Kill or keep patent applications: the TTO dilemma

Unlike corporations or venture investors, technology transfer offices are influenced by non-commercial drivers as well as market drivers, such as maximising revenue. Non-commercial considerations that influence TTOs include attracting and retaining faculty, demonstrating technological capabilities in specific disciplines, supporting political agendas, and, in the UK, gaining access to funding programmes such as Higher Education Innovation Funding (HEIF). 

The general remit of research institutions to gain the maximum value out of their patent portfolio in the long term, not only from a financial point of view, clearly has a strong influence on their TTOs’ decision-making. However, the term “value” is likely to be perceived differently across institutions. At most universities, patent decisions are made fairly autonomously by the licensing officers within an office, leading to self-reinforcing filing and patent management strategies.

According to data from the Association of University Technology Managers (AUTM), the US technology transfer industry generates more than $2.7 billion (£2 billion) a year in licence revenue, but these returns are highly concentrated among the top 20 earners. Most of this income is generated from relatively few licences, with approximately 0.5 per cent of all currently active licences generating more than $1 million a year.

There is clearly work to be done in building a logical, data-driven best practice into the everyday kill/keep decisions of university patent portfolio management. There is also a need to keep sight of the additional factors that have to be considered by TTOs in their decision-making processes, such as delivering impact, measured and rewarded in the UK through the research excellence framework (REF), and promoting entrepreneurship.

In “Know thyself: how well do you understand your own IP strategy?”, a benchmarking study released in June 2016, technology transfer executives at Columbia University examined patent prosecution data, practices and technology transfer outcomes from 25 leading research institutions including Stanford University, the University of California, Berkeley, Cornell University, Harvard University, Princeton University and the University of Oxford.

While it wasn’t surprising that the patenting practices of TTOs were quite unlike those of technology corporations, the authors were taken aback at just how “random” university patenting practices seemed to be. “The seeming randomness of our collective approaches made us question whether our industry truly had IP strategies, as opposed to simply a collection of historical practices,” wrote Orin Herskowitz and Brady Butterfield of Columbia’s Tech Ventures.

The authors estimate that between only 5 per cent and 20 per cent of patents are ever licensed. Yet, given the early stage high-risk nature of university intellectual property, the higher end of this range could be regarded as a rather impressive hit rate. This is partly because university patents are often filed to protect truly cutting-edge areas such as machine learning, graphene, quantum computing and regenerative medicine. The Columbia study called these “hammers waiting for a nail to appear”. They are certainly on the steep uphill curve of Gartner’s Hype Cycle for Emerging Technologies.

The results of the study indicate that patenting practices at TTOs have layers of complexity that may not have been so evident in the past. As the authors have suggested, the diversity of patent strategies is a likely reflection on the multifaceted missions and multiple stakeholders that university TTOs have to keep in balance.

It’s worth bearing in mind that most UK universities do not have the knowledge exchange and commercialisation (KEC) budgets of the 25 institutions included in the Columbia study. Resource constraints, financial and human, mean that most universities simply do not have the luxury of being able to back every opportunity. Therefore it is essential to develop a strategy and process that optimises the chances of backing winners, be it to maximise the financial return or to address the non-financial impact agenda.

Isis Enterprise, the innovation consultancy arm of Oxford University Innovation, manages commercialisation projects and IP with a range of international and UK institutions and corporates across many scientific disciplines. We know that a strong pipeline of research output underpins any successful technology transfer operation but, beyond the research base, implementing a few simple processes can help to maintain a healthy IP portfolio.

Three rules for patent portfolio management

Our methodology for trimming and shaping academic patent portfolios so that they are optimised for strong overall returns can be distilled into three steps:

• Integrated decision-making processes: organisations that own related prior art have already demonstrated a vested interest in your technology and therefore make promising potential licensees. Integrating IP due diligence with market assessment leads to rapid licensee identification.
• Portfolio analysis by, a) department/school – allows the TTO to target resources, preventing opportunities slipping through the net; and, b) technology transfer pipeline – identifies projects that have stalled or hit difficulties. Regular portfolio analysis allows resources and budgets to be managed efficiently.
• Decide quickly: rapid and early collection of market feedback and a policy of only taking forward strong opportunities is important. It allows resources to be concentrated on stronger possibilities and avoids wasting the time of academics and TTO staff.

Each TTO has unique environmental factors (e.g. a focus on a particular technology area) and non-commercial priorities that influence its IP strategy, however, all TTOs can optimise their performance by active portfolio management.

Bruno Reynolds is a senior consultant at Isis Enterprise who specialises in technology commercialisation for universities in the UK and overseas. Ben Oakley, a consultant at Isis Enterprise, has experience assisting clients from both the higher education and corporate sectors in managing their patent portfolios.