One start-up CEO said the University of Minnesota's new model sounds like "a great deal." Corporate leaders were eager for details.
The University of Minnesota is hoping that what has stood between it and more business-backed research is the haggling.
U leaders announced a new program Friday that simplifies contracts for industry-sponsored research, offering exclusive rights to the resulting inventions for an initial fee. They hope that by exchanging back-door dealing for upfront terms, they will put to bed the university's reputation as difficult to deal with.
No longer would the two sides spend months quibbling over royalties that could be years off. Under the new model, businesses would pay a 1 percent royalty on annual sales, only after they exceed $20 million.
"We're so busy protecting ourselves we're losing lots of potential activity," said John Frobenius, a member of the U's Board of Regents, which heard Friday about the Minnesota Innovation Partnerships Program.
Although some large companies have set forth standard research contracts for the universities with which they work, this might be the first time a university has done so.
"Minnesota could be the first to put it right up there in front," said Robin Rasor, president of Association of University Technology Managers. Across the country, "both sides are saying, 'How can we do a better job of this?'"
The U hopes to make industry-sponsored funding a bigger piece of its research pie in part because federal funding for research has leveled off nationally, and could be cut. Meanwhile, research and development funded by industry is growing -- but not at the U. The university's total research take has risen in recent years, yet the amount from business and industry has stalled. Now, they fund only 4 percent of the U's total.
"No matter how you look at this, Minnesota is really sort of lagging," said Tim Mulcahy, the university's vice president for research. "That lagging performance is even more profound given the environment we find ourselves in. We are in the midst of some of the largest Fortune 500 companies that sponsor research. We should be doing better."
Mulcahy believes that the university has been too focused on potential royalties, clinging to intellectual property rights and the terms surrounding them. That approach ignores the many other benefits of working with businesses, he said.
It's common for work between companies and universities to get "stymied" early on, said Peter Grasse, who leads recruiting and leadership development for 3M's R&D arm. Often, "companies have a hard time seeing the value that maybe the university sees in something," he said.
Grasse believes that this new model, at first glance, "will allow that early-stage collaboration without that being a barrier." He, like other business leaders, was eager for more details.
The university brought in $769 million in sponsored research awards in fiscal year 2011, according to a report released Friday. That compares with $823 million last year -- a high-water mark, thanks to federal stimulus funds that have since dried up.
The U ranks eighth among public research universities in National Science Foundation spending but falls a dozen spots when it comes to business-backed research.
U President Eric Kaler, a chemical engineer who holds 10 U.S. patents, said that as an active researcher, he spent "years and years negotiating with companies" and often, the university he worked for "would wind up owning 100 percent of nothing because a company walks away."
The new model allows a for-profit entity to prepay 10 percent of the sponsored research agreement -- or $15,000, whichever is greater -- for exclusive rights to the resulting inventions. That company handles all patenting costs, including attorneys' fees. In exchange, the university nabs 1 percent in royalties only when net sales exceed $20 million a year.
As a University of Minnesota faculty member and the leader of a biotech firm, Scott Fahrenkrug has a host of questions about the new model from both perspectives. How will it handle existing, university-developed intellectual property? Does the deal apply to university researchers who start companies? Does it bring down the cost of overhead?
But he's impressed. "Gee whiz, this is a great deal," said Fahrenkrug, CEO of Recombinetics. "This will turn the university, which is already an intellectual property-generating machine, into an efficient translator of products."
Jenna Ross • 612-673-7168