PACT WITH THE CEO | PAGE 1, 2
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Since many universities share licensing royalties with inventors, (and the Bayh-Dole Act explicitly mandates that revenue must be shared with researchers), many of these corporate deals are turning academics into moguls. With researchers pocketing as much as a third of net proceeds, the potential for personal gain is enormous by nonprofit-sector standards. MIT distributed more than $4.6 million to inventors in its last fiscal year alone.

Could the spread of such arrangements change the very nature of university research? Even Donald Kennedy, former president and professor of biological sciences at Stanford University and enthusiastic proponent of such deals, admits that it's difficult to imagine that licensing revenue doesn't weigh into university and faculty research decisions at all. "It's hard to tell," Kennedy says, "but I suspect there has been at least a modest effect of that kind."

Dianne Rahm, director of the graduate program in public administration at Iowa State University, conducted a survey of academics at top research institutions in 1993. Among respondents who had transferred their research into industry products, 44 percent said their universities rewarded patenting activities and 55 percent said they had felt pressure to adopt an applied-research focus in their work.

But the licensing deals that have raised the hackles of critics are those that grant exclusive rights to single corporations. Since the Bayh-Dole Act originally was designed to give the public more access to the intellectual property developed on university campuses -- by making it available to businesses -- such exclusive arrangements seem to undermine the very laws that make them possible. Proponents argue that exclusive licensing is often the most effective way to deliver technologies to the public -- i.e. in the form of purchasable products and services. But should corporations be allowed to reap monopoly profits from the results of taxpayer-funded research? One Boston Globe report last year cast a harsh light on the handling of an anti-clotting drug called ReoPro, which earned millions each for the biotechnology company Centocor, the State University of New York and a SUNY researcher, but nothing for the National Institutes of Health, which funded the drug's development.

Rahm speculates that license revenues going to individual researchers and specific departments will create a reward system that will warp the internal politics of universities. "Once you start doing that, then you've got winners and losers in the university," she says. "Because certain departments and certain disciplines are entirely cut out of that arrangement, and others are entirely written into that arrangement."

Rahm warns that as the university moves toward a model where just a few star departments thrive as pockets of excellence, the very landscape of intellectual inquiry changes.

"What I worry about is some universities going too far trying to make money, make deals," says Niels Reimers, a pioneer of the marketing-based approach to university licensing. "They've got to realize they're nonprofit entities." He maintains that university research administrators need to manage conflicts of interest carefully -- even when that means forsaking income. Though he won't name names, he said he's seen alarming cases of crossed boundaries at a few universities.

Reimers believes that universities can do a lot to keep their licensing programs clean. All licensing activities should be open to public scrutiny, and every deal that goes through should pass a simple test. "Whatever is done," he says, "you've got to be able to say, This is really in the interest of the public."

Yet Reimers, like other proponents of technology licensing, emphasizes that even with its dangers, the benefits of technology licensing far outweigh the potential for harm. Such programs, Reimers maintains, can create funds for basic research or nurture ideas that might otherwise languish in laboratory basements.

As an example he offers his own story. The licensing program he orchestrated in the 1973 invention of DNA splicing earned more than $200 million in royalties for Stanford University and the University of California at San Francisco. Moreover, he maintains that the invention and Stanford's stewardship of the patent are widely credited with giving birth to the entire biotechnology industry and stimulating its early growth.

Yet once the motivation behind university research comes into question, the whole of the university's teaching and research mission grows suspect. Are universities molding students into tomorrow's scholars or today's worker bees? If relationships between certain corporations and certain universities become entrenched through years of dealmaking, will the lines between nonprofit scholarship and for-profit research become hopelessly muddied? Will universities continue to nurture the pursuit of knowledge for its own sake, or will curiosity need a corporate sponsorship in order to survive?

Even among its boosters there is a growing sense that such technology licensing will lead to a host of new challenges. While Kennedy doesn't regret Stanford's licensing activities during his tenure as president and even wonders whether his administration was too cautious, he's quick to advocate chariness: "I think this is an area in which quite a lot of caution is not a bad idea."
SALON | Feb. 8, 1999

James C. Luh is a freelance writer living in New York.