February 27, 2002: Features

How Princeton ideas go commercial

Students never miss Stephen Forrest’s breakfast meetings. . . . Over croissants and coffee, students and engineers discuss science and projects, and how they can push a technology ahead.

By Van Wallach ’80

Illustration by Jane Sterrett c/o TheIspottm, photo by Frank Wojciechowski

They groan about the timing, but bleary-eyed graduate students never miss Stephen Forrest’s breakfast meetings at the E-Quad or Frist Campus Center. Forrest, the James S. McDonnell Distinguished University Professor of Electrical Engineering, invites to each session an engineer from a company that’s funding or collaborating on student research. Over croissants and coffee, students and engineers discuss science and projects, and how they can push a technology ahead.

Forrest sees such exchanges as critical to technology transfer, the process through which intellectual property flows from academia to commercial ventures. “By having this weekly exposure, both sides develop a sense of involvement and trust. The students get a window onto the industrial world. The relationship doesn’t work if the company just hands money to the university and walks away.”

Such relations are becoming more common as Princeton builds its presence in technology transfer through its Office of Technology Licensing and Intellectual Property (OTL), part of the Office of Research and Project Administration. Since the mid-1990s, OTL has taken a more organized approach to working with faculty members and students interested in patenting and licensing their inventions. “The ultimate goal is to bring to the public the benefits of the research,” says John Ritter, OTL’s director.

OTL has negotiated more than 100 licenses or option agreements, with the university at times receiving nonvoting equity in lieu of up-front fees (the university has no role in managing the companies, and the stake is limited to 5 percent). Income from patent licenses rose from $455,000 in fiscal 1997 to $2.4 million in fiscal 2000. The number of license agreements has held steady, ranging between 18 in 1997 and 14 in 1999. (For contrast, in fiscal 1999—2000 Stanford University’s Office of Technology Licensing concluded 162 licenses and generated net royalty income of $34.6 million.)

Beyond the licensing fees, OTL’s activities bring money to the university, as corporations sponsor research related to their interests. “We’re bringing research money back to Princeton,” Ritter says, with more than $5 million coming from just one unnamed licensee. Royalty income from commercial sales is another revenue source, although no product using licensed technology has reached the market yet.

Princeton’s OTL is part of a trend toward closer links between universities and corporations, dating back 20 years. Until 1980, the federal government retained the rights to any inventions discovered using federal research funds. Licenses were hard to obtain, so companies rarely tried to develop promising technologies coming from universities. The Bayh-Dole Act of 1980 created a uniform patent policy among federal agencies and allowed small businesses and nonprofits such as universities to retain title to inventions made under federally funded research programs. The impact? According to annual surveys of the Association of University Technology Managers, the number of patents granted annually to universities has risen from fewer than 250 before 1980 to more than 2,000 recently.

Patents are just one part of the technology transfer process. OTL also deals with legal, technical, and academic issues, leavened with a bit of matchmaking magic to connect scientists with potential licensees. Kevan Shokat, formerly an associate professor in chemistry, says OTL gave him a “huge amount of education” on intellectual property and licensing matters after he disclosed findings in genetic chemistry.

Shokat, now at the University of California, San Francisco, says, “Academics do a lot of things by convention; we distribute findings in informal ways, but when you do the patents you have to think specifically about what you consider an invention. John told me, ‘You’ve got to get this part right or the patent’s invalid.’ I still call and ask him quick questions.”

An extensive infrastructure governs Princeton’s approach to technology transfer and intellectual property. Specific guidelines regulate such issues as publications, patents, cost reimbursements, use of equipment and facilities, and visitor agreements. For example, commercial interests cannot delay or influence theses or faculty publishing. Com-panies that are concerned about sharing proprietary information are urged to break off nonproprietary parts for students to work on, then add the proprietary aspects later.

Formulas govern how inventors and the university split net income from inventions and copyrights. The inventor gets 50 percent of the first $100,000 of net income received by the university, 40 percent of the next $400,000, and 30 percent of anything over $500,000. Rules for equity transactions guard against conflicts of interest, with the inventor and prospective licensee disclosing any consulting deals that may give rise to conflicts. In another safeguard, representatives of the university will not serve on the board of directors of a licensee.

he long road to licensing begins when faculty members and students disclose their findings to Ritter and technology licensing associate William Gowen, both of whom are patent attorneys with technology backgrounds. Disclosures rose from 76 in 1997 to 107 in fiscal 2001. The disclosure form asks about an invention’s possible uses, novel features, limitations, potential licensees, and any sponsorship supporting the work that led to the invention. Once they understand a disclosed technology and its commercial applications, OTL officials start discussing a strategy to find licensees.

The goal, Ritter says, “is getting companies to take an in-depth review of the technology you’ve got, so they can decide whether it fits into their development needs. We don’t do return on investment numbers for them, but we give them an idea of where we and the professor think this might be useful.”

OTL performs searches for companies that may have an interest, and it posts nonconfidential materials on the Princeton Web site and TechEx.com, an online technology matchmaker of sorts. OTL Web pages list available technologies in six categories, such as chemistry and computers, usually with a short description of the underlying science.

Other university organizations are also stepping out to raise awareness of Princeton’s research findings. For example, the Center for Photonics and Optoelectronic Materials (POEM), part of the engineering school, has held conferences where faculty members and graduate students can mingle with corporate scientists and investors. Joseph X. Montemarano, POEM’s associate director for industrial liaisons, explains that Princeton has had a less entrepreneurial image than leading institutions such as Stanford. “People do not as frequently turn to Princeton to start a company. We’ve been broadcasting that there’s valuable technology here and valuable groups of researchers.”

In January 2001 POEM teamed up with the Materials Institute, OTL, and the Plasma Physics Laboratory to offer a workshop on photonics opportunities. The event attracted 250 attendees from the venture capital world, and 17 professors spoke about their research and potential commercial uses.

Sometimes a license results from serendipity. That’s what happened to Kevan Shokat. In the late 1990s, Shokat wanted to commercialize his findings in chemical genetics. He first spoke with Ritter in 1997, but two years later the technology had yet to be licensed. Then in July 1999 he addressed a conference on molecular and cell biology.

“I sat next to somebody at dinner,” he recalls. “We were talking about our research and that piqued the other person’s interest. He basically said, ‘Hey, your research might fit into the company we’re starting.’ It turned out he was going to be the chief scientific officer of Cellular Genomics.” Ultimately, Cellular Genomics licensed Shokat’s technology, and he joined the company’s scientific advisory board.

One of Princeton’s most prolific sources of technology transfer is Forrest, who started his first company, Epitaxx, in 1984 while teaching at the University of Southern California. The company built systems for long-wavelength optical communications around his research on photodiodes (the company was sold in 1998 to JDS Uniphase for $400 million). At Princeton, findings from Forrest and collaborators have been licensed to Sensors Unlimited (sold to Finisar Corporation in 2000 for $700 million), Universal Display Corporation (traded on Nasdaq as PANL), Global Photonic Energy Corporation, PD-LD, Inc., and ASIP Inc. (Application-Specific Integrated Photonics). He is a board member or scientific adviser for these and other companies.

“I guess I have some entrepreneurial blood in my veins,” says Forrest, who is the chair of ASIP. Based in Somerset, New Jersey, ASIP shows how access to Princeton’s knowledge and research facilities can be invaluable for a startup company.

Yassi Moghaddam, ASIP’s vice president of marketing, says, “Typically in a startup, things happen in a series: funding, building facilities, and starting development. By working with Princeton we could bypass some of the serial processes.” While ASIP was seeking funding, research continued on its basic technologies by Forrest and his postgraduate student Milind Gokhale (ASIP’s acting president and chief technology officer). Moghaddam estimates that the Princeton connection helped the company shave six to nine months off the time required to get samples of its products to larger companies for evaluation. She expects ASIP to begin volume manufacturing in 2002.

What’s ahead for technology transfer at Princeton? Forrest would like to see the concept of technology transfer receive more attention on campus, to become what he terms a “culturally catalyzing influence.” His sunrise sessions with corporate engineers do that to some extent, and he’d welcome more

faculty-level awareness of the ups and downs of private-sector collaboration. He says, “I would like deans and department heads to know how to reach out to the outside world and let it know that Princeton is a friendly place to be.”

Van Wallach ’80 is an occasional contributor to PAW.

ON THE WEB: www.princeton.edu/patents