Partners in Innovation

By Dean Kenneth R. Lutchen

In recent years, a number of major companies have foregone large research operations of their own and moved to academic centers like Boston where they hope to take advantage of the innovation ecosystem spawned by major research universities. But now that they have arrived, many are asking themselves, “Now what?”

They find themselves at an unexpected crossroads where the missions of businesses and universities differ. Both want to partner and accelerate the process that turns ideas into products that benefit society, but the path forward will depend on whether they can resolve the conflict of missions. I think they can.

The standing expectation is that universities do basic-to-applied research solely for purpose of creating new knowledge, and that industry can take that knowledge and use it to create products that can benefit society. I think a better model would be to create partnerships that give companies an avenue to explore and test the feasibility of their ideas for profitable new products, while allowing universities and faculty to reap fair compensation when that process is successful.

By definition, universities attract, retain, and pay leading scholars in their fields. Many companies moved into academic centers in the hope of partnering with this rich intellectual capital to assess high risk concepts and ideas via university research or research partnerships, or by simply mining the potential of ideas and products from the research occurring in the university laboratories. This makes perfect sense in principal, but in practice how can this be operationalized so that both institutions win?

In exchange for funding research, industry hoped that they would own any intellectual property that might result. But that will not work for universities and faculty, which typically own patent rights that result from their innovations and license them to companies for a fee. Also, the faculty themselves feel some ownership over their ideas. While corporate funding might support a particular “discovery” research project, the universities still must pay faculty, and build and maintain an expensive research infrastructure, costs that far exceed this kind of research funding. This conflict has stymied partnership, but it can be resolved.

If universities are willing to take less on the front end and industry is willing to fairly compensate universities for the intellectual property it uses that might emerge from research it funds on the back end, a solution can be found. In a research effort, several patentable discoveries might be made, but very few will be of interest to a company looking to make a product. However, occasionally, with substantial additional expertise and investment by industry, one of those patents will make a highly successful product possible. In my model, universities would be willing to forgo licensing on those patents that do not produce a product, or produce one of minimal value. But, when a highly successful product results, the company would share a meaningful percentage of the profits with the university and researcher. The company only pays for ideas that pay off, and the universities and faculty still fulfill their scholarly mission while getting fairly compensated for particularly impactful innovations.

To be sure, there are implementation issues that would need to be straightened out. Often, unless it is a drug, many patents from different researchers and institutions are involved in a final product and any revenue would need to be distributed equitably. There would also need to be a way to ensure transparency and honesty so everyone would be clear as to which patents were involved in the creation of a particular product. But, commercializing innovation is an inherently interdisciplinary process and there is certainly room in my model for financial and legal experts.

I know that in our College of Engineering, and in other universities, there is rising faculty interest in pursuing industry research partnerships. Moreover, usually the faculty interest is scholarly and not because they see an opportunity for a product and wealth from that product. We need to maximize the likelihood that our most creative faculty can engage with industry funded research. Companies are moving their facilities to academic centers for a reason. There should be ample common ground to build the kind of partnerships that benefit everyone and help move society forward.

This essay is adapted from the Fall 2016 issue of The ENGineer, the College’s alumni magazine.