What Is Tech Transfer? Tapping into Federally-Funded Research

Technology Transfer Explained

What is tech transfer? In the context of academia, technology transfer, also known as tech transfer, refers to the process of transferring scientific discoveries, knowledge, or inventions from research institutions to the commercial sector for development, acting as a bridge between academia and industry. However, tech transfer as we know it was not always like this. 

Before the Bayh-Dole Act was passed, universities had a limited ability to commercialize any inventions that came out of federally funded research within their labs. Because of the limitations, academic institutions rarely engaged in patenting and licensing.

Instead, the federal government handled commercialization. It owned many of the rights to publicly-funded research and decided for itself whether to develop and commercialize an invention or to license it to a private company.

However, this process was often slow and bureaucratic, which discouraged companies from investing in the development and commercialization of federally-funded inventions.

After the Bayh-Dole Act was passed in 1980, universities’ abilities to commercialize changed. They could now more easily own and license inventions or discoveries made within their laboratories, giving them greater control over the commercialization of their research and incentivizing research institutions to invest more heavily in R&D.

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Academia started regularly patenting inventions and licensing directly to US companies, sharing license income with inventors, thus providing inventors with more ownership over their creations and giving them a bigger stake in the commercial success of their work.

The Act also encouraged research universities to establish technology transfer offices (TTOs)—or technology licensing offices (TLOs) as they’re known at some universities—of which there are now many in different forms.

The primary objective of a TTO is to manage the patenting and licensing of inventions and facilitate technology transfer from the university to a separate entity. That entity, whether it’s an existing company or a new startup spun out from the university, handles further development of the invention, turning it into a product for commercialization.

TTOs not only use the process to commercialize new products, they also use it to amplify the influence of the research and create avenues for financial benefit for the university and the inventor.

Tech transfer is an essential part of the innovation ecosystem, as it helps bridge the gap between basic research and commercialization and serves as a critical tool in translating academic research into real-world products and services. This has proven to be an excellent driver of economic growth and innovation.

In this article, we’ll go over the tech transfer process, how patenting and licensing intellectual property (IP) generally works, and more.

How Does the Technology Transfer Process Work?

University TTOs work to identify potentially marketable inventions, file patent applications, and negotiate licenses with companies. They can also provide additional support to researchers who are interested in commercializing their inventions. The tech transfer process involves a number of steps. Here’s an overview:

  • Research & development
  • Invention and disclosure
  • TTO Evaluation
  • IP protection and IP rights
  • Marketing and selecting a licensee
  • Licensing and transfer
  • Product development and commercialization
  • Post commercialization
  • Royalties
  • Managing the IP
  • Monitoring and reviewing
  • Reviewing and renewing

Not all universities will have the same process, but these steps are a good outline of what you can expect. Ultimately, the goal is to enable a licensee to use a patented and licensed technology to generate profits, while also ensuring that the licensor receives fair compensation and retains control over their intellectual property. Lets review each step below.

Initial Research & Development

With all the research activity that occurs at universities, research institutions, and federal laboratories across the country, someone’s observations and experiments always seem to inevitably lead to new discoveries and inventions. Time and time again, basic academic research leads to a breakthrough discovery or cornerstone learning.

Thus, research and development is the first stage in the technology process—it’s really a precursor to the whole thing.

An invention is any practical product, process, device, machine, or composition of matter—a chemical or biological compound, for instance—that is either wholly new or an improvement of an existing machine, process, or product.

Multiple researchers, from students and trainees to faculty members, often contribute to an invention and may be considered inventors. The technology is typically identified as having a potential for commercialization.

Invention & Disclosure

After an invention has been conceived, the inventors will file a written notice, typically known as an invention disclosure form (IDF), or invention and technology disclosure, to their institution’s TTO. It is a confidential document and written notice that serves as the initial documentation of the invention and begins the formal technology transfer process.

The form should fully describe the new aspects of the invention, including its possible commercial applications and its advantages and benefits over any current technologies, as well as the details of who was involved in the invention process.

Timing is paramount at this stage, and inventors need to disclose any invention to their TTO once it has been conceived to preserve its patentability. Additionally, to protect the patentability of the invention, inventors are urged not to publicly disclose or discuss the invention before consulting with their TTO. If a public disclosure, such as a publication or presentation, has been made, the inventor should be prepared to provide details of the disclosure.

Since every invention is different, the technology transfer office will follow up with the inventor to discuss the details that are unique to their invention and situation.

TTO Evaluation

As mentioned, the university’s TTO will conduct a detailed evaluation of your invention disclosure and research results to determine the invention’s potential for commercialization. This can include analyzing the market and competitive technologies, intellectual property analysis, and feasibility studies. The TTO may also conduct patent searches.

Not only does the evaluation help determine the invention’s commercial potential and patentability, it will also guide the licensing strategy and help the office decide whether to license exclusively or non-exclusively or license the invention in different fields of use.

IP Protection & Intellectual Property Rights

If the technology is deemed to have commercial potential, the TTO will likely work to secure patent protection, a standard legal protection method, for the invention by filing a patent application with the US Patent and Trademark Office (USPTO) and, when necessary, foreign patent offices. IP rights prevent others from using or selling the technology without permission.

This is one of the most challenging aspects of tech transfer. Obtaining an issued patent can take many years and tens of thousands of dollars, and there is no guarantee of success. In addition to patents, IP protection can include copyrights and trademarks. In some cases, unique biological materials and software can often be successfully licensed without formal intellectual property protection.

Marketing & Selecting a Licensee

After a patent application has been filed successfully, the next step will be to create a marketing overview of the technology, market it to any interested parties, and determine which partnerships are a good fit. Potential licensees can include other companies, investors, or entrepreneurs that have the expertise, resources, and business networks to bring the technology to market.

The inventor can often provide input in the marketing process and help make a decision on who to license the technology too. However, licensee considerations also commonly include the inventors—the university researchers who came up with the invention.

In our experience underwriting early-stage biotech startups, many ventures experiencing early success and growth are led by scientific founders involved in the invention’s creation and run the company full-time, typically as CEO or another C-suite position.

Licensing & Transfer

After a licensee has been selected, the TTO and licensee will negotiate the licensing agreement to determine the terms of technology transfer. These agreements include details such as intellectual property rights, royalties, and responsibilities of both parties. 

After an agreement has been made, the licensee will typically be able to begin product development and commercialization, paying a licensing fee or royalty to the technology's owner in exchange for the right to use, develop, or sell the technology.

At this point, the technology is transferred from the licensor to the licensee, which can involve knowledge transfer, such as providing training, technical support, or other assistance to ensure that the licensee can effectively use the technology.

Product Development & Commercialization

The licensee then works to commercialize the technology—sometimes with the support of the TTO (they can provide the licensee with access to research facilities, equipment, and regulatory compliance guidance)—which involves further research and development, manufacturing, marketing, and sales. 

At this point, the licensee will typically have exclusive rights to use the technology for a set period of time as outlined in the licensing agreement.

“Post Commercialization”

The commercialization phase can take many years, and as the licensee (and the licensor, potentially) develop the product and bring it to market, a number of things will occur. This can include paying royalties, managing IP, actively monitoring commercialization progress and submitting reports, and reviewing and renewing the agreement periodically, if necessary.

  • Paying royalties: The licensee will pay royalties to the licensor for the use of the technology. The amount and frequency of these payments will be outlined in the licensing agreement.
  • Managing intellectual property: The licensor will typically retain ownership of the intellectual property associated with the licensed technology, and will be responsible for managing and enforcing their intellectual property rights. This may include monitoring the use of the technology, defending against infringement to manage competitiveness, and taking legal action if necessary.
  • Monitoring and reporting: The licensee will be required to provide regular reports to the licensor outlining their progress in commercializing the technology, including sales, profits, and any issues or challenges encountered. The licensor may use this information to make decisions about future licensing agreements or to improve the technology transfer process.
  • Review and renewal: The licensing agreement may be reviewed periodically to ensure that both parties are meeting their obligations and that the terms of the agreement are still appropriate. If the agreement is set to expire, the parties may negotiate a renewal or extension of the license.

Licensing the Technology

There are two main approaches to licensing: working with an existing company or spinning out a startup associated with the university. We touch on this briefly above, but let’s go over each approach in a little more detail below.

The first approach involves licensing a patented intellectual property to a corporation, allowing the company to utilize the technology for a specified period while paying royalties to the research institution. This approach is commonly used when the technology is still in need of further development or when the institution requires additional resources to bring the technology to market.

The second approach is the creation of startup companies, which involves licensing the intellectual property to a newly formed startup company. This new company may be founded by the researchers themselves or by outside investors who see potential in the technology. The approach of spinning out a startup allows for a more active role in the commercialization of the technology and enables the institution to share in the success of the startup.

How to Engage With Your TTO

As a researcher and inventor, you’ll collaborate closely with your university’s TTO during the technology transfer process. This involves contacting the office and discussing the technology to get an evaluation of your technology or invention and gauging your interest in commercialization.

These steps overlap with some of the steps listed above, but by going over them here, we can give you a better idea of how you can start collaborating with your TTO on the tech transfer process.

Contact Your Tech Transfer Office

Before you start collaborating with your TTO, you will contact them and notify them of your invention using an invention disclosure form, or IDF, providing a detailed description of the invention, its novelty, the PI whose lab it came from, any supporting data or research, and an assessment of its commercial potential. Filing an IDF typically means there will be a follow up meeting with the TTO, who will ask for more information.

You can typically find the contact information for your technology transfer office on your university or organization's website. Send an email or call the office to express your interest in commercializing a technology or invention.

Discuss Your Technology

Once you have made contact, you will likely have an initial discussion with a representative from the technology transfer office to discuss the technology or invention you are interested in commercializing. This discussion may include questions about the technology's potential applications, market potential, and intellectual property status.

Conduct an In-Depth Evaluation

After the initial discussion, the technology transfer office will likely conduct a more detailed evaluation of the technology to determine its commercial potential. This may include an assessment of the intellectual property.

How Long Does the Tech Transfer Process Take?

It can take months or even years! Sometimes it’s never completed. The duration of the technology transfer process varies widely depending on a range of factors

Each step can take weeks or months, from doing the research to filing and securing a patent to finding a licensee or spinning out a company. All in all, it’s a difficult and challenging process that requires a serious investment of time and capital, and the timeline for technology transfer will depend on the specific circumstances of the invention and who’s involved.

The Potential Benefits of Tech Transfer

There are a number of potential benefits to technology transfer for researchers and universities. They can include:

  1. Research commercialization: Tech transfer helps researchers commercialize their research and bring it to market. This can result in significant financial benefits for both the researcher and the university, including royalties from licensing agreements, equity in spinoff companies, or consulting fees, to name a few examples.
  2. Professional development: Tech transfer can provide researchers with valuable professional development opportunities, including the development of entrepreneurial and business skills, learning about intellectual property management, and building relationships with industry and private sector partners.
  3. Impact beyond academia: By commercializing research, researchers and universities can increase the impact of their work beyond academia and make a tangible difference in the world. To us, this aspect can be the most rewarding, where scientists can make a positive impact on society.
  4. Networking opportunities: Through technology transfer, researchers often have the opportunity to connect with industry partners, investors, and other experts in their field. These connections can be valuable if a researcher or university are interested in pursuing future collaborations and cooperative research. For scientists, this can also mean new career opportunities and access to resources or funding.
  5. Funding opportunities: Technology transfer can also provide researchers with additional funding opportunities for their research. In fact, some funding agencies prioritize funding proposals that include a clear plan for commercialization of the technology.

The Potential Drawbacks of Tech Transfer

While the potential benefits to tech transfer make the whole thing sound pretty enticing, it’s important to consider that there are possible drawbacks as well, especially for the scientist. Researchers should carefully weigh the drawbacks against the benefits when considering technology transfer. The drawbacks can include:

  1. Time and effort: Technology transfer can be time-consuming and usually requires a lot of effort. This can be a distraction to researchers, taking away time from their core research activities. This may be especially true for early-stage researchers who are still building their research portfolios.
  2. Intellectual property concerns: Researchers and scientists might have good reason to be concerned about giving up control over their intellectual property or losing the ability to pursue further research in their field. It’s also possible that their research, once patented and licensed to someone else, might be used in ways that are not aligned with their values or goals.
  3. Conflicts of interest: Scientists may face a conflict of interest if they have financial interests in companies or technologies that are related to their research, which can create ethical challenges, especially if the researcher is in a position of authority or influence. There are ways to work around this, but that might not always be the case.
  4. Uncertainty and risk: Technology transfer is often a quite uncertain road and almost always involves a significant amount of risk, especially if the technology is still in the early stages of development. It’s always a concern that the technology might fail in the market or that a licensing agreement will fall through.
  5. Limited control: It’s possible that a scientist may end up with limited control over the commercialization process of their invention, which can be really frustrating if the researcher disagrees with the direction or decisions made by the licensee or partner.

It’s also worth mentioning that if you’re interested in commercializing your invention, you will want to ask yourself if its worth it—or possible—to forgo licensing and create a startup anyway, finding a work around to commercializing your technology despite the university potentially owning the rights to the research you’ve done while working at or attending the school.

That said, it's usually in the university’s best interest to work closely with the original researchers of the invention to increase the likelihood of a successful commercialization. Universities and research institutions generally keep this in mind and, as is often the case, end up spinning out a company to develop a commercial product rather than find an external party.

In this way, it can be a good idea to work with the university to patent and license your product back from them, as it will also give you access to their resources and network.

Spinning Out a Biotech Startup

The technology transfer process, while quite an undertaking in its own right, is just one piece of the journey if you’re spinning out a biotech startup.

To spin out a company, you’ll also need to develop a business plan, secure funding, establish the company as a separate legal entity from the university, recruit co-founders and advisors, and more.

You’ll also need to decide how long you stay at your university. Staying can be highly beneficial to startups in the early stages, as your university may have a comprehensive list of resources available to you, including lab space and equipment. However, there will come a time when it will make more sense to venture out on your own.

As you advance your technology, the university environment can become a hindrance rather than a help, as universities are not always well-equipped for commercializing technologies. You will also have to share the resources available, or split time between other responsibilities, which makes it harder to move quickly and build your startup.

That said, the academic lab is an ideal setting for conducting initial experiments and testing the market demand for new products, and leaving a university’s resources behind can feel silly, especially when you might not have access to the lab equipment or space you need. (When you do decide to leave academia to continue building your spinout, leasing can come in very handy.)

From Patent to Profit

Tech transfer refers to the transfer of new inventions and innovations created within research institutions, such as universities or national laboratories, into commercializable products.

Technology transfer generally involves several steps and two main approaches to licensing: licensing a patented invention or discovery to an existing corporation, or starting a new venture and creating a startup company that is founded by faculty and/or students.

It plays a crucial role in driving innovation and economic development and growth. By helping to turn scientific discoveries into useful products and services, tech transfer can create new businesses, jobs, and industries that can benefit society as a whole.

If you’re thinking of going through the technology transfer process to found a biotech startup and spin out of academia—eventually leaving the academic lab behind for your own space—equipment leasing can be an attractive option.

Excedr’s lab equipment leasing program provides startups in the life sciences with access to the latest technology without them having to make a large upfront investment, helping you preserve cash for other core business operations and effectively manage your cash flow and funding through manageable lease payments.

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