologies over the years, including those in batteries, energy efficiency, renewable power, water efficiencies and mining techniques. Assuming that these public IP assets have been properly protected, is our university system utilizing them to spur the Nevada economy?

That’s an important question because university research should go hand-in-hand with economic development. The Nevada System of Higher Education should think like a business when it comes to the return on the investment. The return should not only be measured by the graduates it produces but also by the earnings it generates from the IP assets through leasing and selling the work its researchers do. Such earnings can be used to create new jobs, which Nevada badly needs, through commercialization of the IP assets. But it also can benefit academia by lowering the tuition costs to students, boosting faculty benefits to retain the best of the best and enhancing the academic stature. All of that is essential for a vibrant university system.

According to a survey of 157 universities by the Association of University Technology Managers, universities and their inventors earned more than $1.8 billion from commercializing their academic research in fiscal year 2011. Northwestern University earned the most of any institution, with more than $191 million in licensing income. Its revenue combined with four other $100 million-plus earners — the University of California system and Columbia, New York and Princeton universities — accounted for more than 40 percent of the total.

The universities used different models to harness their IP assets, and together, the surveyed universities formed 617 start-ups.

The good universities are protective of the work their staff and faculty produces, as they should be, guiding inventors through the legal process to protect their work. Last December, Carnegie Mellon University enforced two of its semiconductor circuit patents against the chip maker Marvell Technology Group in federal court and won a preliminary judgment of $1.17 billion. At the final hearing on damages next month, the university is expected to ask for the award to be tripled, plus interest. The total award would be $3.8 billion.

That’s the type of value a university can provide.

The Nevada System of Higher Education can learn from the highly successful universities to monetize the work its researchers do. The system and its universities should consider elevating their efforts to oversee intellectual assets. They should consider creating a high-level office dedicated to intellectual property that would aggressively work to capitalize on the universities’ work. Such an office would be chartered with spurring invention through effective strategies, and that would include educating the research faculty and students about IP, harvesting their inventions, providing legal support and, more importantly, commercializing the IP assets.

Taking the IP and the underlying technology to market is like selling fresh fruit. IP is perishable, and new inventions and technologies have to be timely captured, protected and capitalized, lest they wither on the vine. To prevent that from happening, inventors should be given incentives to come forward with their work, and the universities should work urgently.

In this knowledge-based economy, a university must know how to timely deliver the IP and associated technology to the marketplace and facilitate its transformation into a tangible product by partnering with third parties. That provides lucrative licensing income for a university.

The Governor’s Office of Economic Development is on the right track with its plans for the Knowledge Fund, which would provide money to help bring university research to market. This is the right way to bridge Nevada’s highest priority of economic development and create jobs.

Still, roadblocks exist to commercialize university research and create jobs. An infrastructure is needed to help establish a viable push to oversee and market intellectual assets. A portion of the Knowledge Fund could be used to establish this infrastructure because it would be a great benefit to the state’s economic development effort.

In a nutshell, what is important is a commitment to capitalize on the already created IP assets, timely harness new technologies that are being created in our university system and build new patent portfolio assets in order to sustain or grow job creation and economic development of Nevada.

T. Rao Coca, Ph.D., J.D. is an attorney who has spent more than 30 years working on intellectual property issues for companies including IBM and IGT. He lives in Henderson.