Although many paradigm-changing research discoveries are made by academic scientists at the university level, universities are fundamentally not set up to commercialize these discoveries and rely on out-licensing deals to translate their ideas into products. The downside is that they see a very small fraction of the profits generated by commercially successful ventures deriving from their faculty’s inventions, which begs the question – could they be seeing greater returns by becoming more shrewd in their out-licensing strategy or taking a greater equity position in the commercial vehicles by founding these companies through incubators themselves?
For companies in-licensing the intellectual property (IP) at the core of their commercial programs, profit-sharing is increasingly frustrating when they are shouldering all of the capital requirements and effort to translate a discovery, and as a result taking all of the risk. Most translational research programs do not succeed to market for reasons mostly disconnected from the technology itself. Could investors therefore be controlling more of their assets by funding the discovery programs themselves?
As universities begin investing in incubators and have created translational research support structures to fund the earliest stages of discovery validation and process optimization, private industry has moved to begin investing earlier in knowledge discovery and initial proof-of-concept. This has begun to blur the lines again between what is conventionally the domain of universities or of companies in this process. It should be recognized that many universities in North America are private businesses and many companies are not-for-profits.
There are, of course, no rules that confine universities to being knowledge creation centres, or companies to being knowledge translation centres – and the current explosion of “startup” culture is certainly further blurring these lines. Nowhere is this more evident than in the broadening career trajectories of young scientists. Translational research is scientist-driven and institutionally-supported, not the other way around. For scientists desiring to impact human health and well-being by seeing their (or others’) discoveries into the clinic, the opportunity cost of staying at the university when one’s research enters this phase becomes increasingly high.
An important component to opportunity cost that is rarely discussed in either academic or private circles (for risk that it could de-value the perceived social impact of the work or raise the operating costs of the research programs) is the financial outcome to the scientists. It is no secret that the financial incentives of new discoveries are heavily skewed in favour of the institution, not the scientists. While there is a strong argument that can be made for why a business should own the intellectual property of their employee’s efforts (namely, because they paid for its generation), the public funds academics’ works, and oftentimes their salaries and operating costs as well. What is troubling is that unlike most companies where scientists are generally fairly compensated for their work, and commonly receive equity in exchange for their intellectual contributions (so that if the company does well, they also do well) universities do not extend the same benchmark compensations to their employees.
Different academic institutions have different intellectual property policies. My next post will break out the ownership structure of intellectual property at universities to drive at where the problems exist and how they can be remedied.