Closing gap for licensing

A new report on technology transfer at Canadian universities shows that Canadian institutions are improving their performance and gaining on the US when gauged by licensing revenue as a ratio of sponsored research income. The report — prepared for the Canada Foundation for Innovation (CFI) by Dr Bruce Clayman, VP of research Simon Fraser Univ — also demonstrates that Canada leads the US in the spin-off of new firms. But it suggests that lack of receptor capacity is the likely underlying factor.

The report concludes that successful tech transfer is dependent more upon long-term commitment and support than ownership of intellectual property. And it goes further by arguing the linear relationship between tech transfer and levels of research support mean that increased research funding would inevitably result in greater commercial bene-fits to Canada.

“Increases to the direct funding of university research via the three Granting Agencies, the Canada Foundation for Innovation and other funding agencies, accompanied by payment of the full costs of indirect research - including the costs of technology transfer itself - would benefit the Canadian economy through increased production of transferable technologies and the enhanced means to commercialize them,” the report states.

The report — the second annual follow-up to the original study conducted by Clayman in late 2000 — includes progress reports from 87 Canadian institutions and FY01 data from the Association of University Technology Managers (AUTM) for the top 19 universities in both the US and Canada. All data have been converted to US dollars and US indirect costs have been removed for accurate bilateral comparisons.

The AUTM data provide a full range of outputs (disclosures of inventions, licences and options, licence income, start-up companies formed, and US patents issued).

Precise year-to-year comparisons are hampered by high degrees of variability and non-participation in the AUTM surveys by a small number of institutions with significant research funding such as Carleton Univ.

But the data clearly show that Canada has a superior track record for company creation and is gaining on the US in the area of licensing income. In FY00, Canadian universities averaged $19,000 per $1 million of research income, compared to $52,000 for the US. in FY01. Canada’s average improved to $25,270 while the US average dropped to $32,833. For Canada to continue closing the gap, however, Clayman says more effort is needed.

“There’s an intangible element of institutional culture and commitment to tech transfer which is people and money. It’s variable across the country,” he says. “New investments yield commercialization outputs.”

Having a killer application doesn’t hurt either. The Univ of Sherbrooke easily tops the list of licensing revenue at Canadian institutions (see chart). The report notes that it’s largely due to a series of patents for ACELP speech compression technology, which has been licensed to 72 companies worldwide and is found in virtually every personal computer and cell phone on the planet. Similar cases can be found in the US, such as the Univ of Florida which received $62 million in FY01 for patents relating to a production process for the cancer-fighting drug taxol.

The idea for such bilateral, comparative analysis was first conceived by CFI president/CEO Dr David Strangway as a way to dispel certain misperceptions surrounding university tech transfer.

“In the long run everyone is interested in the impact of all these investments in research,” says Strangway.” I wanted to take a look at the notion that Canada isn’t in the game. To be blunt, it was offensive. Let’s get the facts out there instead of the myths.”

Strangway says a close look at the data indicates that several Canadian universities are performing tech transfer extremely well. Most are located in the west, although eastern-based institutions such as Queen’s Univ, Univ of Sherbrooke and McGill Univ are also producing impressive results.

“There’s something about Quebec, Alberta and BC. They go at it in a big way,” he says. “These universities are saying just do it for the long haul and be aggressive. It’s wonderful to have good luck but it’s amazing how much good luck you have when you work hard at it.”

It’s also evident that the amount of research funding an institution receives has no bearing on its success in spin-offs or licensing revenue. In fact, the Clayman report indicates that the opposite is true. Of the 19 Canadian universities it examines, the effectiveness of tech transfer at the top 10 was : “noticeably lower” than the bottom half of the list. Particularly disappointing were Univ of Ottawa, McMaster Univ and Canada’s biggest research engine, the Univ of Toronto. The surprising disparity does not extend to the US.

While the report provides a good first step towards understanding tech transfer trends and catalysts, it doesn’t include other important factors, such as revenue of industry liaison offices, the amount spent on tech transfer activities, the value of university spin-off equity portfolios and the survival rate of spin-offs.

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