The Relationship between Universities and Industry: The American University Perspective

Arnold L. Demain*

Massachusetts Institute of Technology, 71 Massachusetts Avenues, Cambridge, MA 02139–4307, USA

Received April 2, 2001

Accepted June 20, 2001


The enactment of the Bayh-Dole Act in 1980 by the U.S. Congress allowed universities and small businesses to own patents on research which had been federally-sponsored. This has revolutionized the relationship between academia and industry. The legislation allowed universities to license their patents to industry, exclusively or non-exclusively. Royalties, received by the universities for such licensing, are used for further research and education as well as for rewarding the inventor(s). The intellectual property (the patent) is held by the university and licensed to new or existing companies. Intellectual property is also a key component in research collaborations between universities and companies. Although the interests of the academic and the industrial partner are very different, successful collaboration has been possible when both parties respect each other’s interests and ease the tension around intellectual property considerations. The thorny issue of publication from such collaborations is resolved by allowing the company 30–60 days to examine the manuscript and determine whether patentable inventions are present. Within this period, the patent is filed and the academics are then able to submit the manuscript for publication. The industrial partner is offered the following alternatives: (i) a non-exclusive license to the technology at zero or nominal royalty; (ii) a royalty-bearing exclusive license; or (iii) a waiver of rights for a share of the university’s licensing revenues (the last being offered by only a few universities). The university charges the company the same overhead rate that it charges the federal government on grants. Successful interactions between academia and industry rely on interpersonal (= interscientist) relations on both sides; frequent contact is recommended. The royalty income of leading universities represents, on the average, about 0.5 to 2 % of the annual research budget. In a few cases, some successful universities have obtained major revenues from one or two very successful licenses. University licensing has led to the establishment of an impressive number of new companies. M.I.T. is currently granting 80 to 100 licenses per year to its technology, and spinning off 10 to 20 new companies per year; since 1987, 202 new companies have been founded. Nationally, over 2000 new companies have been established around university technology licenses.

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