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74–722PDF 2012

BEST PRACTICES IN TRANSFORMING 

RESEARCH INTO INNOVATION: 

CREATIVE APPROACHES TO THE 

BAYH-DOLE ACT 

HEARING 

BEFORE THE

SUBCOMMITTEE ON TECHNOLOGY AND INNOVATION 

COMMITTEE ON SCIENCE, SPACE, AND 

TECHNOLOGY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

TUESDAY, JUNE 19, 2012 

Serial No. 112–89 

Printed for the use of the Committee on Science, Space, and Technology 

( 

Available via the World Wide Web: http://science.house.gov 
(II) 

COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY 

HON. RALPH M. HALL, Texas, Chair 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

LAMAR S. SMITH, Texas 

DANA ROHRABACHER, California 

ROSCOE G. BARTLETT, Maryland 

FRANK D. LUCAS, Oklahoma 

JUDY BIGGERT, Illinois 

W. TODD AKIN, Missouri 

RANDY NEUGEBAUER, Texas 

MICHAEL T. MCCAUL, Texas 

PAUL C. BROUN, Georgia 

SANDY ADAMS, Florida 

BENJAMIN QUAYLE, Arizona 

CHARLES J. ‘‘CHUCK’’ FLEISCHMANN, 

Tennessee 

E. SCOTT RIGELL, Virginia 

STEVEN M. PALAZZO, Mississippi 

MO BROOKS, Alabama 

ANDY HARRIS, Maryland 

RANDY HULTGREN, Illinois 

CHIP CRAVAACK, Minnesota 

LARRY BUCSHON, Indiana 

DAN BENISHEK, Michigan 

VACANCY 

EDDIE BERNICE JOHNSON, Texas 

JERRY F. COSTELLO, Illinois 

LYNN C. WOOLSEY, California 

ZOE LOFGREN, California 

BRAD MILLER, North Carolina 

DANIEL LIPINSKI, Illinois 

DONNA F. EDWARDS, Maryland 

BEN R. LUJA ́ N, New Mexico 

PAUL D. TONKO, New York 

JERRY MCNERNEY, California 

TERRI A. SEWELL, Alabama 

FREDERICA S. WILSON, Florida 

HANSEN CLARKE, Michigan 

SUZANNE BONAMICI, Oregon 

VACANCY 

VACANCY 

VACANCY 

SUBCOMMITTEE ON TECHNOLOGY AND INNOVATION

HON. BENJAMIN QUAYLE, Arizona, Chair 

LAMAR S. SMITH, Texas 

JUDY BIGGERT, Illinois 

RANDY NEUGEBAUER, Texas 

MICHAEL T. MCCAUL, Texas 

CHARLES J. ‘‘CHUCK’’ FLEISCHMANN, 

Tennessee 

E. SCOTT RIGELL, Virginia 

RANDY HULTGREN, Illinois 

CHIP CRAVAACK, Minnesota 

RALPH M. HALL, Texas 

DONNA F. EDWARDS, Maryland 

FREDERICA S. WILSON, Florida 

DANIEL LIPINSKI, Illinois 

BEN R. LUJA ́ N, New Mexico 

SUZANNE BONAMICI, Oregon 

VACANCY 

EDDIE BERNICE JOHNSON, Texas 
(III) 

C O N T E N T S 

Tuesday, June 19, 2012 

Page 

Witness List ............................................................................................................. 2 

Hearing Charter ...................................................................................................... 3 

Opening Statements 

Statement by Representative Judy Biggert, Vice Chairman, Subcommittee 

on Technology and Innovation, Committee on Science, Space, and Technology, U.S. House of Representatives ............................................................... 7 

Written Statement ............................................................................................ 8 

Statement by Representative Donna F. Edwards, Ranking Minority Member, 

Subcommittee on Technology and Innovation, Committee on Science, Space, 

and Technology, U.S. House of Representatives ............................................... 8 

Written Statement ............................................................................................ 10 

Prepared Statement by Representative Benjamin Quayle, Chair, Subcommittee on Technology and Innovation, Committee on Science, Space, 

and Technology, U.S. House of Representatives ............................................... 11 

Witnesses: 

Todd T. Sherer, President, the Association of University Technology Managers 

Oral Statement ................................................................................................. 12 

Written Statement ............................................................................................ 14 

Catherine Innes, Director, Office of Technology Development, University of 

North Carolina at Chapel Hill 

Oral Statement ................................................................................................. 24 

Written Statement ............................................................................................ 26 

Ken Nisbet, Executive Director; University of Michigan Technology Transfer 

Oral Statement ................................................................................................. 31 

Written Statement ............................................................................................ 33 

Robert Rosenbaum, President and Executive Director, Maryland Technology 

Development Corporation 

Oral Statement ................................................................................................. 39 

Written Statement ............................................................................................ 41 

Discussion ................................................................................................................. 49 

Appendix 1: Answers to Post-Hearing Questions 

Dr. Todd T. Sherer, President, The Association of University Technology 

Managers .............................................................................................................. 64 

Ms. Catherine Innes, Director, Office of Technology Development, University 

of North Carolina at Chapel Hill ........................................................................ 67 

Mr. Ken Nisbet, Executive Director; University of Michigan Technology 

Transfer ................................................................................................................ 75 

Mr. Robert Rosenbaum, President and Executive Director, Maryland Technology Development Corporation ........................................................................ 79 

(1) 

BEST PRACTICES IN TRANSFORMING 

RESEARCH INTO INNOVATION; 

CREATIVE APPROACHES TO THE 

BAYH-DOYLE ACT 

TUESDAY, JUNE 19, 2012 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON TECHNOLOGY AND INNOVATION, 

COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 10:01 a.m., in Room 

2318 of the Rayburn House Office Building, Hon. Judy Biggert 

[Vice Chairwoman of the Subcommittee] presiding. 
2 

HALPH M, HALL. TEXAS 

CHAIRMAN 

U.S. HOUSE OF REPRESENTATIVES 

EDOlf BERNICE JOHNSON, TEXAS 

RANKfNG MEMBt:R 

COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY 

2321 RAYBURN HOUSE OFFICE BUILDING 

WASHINGTON, DC 20515-6301 

1202) 225-6371 

www.$(;i>;flce.house.goY 

Subcommittee on Technology and Innovation Hearing 

Best Practices in Transforming Research into Innovation: 

Creative Approaches to the Bayh-Dole Act 

Tuesday, June 19,2012 

10:00 a.m. 12:00 p.m. 

2318 Rayburn House Office Building 

Witnesses 

Dr. Todd T. Sherer, President, The Association of University Technology Managers 

Ms. Catherine Innes, Director, Office of Technology Development, University of North Carolina at 

Chapel Hi!! 

Mr. Ken Nisbet, Executive Director, University of Michigan Technology Transfer 

Mr. Robert Rosenbaum, President and Executive Dh'ector, Maryland Technology Development 

:=orporation 
3 

U.S. HOUSE OF REPRESENTATIVES 

COMMITTEE ON SCIENCE, SPACE, AND TECHNOLOGY 

SUBCOMMITTEE ON TECHNOLOGY AND INNOVATION 

I. Purpose 

HEARING CHARTER 

Best Practices in Transforming Research into Innovation: 

Creative Approaches to the Bayh-Dole Act 

Tuesday, Juue 19, 2012 

10:00 a.m. - 12:00 p.m. 

2318 Rayburn House Office Building 

On Tuesday, June 19th, the Committee on Science, Space, and Technology Subcommittee on 

Technology and Innovation will hold a hearing to learn about different approaches universities 

and nonprofits are taking to transfer the results of federally-funded research. 

II. Witnesses 

Dr. Todd T. Sherer, President, The Association of University Technology Managers 

Ms. Catherine Innes, Director, Office of Technology Development, University of North 

Carolina at Chapel Hill 

Mr. Ken Nisbet, Executive Director, University of Michigan Technology Transfer 

Mr. Robert Rosenbaum, President and Executive Director, Maryland Technology Development 

Corporation 

III. Background 

In fiscal year 2012, the Federal government funded more than $135 billion in research and 

development activities. Colleges and universities conduct the majority of basic research in the 

United States, and cumulatively receive more than half of their total research funding from 

federal agencies. J Because of the large amount of funding expended by the federal government 

on basic research by nonprofits, efforts to improve the transfer of federally-funded research are 

of interest to both the federal government and stakeholders across the nation. 

1 Congressional Research Service, January 2012, Federal Support for Academic Research 

http://www.crs.gov/pages/Reports.aspx?PRODCODE=R41895&Source=search 

1 
4 

The Amendments to the Patent and Trademark Act of 1980 (P.L 96-517), commonly known as 

the Bayh-Dole Act, were designed to improve collaboration between commercial concerns and 

nonprofit organizations, including universities, in addition to promoting the utilization of 

inventions arising from federally supported research and development. In order to encourage the 

two sectors to work together to generate new goods, processes, and services for the marketplace, 

the Act gave U.S. universities, small businesses, and nonprofits intellectual property control of 

their inventions and other intellectual property that resulted from such funding,. This alignment 

of ownership and control was a major change from the previous system where the Federal 

government retained title and right to license for inventions. Prior to the passage of the BayhDole Act, there was limited incentive to commercialize early stage, high-risk technologies. The 

U.S. government had licensed fewer than 5 percent of 28,000 accumulated patents.2 Bayh-Dole 

changed the incentive structure for nonprofits and small businesses to patent and license 

inventions. In 1980,390 patents were awarded to universities;) by 2009, the number increased to 

3,088.4 

Bayh-Dole is generally considered a success by most stakeholders. In 2003, the President's 

Council of Advisers on Science and Technology prepared a report examining how to improve 

technology transfer, Technology Transfer of Federally Funded R&D, which found that the model 

of allowing universities to retain intellectual property rights to the results of federally-funded 

research and development" ... has not only dramatically improved the Nation's ability to move 

ideas from research and development into commerce, but also helped enhance the return on this 

substantial taxpayer investment'''s. Furthermore, the 2010 National Research Council report, 

Managing University Intellectual Property in the Public Interest found that, "[t]he system put in 

place by the Bayh-Dole Act, that is, university ownership of inventions from publicly funded 

research and latitude. in exercising associated intellectual property rights subject to certain 

conditions and limitations, is unquestionably more effective than its predecessor systemgovernment ownership subject to waiver in circumstances that varied from agency to agency-in 

making research advances available to the public. ,,6 

In October 2011, President Obama released a Presidential Memorandum to agencies titled 

Acce/erating Technology Transfer and Commercialization of Federal Research in Support of 

High Growth BUSinesses. The memorandum required agencies that conducted intramural 

research to improve their technology transfer results by "establish[ingJ goals and measure 

performance, stream lin [ingJ administrative processes, and facilitate[ingJ local and regional 

2 Wendy H. Schacht, The Bayh·Dole Act: Selected Issues in Patent Policy and the Commercialization a/Technology, 

Congressional Research Service, March 16, 2012, at S. 

3 National Science Board, Science and Engineering Indicators-1993 {Washington, National Science Foundation, 

1993),430. 

4 National Science Board, Science and Engineering Indicators, 2012 (Washington, National Science Foundation, 

2010), Appendix table 5·48, available at http://www.nsf.gov/statistics/seindI2/append/c5/at05-48.pdf. 

5 The President's Council of Advisors on Science and Technology, Report on Technology Transfer of Federally 

Funded R&D (2003), available at http://www.whitehouse.gov/sites/default/files/microsites/ostp/pcast-03-

techtransfer.pdf 

6 National Research Council, Managing University Intellectual Property in the Public Interest (2010), available at 

http://www.nap.edu/openbook.php?recordjd=13001&page=2. 

2 
5 

partnerships in order to accelerate technology transfer and support private sector 

commercialization.,,7 The Department of Commerce's National Advisory Council on Innovation 

and Entrepreneurship has also partnered with research university leaders to find ways to improve 

technology transfer of federally-funded research.8 

Many universities have hired professional technology managers and created technology transfer 

offices to work with facuIty and to address patents and establish guidelines to cover industryuniversity relationships, with education and publication remaining academic priorities. 9 

Due in part to Bayh-Dole, academia has become a major source of innovation and new business 

creation. In 2010, the Association of University Technology Managers' survey identified 657 

new products marketed because of academic R&D. The survey also found that more than 650 

new companies were founded to commercialize universitr; research with over five thousand new 

licenses or options granted mostly to small businesses. 0 A recent report found that "without 

accounting for product substitution effects ... over the period J 996 to 2007, university licensing 

agreements based on product sales contributed at least $47 billion and as much as $187 billion to 

the U.S. GDP .,,11 However, university technology managers report that the major reason for 

patent licensing is commercialization (or product creation), not profit, particularly since the cost 

of a patent is so high. 12 

There have been concerns that accelerating technology transfer at primarily research institutions 

may promote industry-research collaboration and result in business-dictated research. However. 

there are safeguards. such as university's limitations on outside research, mandated expeditious 

publication obligations for some federally-funded research and development, and conflict of 

interest provisions, which are able to insulate research from outside direction by the business 

community. 13 

7 Presidential Memorandum, Accelerating Technology Transfer and Commercialization of Federal Research in 

Support of High-Growth Businesses (Oct. 28, 2011), available at http://www.whitehouse.gov/the-pressoffice/2011/10/28/presidential-memorandum-accelerating-technology-transfer-and-commerciali 

8 April 2011 letter to Secretary Gary locke; 

http://www .aau .edu/policy /Ietters _ statements_ testi mony .aspx ?id;11960 

9 Technology Transfer: Administration of the Bayh-Dole Act by Research Universities. 

10 Association of University Technology Managers, AUTM U.S. Licensing Activity Survey Highlights: FY2010, 

available at http://www.autm.net/AM/Template.cfm?Section;FY_201O_Licensing_Survey&Template; 

/CM/ContentDisplay.cfm&ContentID;6874. 

11 David Roessner, Jennifer Bond, Sumiye Okubo, and Mark Planting, The Economic Impact of licensed 

Commercialized Inventions Originating in University Research, 1996-2007, Final Report to the Biotechnology 

Industry Organization, September 3,2009,32, available at http://www.bio.org/ip/techtransfer/ 

BIO_finaUeport_9_3_09_rev_2.pdf. 

12 Ann M. Thayer, "University Technology Moves to Market via Patenting, Licensing,: Chemical and Engineering 

News, August 24, 1992, 17-18. 

13 See Wendy H. Schacht, The 8ayh-Do/e Act: Selected Issues in Patent Policy and the Commercialization of 

Technology, Congressional Research Service, March 16, 2012. 

3 
6 

IV. Institntional Efforts to Improve Technology Transfer 

Universities, nonprofits, and other interested stakeholders are attempting to improve the transfer 

of technology through a number of methods. Some of the areas of focus include: 

• Reducing the barriers to commercialization to ensure that technologies developed in 

academic and nonprofit settings make it to the public through activities such as reducing 

legal fees, minimizing licensing negotiations, restructuring organizational units, and 

building industry relationships; 

• Universities and nonprofits are working with both students and faculty on promoting 

entrepreneurship. Cross-discipline and cross-college programs have helped to connect 

individuals and share expertise and innovative ideas; 

• Increasing collaboration between industry and innovator through federal agency 

research components, collaborative models, and commercialization potential in grant 

proposals; 

• Linking technology transfer to economic development through regional and local 

partnerships; and 

• Sharing of best practices between institutions with different levels of technology 

transfer capacity and experience. 

V. Issues for Examination 

How has university technology transfer evolved since the passage of Bayh-Dole? 

What are universities across the country doing today to expeditiously transfer the results of 

federally-funded research? Are there any model technology transfer activities being replicated 

across the Nation? 

How have university-industry partnerships impacted technology transfer? 

What are the most innovative practices stakeholders are using to develop ideas that have 

commercial opportunities or societal impact? 

How is the successful transfer of technology measured? 

4 
7 

Mrs. BIGGERT. The Subcommittee on Technology and Innovation 

will come to order. 

Good morning, everyone. I would like to welcome everyone to today’s hearing on the transfer of innovations that come from research funded by the Federal Government. The Federal Government invests more than $135 billion each year in research and development activities, and a portion of that funding supports the 

majority of basic research conducted by universities. The transfer 

of knowledge from universities into the marketplace can have profound economic and social impacts, so we are always looking for 

more ways to encourage this process. I am glad that our Chairman 

decided to hold this important hearing so that our Subcommittee 

can learn about the innovation—innovative approaches that institutions across the Nation are taking to accelerate the transfer of 

federally funded research. 

In fact, tech transfer has been a priority for me. To further this 

goal in the energy sphere, I drafted the Energy Technology Transfer Act, which was signed into law in 2008. This legislation created 

jobs by accelerating breakthrough energy technologies out of the 

national labs and into the marketplace. It was based on best practices developed by agricultural extension programs at the USDA. 

For American universities, however, tech transfer is governed by 

the Bayh-Dole Act. December 2010 marked the 30th anniversary of 

the enactment of the Bayh-Dole Act, which permitted universities 

to retain the intellectual property rights to inventions developed 

with federal funding. 

The Act was passed during bleak economic conditions, not too 

unlike those that we are facing now. The United States was enduring an economic recession, declining productivity, and competition 

from Germany and Japan. All of this sounds familiar. The purpose 

of Bayh-Dole was simple: facilitate and support universities and 

small businesses in the commercialization of their inventions, allowing society to benefit and increasing U.S. global competitiveness. Promoting university-based innovation and technology transfer was seen as a way to combat the forces then working against 

the United States. Thirty years later, Bayh-Dole still elevates these 

efforts. 

The collective efforts encouraged under the Bayh-Dole Act have 

brought about the commercialization of many new technological advances that impact the lives of millions of people across the Nation. 

Prior to the enactment of Bayh-Dole, less than five percent of 

U.S. Government patents were commercially licensed. In 1980, 390 

patents were awarded to universities; by 2009, the number increased to over 3,000. In my home State of Illinois, the University 

of Illinois at Urbana-Champaign holds nearly 400 patents and has 

created 61 companies. 

I look forward to hearing from our witnesses about how university technology transfer has evolved since the passage of BayhDole, and the innovative activities and partnerships institutions 

are trying today to get more results to the public. We thank each 

of you for being here and look forward to your testimony. 

Let me just say that, unfortunately, Chairman Quayle was unable to attend today’s hearing, but I am glad to be here to hear 
8 

about the innovative approaches to technology transfer you are all 

here to discuss. 

I now recognize the gentlelady from Maryland, Ms. Edwards, for 

her opening statement. 

[The prepared statement of Mrs. Biggert follows:] 

PREPARED STATEMENT OF SUBCOMMITTEE VICE CHAIRWOMAN JUDY BIGGERT

Good morning. I would like to welcome everyone to today’s hearing on the transfer 

of innovations that come from research funded by the Federal Government. The 

Federal Government invests more than $135 billion each year in research and development activities, and a portion of that funding supports the majority of basic research conducted by universities. The transfer of knowledge from universities into 

the marketplace can have profound economic and societal impacts, so we are always 

loooking for more ways to encourage this process. I am glad our Chair decided to 

hold this important hearing so that our Subcommittee can learn about the innovative approaches that institutions across the Nation are taking to accelerate the 

transfer of federally funded research. 

In fact, tech transfer has long been a personal priority for me. To further this goal 

in the energy sphere, I drafted the Energy Technology Transfer Act, which was 

signed into law in 2008. This legislation creates jobs by accelerating breakthrough 

energy technologies out of national labs and into the marketplace. It was based on 

best practices developed by agricultural extension programs at the USDA. 

For American universities, however, tech transfer is governed by the Bayh-Dole 

Act. December 2010 marked the 30th anniversary of the enactment of the Bayh-Dole 

Act, which permitted universities to retain the intellectual property rights to inventions developed with federal funding. 

The Act was passed during bleak economic conditions, not too unlike those we are 

facing now. The United States was enduring an economic recession, declining productivity, and competition from Germany and Japan—all of this sounds familiar. 

The purpose of Bayh-Dole was simple: facilitate and support universities and small 

businesses in the commercialization of their inventions, allowing society to benefit 

and increasing U.S. global competitiveness. Promoting university-based innovation 

and technology transfer was seen as a way to combat the forces then working 

against the U.S. Thirty years later, Bayh-Dole still elevates those efforts. 

The collaborative efforts encouraged under the Bayh-Dole Act have brought about 

the commercialization of many new technological advances that impact the lives of 

millions of people across the Nation. 

Prior to the enactment of Bayh-Dole, less than five percent of U.S. Government 

patents were commercially licensed, In 1980, 390 patents were awarded to universities; by 2009, the number increased to over 3,000. In my home State of Illinois, 

the University of Illinois at Urbana-Champaign holds nearly 400 patents and has 

created 61 companies. 

I look forward to hearing from our witnesses about how university technology 

transfer has evolved since the passage of Bayh-Dole and the innovative activities 

and partnerships institutions are trying today to get more research results to the 

public. We thank each of you for being here and look forward to your testimony. 

Ms. EDWARDS. Thank you, Madam Chair. And thank you to the 

Chairman also for calling this hearing on university technology 

transfer. And I want to thank our witnesses for joining us here 

today to share your perspective on how we can get more promising 

research out of the university labs and right into the marketplace. 

I am pleased that we are taking a serious look at this issue. I 

am convinced there are a number of ways that we can strengthen 

and improve technology transfer in this country. There are far too 

many good ideas out there in our universities, good ideas that have 

been developed through tax—federal taxpayer support, but they 

languish. And as we continue to look for ways to strengthen our 

economy and secure our global competitiveness, I think it would be 

wise to focus on technology transfer. 

I am excited to hear from our witnesses today about some innovative approaches to technology transfer and to discuss the ways 
9 

that the Federal Government can facilitate these approaches. I am 

particularly interested in hearing Mr. Rosenbaum’s testimony 

today about our experience in Maryland. 

The truth is there are various elements that contribute to efficient and effective technology transfer. First, you have to be able 

to identify research with commercial potential. This is not an easy 

task. It can be a significant challenge since researchers are not necessarily equipped to recognize commercial potential and industry 

has limited exposure to all the research coming out of universities. 

At the same time, research may have commercial relevance in a 

space not initially envisioned by the researcher or recognized by industry. Finding better ways to identify ideas with commercial potential is a challenge but one that is critical to the entire technology transfer process. 

Once you have identified an idea or concept with commercial potential, you have to demonstrate its technical feasibility. This is 

often accomplished through some sort of proof-of-concept research 

and development of a prototype. Unfortunately, there are limited financial resources for this sort of research and development. I am 

pleased that the Economic Development Administration has started 

funding these sorts of activities through its i6 Challenges, which 

are generally focused on accelerating technology commercialization. 

And I am also pleased that EDA announced an i6 Challenge just 

last week specifically on the development or expansion of proof-ofconcept centers. 

Once the technical feasibility of an idea or concept is proven, we 

have to get that technology out of the lab and into the hands of a 

private sector entity that can commercialize it. In some cases, this 

is accomplished by the researcher leaving academia to start his or 

her own business, but it is often achieved by the university licensing that technology to an outside company or entrepreneur. Unfortunately, we frequently hear from industry that licensing university-developed technology is far from easy or straightforward and 

that often bureaucratic red tape and unnecessary time delays frustrate and, in some cases, deter industry altogether. 

Our economy can’t afford to let good ideas die in university labs. 

We need to figure out a way to do this more seamlessly, and I am 

eager to hear from our witnesses today about innovative ways of 

speeding up this process and making it more efficient. 

And finally, once the technology makes its way out of the lab, it 

needs to be commercialized. This may include large-scale demonstrations and the development of functional prototypes, putting 

together business plans and management teams, and carrying out 

market validation activities. Certainly, these are private sector 

functions. However, when it comes to technology that has been developed with federal taxpayer resources, I believe the Federal Government may have an important role to play in facilitating the 

commercialization of these technologies. Our responsibility should 

be to ensure that federal taxpayers get the biggest bang for our 

buck and that technologies developed with federal resources make 

it across the finish line and into the marketplace. 

There are, unfortunately, limited resources for commercialization 

assistance for federally funded technologies. I hope today we can 

discuss whether there are appropriate leverage points for the Fed-
10 

eral Government when it comes to commercializing these sorts of 

technologies. I hope our witnesses will challenge us to think more 

broadly. 

Mr. Chairman, I want to—or Madam Chair, I want to thank you 

again for holding this hearing, and I look forward to hearing from 

our witnesses. And I hope we will be following up this hearing with 

a separate hearing focused on technology transfer from federal 

labs. I am pretty confident that there are a number of Members on 

both sides of the aisle that are interested in taking a critical look 

at these efforts and ways that they can be strengthened and improved. And with that, I yield the balance of my time. 

[The prepared statement of Ms. Edwards follows:] 

PREPARED STATEMENT OF SUBCOMMITTEE RANKING MEMBER DONNA F. EDWARDS

Mr. Chairman, thank you for calling this hearing on university technology transfer. And thank you to our witnesses for joining us here today to share your perspective on how to get more promising research out of university labs and into the marketplace. 

I am very pleased that we are taking a serious look at this issue. I am convinced 

that there are a number of ways that we can strengthen and improve technology 

transfer in this country. There are far too many good ideas out there in our universities—good ideas that have been developed through federal taxpayer support—that 

languish. And, as we continue to look for ways to strengthen our economy and secure our global competitiveness, I think it would be wise to focus on technology 

transfer. I am excited to hear from our witnesses today about some innovative approaches to technology transfer and discuss ways that the Federal Government can 

help facilitate these approaches. 

The truth is that there are various elements that contribute to efficient and effective technology transfer. 

First, you have to be able to identify research with commercial potential. This can 

be a significant challenge since researchers are not necessarily equipped to recognize commercial potential, and industry has limited exposure to all of the research 

coming out of universities. At the same time, research may have commercial relevance in a space not initially envisioned by the researcher or recognized by industry. Finding better ways to identify ideas with commercial potential is certainly a 

challenge, but one that is critical to the entire technology transfer process. 

Once you’ve identified an idea or concept with commercial potential, you have to 

demonstrate its technical feasibility. This is often accomplished through some sort 

of proof of concept research and the development of a prototype. Unfortunately, 

there are limited financial resources for this sort of research and development. I am 

very pleased that the Economic Development Administration has started funding 

these sorts of activities through its i6 challenges, whic are generally focused on accelerating technology commercialization, and am particularly pleased that the EDA 

announced an i6 challenge just last week specifically on the development or expansion of proof of concept centers. 

Once the technical feasibility of an idea or concept is proven, we have to get that 

technology out of the lab and into the hands of a private sector entity that can commercialize it. In some cases, this is accomplished by the researcher leaving academia to start his or her own business. But it is also often acheived by the university licensing that technology to an outside company or entrepreneur. Unfortunately, 

we have frequently heard from industry that licensing university-developed technology is far from easy or straightforward and that, often, bureaucratic red tape and 

unnecessary time delays frustrate and—in some cases—deter industry altogether. 

Our economy can’t afford to let good ideas die in university labs. We need to figure 

out ways to do this more seamlessly, and I am eager to hear from some of our witnesses today about innovative ways of speeding up this process and making it more 

efficient. 

And, finally, once the technology makes its way out of the lab, it needs to be commercialized. This may include large-scale demonstrations and the development of 

functional prototypes, putting together business plans and management teams, and 

carrying out market validation activities. Certainly, these are private sector functions. However, when it comes to technologies that have been developed with federal 
11 

taxpayer resources, I believe that the Federal Government may have an important 

role to play in facilitating the commercialization of those technologies. 

Our responsibility should be to ensure that federal taxpayers get the biggest bang 

for their buck and that technologies developed with federal resources make it across 

the finish line and into the marketplace. There are, unfortunately, limited resources 

for commercialization assistance for federally funded technologies. I hope today that 

we can discuss whether there are appropriate leverage points for the Federal Government when it comes to commercializing these sorts of technologies. 

Mr. Chairman, thank you again for holding this hearing. I look forward to hearing 

from our witnesses on this important topic. I also hope that we will be following 

up this hearing with a separate hearing focused on technology transfer from federal 

labs. I am fairly confident that there are a number of Members on both sides of the 

aisle that are very interested in taking a critical look at these efforts and ways that 

they can be strengthened and improved. I yield back the balance of my time. 

Mrs. BIGGERT. Thank you, Ms. Edwards. 

If there are Members who wish to submit additional opening 

statements, your statements will be added to the record. 

[The prepared statement of Mr. Quayle follows:] 

PREPARED STATEMENT OF SUBCOMMITTEE CHAIRMAN BENJAMIN QUAYLE

Good morning. I would like to welcome eeryon to today’s hearing. 

Today we have the opportunity to survey some of the activities that universities 

and other organizations are undertaking to improve the transfer of federally funded 

research. I know there are some innovative activities regions are taking across the 

country, and I am looking forward to hearing about what things that have been 

found to work well. 

Passed in 1980, the Bayh-Dole Act enabled universities and nonprofit organizations to retain title to their inventions that result from federally funded research 

programs. In 2002, the Economist Technology Quarterly stated that the 1980 BayhDole Act was ‘‘[p]ossibly the most inspired piece of legislation to be enacted in America over the past half-century...More than anything, this single policy measure 

helped reverse America’s precipitous slide into industrial irrelevance.’’ Even after 30 

years under Bayh-Dole, the process of technology transfer is evolving. That’s why 

we are here today, to understand how our Nation’s universities and nonprofits can 

more effectively transfer federally funded technology to better society. 

University research is generally long term and exploratory in nature. Even when 

a university works to patent a discovery, it may be many years before the intellectual property proves to be a marketable success. The are many reasons universities 

create new innovations, including profit, but I believe both the technology transfer 

process and incentives to commercialize are more complex than simply making 

money. Economic reward is just one of many metrics I suspect these institutions are 

driven by to accelerate technology transfer.I look forward to hearing from our witnesses about their experiences with technology transfer and its evolution. Thank 

you for your presence and willingness to testify before us today. 

Mrs. BIGGERT. At this time, I would like to introduce our witnesses, and then we will proceed to hear from each of them in 

order. 

Our first witness is Dr. Todd Sherer, President of the Association 

of University Technology Managers and an Associate Vice President of Research Administration at Emory University. 

Next, we will hear from Ms. Catherine Innes, who is the Director 

of the Office of Technology Development at the University of North 

Carolina at Chapel Hill. 

Our third witness is Mr. Ken Nisbet. Mr. Nisbet is the Executive 

Director of Technology Transfer at the University of Michigan. 

Our final witness is Mr. Robert Rosenbaum, the President and 

Executive Director of the Maryland Technology Development Corporation. 

Again, thank you for being our witnesses this morning. As I am 

sure our witnesses know, spoken testimony is limited to five min-
12 

utes each. After all of the witnesses, Members of the Committee 

will have five minutes each to ask questions. 

And I now recognize our first witness, Dr. Sherer, for five minutes. 

STATEMENT OF DR. TODD T. SHERER, PRESIDENT, 

THE ASSOCIATION OF UNIVERSITY TECHNOLOGY MANAGERS 

Dr. SHERER. Madam Chairwoman and Honorable Members of 

this Subcommittee, thank you for the opportunity to testify before 

you today on the important topic of transferring university technology transfer from lab to the marketplace. My name is Todd 

Sherer, and I am the President of the Association of University 

Technology Managers known as AUTM. AUTM is an international 

organization with more than 3,000 members, primarily university 

technology transfer professionals who come from over 300 universities, research institutions, and teaching hospitals. 

I also head the Technology Transfer Office at Emory University, 

and my office is responsible for managing a portfolio of around 

1,000 biomedical inventions made by Emory faculty. We work closely with our faculty inventors to evaluate early-stage technologies 

for commercial potential, determine the best intellectual property 

protection strategy, and market our technologies through a variety 

of channels in the hopes of finding a corporate partner. If we find 

an interested company, then we negotiate appropriate contractual 

partnerships to ensure that our inventors, our universities, and 

taxpayers benefit from the ultimate products. After licenses are 

signed, we maintain relationships throughout the life of the agreement, sometimes insisting upon return of our technology should 

our partners decide to abandon its development. 

As a result of Emory’s passion and commitment to commercializing its technology, over 90 percent of HIV-infected patients in 

the United States and Europe on lifesaving antiviral therapy take 

a drug developed by our researchers. 

In the decades leading up to the 1980 Bayh-Dole Act, the Federal 

Government accumulated title to approximately 28,000 patents, of 

which fewer than five percent were licensed to companies for commercialization. Unless an exception was granted, the ownership of 

inventions was kept centrally at the federal agencies from which 

they were funded. The passage of the Bayh-Dole Act boldly changed 

government patent policy, providing ownership and control to any 

invention made with federal funds to the very universities and 

small businesses that made them. 

Since its passage, the Bayh-Dole Act has proven instrumental in 

recognizing that federal patent policy is an integral part of U.S. 

competitiveness and it is the envy of nearly every country in the 

world, as evidenced by similar legislation in a wide variety of countries, including South Africa, India, China, Japan, South Korea, 

and Taiwan. Its beauty is that it aligns ownership and control of 

patent rights to create incentives for universities, researchers, and 

companies to develop and invest in patenting and licensing their 

new technologies. Without local pride of ownership and control created by the Act, many of these discoveries would still be lan-
13 

guishing on the shelf and their revenues would be returned to fund 

even more research. 

According to an article published in the journal Nature, ‘‘an invention made by an academic in the United States has a better 

chance of going to market than it does in other nations.’’ Since the 

Bayh-Dole Act was passed, more than 5,000 new companies have 

formed around university research, the majority of which are located in close proximity to the university. 

In fiscal year 2010, university research helped create on average 

1.7 new companies a day. University technology transfer creates 

billions of dollars of direct benefits to the U.S. economy every year. 

In fiscal year 2010, universities helped create 657 new products. 

According to the former President of NASDAQ, an estimated 30 

percent of its value is rooted in university-based federally funded 

research results. 

Technology transfer is not perfect. After all, we work at the 

riskiest of all stages in the innovation pathway where funding and 

resources are hardest to find. The odds of any particular technology 

making it to market are astronomical, so figuring out what works 

has not been easy and has taken time. 

Despite the challenges of working at the discovery phase, the 

academic community and federal agencies continue to find better 

ways to manage innovations. Technology transfer offices are constantly adapting to changes in the economy, learning the best practices from each other, and understanding the marketplace. Technology transfer offices have expanded their service to help faculty 

create new companies. They are creating accelerators, finding gap 

funding, encouraging entrepreneurship by faculty and students, 

and rewarding that entrepreneurship. While TTOs focus on negotiating licenses, that is just the means to an end. The end is to get 

technologies out the door and into the market for the benefit of the 

public. 

Not all technology transfer offices have the same level of experience but they have more resources to turn to than ever before. Universities from across the country are already working with smaller 

tech transfer offices to help them improve their technology transfer 

function. 

AUTM will continue its commitment to providing training and 

education for technology transfer professionals for years to come. 

We will provide networking events for our members to share best 

practices and technology transfer as we all expect new practices to 

continue to emerge just as they always have. Our members must 

continue to strive to find new ways to reduce the barriers to getting 

our technology from lab to market. We believe that continued support for research at NIH, NSF, and other agencies such as the 

newly formed NCATS is the best way that the Federal Government 

can encourage even more commercialization of American technologies. 

AUTM, as well as other organizations, believe that the U.S. technology transfer system will continue to be the catalyst for innovation in the U.S. economy for many decades to come. 

Thank you. 

[The prepared statement of Dr. Sherer follows:] 
14 

Statement of 

Todd T. Sherer, PhD, CLP 

President, Association of University Technology Managers 

Associate Vice President Research Administration, Executive Director, Office of Technology 

Transfer, 

Emory University 

Before the 

U.S. House of Representatives 

Committee on Science, Space, and Technology 

Subcommittee on Technology and Innovation 

June 19, 2012 

Mr. Chairman and honorable Members of the Subcommittee, thank you for the opportunity to 

testify before you today on the important topic of transferring university technology from the lab 

to the marketplace. 

My name is Todd Sherer, and I am the Associate Vice President for Research Administration 

and Executive Director of the Office of Technology Transfer for Emory University in Atlanta 

Georgia. I am also President of the Association of University Technology Managers (AUTM). 

AUTM is a nonprofit organization dedicated to promoting, supporting and enhancing the global 

academic technology transfer profession. AUTM is an international organization with more than 

3,000 members, primarily managers of intellectual property, who come from over 300 

universities, research institutions and teaching hospitals as well as numerous businesses and 

government organizations. 

My office at Emory is responsible for managing a portfolio of around 1,000 biomedical 

inventions made by Emory faculty. Put simply, my professional colleagues and I shepherd them 

from the lab bench to the hands of commercial partners who then take them through capitalintensive development programs and complicated regulatory processes to get them into the 

hands of patients. While it may sound simple, in actuality, what we do is quite complex. We 

evaluate early stage technologies for commercial potential, determine the best intellectual 

property protection strategy, and market our technologies through a variety of channels in hopes 

of finding a corporate partner. We then negotiate often complicated agreements to ensure that 

our inventors, our universities and the taxpayer benefit from the ultimate products. Often we 

create or assist in the creation of entirely new companies to commercialize our technologies -

many of them creating jobs in our own region and state. After licenses are signed, we maintain 

relationships throughout the life of the agreement, sometimes insisting upon the return of our 

technology should our partner decide to abandon our technology. Most importantly, we work as 

a team with our inventors to help make the world a better place by getting academic 

technologies out of the laboratory and into the economy. 

As a result of our activities, over 90 percent of HIV patients in the U.S. on life-saving antiviral 

therapy take a drug developed at Emory. In addition, more than 4 million patients each year 

benefit from cardiac imaging innovations made at Emory, including our faculty inventor who 

underwent cardiac by-pass surgery. 

Prior to the 8ayh-Dole Act 

In the decades leading up to the 1980 Bayh-Dole Act, the federal government accumulated title 

to approximately 28,000 patents of which fewer than 5 percent were licensed to companies for 

commercialization. Several factors influenced the lack of commercialization: lack of incentives 

for universities and faculty to engage in the very inventions they had made, patent policies that 
15 

varied by federal agency and a lack of clarity of ownership of patents developed under federal 

funding. 

The Bayh-Dole Act boldly changed government patent policy, providing ownership and control 

to any invention made with federal funds to the very universities and small businesses that 

made them. The Act also established a federal patent policy that was uniformly applied to all of 

its agencies. Since its passage over 30 years ago, the Bayh-Dole Act has proven instrumental 

in recognizing that federal patent policy is an integral part of U.S. competitiveness and is the 

envy of nearly every other country in the world as evidenced by similar legislation in a wide 

variety of countries including South Africa, India, China, Japan, South Korea and Taiwan. The 

Bay-Dole Act has served the United States well for more than 30 years. Its beauty is that it 

creates market incentives for universities, researchers and companies to develop and invest in 

patenting and licensing new technologies or treatments for diseases. Without the local pride of 

ownership and control created by the Act, many of these discoveries would still be languishing 

on the shelf and no revenues would be returned to fund even more research. 

After Passage of the Bayh-Dole Act 

Universities responded to the passage of the Bayh-Dole Act by creating technology transfer 

offices (TTOs) to manage the inventions of their faculty. Only 23 universities had nos before 

Bayh-Dole; today, all major research institutions have a technology transfer operation. The level 

of basic technology transfer activity-invention disclosures, patent applications, patent 

issuances, and licensing- has increased steadily, too. AUTM has conducted an annual 

licensing activity survey since 1991. Attachment 1 shows how key measures of activity have 

increased since the inception of the survey. 

According to an article published in the journal Nature, "An invention by an academic in the 

United States has a better chance of going to market than it does in other nations." University 

Entrepreneurship and Professor Privilege, a working paper released by the Research Institute of 

Industrial Economics in Stockholm on April 12, 2012, also finds that U.S. technology-transfer 

offices have more market-analysis skills, invest more in commercialization and often license to 

solid businesses, boosting the chances of success.' 

Since the Bayh-Dole Act was passed, more than 5,000 new companies have formed around 

university research; the majority of which are located in close proximity to the university. In fiscal 

year 2010, university research helped create on average 1.7 new companies a day. University 

technology transfer creates billions of dollars of direct benefits to the U.S. economy every year. 

In fiscal year 2010, universities helped create 657 new products.2 

And, since the passage of Bayh-Dole, university innovations have helped create whole new 

industries, like biotechnology, where the U.S. enjoys a leadership role. The bioscience sector 

represents an employment impact of 8 million jobs, and 76 percent of biotech companies have a 

license from a university. At least 50 percent of current biotech companies got their start as a 

result of a university license. According to a 2009 study by the Biotechnology Industry 

Organization, 279,000 jobs were created through university licenses in the United States 

1 Nature, vol 485, p. 27, May 10, 2012 

2 AUTM Licensing Activity Survey FY2010, pg. 13 
16 

between 1996 and 2007 and as much as $187 billion was contributed to the gross domestic 

product. 3 

According to the former President of the NASDAQ Stock Market, an estimated 30 percent of its 

value is rooted in university-based, federally funded research results, which might never have 

been commercialized had it not been for the Bayh-Dole Act. 

Significant benefits for public health and wellbeing are derived from technologies developed 

under the Bayh-Dole Act, such as: 

• HIV medications 

• Synthetic penicillin 

Hepatitis B vaccine 

• HPV vaccine 

• Cisplatin and carboplatin (cancer therapeutics) 

Human growth hormones 

Treatments for Crohn's disease 

Avian Flu vaccine 

These breakthroughs occur not only in the field of biotechnology and life sciences, but in all 

fields ranging from electronics to agriculture. A few examples from AUTM's Better World Report 

series (http://www.betterworldproject.net/) are available in Attachment 2. 

Making Technology Transfer Stronger for the Future 

The academic community and federal agencies continue to find new ways to innovate and to 

manage innovations. Technology transfer offices are constantly adapting to changes in the 

economy, learning best practices from each other and understanding the marketplace. TTOs 

have adapted to address how to help ideas become companies-bridging the valley of deathand to do so they've had to get creative. They are creating accelerators, finding gap funding, 

encouraging entrepreneurship by faculty and students and rewarding that entrepreneurship. 

They're finding new ways to advance their technologies. While TTOs focus on negotiating 

licenses, that is just the means to an end. The end is to get technologies out the door and into 

public usage for the benefit of taxpayers. 

Technology transfer offices are using innovative online partnering tools such as the AUTM 

Global Technology Portal (GTP). Launched by AUTM in 2012, the GTP is a website that 

provides a "one stop shop" for industry to identify academic innovations available for licensing 

thereby helping facilitate licensing agreements and investments or partnership agreements with 

university startups. In addition to cutting edge technology transfer activities such as the GTP 

and other web portals, technology transfer offices are using showcases, partnering meetings, 

translational research funds (gap and seed). They're also training colleagues by providing 

entrepreneurship assistance and providing education for professors on commercialization. 

The old saying that technology transfer is a "contact sport" is still valid, but technology transfer 

professionals are making use of every marketing channel they have access too-including 

social networking sites such as Twitter, Linkedln and Facebook. 

Specific examples of innovative university programs can be found in Attachment 3. 

3 The Economic Impact of licensed Commercialized Inventions Originating in University Research, 1996-2007, Final Report to 

the Biotechnology Industry Organization, Pg. 8 
17 

Many universities across the country are working with smaller technology transfer offices to help 

them improve their technology transfer function. They are doing this through job shadowing, and 

networking events to share best practices, as well as with formal arrangements to assist with 

technology transfer services like the one recently announced between Notre Dame and Purdue. 

These projects reflect growing interest by universities toward a more active role in bringing new 

technology to market.' As you can see, universities are not resting on their laurels as we 

continue to innovate and find better ways to transfer our technology from the lab to the 

marketplace. 

Small Business Innovation Research (SBIR) and Small Business Technology Transfer (STIR) 

grants were recently reauthorized for six years, and that's great news for emerging companies 

in the early development stages of research-often university startups. AUTM and our sister 

organizations, such as the Association of Public and Land Grant Universities, and the 

Biotechnology Industry Organization, have advocated for reauthorization for years, knowing that 

the six month or even month-to-month extensions provided in the past did not give companies 

the ability to plan effectively. Now they can. In addition, allowing startups funded through 

venture capital to compete for SBIRISTTR grants will increase the number of new innovations 

available to the public, and making innovations available to the public is at the very heart of 

what we do. 

AUTM will continue its commitment to providing training and education for technology transfer 

professionals for years to come. We will provide networking events for our members to share 

best practices in technology transfer as we all expect new practices to continue to emerge, as 

they always have. Our members must continue to strive to find new ways to reduce the barriers 

to getting our technology from the lab to the market. We believe that continued support for 

research at NIH, NSF and other agencies, such as the newly formed NeATS, is the best way 

that the federal government can encourage even more commercialization of American 

technologies - after all, it is the level of research funding that drives the level of innovation at 

our universities. I, AUTM, as well as other organizations, believe that the U.S. technology 

transfer system will continue to be a catalyst for innovation in the U.S. economy for many 

decades to come. 
18 

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Attachment 1 

Statement of 

Todd T. Sherer, PhD, CLP 

President, Association of University Technology Managers 

Associate Vice President Research Administration, Executive Director, Office of Technology 

Transfer, 

Emory University 

Before the 

U.S. House of Representatives 

Committee on Science, Space, and Technology 

Subcommittee on Technology and Innovation 

June 19,2012 

AUTM has conducted an annual licensing activity survey since 1991. Each year, the survey 

reveals how activity has increased since the inception of the survey. 

Federal Research Drives Innovation 

$70.00 25000 

$60.00 20000 

$50.00 

$40.00 15000 

$30.00 10000 

$20.00 

$10.00 5000 

$0.00 0 

19911993 1995 1997 1999 2001 2003 2005 2007 2009 

~ 1: 

a 

c 

0 

:g 

~ 

~ z 
19 

Results of Investment - Startups and New Products 

800 

700 ~'.'~": :, , :,;;0;'; 600 <.11,1'''''''''''' 500 iii', ,,,"",,,,,,Startups 

,"""/: "",lil~""C::~~" 400 

",(r """"0" Products 

300 ",;:'1'~"':"" 200 

100 

0 I I I I 1 I j j I j i i i i I ! I [ 

1991199319951997199920012003200520072009 

Results of Investment 

1991-Universities reporting more than $10 million in license income 

$30,000,000.00 

$25,000,000.00 

$20,000,000.00 

$15,000,000.00 

$10,000,000.00 

$5,000,000.00 

$0.00 

! 

I 
20 

Results of Investment 

2010- Universities reporting more than $10 million in license income 

!$200,000,000.00 -1-------------------------;, 

$150,000,000.00 -I----------------------....",.-lIHl,.,i!-

$100,000,000.00 +----------------------R-I!--l!--H-~L 

$50,000,000.00 -I----------------....,rt-H·,:Kl-+riHHIHI-H-lIEconomic Development: Startups 

700 

j"f'~iF"~ 

I 

:<""'" ./' 

600 

500 

400 

If" 

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II I I I 

II I I I 

300 

200 

100 

4000 

3500 

3000 

2500 

2000 _Startups 

_In Home State 

1500 _Total Still operating 

1000 

500 
21 

Attachment 2 

Statement of 

Todd T. Sherer, PhD, CLP 

President, Association of University Technology Managers 

Associate Vice President Research Administration, Executive Director, Office of Technology 

Transfer, 

Emory University 

Before the 

u.S. House of Representatives 

Committee on Science, Space, and Technology 

Subcommittee on Technology and Innovation 

June 19, 2012 

Technology transfer breakthroughs occur not only in the field of biotechnology and life sciences, 

but in all fields ranging from electronics to agriculture. There are hundreds of examples in 

AUTM's Better World Report series (http://www.bettelWorldproject.ne\D. Here is just a sampling: 

Arizona 

Lighting strike detection technology that is now deployed in over 40 countries 

University of Arizona 

Chemical-free technology to help control crop diseases is licensed to companies in the 

Midwest 

University of Arizona 

California 

Topical gel treatment for AIDS-related Kaposi's sarcoma 

Salk Institute for Biological Studies 

Electrodes that enable three-dimensional imaging with atomic force microscopy 

Stanford University 

Novel IV catheters that eliminate risks of potentially dangerous needlesticks 

City of Hope 

Florida 

First blood test to diagnose brain injuries 

University of Florida 
22 

Georgia 

Once-a-Day HIV Medication 

Emory University 

Indiana 

Altered yeast strains for expanded biofuel supplies 

Indiana University 

Maryland 

Shigellosis Vaccine 

University of Maryland 

Nebraska 

Drought tolerant grass 

University of Nebraska-Lincoln 

New Organo-metallic reagents for the synthesis of drugs 

University of Nebraska-Lincoln 

Pennsylvania 

Artificial Lung 

University of Pittsburgh 

Vermont 

Sustainable water filtration technology that reduces phosphorous, suspended solids and 

pathogens from water supplies 

University of Vermont 

Wisconsin 

Brainport to help the blind "see" 

University of Wisconsin 
23 

Attachment 3 

Statement of 

Todd T. Sherer, PhD, CLP 

President, Association of University Technology Managers 

Associate Vice President Research Administration, Executive Director, Office of Technology 

Transfer, 

Emory University 

Before the 

U.S. House of Representatives 

Committee on Science, Space, and Technology 

Subcommittee on Technology and Innovation 

June 19, 2012 

Examples of Innovative University Programs 

The University of California, San Diego is launching a Center for Novel Therapeutics (CNT) to 

promote interaction between private company researchers and their university counterparts 

based at nearby clinical facilities. The CNT will bridge the gap between academic discovery and 

development of new therapeutics. 

The University of Florida will open its Clinical and TranSlational Research Building in 

Gainesville, Florida in February 2013. The building will house the university's Institute on Aging, 

the Clinical and Translational Science Institute, and an Ambulatory Clinical Research Center.' 

The Ohio State University and Ohio University launched a new venture fund designed to finance 

early stages of biopharma and other innovative technology ventures from the two schools as 

well as other Ohio-based academic institutions. 

Emory University created an in-house patent counsel as opposed to using more expensive 

outside law firms. This approach has not only saved the university money, but increased the 

number of patent filings by better aligning patent and license strategies. Emory's faculty 

inventors love this new service. 

1 Academia IncreaSingly Going Beyond Basic Research by·Setting Up Translationa! Med Centers, Genetic 

Engineering & Biotechnology News, May 30,2012 
24 

Mrs. BIGGERT. Thank you, Dr. Sherer. 

Ms. Innes, you are recognized for five minutes. 

STATEMENT OF MS. CATHERINE INNES, DIRECTOR, 

OFFICE OF TECHNOLOGY DEVELOPMENT, 

UNIVERSITY OF NORTH CAROLINA AT CHAPEL HILL 

Ms. INNES. Thank you. Good morning, Chairwoman Biggert, 

Ranking Member Edwards, and Members of the Subcommittee. 

Thank you for the opportunity to appear before you today to provide testimony on the challenging, unpredictable, and oftentimes 

rewarding process of moving good ideas from university labs to the 

marketplace. My name is Catherine Innes, and I am the Director 

of the Office of Technology Development at the University of North 

Carolina at Chapel Hill. I am responsible for patenting and commercializing promising new inventions arising from our research 

endeavors. My testimony today focuses on the implementation and 

success of the Carolina Express License Agreement, which is a onesize-fits-all approach to licensing technologies to UNC startup companies. 

In early 2009, UNC began internal discussions among faculty 

and research administrators on what could be done to stimulate 

and increase the volume of new companies starting around UNC 

technologies and how the process could be streamlined. We wanted 

to start more companies and help them become sustainable. However, we were constrained by limited financial resources and unable to invest in these ventures. Instead, we focused on finding 

ways to make the license process faster, easier, and more transparent so that startups could more readily get up and running. 

UNC formed a committee comprised of serial entrepreneur faculty members, licensing staff, general counsel, and a local venture 

capitalist to consider what we might do. They reviewed the terms 

of previous startups and determined the historical range of financial terms and equity positions, both at the time of license and at 

the point of a liquidity event. Our data indicated that all of our 

past deals had been actually very similar and that by the time an 

equity was liquid, the university’s share was less than one percent. 

The committee arrived, then, at a set of financial terms that the 

stakeholders agreed would be fair to all parties and would not need 

to be renegotiated for the company to attract financing. Minimizing 

the need to renegotiate was an important objective as the negotiation process can be both time-consuming and costly for all involved. 

A significant factor in the successful launch of this program was 

the buy-in from three local law firms that worked with the majority 

of our startup companies. They agreed to forfeit the fees they 

would normally receive to negotiate individual deals with the university and recommend their client sign the express license. While 

in part altruistic, the firms all expect their businesses will grow in 

the long run as we increase the rate at which we are starting new 

companies. 

Another key feature of the express license is that it is optional. 

If a company wants a different deal, they are free to negotiate that 

deal with the university as usual. To qualify for the express license, the company must have a UNC faculty, student, or staff 
25 

member as one of the founders and the company must submit a 

business plan for review and approval by the university. 

The financial terms of the license agreement are modest but, we 

believe, fair for the stage of development of the technologies being 

licensed. One of the most unique features of the agreement is that 

in lieu of taking equity, the university receives a cash payout of .75 

percent of the value of the company at a liquidity event. Typically, 

universities take equity in their startup companies, but we felt the 

cash payoff when the company goes public or is acquired is much 

less burdensome than dealing with a stock issuance and we end up 

at the same overall value point. 

The full text of the Carolina express license and related program 

documents can be found on my office’s Website, and I have provided that URL in my written testimony. 

As with any new and different approach, there are supporters 

and critics. Our motto was unique when first implemented because 

it offered the same set of terms to all startups regardless of technology. Many licensing professionals felt that the financial terms 

should vary by technology or should offer a greater return to the 

university. These are relevant points and questions each institution 

should ask in considering the implementation of a standard licensing program. 

We have found the program to be very effective and it serves our 

objective of starting more companies. In the 2–1/2 years since inception, UNC has launched 19 startup companies around intellectual property. All but three used the Carolina express license. We 

have more than doubled the number of new companies forming 

each year. At this time, all these companies are still in existence, 

although most are struggling with fundraising. 

We have learned through this process that most of our companies 

cannot repay the university for patent expenses on time, and thus 

we must carry these costs for them for much longer than anticipated. This is straining our internal resources, but we believe 

starting companies is important and we continue to explore new 

ways to support this effort. Many of our companies have gotten 

started by winning SBIR grants and we very much value this program. 

In summary, I strongly believe that a standard licensing program 

can work for universities, particularly for licenses to startups. For 

a one-size-fits-all program to be successful, the university must be 

willing to settle for a fair deal rather than the most lucrative deal. 

It is also important to establish criteria for when the standard 

agreements can be used, and perhaps more importantly, when they 

cannot. 

Finally, to implement a standard agreement that is intended to 

work for many deals, it is essential for the university to gain the 

support and buy-in of those negotiating on behalf of the other side 

of the deal because just floating a standard that one party thinks 

is workable will not likely get much traction. 

Thank you again, Madam Chairwoman and Subcommittee Members, for the opportunity to appear before you today. I stand ready 

to answer any questions you may have. 

[The prepared statement of Ms. Innes follows:] 
26 

Testimony of Catherine Innes 

Director, Office of Technology Development 

The University of North carolina at Chapel Hill 

Presented before the 

U.S. House of Representatives 

Committee on Science, Space, and Technology 

Subcommittee on Technology and Innovation 

Best Practices in Transforming Research into Innovation: 

Creative Approaches to the Bayh-Dole Act 

June 19, 2012 

Good morning Chairman Quayle, Ranking Member Edwards, and Members of the 

Subcommittee. Thank you for the opportunity to appear before you today to provide 

testimony on the challenging, unpredictable, and oftentimes, rewarding process of moving 

good ideas from university labs to the marketplace. My name is Catherine Innes and I am the 

Director of the Office ofTechnology Development at the University of North Carolina at Chapel 

Hill. I am responsible for patenting and commercializing promising new inventions arising from 

our research endeavors. I know the committee is aware that the Bayh-Dole Act encourages 

universities to license their innovations to small businesses and the Act spurred many 

universities into developing programs and processes to form and support startup companies. 

My testimony today focuses on the implementation and success of the Carolina Express license 

Agreement, which is a 'one-size-fits-all' approach to licensing technologies to UNC startup 

companies. 

Personal Background 

I have more than 20 years experience in academic technology transfer at three leading US 

public institutions: the University of California, the University of Washington and currently, the 

University of North Carolina at Chapel Hill. I have licensed hundreds of technologies and been 

involved in licensing transactions with over 100 startup companies. 

Genesis of the Carolina Express License Agreement 

UNC began very modest technology transfer and commercialization activities shortly after the 

passage of the Bayh-Dole Act in 1980 but did not actively pursue commercialization and startup 

formation until the mid '90s. In the boom years that followed, some 20 companies formed, but 

the rate of new company formation slowed considerably between the years of 2000 and 2008. 

In early 2009, UNC began internal discussions among faculty and research administrators on 

what could be done to stimulate and increase the volume of new companies starting around 
27 

UNC technologies and how the process could be streamlined. New company formation plays an 

important role in regional economic development; but even more importantly, forming a 

company around an embryonic technology may be the only way to move it forward into 

commercial applications. Many innovations arising from university research are simply too 

nascent and pose too many technical risks to be licensable to larger firms until more data on 

efficacy can be obtained. This is especially true for small molecules, biological therapeutics and 

other life science technologies which represent nearly 80% of our innovation portfolio. To 

advance inventions from UNC we need to foster a robust startup pipeline. 

Historically, the licensing office at UNC, the Office ofTechnology Development, was responsive 

and supportive of startups, but deals tended to become bogged down because faculty founders 

were unfamiliar with the licensing process and the legal obligations surrounding intellectual 

property. It was also costly for new companies to pay their business attorneys to negotiate a 

license with the University and thus the negotiations often dragged on while necessary funds 

were secured to continue the process. 

At Carolina, we wanted to start more companies and help them become sustainable, but we 

were constrained by limited financial resources and were unable to invest in these ventures. 

Instead, we focused on finding ways to make the license process faster, easier and more 

transparent so that the money a company did have could go toward getting the company up 

and running. 

As a first step, a committee comprised of serial entrepreneur faculty members, licensing staff, 

general counsel and a local venture capitalist reviewed the terms of all of Carolina's previous 

startups to determine the range of historical royalty, eqUity, milestone and annual fees, at both 

the onset of the deal and after the deal had been renegotiated to accommodate institutional 

investment in the company. The committee concluded that all of our past deals had been very 

similar by the point of company liquidity and that the University really never had a large equity 

stake after multiple rounds of dilutive funding. 

The committee arrived at a set of financial terms that the stakeholders agreed would be fair to 

all parties and would not need to be renegotiated for the company to attract financing. The 

financial return to the University was on the low side, but within our historic norms for early 

stage life science deals. The next step was to find a way to embed the agreed upon financial 

terms into a complete contract that all parties would agree to sign. While straightforward in 

principle, it can take months to negotiate terms to everyone's satisfaction. 

We arrived at the final contract after only a few rounds of negotiation. What made the process 

work so smoothly is that three local law firms that serve as business counsel for most startups 

in the area agreed to work with us to develop the license. It is important to recognize that by 

eliminating the need to negotiate a license for each new startup these firms were forfeiting 

significant revenue they would have otherwise been paid. Their rationale was altruistic in part, 

but they also recognized that by fostering a larger and more vibrant startup community would 

generate long term gains that could greatly exceed any short term losses. 

2 
28 

Features of the Agreement 

The Carolina Express License is an option for all startups with a UNC faculty, student or staff 

founder if we approve of the company's management team and business plan. The same 

financial terms are offered to ail, regardless of the technology, and the financial terms in this 

agreement represent the best deal available from the University. 

Key license provisions include: 

• No upfront license fees; 

• Six month delay in obligation to begin repayment of patent costs; 

• Optional payment plan to spread patent cost reimbursement over four years; 

• A 1% royalty on products requiring Food and Drug Administration approval based upon 

human clinical trials; 

• A 2% royalty on all other products; 

• A cash payout to UNC equal to 0.75 percent of the company's fair market value atthe 

time of a merger, stock sale, asset sale or initial public offering; and 

• Provisions to make products available on a humanitarian basis in developing countries. 

The agreement does not include provisions granting UNC equity in the company or milestone 

fees. The committee found that while most universities' start-up deals have equity provisions 

in lieu of cash upfront fees, it is difficult for the University to manage equity and by the time a 

liquidation event occurs, the University typically only holds a small amount of equity in the 

company. One venture capital firm analyzed historical transactions and found that on average, 

a university has .6% equity in their startup companies at a liquidity event. UNC arrived at the 

payout value and royalty terms through an analysis of our previous transactions. 

The first version of the Carolina Express license provided a one year deferment for repayment 

of incurred patent costs. We anticipated that the companies would be able to raise sufficient 

funds during the first year to repay outstanding patent costs by the first anniversary of the 

license, but this objective proved to be overly ambitious. Many companies have had to request 

an extended payment schedule, which the University has granted. In the current version of the 

Carolina Express License companies are required to begin monthly payments towards patent 

costs after six months. Ifthey are unable to pay outstanding costs in full by the end of the first 

year, the University will offer an extended repayment schedule in exchange for increased 

payout percentage. 

The full text of the Carolina Express license is available on our website at 

http://otd.unc.edu!starting a company.php#CaroExLic 

Implementation, SUpporters and Critics 

Our model was unique when first implemented because it offered the same set of terms to all 

startups. Many licensing professionals felt that their deals were too dissimilar to offer the same 

3 
29 

financial terms to all or that the university should receive greater returns from its licenses. 

These are relevant points and questions each institution should ask in considering the 

implementation of a standard licensing program. The value of standard licenses is they can be 

put in place quickly with minimal negotiation. However, for multiple parties to agree to use the 

standard terms the university will likely have to offer favorable financial terms and pose no 

unreasonable restrictions or liabilities. If the objective is to maximize financial returns to the 

university a standard license is not going to be helpful. 

Many licensing professionals are surprised to learn that the startup companies are willing to 

accept a license agreement without negotiation. The important element in our case is that the 

agreement is non-negotiable because it has already been negotiated. By working with the local 

law firms that represent nearly all of our emerging startup companies we were able to reach 

agreement on a set of terms that each law firm would recommend to its clients without 

hesitation. Without the law firms' willingness to partner with UNC on this endeavor we likely 

would not have been able to arrive at a standard agreement. In areas where startup companies 

use dozens of law firms to represent them rather than two or three, it might be very difficult to 

find a set of terms that all firms would accept. 

It is also essential to consider whether or not you have a set of transactions that are inherently 

similar. UNC is predominantly licensing very early stage life science technologies and the 

Express license royalty terms reflect those of our past deals in this sector. We have used this 

license for non-life science technologies and were willing to accept that our returns for these 

may be lower than if we negotiated a license for each specific deal. In recent years, a number 

of universities and institutions around the country that have implemented standard licensing 

programs and several, including the NIH, that have implemented programs similar to the 

Carolina Express License. 

Results to date 

In the two and a half years since program inception, UNC has launched 19 startup companies 

around intellectual property; all but three used the Carolina Express license. The vast 

majority, 79%, of these companies have formed around life science technologies. 

Prior to implementation of the Express License, we were starting 3 companies per year, on 

average. For the past two and a half years we have started 7-8 companies per year, more than 

doubling our historical average. At this time, all 16 Carolina Express companies are still in 

existence, though most are struggling with fund raiSing. One of our companies has attracted 

institutional seed funding and several others have received loans from the regional small 

business development entities, or leveraged the SBIR and STIR programs. 

Summary 

We have learned through this process that most of our companies are having trouble finding 

sufficient funding to support payment for patent costs so the University must carry expenses 

4 
30 

for three or four years rather than the one year we originally anticipated. This is straining our 

internal resources, but we believe starting companies is important and we must continue to 

find new ways to support this effort. 

UNC has invested in a program called Carolina KickStart to improve the probability of 

successfully commercializing the intellectual property developed at UNC faculty by assisting 

faculty in the business planning process, building liaisons with industry, identifying stageappropriate funding, educating faculty about the commercialization process, and incubating 

companies spinning out of UNC. Carolina KickStart is part of the NC Translational and Clinical 

Sciences (NC TraCS) Institute, the academic home of the NIH Clinical and Translational Science 

Awards (CTSA) at UNC. 

In addition, UNC has launched the Innovate@Carolina Campaign to implement the next 

generation of cross-campus entrepreneurship initiatives. The $125 million campaign seeks to 

make Carolina a world leader in launching university-born ideas for the good of society. Key 

initiatives of the campaign include: seed funding for the most promising innovations on 

campus; entrepreneurs-in-residence to mentor and counsel students and faculty involved in 

entrepreneurial ventures; Innovation Professorships; a student Innovation Hub; an Innovation 

Scholars Program; and the expansion of the Carolina KickStart program among other initiatives. 

I strongly believe that a standard licensing program can work for universities, particularly for 

licenses to university startups. For these programs to be successfu I, the university must be 

willing to settle for a fair deal rather than the most lucrative deal and establish criteria for when 

the standards can be used and when they cannot. It is essential for the university to gain the 

support and buy-in of those negotiating on behalf of the startups as they must be willing to 

forfeit payment for negotiating multiple deals with the university for the benefit of the program 

and the opportunity for a greater volume of business in the future. 

Thank you, again, Mr. Chairman and Subcommittee Members for the opportunity to appear 

before you today. I stand ready to answer any questions you may have. 

5 
31 

Mrs. BIGGERT. Thank you, Ms. Innes. 

Mr. Nisbet, you are recognized for five minutes. 

STATEMENT OF MR. KEN NISBET, 

EXECUTIVE DIRECTOR, 

UNIVERSITY OF MICHIGAN TECHNOLOGY TRANSFER 

Mr. NISBET. Thank you, Madam Chair, for the opportunity to 

speak to you today on the important topic of technology transfer 

and the importance to the American public. I am Ken Nisbet, Executive Director of Tech Transfer at the University of Michigan. 

The University of Michigan has a well-deserved reputation for 

excellence and the breadth and depth of its research of activities 

with over $1.2 billion of research expenditures annually. While 

having a robust pipeline of research discoveries is an ingredient for 

tech transfer success, it is only one component of many. A critical 

factor is support from university leadership to provide the resources and encouragement for tech transfer and entrepreneurship. 

Our President, Mary Sue Coleman, our Executive Officers, our 

Deans, and others regularly communicate the importance of our 

tech transfer activities with our faculty, our students, our staff, and 

alumni. 

Each year, our faculty report to our office over 300 new discoveries that form a diverse portfolio of technologies and market applications. We enter into over 100 different agreements with our industry partners and annually and spin out an average of one new 

start up every five weeks, most of which stay in Michigan. We also 

strive to measure what is even more important—the impact of our 

technologies and our activities on our communities, our people, and 

our Nation. 

There are a lot of good ideas to enhance tech transfer, but it is 

important to tailor these initiatives to account for the advantages 

and the challenges of a particular region. I want to highlight three 

particular efforts that we believe are making a big difference at the 

University of Michigan. 

The first involves changes in investments we have made within 

our office and our university to improve our operational effectiveness. The second is using early stage development funding to reduce the technical and market risk of our early stage innovations. 

The third is enhancing our access to talent to speed the deployment 

of our technologies and the formation of our startups. 

Over the last 10 years, we have revamped our office culture by 

attracting and training tech transfer professionals with technical 

and market skills and an appreciation for creativity, risk-taking, 

and customer service. We have simplified our work documents and 

processes to make working with others more rapid, effective, and 

friendly. We have standardized agreements for some situations— 

for example, software and research tool licensing—but we find it 

important given the wide diversity of technology opportunities and 

business models to be flexible and nimble for the value propositions 

required by our partners. 

We have established a full-service venture creation capability 

with our office called the Venture Center to more effectively form 

great startups for entrepreneurs and our investors and to make it 

easier to do business with the university. We have changed univer-
32 

sity policies and practices to motivate our faculty to engage with 

industry and to participate in commercialization activities. 

We have formed broader industry research agreements with innovation partners such as Procter & Gamble, Dow, and Ford, and 

we have addressed industry needs for predictability and flexibility 

with a new program, the Michigan Research Advantage, that provides up-front license terms for future inventions that may be derived from industry-sponsored research. 

We have expanded the funding resources available for our early 

stage technologies and new startup opportunities. Our university 

has several translational funds that allow technical validation for 

emerging discoveries. One example is the Coulter Translational 

Fund for promising biomedical innovations created via a matched 

endowment from the Coulter Foundation. 

Complementing our translational funds, the university is reinvesting our tech transfer revenues into an internal gap fund that 

is generously matched with funds from the State of Michigan to address market validation and commercial readiness issues. And recently, we established a program called MINTS—Michigan Invests 

in New Technology Startups—in which the university, alongside a 

qualified venture firm, is investing endowment funds in promising 

U of M startups. 

Having access to high-quality talent is a key ingredient for success, and we focused our efforts to create several effective talent 

initiatives. We have recruited and trained graduate students and 

post-docs to provide technology assessments and market analysis to 

enable our licensing professionals to make quicker decisions and 

find more potential partners. We have also pioneered a program to 

embed within tech transfer a team of seasoned entrepreneurs, our 

Mentors-in-Residence, to assist our efforts. The result has been improved venture creation capabilities and a stream of high-quality, 

sustainable startups that are creating jobs and providing superior 

investment returns. 

And seeing the positive impact of our U of M talent programs 

over the last five years, we recently proposed and received State 

funding for a Tech Transfer Talent Network. With six other Michigan universities, we are sharing and creating talent tools, resources, and activities tailored to their regions to accelerate tech 

transfer success for their institutions. 

In conclusion, at the University of Michigan, we are firmly committed to continual improvement of our tech transfer capability and 

sharing of our findings to maximize the impact of research discoveries on our economy and our quality of life. As U of M President 

Coleman has said, ‘‘universities bring ideas to life but it is technology transfer that gives them wings and lets them fly.’’ 

Thank you for this opportunity. I am happy to answer any questions. 

[The prepared statement of Mr. Nisbet follows:] 
33 

STATEMENT OF 

MR. KEN NISBET 

EXECUTIVE DIRECTOR OF TECHNOLOGY TRANSFER 

UNIVERSITY OF MICHIGAN 

BEFORE THE 

TECHNOLOGY AND INNOVATION SUBCOMMITTEE 

HOUSE SCIENCE AND TECHNOLOGY COMMITTEE 

ON 

"BEST PRACTICES IN TRANSFORMING RESEARCH INTO INNOVATION: 

CREATIVE APPROACHES TO THE BAYH-DOLE ACT" 

TUESDAY, JUNE 19, 2012 
34 

Thank you, Mr. Chairman, for the opportunity to speak to you today about 

the important topic of technology transfer and its value to the American public. I am 

Ken Nisbet, Executive Director of Technology Transfer at the University of Michigan. 

Our office helps to transform university research discoveries into valuable 

technologies for existing businesses and as the basis for creating new start-up 

ventures, both of which can generate jobs and economic benefits for the University, 

our communities and our nation. 

The University of Michigan has a well-deserved reputation for excellence in 

the breadth and depth of our research activities, with over $1.2 billion of annual 

expenditures. While having a robust pipeline of research discoveries is an 

ingredient for tech transfer success, it is only one component of many. A critical 

factor is support from University leadership to provide the resources and 

encouragement for tech transfer and entrepreneurship. Our President, Mary Sue 

Coleman, our Executive Officers, our Deans and others regularly communicate the 

importance of our tech transfer activities to faculty, students, staff and alumni. 

Tech transfer is hard work requiring professionals with an unusual 

combination of skills and qualifications. Each year our faculty report to our office 

more than 300 new discoveries that form a diverse portfolio of technologies and 

market applications. We enter into over 100 different agreements with our industry 

partners annually and spin out an average of one new start-up every five weeks, 

most of which stay in Michigan. We also strive to measure what is even more 
35 

important - the impact of our technologies and our activities on our communities, 

our people and our nation .. 

Examples of Michigan technologies making an impact on society include 

FluMist®, a nasally-administered flu vaccine that is an alternative to a flu shot, the 

IntraLase® FS bladeless technology for LASlK corrective eye surgery, Arbor 

Networks, a University start-up that is providing network access security to data 

centers and businesses around the world and ARTISTRY® anti-wrinkle firming 

serum, a recently introduced cosmetic from Amway Corporation that uses a 

patented U-M technology. 

There are a lot of great ideas to enhance tech transfer, but it is important to 

tailor these initiatives to account for the advantages and challenges of a specific 

region. I want to highlight three particular efforts that we believe are making a big 

difference at the University of Michigan. The first involves changes and investments 

we have made within our office and our university to improve our operational 

effectiveness. The second is using early-stage development funding to further 

develop and reduce the technical and market risk of our early stage innovations. 

And the third is enhancing our access to talent to more fully understand market 

needs and speed the deployment of our technologies and formation of our start-ups. 

Over the last ten years, we have revamped our office culture by attracting 

and training tech transfer professionals with technical and market skills and an 

appreciation for creativity, risk-taking and customer service. We've simplified our 
36 

work documents and processes, to make working with others more rapid, effective 

and friendly. We have standardized agreements where it makes sense (for example, 

in software and research tool licensing), but we find it important, given the wide 

diversity of technology opportunities and business models, to be flexible and nimble 

for the value propositions required by our partners. 

We've established a full service venture creation capability within our office, 

called the Venture Center, to more effectively form great start-ups for our 

entrepreneurs and investors, and to make it easier to do business with the 

University. We have changed University policies and practices to motivate our 

faculty to engage with industry and participate in commercialization activities, and 

to encourage our students to bring their own innovations to campus without fear of 

losing ownership of their inventions. And we encourage outreach and service 

internally, for example providing mentoring to student entrepreneurs, within our 

region and beyond, which enhances our market understanding, cultivates more 

partnerships and markets our resources and capabilities. 

We've formed broader industry research agreements with innovation 

partners such as Procter & Gamble, Dow, and Ford. And we have addressed 

industry needs for predictability and flexibility with a new program, the Michigan 

Research Advantage, that provides up-front license terms for future inventions that 

may be derived from industry-sponsored research. 
37 

We have expanded the funding resources available for our early-stage 

technologies and new start-up opportunities. Our University has several 

translational funds that allow technical validation for emerging discoveries. One 

example is the Coulter Translational Fund for promising biomedical projects, 

created via a matched endowment from the Coulter Foundation. Complementing 

our translational funds, the University is reinvesting tech transfer revenues into an 

internal "Gap" fund that is generously matched with funds from the state of 

Michigan to address market validation and commercial-readiness issues. And 

recently, we established a program called MINTS (Michigan Invests in New 

Technology Start-ups) in which the University, alongside a qualified venture firm, is 

investing endowment funds in promising U-M start-ups. We have worked hard to 

establish partnerships for other funding resources, such as a Pre-Seed Fund 

administered by Ann Arbor SPARK, our local economic development partner. Our 

State has helped to broaden our early stage venture resources with Venture 

Michigan, a fund of funds and other programs administered by another partner, the 

Michigan Venture Capital Association. We have established effective relationships 

with local and national venture funding partners, understanding their investment 

needs and resources and providing them tailored funding opportunities to make a 

"yes" more probable. 

Having access to high-quality talent is also a key ingredient for success, and 

we have focused our efforts to create several effective talent initiatives. We've 

recruited and trained graduate students and post-docs to provide technology 
38 

assessments and market analysis to enable our licensing professionals to make 

quicker decisions and to find more potential partners. We also pioneered a program 

to "embed" within tech transfer a team of seasoned entrepreneurs, our "Mentors-inResidence," to assist our efforts. The result has been improved venture creation 

capabilities, and a stream of high quality, sustainable startups that are creating jobs 

and providing superior investment returns. And seeing the positive impact of our 

U-M talent programs over the last 5 years, we recently proposed and received state 

funding for a Tech Transfer Talent Network. With six other Michigan universities, 

we are sharing and creating talent tools, resources and activities -- tailored to their 

regions -- to accelerate tech transfer success for their institutions. 

In conclusion, at the University of Michigan we are firmly committed to 

continual improvement of our tech transfer operational capabilities and sharing of 

our findings to maximize the impact of research discoveries on our economy and 

our quality of life. As U-M President Coleman has said: "Universities bring ideas to 

life. But it is technology transfer that gives them wings and lets them flY." 

Thank you for this opportunity. I am happy to answer any questions you 

may have. 

-0-
39 

Mrs. BIGGERT. Thank you, Mr. Nisbet. 

Mr. Rosenbaum, you are recognized for five minutes. 

STATEMENT OF MR. ROBERT ROSENBAUM, 

PRESIDENT AND EXECUTIVE DIRECTOR, 

MARYLAND TECHNOLOGY DEVELOPMENT CORPORATION 

Mr. ROSENBAUM. Thank you, Madam Chairwoman, Members of 

the Committee, for the opportunity to speak with you today. We 

have heard today so far from three folks with primarily academic 

focus. I bring a little bit different focus, never been employed by 

a university, always been in the private sector, and now am with 

a quasi-public entity. I am Rob Rosenbaum, President of the Maryland Technology Development Corporation, proud to be representing the State that was recently named number one for entrepreneurship in the country by the U.S. Chamber of Commerce and 

the home for many billions of dollars of federal research money, 

both in our universities and federal labs. 

As an intermediary organization, we look at ourselves first and 

foremost as partners to the tech transfer offices. There are a lot of 

elements that go into getting a business or technology into a business. Tech transfer is one of the steps. Intermediaries provide 

many other skills and opportunities that don’t exist within the university offices and often don’t exist within the entrepreneurs that 

are trying to commercialize these technologies. So it is intermediaries; it is we folks that can get in there and help them and 

teach them and train them on the things that they need to do. 

The other important difference for intermediaries versus other 

constituents and stakeholders in the process is that we are specifically and directly incentivized to do tech transfer, to create jobs, to 

create economic development. We are not there to create income for 

the universities, we are not there to put our names on patents, and 

we are not there to take the fame for successful IPO. We are there 

to create jobs and that is our primary role. 

One of the things that we help do is deal with the difficulties of 

university culture. And I think it is fair to say that universities 

have a very distinct culture in and of themselves, and the researchers within those universities have a particular headset in and of 

themselves. Primarily speaking and historically speaking—although it is changing—researchers within universities are very 

risk-averse. They enjoy doing research, they enjoy the comforts of 

their labs, they enjoy creating basic knowledge, and they have been 

incentivized to do this over the years. 

Universities are slowly changing their culture and changing the 

incentives to get researchers to be a little bit more risk-taking. Programs such as sabbaticals to take job creation and job company formation to reality, programs that include tenure as—include commercialization as part of tenure tracks are all important. Also, the 

university culture is one of fairly complex and byzantine rules and 

regulations. Intermediaries help the entrepreneurs who have never 

even known the existence of tech transfer offices to understand 

what is going on, to help them understand what an express license 

is versus trying to negotiate their own. So we play an important 

role in that respect. 
40 

We incentivize behavior. We believe in incentivizing behavior and 

we believe that the federal policies can do such things. We believe 

that activities such as job credits for job creation and commercialization on the commercial side, on the private sector side, would 

leverage public dollars with private dollars in order to introduce 

and exaggerate the activity of private sector organizations. We believe that there is an opportunity for grant set-asides for commercial enterprises to do tech transfer. SBIR programs are there to 

promote commercial activities, but they are not targeted at tech 

transfer. They could be targeted at tech transfer. 

Some of the samples and examples of these successes in Maryland and one of the programs that I think is known to the Committee Members is the Maryland Innovation Initiative, which is a 

new program that aggregates five research universities with a 

unique process of mining technologies and utilizing an intermediary to bring those technologies to the public and to bring the 

entrepreneurs together with those technologies. 

We have also had experience in forming foundations that can be 

an aggregator for private sector dollars to be brought to universities or federal labs in order to promote private-sector involvement 

and commercialization of technologies. We have many, many more 

examples, and we have created hundreds of companies and thousands of jobs and would be happy to answer any further questions 

you have on our specific successes or any other subjects. 

Thank you. 

[The prepared statement of Mr. Rosenbaum follows:] 
41 

f'::'EDCO 

Technology·Oevelopment·Corporation 

TESTIMONY OF ROBERT A. ROSENBAUM 

President & Executive Director, Maryland Technology Development Corporation 

Commmittee on Science, Space and Technology 

Subcommittee on Technology and Innovation 

June 19, 2012 

Mr. Chairman, members of the Committee, thank you for the opportunity to appear before you 

to discuss Best Practices in Transforming Research inta Innavation: Creative Approaches ta 

Bayh-Da/e Act. 

Background 

As an innovation economy with massive future potential, Maryland ranks highly. Nationally, 

Maryland ranks 1st in federal research and development dollars invested per capita and 1st in 

Ph.D. scientists and engineers per capita. According to the Milken Institute, Maryland is in the 

top two for science and technology and we occupy the top slot for human capital investments. 

The u.s. Chamber of Commerce also puts Maryland in the top five for growth and Education 

Weekly has ranked Maryland's public schools 1st for four years running. And finally, most 

recently in another report released by the u.s. Chamber of Commerce, Maryland was ranked 

1st in entrepreneurship and innovation. However, there is a clear gap between the significant 

potential suggested by these rankings and the current level of entrepreneurial activity across 

the State. 

The 2010 Annual Survey of the Association of University Technology Managers (AUTM) 

reported the following data for Maryland institutions: 

Total Maryland Invention Disclosures in FY 768 

2010 

National Ranking for Invention Disclosures 45th 

per Research Expenditures 

The national rankings for start-up company formation suggest similarly low rankings, given 

Maryland's expenditures and assets: 

National Ranking for Start-up Companies 40th 

Formed per Research Expenditure 

National Ranking for Start-up Companies 37th 

Formed per Invention Disclosure 

556S Sterrett Place' Suite 214 • Columbia' Maryland' 21044 

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Page 1 of 8 
42 

MEDea 

Technology-Development-Corporation 

National Ranking for University Start-ups 38th 

Formed in Maryland 

National Ranking for License Agreements 30th 

Completed per Disclosure 

The Maryland Innovation Initiative 

The purpose of the Maryland Innovation Initiative (MI2) is to: promote the commercialization 

of research conducted in participating universities; encourage qualifying universities to partner 

on commercialization proposals, strategies, and funding sources, including with federal 

laboratories located in Maryland; and facilitate technology transfer from university labs to 

start-up companies. 

MI2 is the first of its kind partnership between the State and Maryland's five academic research 

institutions designed to accelerate commercialization of technology, including, but not limited 

to, medical devices, imaging, informatics and cyber-security. Proof of concept and prototyping 

grants will be awarded to innovators and innovations best positioned to quickly create products 

that will meet needs present in the commercial marketplace. By supplying the right expertise 

and incentives, a relatively modest investment by the program can facilitate the transfer new 

technologies from the lab to the market within two years. 

The State has appropriated $5M to establish M12. Additionally, all five of the state's academic 

research institutions, University of Maryland College Park (UMCP), University of Maryland 

Baltimore (UMB), University of Maryland Baltimore County (UMBC), Morgan State University 

and Johns Hopkins University (JHU) are participating in the program. The three largest 

universities, UMCP, UMB and JHU are investing $200k each and the two smaller universities, 

UMBC and Morgan State are investing $100k each. These investments by the universities are 

new dollars expended beyond current resources to seed research. Combined, this provides an 

annual budget of $S.8M for the program. 

MI2 will be managed by a full-time Director. The Director will report to the participating 

members of the initiative, which will include one representative from each participating 

university, one State official, and two private sector representatives with relevant professional 

expertise appointed by the Senate President and House Speaker. 

MI2 will use "site miners" who will: 

• Be either technology transfer professionals who work in consultation with university 

faculty, or members of university faculty; 

5S65 Sterrett Place' Suite 214 • Columbia' Maryland' 21044 

410' 740 • 9442 

Page 2 of 8 
43 

E':d)EDCO 

Technology.Oevelopment·Corporation 

• Create inter-disciplinary teams of clinicians, scientists, engineers, business strategists, 

lawyers, and pharmacists to solve existing problems identified in the commercial 

marketplace; and 

• Will work within the academic research facilities, and will come together as a single 

group periodically to enable multi-university collaborative solutions to identified market 

needs. 

The teams created by the site miners will compete for up to 40 grants of up to $100K. The 

grants will be awarded on a rolling basis over the course of 12 months by the MI2 board. The 

board will meet as often as necessary to ensure the grants are awarded in a timely manner. 

By linking innovators with experienced entrepreneurs and the technology transfer offices at 

these five institutions, we anticipate 10% 20% of the funded projects will become new startup companies, be licensed to established companies, and/or become standards of clinical care 

within two years of receiving funding. 

In addition to creating jobs, spinning off new businesses, and spurring growth in Maryland's 

innovation economy, MI2 will generate broader collaboration among the State's leading private 

and public research institutions. The partnership will further develop the existing 

entrepreneurial environment within the institutions, and allow all the institutions to seek 

outside funding for more technology transfer and commercialization projects. 

Tech Transfer Best Practices and Policies 

In an effort to think about what policy changes could be made in support of university 

technology transfer efforts, one approach is to start with the greatest obstacles to 

commercializing technology and consider the policies that could minimize these obstacles. To 

this pOint, university technology commercialization faces two significant challenges, which have 

the potential to be affected by federal policy: 

1. Invention disclosures resulting from federal (and other) funding are not sufficiently 

mature for commercialization and cannot be evaluated effectively for their 

commercial applications and potential- there is insufficient funding for translational 

research in universities (the "Translational Research Problem"); and 

2. There is not sufficient interaction between universities and industry to foster 

commercialization of university technology (the "Industry Involvement Problem"). 

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Page 3 of 8 
44 

AEDCO 

Technology-Development.Corporation 

to 

The Translational Research Problem (#1 above) has two main causes. First, the majority of 

federal funding programs supporting university research are targeted to basic research. Long 

standing federal policies focused on basic research have positioned the United States as the 

world leader in scientific discovery and helped to position the nation as a leader in higher 

education. While a strong policy focus supportive of basic research has served this nation well 

by creating a wealth of new discoveries, it has ignored the step of commercialization that is 

required for these discoveries to be translated into products that can benefit the public good. 

Second, the academic culture that values independent, basic research and a focus on 

publication in academic journals, which also have a bias toward basic research, stifle 

translational research and commercialization. 

Cognizant of the power of public funding to influence behavior, over the last 8 years TEDCO 

developed and refined two programs to promote desired behaviors. 

The techstart program is designed to validate the commercial need for an innovation developed 

by researchers in the insulated environs of a research lab. The program's key feature is that 

before excessive dollars are spent on pilot programs or proof of concept projects a team 

evaluates the commercial demand for the technology. Specifically, an entrepreneur, the 

inventor and a representative from the tech transfer office come together to answer a strategic 

question. Depending upon the technology this question or analysis may be what is the 

commercial market size, what is the competitive landscape, a freedom to operate evaluation, 

are there viable distribution channels, or the answer to any other strategic issue that would 

indicate commercial viability. 

Only with an affirmative answer to the TechStart is further money invested in the translation, or 

commercialization of the technology at hand. The benefits of this approach are a significant 

savings of capital, human resources and infrastructure assets. First, this research can be done 

for $10k to $15k, a small fraction of the cost of a pilot project that can cost $100k or more and 

second, human resources and lab facilities and equipment can be directed at other innovations 

that have more commercial viability instead of driving to a dead end. 

Only once an affirmative answer has been established via a Techstart project, or a commercial 

need has been identified by the site miners deployed by MI2 is it time to expend resources on 

proof of concept to pilot projects. While MI2 is a new program, TEDCO's University Technology 

Development Fund (UTDF) has been in operation for many years and has demonstrated the 

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efficacy of similar programs. Like M12, UTDF is designed to provide limited dollars to a 

university or federal lab researcher in order to complete a proof of concept project. 

UTDF resources have been limited to providing $50k per project and have only been able to 

complete 112 projects. Despite its small scale, UTDF's results are impressive. Of the 112 

projects funded, 43 resulted in new license agreements for the developed technology and 29 

new companies were formed. MI2 will scale up the successes in Maryland. Federal funds, in 

keeping with the intent of the presidential memorandum dated October 11, 2011 regarding 

Accelerating Technology Transfer and Commercialization of Federal Research in Support of 

High-Growth Businesses would do the same for federal research laboratories. 

The Industry Involvement Problem (#2 above) is created primarily by the difference in 

corporate and university cultures. This is compounded by issues related to intellectual 

property, publication, conflict of interest, and other issues that are rooted in public policy, e.g., 

Bayh-Dole. The cultures at universities and those in industry are well-entrenched and would 

require policy changes that create strong incentives to have an impact. TEDCO, in collaboration 

with the University System of Maryland has developed an effective program to address this 

problem. 

Maryland industrial Partnershills Program 

The Maryland Industrial Partnerships Program (MIPs) primary objective is to promote 

collaboration between commercial enterprises and a university research lab. The basic premise 

of the program is that there are resources and know-how in university labs that can solve 

commercial problems. The economic element is a sliding scale of state matching funds to the 

dollars invested by the company. Depending upon the size and maturity of the company, the 

state will provide between 50% and 90% of the cost of the project. This effort has been highly 

successful resulting in 1000's of jobs, billions of dollars in revenue and at least one public 

company. 

Other Policy Changes to Support Technology Transfer 

The recent increased focus on innovation and the creation of new jobs at the federal and state 

levels creates an opportunity for new policies that loosen the bottleneck between university 

discovery and the development of new products. Fundamentally there needs to be more 

emphasis placed on translational research. This may come at the expense of basic research or 

it may come as a further compliment to basic research, either way the additional emphasis is 

needed. 

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Following are a number of thoughts for consideration in discussions about policies that address 

the specific problems listed above: 

• It might be useful to allocate a percentage of the federal extramural research budget for 

programs directed to translational research in universities. Translational research will 

need to be defined carefully for these programs, but applicants could be required to 

include a commercialization plan with a description of potential products as part of the 

proposal process. In addition to academic reviewers, individuals from industry should 

be included on review committees for these proposals, as these individuals are more 

likely to have an understanding of the market demand for university innovations that 

might arise from the proposed project. 

• Traditional basic research programs should add a review criterion requiring the 

applicant to describe the potential commercial application of any newly discovered 

knowledge that could result from the proposed project. In addition, some programs 

should be targeted for specific public needs - even if they are for basic research. For 

example, an NIH funding program supporting basic research that could lead to the 

reduction of some aspect of healthcare costs would be more likely to generate an 

invention that could be commercialized. Such a program could help to focus basic 

research toward specific outcomes rather than just the pursuit of new knowledge. 

Again, these statements are not intended to suggest that all research programs should 

change; rather, a portion of programs should consider this approach. 

• The SBIR/STTR programs are great resources for entrepreneurs and small businesses, 

but they could be modified to foster more university commercialization. First, more 

people from industry, rather than just academics, should be used on review committees 

so proposals are evaluated with a bias toward commercial research rather than 

academic research. Second, setting aside a percentage of SBIR/STTR funding for 

companies that are commercializing technologies licensed from universities (or federal 

labs, to be inclusive) would foster more commercialization of university technology. 

Third, limiting the number of companies that can apply for SBIR funding might create 

more opportunity for small business, which is where most job creation occurs. To this 

point, policy could create a preference for micro enterprises (less than 50 employees) or 

give preference for companies that have only been in business for less than 5 years. The 

current definition of "Small Business" includes 99.7% of all companies in the U.s. This 

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makes it difficult for start-up companies (like the ones commercializing university 

technologies) to compete with larger, established companies. 

• One way to force companies to interact with industry is to change the dynamic with 

respect to who is funding university research. For example, providing industry tax 

credits for sponsoring research in universities would incentivize interaction. The 

potential success of such a fund matching program is demonstrated by the state 

matching dollars in the MIPS program previously described. The tax credits could be 

paid for by reallocating research funds in the federal research budget. Moreover, the 

tax credits, which would only be a percentage of the industry-funded research, would 

be leveraged by industry funding and ultimately could lead to greater university 

research funding. A similar model could be used as an incentive for companies licensing 

technology - i.e., tax credits for licensing fees, much of which is returned to the 

university to support research in accordance with Bayh-Dole. With universities and 

industry working closely, more opportunities for collaboration, licensing, and 

commercialization would result. 

• Industry often claims that it is difficult to negotiate license agreements with universities. 

A guidance or effort in conjunction with the Association for University Technology 

Managers (AUTM) and the licensing Executives Society (lES) for standardizing licensing 

terms for federally funded inventions might help to address this issue and facilitate the 

licensing and commercialization process. There are already some efforts to accomplish 

licensing standardization at the University of North Carolina and at NIH. Expanding 

these efforts would be beneficial. 

General SI.l:!!:5!E~stiml§ 

Programs like the NSF's Partnerships for Innovation should be created at other agencies 

to explore new models of technology transfer and commercialization. NSF's PFI was 

used to fund two highly successful programs in Maryland, Activate and Innovate. These 

programs were an experiment in entrepreneurship and tech transfer targeted at women 

and post-doctoral fellows respectively. Deemed very successful tech transfer programs, 

they also helped to foster relationships between universities and industry. 

• University policy changes regarding tenure and sabbaticals could also have an impact on 

commercialization efforts. Currently, and simplistically, success, defined as tenure, for a 

university researcher is accomplished in part by the publication of a paper, the filing of a 

patent, or a speaking engagement at a conference. Nowhere in that success formula is 

commercialization. The Regents of the University System of Maryland, however, 

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recently modified tenure criteria to include commercialization. Likewise, universities 

offer sabbaticals for research but not for entrepreneurship. A sabbatical program 

offering a year to go start a business with the security of returning to the university if 

needed would go a long way to incenting the desired actions. 

The initial thoughts that are described above are specifically for improving university 

technology transfer. While these ideas could benefit technology transfer from the federal labs, 

the federal labs have a unique set of challenges that could also be addressed with changes to 

policy. Such challenges are not specifically addressed in this document. 

The ideas contained in this document are preliminary in nature and intended to foster 

discussion. Clearly, additional thought and discussion would improve these ideas and generate 

others. 

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Mrs. BIGGERT. I thank the witnesses for their testimony and reminding Members that Committee rules limit questioning to five 

minutes. 

The Chair will at this point open the round of questions. And I 

recognize myself for five minutes. 

This is a question for, I guess, whoever wants to answer. I hope 

you all do. In considering inventions to accelerate technology transfer, what do you set as your target metric? New businesses, products, patents, profit, citations? And then depending on the metric, 

how does the metric influence the intervention? Dr. Sherer, do you 

have any comment on that? 

Dr. SHERER. Yeah, it is a great question. The way I view that 

and the way I articulate it to my staff in my offices that we are 

dealmakers, and so the important thing for us to do is to get a deal 

done, whether that is with a startup company or an established 

company because that is the beginning of how we transfer our technology. There is a lot that goes on in a relationship with a startup 

or an established company once the license is signed. 

Mrs. BIGGERT. Okay. Ms. Innes. 

Ms. INNES. Thank you. Yes, much like Dr. Sherer, we have the 

same philosophy. Our goal is to get technologies licensed because 

if we can’t get a commercial partner, those good ideas are going to 

sit on our shelves. So our most important metric would be getting 

that deal done, whether it be to a university startup or to an existing firm. So we look for technologies that have a market opportunity and try to position them and find the partner. So those are 

our most important activities. 

Mrs. BIGGERT. And Mr. Nisbet, you have had a lot of, it sounds 

like, companies and—companies that are well entrenched already 

that you have dealt with. 

Mr. NISBET. Right, and our approach is similar that we do look 

for having agreements and not just an agreement—but a good 

agreement—with either an existing company or a startup. I think 

our measure is both to have a quantity of agreements showing that 

transfer of technology but also trying to measure the impact that 

the agreement and our technology would play in the American public. And we feel that is far more important than the revenue. If you 

do a successful job, the revenues will follow. 

Mrs. BIGGERT. Thank you. 

Mr. Rosenbaum. 

Mr. ROSENBAUM. Yes, substantially different from the universities, our incentive is measured by economic development. Are we 

creating jobs? Are we creating revenues? Are we creating tax base? 

And one of the things we look at is capital that is brought into our 

State as a result of our activities. And we bring $43 for every dollar 

we spend back into the State. So that is a huge measure for us and 

our primary goal. 

Mrs. BIGGERT. And certainly job creation is very important to us, 

and thank you for what you are all doing. 

But should technology transfer be a priority for every university? 

Is it likely to be a profitable business for any but the major research institutions? Mr. Nisbet, I think you could speak to that. 

Mr. NISBET. Right. That is a great question because I think that 

the potential of tech transfer at a particular institution is depend-
50 

ent on a number of factors. Obviously, you have to have a stream 

of quality research and researchers that form the pipeline for those 

opportunities, but I think the ecosystem also that the institution 

resides in is very important. So we have worked with our sister 

universities in Michigan trying to adapt some of the practices we 

have found that have worked in the Ann Arbor area where we tried 

to figure out a way to kind of influence things and augment their 

resources to do a better job. 

In the end, it is a very patient business and trying to go after 

it just for money is, I think, shortsighted because it takes so long. 

But the long-term potential of job creation and economic opportunity is very vital. 

Mrs. BIGGERT. Are there any other reasons for technological 

transfer to be important to an institution? 

Mr. NISBET. There are tremendous side benefits to tech transfer 

besides the engagement and the attraction and recruitment of key 

faculty. It also is a wonderful way for students who are finding it 

more and more important for them to engage in these activities. So 

it is a wonderful learning opportunity. It is a great attraction opportunity. It has wonderful opportunities for engagement with the 

industry and other partners. It is a great way to engage with industry, which brings also great learning. So there is a number of 

reasons besides the direct tech transfer activity itself that brings 

benefits back to the institution and the region. 

Mrs. BIGGERT. Thank you. 

You know, with the research—and I know sometimes that the 

labs that—you know, the funding runs out. What happens? And 

this—you have got a contract, whatever, and a license. What happens if—or that the research just doesn’t go anywhere? 

Ms. INNES. Those are very real questions. Thank you. 

We do our best to help the companies. If they are small companies, we help them get on their feet. We give them payment plans. 

We do everything we can to keep them moving forward because, I 

think, as my colleagues have said, we are really trying to see these 

technologies advance because we want to see an impact from our 

research. But it is very difficult. We spend money on patents that 

we end up not being able to license or that companies can’t pay us 

for and that, unfortunately, is just a cost of doing this business. We 

try to make more good decisions than bad and try to choose wisely 

and invest wisely, and I think to a large extent we do. But there 

are difficulties. And again as we hit them, we try to work through 

them. And so we are pretty flexible in our licensing terms. We 

want to work with a company if they have hit hard times or cannot 

pay to try to find a solution and maybe it is, again, a longer term 

to pay us back. 

Mrs. BIGGERT. Thank you. My time is up. 

Ms. Edwards, you are recognized for five minutes. 

Ms. EDWARDS. Thank you, Madam Chair, and thank you to the 

witnesses. 

I mean I think it has really been clear that all of us agree that 

the Bayh-Dole Act was really transformational in terms of university research and moving toward commercialization, but in recent 

years, a number of very provocative ideas have been thrown out 

about ways to modify Bayh-Dole. And some of those include allow-
51 

ing the Federal Government to recoup some of its investment if a 

federally funded technology is successfully commercialized. Others 

include allowing researchers to choose a third party or themselves 

to negotiate license agreements for commercialization or establishing regional technology transfer offices. And of course there are 

others and so I wonder if each of you would just briefly comment 

on some of these concepts or others that would challenge the status 

quo and discuss why they are or are not good ideas. Dr. Sherer. 

Dr. SHERER. Thank you, Ms. Edwards. I will speak first to the 

concept of potentially allowing researchers to control or make a decision about who would manage their intellectual property, a concept which is sometimes referred to as ‘‘free agency.’’ I think that 

is a bad concept and the reason that I think it is is because it adds 

additional negotiation time to an already pretty burdensome process, because by definition you have to add at least one more negotiation to whatever negotiations are going to follow. And that is a 

negotiation between the home institution and the party that is 

going to now manage that intellectual property. 

I think it is best to keep incentives aligned between the university and the faculty member at which the invention was created. 

And I also think that that kind of a system could potentially—we 

could see more of our innovation move out of state because you 

tend to engage the experts and the money and the people around 

you where you are putting the deal together. And if it is being 

managed out of state or across the country, I would argue that that 

would be where things would have a tendency to be concentrated. 

Ms. EDWARDS. Thank you. 

Ms. Innes. 

Ms. INNES. Yes, thank you. I think a number of initiatives that 

would be very helpful. In particular I wanted to talk about the regional tech transfer offices. I think in areas where you have a number of smaller universities who may not have a large research base 

and can’t really sustain an office that could be very helpful. Those 

are some initiatives we have talked about in North Carolina for our 

large university base where we have tech transfer offices in place 

at 6 of the larger of the 16 institutions. 

I am not in favor of free agency. I just don’t see that as workable. 

I know I would have no capacity to take on innovations from another university, from a free agency. Times are tough; finances are 

tight. I am going to use my resources to support the best and 

brightest coming out of my own institution. So I think that is just 

not a workable situation for us. And honestly, I think most faculty—but very few—would be skilled negotiators for themselves. I 

think we offer a very value-added service and we are helping protect their interest. We are helping them find a good deal and a favorable deal so I think we add value in that process. 

So I think there are ways to enhance this and those would be— 

my focus would be helping the regional offices get created. 

Ms. EDWARDS. Thank you. 

Mr. Nisbet. 

Mr. NISBET. I will also address that regional question. I think it 

is a good one, because I think one size does not fit all in terms of 

how you do it. Sometimes it makes sense to have something centralized within a region, but often I find that the hub-and-spoke 
52 

model of cooperation is better. We have recently had some experiences because our state government has provided some funds to encourage just that, that partnering among some of the neighboring 

Michigan schools and it has worked very well, in particular helping 

to fund—find the talent and fund the talent that helps with the 

evaluation of new opportunities, to help with the venture creation 

activities, finding and prospecting for new licensees, especially in 

the execution of those relationships. 

And I think it is important to note, though, that we have found 

that the strength of those regional centers, the pride in their ownership, the links to their own alumni are very important to maintain. So that is one reason why I am in favor of a hub-and-spoke 

model to try to have the best of both worlds. 

Ms. EDWARDS. Thank you. 

Mr. Rosenbaum. 

Mr. ROSENBAUM. I guess, with my background, I am going to follow the money. You mentioned the Federal Government recovering 

some of their investment in the research and my concern with that 

is there are different motivations for every entity and institution 

and money is a huge driver. And when you redirect money, you are 

going to redirect incentives and you are going to redirect efforts. 

And while it may be beneficial to see some of that money come 

back to the federal labs that have done that research, I don’t think 

in the grand scheme of things it is going to be a significant number 

of dollars on the federal side but I think there are going to be some 

significant changes in behavior on the research side, on the university side that could be adverse. So I would be very worried about 

making changes like that. 

Ms. EDWARDS. Thank you. My time is expired. Thank you. 

Mrs. BIGGERT. Thank you. The gentleman from Illinois, Mr. 

Hultgren, you are recognized for five minutes. 

Mr. HULTGREN. Thank you, Chairwoman Biggert. 

Thank you all for being here today. A couple of questions, first, 

Dr. Sherer, wondered with the AUTM annual licensing survey, I 

wondered what the biggest surprise you have found from AUTM 

and just wondering if you are seeing any trends that encourage you 

or anything that disturbs you really from the findings from AUTM, 

the—I guess the Association of University Technology Mangers annual licensing survey. So I wondered if you could give me any 

thoughts on that. 

Dr. SHERER. I would be happy to. We just completed 20 years of 

holding and conducting the licensing survey and had a chance to 

look over some of the trends of that data for the last 20 years. We 

don’t have 20 years worth of data points for every question within 

the licensing survey. The one result that I found most surprising 

was that if you look at the—and it is in my—the attachment of my 

materials. If you look at the rate of federal research funding over 

the last 20 years, you can see there has been a very steep and 

steady increase in federal funding and what I found amazing was 

how closely the number of new invention disclosures and errors 

that occur. Again, it is on a different scale but the shape of those 

lines and the increase of those lines is very similar. We have always said that the amount of federal funding drives the amount of 
53 

tech transfer that we expect to see at our universities, but I didn’t 

expect the data to mirror each other that closely. 

The other interesting thing is that everything sort of follows from 

it. As we get more inventions disclosures, we found more patents. 

As we found more patents, we get more issued patents. As we negotiate more licenses, we see more products on the market and we 

have—we are actually awaiting some new job data that is going to 

be released tomorrow at the BIO International meeting in Boston 

with calculations of jobs created as a result of the licensing revenue. 

Mr. HULTGREN. Great, thank you. 

Want to open this up to any of you that would have some 

thoughts on this but one of my passions is again encouraging 

young people to go into research and science and wonder just as 

we are considering ways to help faculty and students transfer more 

of the technology that they conduct research on wondered from 

your perspective are younger faculty more open to spending time 

on technology transfer? Have you seen that institutions have built 

technology transfer into their tenure award system? Or what approaches could we do to—and that have you seen, to catch future 

faculty at earlier stages in their careers to encourage them in this 

process of technology transfer? 

Mr. NISBET. Yes, I think that is a great question because we are 

seeing efforts to try to engage both the younger faculty in particular, but also some of the students, the post-docs and the grad 

students who are engaged in these research activities. They are 

very much interested in engaging in these both for career opportunities but also for learning and for their own networking purposes. 

At the University of Michigan, we would make it a point to try 

to reach every new faculty and to make sure that they are acquainted with our office and the advantages. We have been surprised that sometimes in recruiting trips from faculty to Michigan 

they are actually looking for our capabilities and it is one of the 

factors in their decision. That is always great. We are looking for 

ways to try engage students in particular in this through internships. The fellows program that I mentioned is a great way to 

bring in grad students and post-docs and introduce them to new 

opportunities and the thought process, the decision process that 

shows their attraction in the marketplace. 

And we are now trying to experiment with an opportunity to 

take post-docs who often have challenging academic career decisions and if they are interested in following a commercialization 

path through a new company that we have licensed or into an existing company to provide some funding to give them that path to 

see if that might be a career decision they would like to make. So 

all of those things are very important for the culture of the university, for the vibrancy of the region, and for our activities in tech 

transfer. 

Ms. INNES. I would also like to comment that we have done a 

number of programs as well at the university. We do factor in participation in the patenting and invention disclosure process as part 

of promotion and tenure decisions. I think that is very important 

to get our faculty engaged. And we are seeing a lot of activity towards this coming out of the departments. They are very interested 
54 

in innovation. They are very interested in seeing an impact from 

their research. 

We have also developed a program for an entrepreneurship 

minor for students in the College of Arts and Sciences, and it is our 

most popular minor to date. We also have a program where we are 

teaching how to start a company through our business school and 

that is accessible to all faculty, students, and staff. It is in the 

evening and it is free so we are really trying to promote this. 

As part of our new innovative Carolina fundraising campaign, we 

also intend to—some of the money is going towards innovation faculty so that we can really extend and consider this opportunity. 

Thank you. 

Mr. HULTGREN. I am going to ask one more question real quick. 

My time is running down, but I would love to get some quick comments on one last thing. 

Many of you have talked about programs that allow business 

people to come alongside faculty and to assist in the commercialization process here. Wondered if you could just briefly talk about best 

practices that you have seen to help us do that. 

Dr. SHERER. One area of the best practices is to have an entrepreneurial residence type of program where you bring a skilled industry expert into the university and let them spend x period time, 

maybe six months, and you work with them to meet with faculty 

and potentially find an opportunity that they could spin out into 

a company. 

Ms. INNES. We also use entrepreneurs and local businesspeople 

to help us make tough decisions if we are deciding on whether or 

not a technology we should continue with that if the licensing is 

stagnant. We gather their expertise, help us redirect the technology, help us find some way to help the company if necessary, a 

very valuable resource. 

Mr. NISBET. And quickly, we took the approach of a mentor-inresidence. We changed it because rather than follow one technology, we wanted them to have a portfolio of technologies like 

staff. It has been great with assessment, it has been great for faculty consulting, and it has really enhanced our capabilities. 

Mr. ROSENBAUM. And finally, real quickly, before we fund any 

project that is a tech transfer or otherwise, we engage outside industry experts to help evaluate the viability of it so we are making 

sure there is a commercial viability before we spend the dollars. 

Mr. HULTGREN. Well, thank you again. Thanks for your speedy 

answers there but appreciate it so much. Appreciate your being 

here and I yield back. 

Thank you. 

Mrs. BIGGERT. Thank you. 

The gentlelady from Oregon, Ms. Bonamici. 

Ms. BONAMICI. Thank you very much, Madam Chair. 

I have the privilege of representing a district in Oregon that includes part of what is known as the ‘‘Silicon Forest.’’ We have trees 

and more rain. The important work that is conducted by our high 

tech sector there is really exciting. Of particular importance to the 

State is the Oregon Nanoscience and Microtechnologies Institute, 

which is affectionately known as ONAMI. It is a Signature Research Center that is an academic, business, and government col-
55 

laboration that grows research volume and commercialization in 

the broad area of nano- and microscale science and engineering. 

Since its inception in 2003 and through last year, they have le- veraged more than $185 million in federal and private, created 21 

startups with $70 million in venture and capital funding. They employ 86 full-time people and support another 1,700 jobs through research grants. They have created $290 million in revenue and filed 

211 invention disclosures and received 21 patents in nanoscience 

and microtechnology. So I can tell you from looking at this record 

that they have been a key player in our community. 

So I would like to ask our witnesses how do you work with any 

external partners like ONAMI to accelerate commercialization? 

Dr. SHERER. Well, I can’t resist taking that question, because I 

hail from Oregon myself and ran the tech transfer program at the 

University of Oregon and Oregon Health Sciences University where 

I was born and raised before coming to Georgia in 2003. So I 

missed ONAMI and I know a number of great things have happened since I left the State. 

One of the things that we do in Georgia and do quite successfully—and it is similar to what you are describing—is we work 

with the Georgia Research Alliance, which is money that comes out 

of the State and helps provide valuable risk capital for early stage 

projects with the goal of creating new companies that are going to 

build a workforce in Oregon. In order to do that, we not only sit 

down with experts at the Georgia Research Alliance, but through 

that program, we engage some of the entrepreneurs I was talking 

about a moment ago. And we also work closely with sister institutions throughout the State because we all compete and participate 

in this Venture Lab program. 

Ms. BONAMICI. Thank you. 

Anyone else. 

Ms. INNES. Similarly, we work very closely with the biotech sector in North Carolina. We have the North Carolina Biotech Center. 

They are helping us with technology transfer grants, with loans to 

startup companies, and a number of programming to foster the innovation coming out in the large bioscience sector in our region. 

Ms. BONAMICI. Terrific. 

Mr. NISBET. In a similar vein, we have an organization called 

Ann Arbor SPARK, which is a public-private entity that is a collaboration with the university and with government and industry 

that actually industry was formed as a result of a recommendation 

from my Tech Transfer National Advisory Board that were looking 

for ways to enhance our tech transfer performance. And we talked 

about some of the ecosystem advantages that we were lacking. 

We have a very close relationship. We serve on the board. They 

focus on things that we also focus on—business development and 

traction, business acceleration, talent and funding, and of course 

marketing of a region. So it is a very close collaboration. It also has 

an extension into our state government with our Michigan Economic Development Corporation. So very similar outcomes, slightly 

different format. 

Ms. BONAMICI. Excellent. 

Mr. ROSENBAUM. And I daresay TEDCO is one of those 

aggregators and accumulators of skills and technologies. We actu-
56 

ally—because we are not aligned with a specific university, a specific corporation, or a specific interest or stakeholder, we can actually aggregate and do aggregate resources from around the State 

and are able to convene groups of folks that wouldn’t otherwise be 

able to get together. We sit on the boards of every incubator in the 

State. We sit on the board of every tech council in the State. We 

are involved with every tech transfer office in the State both federal and university. And we very often and easily can bring a crosssection of all those constituents to the table in order to collaborate 

in a very unthreatening manner. 

Ms. BONAMICI. Terrific. 

And just as a follow-up to the earlier response about how do we 

inspire and involve especially the students—and know Dr. Sherer 

will be proud of this—the University of Oregon has a technology 

entrepreneurship program. It is a year-long program in which business, law, and science graduate students work together to evaluate 

new technologies for commercial potential and then they develop a 

business plan. It has led to the creation of several successful companies since its inception in 2003. So that is a good partnership of 

bringing groups together. 

And I am almost out of time, but I wanted to ask Mr. Nisbet. 

You mentioned that the University of Michigan has changed policies and practices to motivate faculty to engage more with industry. Can you talk about the challenges that researchers face when 

engaging with industry and participating in commercialization activities? 

Mr. NISBET. Yes. Often it is because of the nature of their research interests and the interest of the organization that is from 

industry. What we have found, actually, it wasn’t so much the 

terms that were really important; it was the predictability and the 

timeliness as you mentioned. So that is why we formed this recent 

initiative called the Michigan Research Advantage and we—it is 

again optional and sometimes the industry does not want it. But 

what we try to do is to come up with a way of predetermining the 

license terms before the invention is even created, which of course 

is quite difficult. But we find that when we bound the opportunities 

and bound their cost, it would lead to a much richer relationship 

with industry, which leads to a lot of other advantages. 

Ms. BONAMICI. Thank you very much. 

I will yield back. 

Mrs. BIGGERT. Okay. The gentleman from New Mexico, Mr. 

Luja ́n, is recognized for five minutes. 

Mr. LUJA ́ N. Thank you very much, Madam Chair, and appreciate 

you calling this hearing. 

Dr. Sherer, I very much appreciate you bringing to light the correlation behind the investment into tech transfer and the number 

of licenses that are being yielded. Sometimes we don’t have to look 

far to see the importance of investment to tech transfer. And I 

think we all certainly agree, including most of us on this Committee, about the significance of what tech transfer can yield for 

the United States economy. Does everyone here—is there anyone 

that would disagree with the statement that the future of the economy in the United States can be strengthened through more robust 

investments and collaboration with the Federal Government, uni-
57 

versities, and our national labs, and the private sector in developing tech transfer? 

I appreciate that because this is something that if the United 

States was serious about—and I will just note for the record that 

no one disagreed with that, Madam Chair—the seriousness behind 

this is what can we do to turn this up? Herein lies an opportunity 

where we have seen the loss of manufacturing in the United States 

or even on that assembly line, on the frontline the innovation 

yields that we reap that were highlighted in a book ‘‘Make it in 

America’’ by the former CEO of Dow Chemical—or the CEO from 

Dow Chemical talks about the need to be able to bring that back. 

But in the realm of tech transfer specifically, what are the right 

metrics to use in judging the success of technology transfer? Just 

looking at the number of patents and licenses is not anything sufficient to understand the effect on the economy. And also, wouldn’t 

it be helpful to have longitudinal studies that would look over time 

at the impacts of technologies? Ask anyone. Mr. Rosenbaum. 

Mr. ROSENBAUM. Yes. We actually measure our tech transfer programs, not by the number of licenses because every project we fund 

is a tech transfer license, but we track our companies longitudinally for job creation, total revenue tax base, and are proud to 

say that with the right support these young companies can beat the 

averages. We have 82 percent of our companies still in existence 

after five years, which is off the charts compared to most startup 

statistics in the country. 

Mr. LUJA ́ N. Mr. Nisbet. 

Mr. NISBET. I think that is a very important point that we also 

try to—I think that quantity is important by the way. The number 

of agreements, number of startups does show that the number of 

shots on goal, but it is also important to measure the impact of 

what occurs. And I think part of it is going to be to follow on job 

opportunities and tax rates. That is a very long-term process 

though and it is very difficult to measure that when your technologies go into existing companies, which is common. 

Instead, what we try to do is to tell stories, show stories of the 

inventors, of the inventions, of the technologies, and the companies 

and try to show the impact on the American people. I think that 

is one great way to motivate people. And in the end what you are 

trying to do is to promote more engagement which what you want 

to do is have some very careful ways of marketing and reaching to 

all of your channels, including your alumni which are quite valuable to get them to work with the universities and to get your technologies out into the marketplace. 

Dr. SHERER. I would just add that I have always felt like new 

products on the market are the ultimate validation of any tech 

transfer program because that is really what it is all about and 

used to think that it didn’t really matter whether it was a startup 

or an established company because it is just a means to an end and 

the end is to get—the end goal is to get products on the market. 

But in this jobless economy, talking about jobs has become much 

more important. 

We do know from an old BIO study that about 279,000 jobs were 

created between 1996 and 2007 as a result of licensing revenue and 

the products put on the market through universities and hospitals. 
58 

And so I would still advocate that products are a very important 

metric that we track and that we need to get deals done so that 

our partners can get products on the market. 

Ms. INNES. I would emphasize that it is also—I agree with everything that we have said. It is here on the—with my colleagues. It 

is important to get the products on the market. Absolutely that is 

the number one. Licensing is a measure of how well you are reaching your contacts. But I think it is also important to recognize this 

is an extremely long-term process, especially if you are in early 

stage therapeutics and biotech. So the return on investment is likely to come 10, 15, even—years later. So it is important to recognize 

it is a number of things that have to come together. It is not one 

metric or another. 

Mr. LUJA ́ N. Thank you. And I have some other questions I will 

be submitting to the record, but given the—we have heard a little 

bit about SBIR today. We don’t talk much about STTR, a program 

that has been terribly neglected by the Federal Government when 

I would suggest the importance of what we could be doing with 

small businesses around small business technology transfer programs. Could STTR be reprogrammed to be able to better work 

with small businesses, universities, and encourage collaboration 

with our national labs to close that gap to have better yields associated with technology transfer? Anyone. 

Mr. NISBET. I think absolutely it does and it is—and one is obviously because of the funding. As my colleague mentioned, you 

know, follow the funding and that does create incentives. But it is 

also I think that engagement. It has to be a carefully crafted opportunity that is not just finding funding for the discovery purpose 

itself but to try to have that partnership that whatever discoveries 

occur because of that have a place in the marketplace. So it has 

to have a market awareness and validation aspect to make sure 

that it is going to be successful. But I think it definitely could be 

a valuable part. 

Mr. LUJA ́ N. Anyone else? Dr. Sherer. 

Dr. SHERER. Yeah, I would just argue that we use the STTR a 

lot as in—sometimes we use SBIR just sort of loosely to meet those 

two programs. But we work very closely with our startup companies to help them submit SBIR as well as STTR applications. 

Mr. LUJA ́ N. Very good. Thank you very much. 

Thank you, Madam Chair—Mr. Chairman. 

Chairman HALL. [Presiding] Gentleman yields back, I presume? 

Mr. LUJA ́ N. Yes. 

Chairman HALL. Chair recognizes Mr. Lipinski, the gentleman 

from Illinois. 

Mr. LIPINSKI. Thank you, Mr. Chairman. 

I think that this is one of the most important hearings going on 

right now up here because everyone wants to know the answer to 

the question where are the jobs going to come from in our country? 

And there are great concerns over that and I certainly think that 

we need to be doing more to leverage the great research universities of our nation and also make sure we do what—all that we 

can to get the return on investment for all of the federal dollars 

that go into research in our Nation. 
59 

So let me start out with—there are a lot of different questions 

because I think this is critically important. But I want to first talk 

about the National Science Foundation program called the Innovation Corps or I–Corps. And the purpose of the I–Corps—it is a new 

program at NSF. It is to take individuals who have received NSF 

funding for research before and to teach them how to be entrepreneurs, essentially how to commercially develop their ideas. Are 

any of you familiar with the I–Corps program? I just wanted to 

know—I see Mr. Nisbet nodding his head. Do you have any comments on the value of the program or suggestions to improve it? 

So let me start, Mr. Nisbet. 

Mr. NISBET. In our case it is fairly new. We are establishing an 

I–Corps center in Ann Arbor for the Midwest to provide that training that is associated with the I–Corps program. The one thing I 

find most valuable is—it is twofold. The focus on market awareness 

and understanding the market needs before getting too far into the 

funding that typically occurs through NSF grants and others; and 

secondly is developing the entrepreneurial support and the 

mentorship to try to provide some early stage guidance to those 

projects. But I think it has the potential to—one, to attract more 

people into the whole area of trying to commercialize research but 

also to put it in a more focused path towards a real market need. 

Mr. LIPINSKI. Well, I was hoping Mr. Nisbet was familiar with 

it since July 16 is one of a—that starts at—another round that 

starts at Michigan. Thank you. 

Anyone else? Mr. Rosenbaum. 

Mr. ROSENBAUM. Yes, I would just like to say that I–Corps as 

well as many other entrepreneurship programs around the country 

and most universities today are very important but they are just 

the first step of getting products to market. A business needs to 

mature and I find that a lot of the entrepreneurship programs 

teach folks how to start a business but don’t necessarily teach them 

how to grow a business and manage a business. So I think that the 

I–Corps program is great but we are going to need some follow-on 

support behind it if we are going to have some long-term success. 

As we have said, these things don’t happen in a year or two years. 

Sometimes they take ten years. And an entrepreneurship program 

talks about the first year of life. 

Mr. LIPINSKI. Anyone else. 

Move on to another issue Mr. Rosenbaum had mentioned that 

Maryland Innovation Initiative supports the use of funds for early 

stage proof-of-concept and prototyping work. I was able to get language into the SBIR reauthorization last year that grants authority 

to NIH for a proof-of-concept program. What—I am going to ask everyone on the panel. What are your thoughts on the early stage 

funding for proof-of-concept programs? Is it something that all federal agencies should be exploring? So I will start with Mr. Rosenbaum. 

Mr. ROSENBAUM. Yes, proof-of-concept is important, but one of 

the unique elements of the Maryland Innovation Initiative and 

other programs that TEDCO has had is that we don’t fund those 

proof-of-concept projects until we know there is a market availability and viability for the product. A challenge with federal lab 

in particular is they don’t have resources to look outside at market 
60 

needs. So you will need a third party to validate a market need and 

then absolutely fund that proof of concept for that research. But I 

would hate to see proof of concept funds going to a dead-end product. 

Mr. NISBET. We have had some great experiences with the 

Coulter Translational Fund that we have operated at the University of Michigan for about five years. We have addressed that issue 

of the market validation by actually closely coupling the project 

management resources that were involved with shepherding the inventions and the work that was going on in the lab with work— 

with insider tech transfer office for doing the market awareness 

and assessing the market needs. They also used a board of directors, a council to help steer those projects on a quarterly basis so 

the results we saw was much accelerated projects with better decision-making and some real market successes. We think that that 

early stage funding, although not very large, can go a very long 

way in ensuring success. 

Ms. INNES. I think it is a tremendous idea to support the proofof-concept center and proof-of-concept funding. This is an area that 

is really important, especially in these long-term development 

projects such as early stage therapeutics. We really need to get 

more information before you can tell if they will be able to address 

the market they are attempting to serve and this proof-of-concept 

center would be tremendous. 

Dr. SHERER. I would just add that the single most common feedback we get from potential licensees is the technology is too early. 

So proof-of-principle, proof-of-concept funding is the gating factor to 

getting more technology to a go-or-no-go decision point. 

The other thing I would add is that too often proof-of-principle 

funds provide the same level of funding for life sciences and physical sciences type of inventions, and it takes a lot more money to 

get a life science invention to a proof-of-concept stage. 

Mr. LIPINSKI. Thank you for your testimony. I yield back. 

Chairman HALL. The gentleman yields back. 

I don’t see anyone else that needs to testify or wants to testify 

but I want to thank you for your time, and thank you for timely 

presenting your testimony to where we could be ready to ask you 

the proper questions. And thank you for the time it took to travel 

here and you have been very generous. And with that, I would ask 

you that we may ask you to respond to some of the things in writing we send you, to timely do that if you can. There will be others 

that aren’t here. The other empty chairs indicate that they have 

got other hearings and things that are going on now but they are 

interested in your testimony and they are appreciative of your testimony and may have some other questions to ask you. 

Mr. LUJA ́ N. Mr. Chairman. 

Chairman HALL. Yes, sir. 

Mr. LUJA ́ N. Because there were not a lot of folks that came to 

the Committee hearing today, is it possible to get another round of 

questions? 

Chairman HALL. I don’t think so. Do you have any other questions? 

Mr. LUJA ́ N. I do, Mr. Chairman. 
61 

Chairman HALL. All right. I will recognize you for how many 

minutes? 

Mr. LUJA ́ N. You can give me two, Mr. Chairman. 

Chairman HALL. I will give you five minutes. 

Mr. LUJA ́ N. Appreciate that, sir. 

Chairman HALL. I will give anybody else time if they have questions they really want to ask. 

Mr. LUJA ́ N. I appreciate that, Chairman, and thank you for calling this hearing. As I said earlier, I hope that we are able to have 

a similar discussion when it comes to natural labs—national labs 

and the technology transfer associated with the relationships with 

our universities as well. 

There is a program that recently was granted to one of the universities of the United States where there is a collaboration around 

entrepreneurship training. I appreciate the recognition of what has 

been done to introduce entrepreneurship into undergraduate programs but also making sure that across disciplines—engineering, 

medical fields—that we are including entrepreneurial studies to see 

what we can do there. 

Mr. Chairman, we have encouraged the entity associated with 

the responsibilities with Epicenter that they invite Members of 

Congress to be able to put together an entrepreneurship training 

so that way we begin to be able to think outside of the box associated with policy as well. 

But specifically, Dr. Sherer, I am interested in the role of the 

Federal Government in funding transitional research beyond basic 

research to bridge the valley of death and help mature promising 

new technologies. There already exist a number of such federal programs with ARPA–E and with DARPA. Now, we begin to see the 

DHS S&T directorate as well beginning to take shape to spur innovation in particular sectors. However, there is not a lot of promising technologies—or there are a lot of promising technologies that 

don’t necessarily fit into those programs necessarily from a topdown approach. What are your thoughts associated with the importance of strengthening the Nation’s economic competitiveness from 

a bottom-up technology transfer approach? 

Dr. SHERER. There are a lot of different directions I could go with 

that question. One of the challenges I think with translational 

funding is—and I think it is what you were alluding to—is there 

are pockets of it and you can participate in this particular one if 

you happen to come out of a particular area and maybe this one 

over here—excuse me—if you are in engineering or something of 

that sort. So not every technology necessarily has a route or a path 

or the same path and access to translational research funding. 

But the other thing that I fear we are going to abandon in these 

times that we are in is just the need to continue to focus on the 

fundamentals and invest in the fundamentals. And we need to 

have properly staffed tech transfer offices and we need adequately 

sized patent budgets. The good news is is if—again if you look at 

the amount of data, it hasn’t started to really taper off. It is in a 

few categories. If federal funding goes down, it will be interesting 

to see if that disclosure rate goes down and then everything else 

falls—flows from there. 
62 

So we don’t yet—so the good news is is despite what is going on 

in the economy, tech transfer activity has been strong even over 

the last two or three years. I don’t know what the next two or three 

will look like. 

Mr. LUJA ́ N. Appreciate that. 

Mr. Rosenbaum, I am very intrigued and supportive of the Maryland Innovation Initiative, so congratulations there, in part because 

there are some similarities in this area between Maryland and 

New Mexico and having a large number of researchers yet a relatively low degree of entrepreneurial activity that we are hoping to 

spur up. We have two national labs. We have the Air Force Research Labs, Air Force Nuclear Weapons Center, in conjunction 

with Kirtland Air Force Base where work was done with Sandia to 

the Satellite Operations Office, three bases from a military perspective that the energy directive programs, with Boeing, things of that 

nature, but yet we are not seeing the promise there. 

Over what time frame does the State of Maryland expect its in- novation initiative start yielding a positive return on its $5 million 

investment? And what are the key factors in making it a success? 

And what is the role of the Federal Government to support that 

initiative? 

Mr. ROSENBAUM. Thank you. The key factor is some of the 

uniqueness in the way it has been structured. There are five universities participating, and all five universities will have a modified 

version of an entrepreneur in residence. We are calling them site 

miners because there will be multiples from each university and 

they will be cross-discipline and they will be charged with collaborating amongst each other and going to each other’s universities to 

see pieces that may be able to be put together to create a whole 

solution. Much of what goes on in medicine today, for instance, is 

as much involved in IT as it is involved in biology. So having cross 

pollination across the disciplines is a key success factor there. 

TEDCO’s history with doing proof-of-concept projects is that we 

get about 25 percent of our projects to turn into companies. We get 

about 40 percent of them end up licensing technologies and about 

25 percent turn into companies. So with our $5 to $6 million budget, once we are up and fully running, we expect to be funding between 40 and 45 projects a year so we expect to be spawning 10 

to 15 new companies a year out of that. And we think that that 

will start in year two. 

Mr. LUJA ́ N. Mr. Chairman, I appreciate your graciousness in the 

recognition of more time. And with that I yield back. 

Chairman HALL. The name of Luja ́n in New Mexico is very dear 

to me, and that is why I give you 10 minutes and everybody else 

gets five. If there are no further questions, the witnesses are excused. And for any additional comments and statements that we 

need from Members, you can do it by writing to them. 

And at this time we are adjourned. 

[Whereupon, at 11:14 a.m., the Subcommittee was adjourned.] 
63 

ANSWERS TO POST-HEARING QUESTIONS
64 

ANSWERS TO POST-HEARING QUESTIONS

RESPONSES FROM DR. TODD T. SHERER
65 

also provide this kind of training, including the Licensing Executives Society and Technology Transfer Tactics. 

Universities are currently building additional capacity in their technology transfer offices to do more of this 

including hiring dedicated marketing/triaging personnel, engaging graduate student interns and hiring external 

vendors to provide these services. 

Questions from the Honorable Randy Neugebauer (R-TX) 

Q: Historically, federal funding has primarily focused on basic research and not on the post-applied steps 

towards commercialization. In the current budget environment, I know we would all like to see more funding for 

everything, but that is simply not the reality. If you had to choose whether to fund basic research or 

commercialization at a university, where do you think federal funds should go? 

A: Without research funding at universities, there would be no technologies to transfer or commercialize. Under 

the current budget cycle, more federal dollars are being allocated to more applied/translational research then in 

the past. It is largely unproven how successful these programs will be and for that reason I think a balanced 

approach is most prudent. In areas like the drug discovery, the odds are very small that any new drug will make 

it through the clinical and regulatory hurdles and onto the market. Without an ongoing investment in basic 

research we will soon run out of new drugs to study and many diseases will continue to go untreated for years 

to come 

Q: Besides funding, what do you think is the biggest obstacle to accelerating technology transfer? 

A: Patience, proper expectations, the economy and uncertainties regarding changing regulatory and clinical 

requirements. 

Q: Many of you are promoting programs that allow business people to come alongside faculty to assist in the 

commercialization process. Could you elaborate on what you have found to be the best practices in this area? 

A: Many universities have created comprehensive programs to assist startup companies. In addition, there are 

often many other sources of this support within our local economic ecosystems. As you allude to, it is critical to 

provide industry inSight into product development, venture capital insight in fund raising strategies, and legal 

insight into corporate/patent matters. Best practices are to directly, or indirectly, link faculty-startups to all of 

these areas as they need to cross all the plates to hit a home run. 

Questions from the Honorable Ben Lujan (D-NM) 

Q: This regards the role of the federal government in funding translational research, beyond basic research, to 

bridge the valley of death and help mature promising new technologies. There already exist a number of such 

federal programs that support technology transfer from the top-down, such as ARPA-E, to spur innovation in 

particular areas such as energy security. However, there are a lot of promising technologies that don't fit within 

that top-down approach, but could still contribute to the Nation's economic competiveness. Should the federal 

government support such bottom-up technology transfer? 
66 

A: I don't have knowledge of the ARPA-E program. I can imagine that such a top-down approach could be 

particularly useful in certain technology areas like energy. It would need to be evaluated more closely in areas 

that have a history of less government support to market. 

Q: How are the changes to the patent law affecting university technology transfer? 

A: Universities across the country have worked closely with their legal counsel to understand the implications of 

the America Invents Act. My sense is that everyone is feeling prepared for the changes. What is of bigger 

concern are the technical amendments and our hopes that they do not materially change the way the AlA is 

currently expected to work. 

Q: What are the right metrics to use in judging the success of technology transfer? Just looking at the number of 

patents and licenses is not sufficient to understand the effect on the economy. Also, wouldn't it be helpful to 

have longitudinal studies that look over time at the impacts of technologies? 

A: I have always felt thatthe number of new products on the market is the ultimate validation of technology 

transfer and new products take time to develop and very few technologies will make it that far. For some, that 

will be an appropriate metric, for others it will be the impact of those products which AUTM captures in its 

Better World Report featuring short stories about university technology that is making the world a better place 

to live. Still others will want to see the jobs number. University technology transfer offices aren't directly 

responsible for any of these metrics, though our activities make them possible. We are directly in control of 

working with faculty to solicit new inventions, filing patents and negotiating deals. Completing the deal is the 

final step in transferring our technology into the hands of a corporate partner who will then develop new 

products for the market. Of course, the number of deals will be larger at universities with more sponsored 

research. longitudinal studies are very helpful as they help emphasize the many steps and timelines required to 

get technologies to market and the totality of their impact once on the market. 
67 

RESPONSES TO 

QUESTIONS FOR THE RECORD 

THE HONORABLE JUDY BIGGERT (R-IL) 

U.S. House Committee on Science, Space and Technology 

Subcommittee on Technology and Innovation 

Best Practices in Transforming Research into Innovation: Creative Approaches to the BayhDole Act 

Tuesday, June 19,2012 

Submitted by Catherine Innes 

Director, Office of Technology Development 

University of North Carolina at Chapel Hill 

1. How does the United States' model jar technology transfer compare to technology transfer in 

other countries? Are our universities generally more or less successful, and in what ways? 

The United States has the most well established technology transfer program in the world. With 

the passage of the Bayh-Dole Act in 1980, most research universities in the U.S. developed 

technology transfer otIices and began the process of commercializing innovations arising from 

their research. Over the past 30 years, many other countries, including South Korea, Germany 

and France, have passed similar laws and emulated the U.S. technology transfer model and 

expanded upon it. 

For example, the United Kingdom has implemented a number of programs to enhance academic 

technology transfer. The Government has contributed to early stage seed funds at universities, 

created entrepreneurship centers, and in 2000 began the Higher Education Innovation Fund to 

create business development offices at universities. This influx of funding has dramatically 

changed the technology commercialization landscape in the UK and resulted in business 

development offices at most universities and regional networking activities and proof of concept 

funds. 

The German Government launched a Patent Marketing Agency program in 2002. These 

Agencies provide professional services to universities and research institutes to evaluate, protect, 

and market new technologies. The Agencies work with technology transfer offices to select the 

most promising technologies to move forward. This approach has resulted in increased patent 

and commercialization awareness as well as an integrated national network among the Agencies 

representing more than 200 scientific institutions in the country. 

U.S. universities have been engaged in technology transfer for more years than our counterparts 

in other countries so we have seen more technologies enter the market and we have generated 

more revenue than our peers around the world. By these measures we are likely more 

successful, but over time I would expect European and Asian nations to see similar results. 
68 

The challenges in commercializing university technologies are global: inventions arising from 

academic research are early stage and unproven. They require significant investment to reach 

commercial adoption. The majority of universities in the U.S. have not achieved significant 

financial success from their efforts. We would do well to emulate other countries and develop a 

sustainable source of funding to support early stage technology development through both public 

and private investment. 

2. Do you have any recommendations for changing the Small Business Technology Transfer 

Program (ST1'R) to allow for better utilization by universities and businesses? 

Reimburse Patent Costs. It would be very helpful if STTR and SBIR funds could be used for 

patent cost reimbursement when the startup company is licensing technology from a university. 

Universities often cannot carry patent expenses for their startups and the companies may have 

very limited funding when filing for patents is critical. Patent costs are not an allowable expense 

for any of the II participating federal agencies except the Department of Energy. While all of 

the agencies do allow for a line item to be included in the SBIRISTTR budgets called a "fee", the 

maximum fee that can be requested is 7% of the total direct and indirect costs that are being 

requested. The fee can be used for business related expenses such as patent costs, but often the 

costs a startup must cover from this fee far exceed the total they may spend. 

Reduce Wait Time for Notification of Award. One item that is difficult for applicants to endure 

is the long wait time for reviews for both Phase 1 and Phase 2 proposals. While it is 

understandable that reviewing of thousands of proposals is a monumental task, it would be 

helpful for companies to have a clear picture of whether or not they have been funded sooner 

than the six to nine months it currently takes. 

Diversify Awardees. Finally, it appears that a relatively small number of companies across the 

country continue to win a large number of awards (the proverbial "SBIR Mills"). The agencies 

have taken steps toward requiring companies that have won previous awards to demonstrate that 

they are adequately commercializing research from previous awards, but it would help to ensure 

that funds are broadly disseminated. 

3. In your experience with the Carolina Express License, you mention that the small number of 

law firms that UNC-Chapel Hill companies typically use helped ease the development of a 

standard agreement. Does this mean that larger cities and communities may have difficultly 

modeling this type of licensing agreement? What other aspects of the agreement do you feel may 

have worked because of the size or unique nature of where your university is located? 

Being located in a relatively small region made it easier for us to implement the Carolina Express 

License as the number of key players we needed to bring into the process was relatively small. 

While it will be more complex to engage a greater number of stakeholders in a larger region, this 

need not be a barrier. The key factor is to engage with those representing the startup community: 

attorneys, venture capitalists and serial entrepreneurs, and ask them to work with the university 

to implement a standard program that will benefit all stakeholders. In the RTP region, there is 

tremendous collaboration between regional universities, state government and the business 

community and these factors also aided development of our standard license. 
69 

RESPONSES TO 

QUESTIONS FOR THE RECORD 

THE HONORABLE DONNA EDWARDS (D-MD) 

U.S. House Committee on Science, Space and Technology 

Subcommittee on Technology and Innovation 

Best Practices in Transforming Research into Innovation: Creative Approaches to tfte BayhDole Act 

Tuesday, June 19,2012 

Submitted by Catherine Innes 

Director, Office of Technology Development 

University of North Carolina at Chapel Hill 

1. We often hear how important comprehensive market analysis and market validation are to 

successfully commercializing new technologies. I'm wondering what the University of North 

Carolina at Chapel Hill is doing to help facilitate these activities for university-developed 

technologies, particularly for university researchers who generally will not have the expertise or 

market contacts to carry out this sort of analysis? What more, if anything, could be done? 

Market analysis and validation are critical aspects of commercial development. Much of this 

activity at UNC Chapel Hill is conducted by the technology transfer office staff. We keep 

abreast of the state of the art and what companies are developing in our target market sectors. 

We obtain feedback from industry contacts and investors on the potential for our innovations. In 

addition, there are a number of resources available, such as consultants and market reports, that 

are extremely valuable and many technology transfer offices use these resources. We do not 

make extensive use of external resources due to budgetary constraints. 

One of the biggest challenges in assessing the market viability of an invention is that our 

invention is unproven rather than there being a question of market need. For example, we have a 

number of compounds that have shown efficacy in treating bacterial infection, malaria, and 

epilepsy. Clearly there is a market for therapeutics for these indications; however, it will take 

considerable development and testing to determine if any of our compounds are efficacious in 

humans, cost effective, and non-toxic. In other cases we have innovations that have considerable 

functionality but there is no current market for it as yet, such as a development for solar fuels or 

use of hepatic stem cells to treat liver disease. It is hard to predict if the state of the art will 

evolve along the lines of our innovation and if we invest in patents, whether these will prove to 

be marketable when they issue several years later. 

For the U.S. to maintain its leadership in the innovation economy, we must find ways to cost 

effectively advance promising technologies to point of adoption. We should consider developing 

non-profit regional proof of concept facilities offering at-cost or low cost experiments to advance 

early stage life science technologies. In this way universities could identify most viable 

technologies and accelerate commercial development. This would be particularly valuable if 
70 

structured as a public-private partnership such that the projects selected for advancement could 

address industry needs. Further, we need to find a way to close the development gap and offer 

incentives to companies licensing in early stage inventions from universities such as R&D tax 

credits, fast track patent review vouchers, or other. 

2. In your testimony, you mention that the University of North Carolina was interested in starting 

more companies and helping them become sustainable, but that you had been constrained by 

limited financial resources and were therefore unable to invest in those ventures. 1 also 

understand that the University of North Carolina - along with over 30 other partnerssubmitted a proposal to the Economic Development Administration's 16 Cnallenge but 

unfortunately did not receive funding. Can you tell us some of the areas you would invest in if 

you had additional financial resources? What activities would have been funded had the 

University of North Carolina received the i6 funding? 

We proposed to leverage i6 funds with existing resources to establish the ACTION Model 

(Accelerating ~ommercialization and Transfer - .!nnovation Qpportunity tJ:etwork) in North 

Carolina. The comprehensive model proposed to address persistent areas of critical need in North 

Carolina's innovation ecosystem, including a strategic build-out of the innovation culture and 

supporting infrastructure, talent development, and gap funding. The ACTION model as proposed 

initially focused on the University of North Carolina's (UNC) sixteen constituent universities, 

particularly those where an infusion of resources could further their impact in economically 

distressed areas. 

Had this proposal been funded, North Carolina proposed to accelerate discovery of new 

innovations at UNC campuses that do not currently have a technology transfer program. The 

grant would have funded fellows to serve the 10 campuses in less populous regions of the state to 

identify promising innovations and develop the commercialization assessment resources and 

infrastructure for supporting new ventures. We are still seeking ways to advance technology 

commercialization throughout the state with other funding approaches. 
71 

RESPONSES TO 

QUESTIONS FOR THE RECORD 

THE HONORABLE RANDY NEUGEBAUER (R-TX) 

U.S. House Committee on Science, Space and Technology 

Subcommittee on Technology and Innovation 

Best Practices in Transforming Research into Innovation: Creative Approaches to the BayhDo/eAet 

Tuesday, June 19,2012 

Submitted by Catherine Innes 

Director, Office of Technology Development 

University of North Carolina at Chapel Hill 

1. Historically, federal funding has primarily focused on basic research and not on the postapplied steps toward commercialization. In the current budget environment, 1 know we would all 

like 10 see more funding for everything, but that is simply not the reality. If you had to choose 

whether 10 fund basic research or commercialization at a university, where do you think federal 

funds should go? 

This is very difficult question to answer. UNC, like many of its peer institutions across the 

country, relies heavily on federal funding to support our research initiatives and we would lose 

the ability to conduct important breakthrough research iffederal funding were reduced. That 

said it would be beneficial to have additional funding opportunities to move promising 

innovations forward. 

If I had to choose where federal funds would go I would have to say we need to continue funding 

basic research. While I personally would like to see more funding for applied research, it cannot 

be at the expense of basic research funding. Basic research is vital to the innovation economy 

and reduction in funding could cause irreparable harm to our innovation capacity. 

2. Besidesfunding, what do you think is the biggest obstacle to accelerating technology transfer? 

The biggest challenge is finding thc market for technologies that are at an extremely early stage 

of development. Even with all the digital technology available today, we still have no effective 

way to easily connect university innovations to the companies that can advance them. There 

have been many good efforts at developing searchable databases for technologies from multiple 

sources, but in my view none has emerged as the sole' go to' resource for universities to find 

licensees for their inventions. Part of the challenge is that a business model for this type of 

resource has not yet evolved and thus a common platform has not been established. Sourcing 

deals remains largely a network contact approach. 
72 

3. Many of you are promoting programs that allow business people to come alongside jaculty to 

assist in the commercialization process. Could you elaborate on what have you found to be the 

best practices in this area? 

One of the industry activities that we have found to be very helpful is the creation of dedicated 

'technology scouts' that work with researchers and technology transfer offices at universities to 

identify research and inventions that are of interest to the company. In many cases research can 

be supported by the company and if inventions arise they can be readily licensed to the company, 

often on pre-established terms. This has worked well in the pharmaceutical sector and we hope 

to see this trend continue in other markets as well. 

A new initiative in North Carolina is a partnership between the Blackstone Charitable 

Foundation and UNC Chapel Hill, North Carolina State University, North Carolina Central 

University, Duke University and the Council on Economic Development. This five-year 

initiative is aimed at making North Carolina's Research Triangle headquarters for America's 

next high-growth companies with the greatest potential to create new jobs. A $3.63 million gift 

will serve as the impetus to bring master entrepreneurs to the area and accelerate the rate of new 

company formation around new innovations. 
73 

RESPONSES TO 

QUESTIONS FOR THE RECORD 

THE HONORABLE BEN LUJAN 

U.S. House Committee on Science, Space and Technology 

Subcommittee on Technology and Innovation 

Best Practices in Transforming Research into Innovation: Creative Approaches to tlte BayhDole Act 

Tuesday, June 19,2012 

Submitted by Catherine Innes 

Director, Office of Technology Development 

University of North Carolina at Chapel Hill 

1. How are the changes to the patent law affecting university technology transfer? 

The America Invents Act will make many improvements to the patent system that will benefit 

universities. Universities support the reduced fees under the new micro entity status and the 

simplified application process. Harmonization with the rest of the world should increase the 

opportunity for global interactions for both research and licensing. There also are protections for 

university inventions such as an exemption from the "prior user rights" defense to patent 

infringement. As we are awaiting final rules and the implementation of major provisions of the 

Act next year we can only speculate on the impact to universities at this point in time. 

University technology transfer offices have to determine which potentially patentable inventions 

they should protect and which they should discard when the inventions are at a very early stage 

of development. Technology transfer offices try to balance the need to file patent applications 

prior to a researcher's publications and the risk that the innovation is not sufficiently developed 

to attract a licensee before incurring patent prosecution and foreign filing costs. While the new 

first inventor to file system is not effective until March of next year, university technology 

transfer offices are likely to be under increased pressure to file applications early and this will 

strain already tight budgets in most offices. I expect this impact to be transitional as inventors 

become familiar with the new system. 

Universities will need to be far more diligent in educating researchers on disclosure requirements 

and the expanded body of prior art that will come into play in the new system. I understand that 

these provisions are still evolving and appreciate that universities have engaged in the process to 

ensure that the new law is balanced and provides a robust patent system for the United States. 
74 

2. What are the right metrics to use in judging the success of technology transfer? Just looking at 

the number of patents and licenses is not J think sufficient to understand the ejfect on the 

economy. Also, wouldn'l it be helpjitlto have longitudinal studies that look over time at the 

impacts of technologies? 

This is an extremely important question without an easy answer. I think it is important to look at 

the percentage of disclosed inventions that are licensed and whether those licenses result in new 

products and services entering the market. This type of metric can only be measured over 

considerable time as time to license may be up to ten years after an invention is reported and 

time to commercial products may be another decade beyond that. This has a great deal to do 

with the stage of development of the invention and market sector. But beyond licensing, we also 

need to look at what happens because of a license. Licensing should foster increased research 

and development and ultimately new business creation and new products and services on the 

market. 

It is also very important to measure economic activity related to technology transfer efforts. The 

number of new companies formed is important to capture, but it is most important to track this 

impact over time and measure the growth in the number of employees and products emerging 

from these companies. My understanding is that start-ups based on university technologies have 

a good track record in this regard. Technology licensing often leads to increases in sponsored 

research funding back to the university and further technology innovation. 

You have hit upon a key point in that any measure of technology transfer must be over decades 

rather than one or two years. Groups such as the Association of University Technology 

Managers (AUTM) and the Association of Public and Land Grant Universities (APLU) have 

been working to develop better metrics. 
75 

QUESTIONS FOR THE RECORD 

THE HONORABLE JUDY BIGGERT (R-IL) 

U.S. House Committee on Science, Space, aud Technology 

Subcommittee on Technology and. Innovation 

Best Practices in Trans/arming Research into Innovation: Creative Approaches to the 

Bayh-Do/e Act 

Tuesday, June 19,2012 

1. How does the United States' model for technology transfer compare to technology 

transfer in other countries? Are our universities generally more or less successful, and in 

what ways? 

My informal comparison from conversations with peers in other countries indicate that 

the U.S. model based on Bayh-Dole is seen as being very successful. The ownership by 

universities drives subsequent internal investment in offices, development resources and 

leveraging of university relationships. 

2. Do you have any recommendations for changing the Small Business Technology 

Transfer Program (STTR) to allow for better utilization by universities and businesses? 

No. 

3. In 2010, 14 Ohio universities signed an agreement with Proctor and Gamble (P&G) to 

simplify the legal process of negotiating joint research projects with the intent of bringing 

ideas to market faster. I understand that the University of Michigan has similar 

agreements in place with P&G, Dow Chemical, and the Ford Motor Company. How do 

such agreements provide predictability and flexibility for both the University and the 

innovation partner? Have you seen the anticipated results come to fruition? 

These master agreements are helpful in cases when there is potential for significant 

engagements between the parties, as they provide a template to 

enhance relationships to expand partnering opportunities 

define major terms for the initial and subsequent agreements 

define expectations and priorities between the parties (useful for future inventor 

and business participants) 

facilitates discussions of future needs and opportunities 

Yes, our researchers are very happy with the expanded project relationships and both parties 

feel good about our enhanced relationships. 
76 

QUESTIONS FOR THE RECORD 

THE HONORABLE DONNA EDWARDS (D-MD) U.S. 

House Committee on Science, Space, and Technology 

Subcommittee on Technology and Innovation 

Best Practices in Transforming Research into Innovation: Creative Approaches to the 

Bayh-Dole Act 

Tuesday, June 19,2012 

1. We often hear how important comprehensive market analysis and market validation 

are to successfully commercializing new technologies. I'm wondering what the 

University of Michigan is doing to help facilitate these activities for university-developed 

technologies, particularly for university researchers who generally will not have the 

expertise or market contacts to carry out this sort of analysis? What more, if anything, 

could be done? 

We do leverage the contacts and expertise of our faculty, which is often the best source for 

market paltners and information. We also recruit and train our licensing staff to have these 

market analysis and validation skills. We invest in market research tools and databases, and 

also in industry conferences and engagements to obtain market intelligence. We also have 

created a Tech Transfer Fellows program using advanced degree students managed by a 

central tech transfer resource, to perform market studies to assist our license professionals in 

making decisions. 

2. In your testimony, you mention the importance of tailoring technology transfer 

initiatives so that they account for the advantages and challenges of a specific region. 

Can you please elaborate on this comment and the how technology transfer initiatives 

could, or should, vary across regions? Also, in your experience, what are the key 

elements necessary to foster regional innovation and how can we leverage Federal 

research dollars to contribute to regional innovation ecosystems? 

It is important to understand a region's advantages and resources, along with their 

challenges and lack of resources, in constructing a viable commercialization process. 

The "tailoring" factors include: 

availability and access to industry 

availability of early stage funding and entrepreneurs 

the amount and quality of research, and the areas of expertise 

the availability of regional commercialization resources and expertise 

Some key elements for fostering innovation include 

A. Talent to 

assess technical and market potential 

model commercialization plans 

connect to market partners and expand networks 

operationalize opportunities 

B. Funding (translational and gap funds, early stage private funds, growth funds) 

C. Supportive culture and ecosystem 

We can leverage Federal research dollars by ensuring vibrant support mechanisms are in 

place to support researchers and their research. 
77 

QUESTIONS FOR THE RECORD 

THE HONORABLE RANDY NEUGEBAUER (R-TX) 

U.S. House Committee on Science, Space, and Technology 

Subcommittee on Technology and Innovation 

Best Practices in Transforming Research into Innovation: Creative Approaches to the 

Bayh-Dole Act 

Tuesday, June 19, 2012 

1. Historically, federal funding has primarily focused on basic research and not on the 

post-applied steps toward commercialization. In the CUlTent budget enviromnent, I 

know we would all like to see more funding for everything, but that is simply not the 

reality. If you had to choose whether to fund basic research or commercialization at 

a university, where do you think federal funds should go? 

Tough question. I would fund commercialization funding only if there was minimal impact on 

the quantity and quality of basic research funds. 

2. Besides funding, what do you think is the biggest obstacle to accelerating technology 

transfer? 

Having expertise and resources to understand market needs related to tech transfer 

opportunities 

Having access to talent to plan and implement commercialization plans 

3. Many of you are promoting programs that allow business people to come alongside 

faculty to assist in the commercialization process. Could you elaborate on what have you 

found to be the best practices in this area? 

We have a Mentor-in-Residence (MiR) program in which experienced entrepreneurs are 

employed as half-time employees for 12-18 month rotations within our tech transfer 

office. They help assess our new inventions and provide guidance to our inventors and 

our staff in creating new ventures. They can have no financial stake in our projects, 

ensuring total objectivity in their work. They expand our networks by connecting us to 

additional talent and resources. We have seen a dramatic enhancement in our productivity 

with this program. 
78 

QUESTIONS FOR THE RECORD 

THE HONORABLE BEN LUJAN (D-NM) 

U.S. House Committee ou Science, Space, and Technology 

Subcommittee on Technology and Innovation 

Best Practices in Transforming Research into Innovation: Creative Approaches to the 

Bayh-Dole Act 

Tuesday, June 19,2012 

1. How are the changes to the patent law affecting university technology 

transfer? 

We have seen no material changes. 

2. What are the right metrics to use in judging the success of technology transfer? Just 

looking at the number of patents and licenses is not I think sufficient to understand the 

effect on the economy. Also, wouldn't it be helpful to have longitudinal studies that look 

over time at the impacts of technologies? 

License agreements (to existing and start-up businesses) are our primary measure of 

success. 

Licenses to start-ups are a special focus because of their regional economic development 

impact. 

Impact is difficult to measure because success often requires long-term efforts. We 

measure business expansions and jobs created, as well as induced investment in the 

University (new sponsored research) and community. We find that telling stories and 

describing their impact is helpful: cost savings, lives saved, productivity, industries 

created, enhanced quality of life, etc. 
79 

QUESTIONS FOR THE RECORD 

THE HONORABLE JUDY BIGGERT (R-IL) 

U.S. House Committee on Science, Space, and Technology 

Subcommittee on Technology and Innovation 

Best Practices in Transforming Research into Innovation: Creative Approaches to the 

Bayh-Dole Act 

Tuesday, June 19,2012 

1. How does the United States' model for technology transfer compare to technology 

transfer in other countries? Are our universities generally more or less successful, and in 

what ways? 

Bigger! Question 1: The only other country I am familiar with is Israel and to the best of my knowledge 

tech transfer is not intended to be a profit center. The only motive is to get technology into the commercial 

markets, with or without defined remuneration, 

2. Do you have any recommendations for changing the Small Business Technology 

Transfer Program (STIR) to allow for better utilization by universities and businesses? 

Not Answered. 
80 

QUESTIONS FOR THE RECORD 

THE HONORABLE DONNA EDWARDS (D-MD) 

U.S. House Committee on Science, Space, and Technology 

Subcommittee on Technology and Innovation 

Best Practices in Transforming Research into Innovation: Creative Approaches to the 

Bayh-Dole Act 

Tuesday, June 19,2012 

1. Identifying ideas in a university that have commercial potential can be a challenge. The 

concept of using "site miners" in the Maryland Innovation Initiative has the possibility of 

speeding up the identification and commercialization of federally-funded university 

research. Can you please elaborate on how these "site miners" would operate and what 

makes their activities different than activities performed in a university technology 

transfer office? 

Edwards Question 1: A white paper was written by Bryan Sivak during his tenure as 

Maryland's Chief Innovation Officer. Within the white paper he described the site miners 

as follows: 

The site miners will: 

o Either be technology transfer professionals who work in consultation with 

university faculty, or members of university faculty; 

o Create inter-disciplinary teams of clinicians, scientists, engineers, business 

strategists, lawyers, and pharmacists to solve existing problems identified in 

clinical practice; and 

o Will work within the academic research facilities, and will come together as a 

single group periodically at a location designated by the Secretary of Business and 

Economic Development. 

The teams created by the site miners will compete for no less than 40 grants of up to 

$100K. The grants will be awarded on a rolling basis over the course of 12 months by the 

MI board. The board will meet as often as necessary to ensure the grants are awarded in a 

timely manner. 

By linking innovators with experienced entrepreneurs and the technology transfer offices 

at these three institutions, we anticipate 10% of the funded projects will become new 

start-up companies, be licensed to established companies, and/or become standards of 

clinical care within two years of receiving funding. 

2. We often hear how important comprehensive market analysis and market validation 

are to successfully commercializing new technologies. I'm wondering what TEDCO is 

doing to help facilitate these activities for university-developed technologies, particularly 

for university researchers who generally will not have the expertise or market contacts to 

cany out this sort of analysis? What more, if anything, could be done? 

Edwards Question 2: TEDCO has a program targeted at that very problem. The TechStart program 

provides funding to a small team consisting of an entrepreneur, scientist and the tech transfer office to 

evaluate the commercial viability of the scientist's innovation. The money is used to answer a strategic 
81 

question around competition, market size, freedom to operate, or any other issue that is needed to decide if 

there is a viable business that can be created from the innovation. 
82 

QUESTIONS FOR THE RECORD 

THE HONORABLE RANDY NEUGEBAUER (R-TX) 

U.S. House Committee on Science, Space, and Technology 

Subcommittee on Technology and Innovation 

Best Practices in Transforming Research into Innovation: Creative Approaches to the 

Bayh-Dole Act 

Tuesday, June 19,20]2 

1. Historically, federal funding has primarily focused on basic research and not on the 

post-applied steps toward commercialization. In the current budget environment, I know 

we would all like to see more funding for everything, but that is simply not the reality. If 

you had to choose whether to fund basic research or commercialization at a university, 

where do you think federal funds should go? 

Neugebauer Question 1: Assuming federal labs continue basic research commercialization funding for 

universities would be very beneficial. 

2. Besides funding, what do you think is the biggest obstacle to accelerating technology 

transfer? 

Neugebauer Question 2: University culture 

3. Many of you are promoting programs that allow business people to come alongside 

faculty to assist in the commercialization process. Could you elaborate on what have you 

found to be the best practices in this area? 

Not Answered. 
83 

Æ 

QUESTIONS FOR THE RECORD 

THE HONORABLE BEN LUJAN (D-NM) 

U.s. House Committee on Science, Space, and Technology 

Subcommittee on Technology and Innovation 

Best Practices in Transforming Research into Innovation: Creative Approaches to the 

Bayh-Dole Act 

Tuesday, June 19,2012 

1) Over what time frame does the state of Maryland expect its Innovation Initiative 

to start yielding a positive return on its 5 million dollar investment? Also, what will be 

the key factors in making it successful? 

Lujan Question I: We believe company formation will start within 6 months of the first project 

completion. The key success factor will be the collaboration between industry and the site miners. 

2) How are the changes to the patent law affecting university technology transfer? 

Not Answered 

3) What are the right metrics to use in judging the success oftechnology transfer? 

Just looking at the number of patents and licenses is not I think sufficient to understand 

the effect on the economy. Also, wouldn't it be helpful to have longitudinal studies that 

look over time at the impacts of technologies? 

Lujan Question 3: I believe commercial impact, either jobs, revenue, or in the case of medicine, 

improvements in the standard of care should be considered. Longitudinal studies would definitely be 

beneficial.