Big companies and major research universities have begun to work out new terms of engagement that could usher in the next era of path-breaking products. But the transformation has only just begun and success will depend largely on visionary CEOs who move beyond cherry-picking academic advances to establishing more flexible and enduring academic relationships.
Here are seven ways companies can forge collaborative arrangements with research universities that go beyond simply seeking promising patents or one-off projects with faculty known to them from a publication:
Fund or co-fund seed grants with PhD candidates or postdoctoral researchers. If something promising emerges, then more funding would be forthcoming either directly from the company or via a collaborative proposal to a government agency by the university and the company. For example, my school has have recently partnered with Schlumberger to co-fund Ph.D. students on projects some of which have justified continued funding from the company. If the seed work yields nothing of value to the company, the researcher would move on with both the company and the researcher having learned something valuable nevertheless.
Fund a multiyear project up front. Converge on a well-defined set of questions and approaches that both the company and the university are ready to commit to now, rather than just seed. Recently, we developed a multiyear funded project with Philips Healthcare, Inc. related to understanding some fundamental science question in the general area of personalized medicine.
Relocate R&D near the talent. More companies are recognizing the advantages of having an R&D presence in industry clusters near major research universities. Tech companies in Silicon Valley near Stanford and University of California, Berkeley, are only the most obvious example. One of the largest medical technology clusters in the world had grown up near the University of Minnesota and its dedicated Earl E. Bakken Medical Devices Center for research. Numerous healthcare, internet, product design, and other technology companies have located R&D operations in the greater Boston area, home to 55 institutions of higher learning. Those companies include Pfizer, Philips Healthcare, Facebook, Twitter, Amazon, Google, IBM, Schlumberger, Microsoft, PTC, Comcast, and Oracle, to name just a few.
Rethink non-disclosure agreements. Typically, such agreements, designed by companies to keep breakthroughs out of the hands of competitors, are seen by many academics as being so broad in scope as essentially to violate the scientific spirit of free and open inquiry. Companies tend to start out with general topic-like language so encompassing (“medical applications,” for example) that it scares off or confuses traditional academics who are not used to being restricted about discussing anything. Company representatives need to be as specific as possible in meetings with faculty. For example, my school recently converged on an acceptable non-disclosure agreement with a healthcare company, which ensures that the company will make clear during each meeting with faculty what is confidential.
Develop flexible licensing arrangements. Emerging models include allowing the company royalty-free exclusive patent rights if a patent does emerge and paying the university license royalties or specific lump sums only when revenue from the patent exceeds some negotiated threshold.
This frees the company to decide whether and how to invest in converting the patent to a real product without additional costs due to the university. The company can avoid further costs if no successful product emerges. If the company does not develop a product within an allotted time, rights to the patent need to revert to the university, which can then shop it around. This prevents a company from sitting indefinitely on what could be a valuable patent.
Take care to determine how much value an individual patent contributes to the success of a commercial product. The value can vary greatly, depending on the product. In pharma, for example, the patent is often a single molecule that is virtually the sole source of the product’s value. However, in many other fields a patent might be embedded in a complex device that embodies several other patents. For example, several hundred patents go into something as simple sounding as a drug delivery or diagnostic device. Determining the value of a single patent in such products can be a daunting task. Ultimately, both parties must agree to behave honestly and respectfully relative to original agreements.
Focus on long-term relationships, not short-term transactions. Companies and universities need each other more than ever. The expense of research infrastructure, the velocity of technological change, and the increasing complexity of scientific knowledge have impelled companies to seek as many avenues as possible for generating innovative advances from research and gaining valuable intellectual property. Meanwhile, government has been shrinking funding for research in recent years and increasingly asking to see return on their investments.
As a result, universities have been forced to seek additional sources of funds elsewhere or additional partnerships with industry in ways that in principle can more rapidly translate new knowledge to products. Neither side can any longer afford a transactional model that requires a negotiation every time another research project is being considered. Instead, they should seek long-term relationships that keep companies continuously connected to early stage research that they can accelerate into new products that drive economic growth.