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Universities contributed $25 billion, 212,000 jobs to U.S. economy in '96

Academic research and inventions supported 212,000 jobs and contributed $24.8 billion to the US economy in 1996, according to the sixth annual licensing survey released by the Association of University Technology Managers (AUTM).

The study confirms that the transfer of research done at academic research institutions to companies plays a vital role in the US economy. AUTM estimates that sales of products developed from inventions made in the course of academic research and licensed to industry amounted to $20.6 billion in 1996.

Furthermore, licensee companies, including 248 new ones, invested an estimated $4.2 billion prior to sales to bring the early-stage inventions to market. The combination supported an estimated 212,500 primarily high-wage, high-skill jobs in 1996.

"The survey data show that the private sector is expanding its partnerships with universities and other nonprofit research institutions, as Congress hoped when it gave us control over our patents," said Marvin C. Guthrie, president of AUTM and vice president for patents and licensing of Massachusetts General Hospital. "I'm especially gratified that small companies took nearly two-thirds (64 percent) of all the licenses granted last year, just as Congress intended."

The nearly 300-page survey presents a comprehensive profile of academic technology transfer -- the process by which, following the Bayh-Dole Act of 1980, universities and other nonprofit research institutions find private-sector partners to take on the commercialization of federally funded research discoveries and innovations.

It includes reports from 131 US universities (including 89 percent of the top 100 research universities), 26 teaching hospitals and other nonprofit research institutions, 14 Canadian academic institutions and two patent management firms. The data enhance our understanding of one of the major pathways by which the nation's investment in basic academic research is translated into public benefits.

The survey reports that research institutions received 10,178 disclosures of inventions from their researchers in 1996, resulting in 3,261 new patent applications. Institutions reported negotiating 2,741 new licenses or options to commercialize academic discoveries. Licenses are the agreements that define terms and conditions for the right to develop inventions into commercial products. The cumulative total of active licenses, signifying that the industry partner is pursuing commercialization, reached 12,951 in 1996.

"The survey confirms that research universities are effectively translating theory into practice to the enormous benefit of the public," said Karen Hersey, president-elect of AUTM and intellectual property counsel at MIT. "The volume of technology transfer activity demonstrates that industry not only needs the creativity and innovation of academic research, but values our active participation in the process of building partnerships."

Reports from a subset of institutions that have provided data every year since 1991, when the survey began, help shed light on trends. Technology transfer appeared to be more efficient in 1996, with research expenditures in support of academic research upon which licensing depends rising at an average rate of 6 percent annually since 1991 (not inflation-adjusted). Meanwhile, licenses executed at these institutions have increased 75 percent since 1991, or an average of 12 percent per year.

While not every innovation succeeds in the market or even in reaching the market, many of the active licenses have or will result in highly significant new products or processes, sometimes laying the foundation for new companies or even entire industries. In particular, the biotechnology industry has depended on academic research since its beginnings in the early 1980s.

Newly available data in the 1996 edition of the survey confirm how crucial technology transfer is to meeting medical needs: 67 percent of the active licenses and an even larger percentage of the license income received by institutions (86 percent) drew upon research in the biomedical and other life sciences.

Universities reported more detail this year on their level of activity as equity investors in start-ups or small companies. Universities generally accept an equity position partially in lieu of licensing fees to permit start-ups to direct the cash conserved towards faster commercialization. The Survey shows that in 1996, 167 licenses, about six percent, included equity participation for the institutions.

AUTM is a nonprofit, professional membership society with more than 1,800 members from 250 academic institutions and an equal number of companies.

A version of this article appeared in MIT Tech Talk on February 25, 1998.

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