Cambridge Tries U.S. Model
To Make Profits on Patents

For more than a century, scientists at the University of Cambridge have benefited from what many would call a splendid deal: If they invented something, they kept the rights to it. If they commercialized it, they usually kept the profits.

The university has long been proud of its freewheeling approach to intellectual property. But that tradition is likely to fall soon. Under a new policy intended to take effect in January, Cambridge would fall in step with other universities and become sole owner of intellectual work done on its premises. It would also keep most of the money derived from inventions and have a say over whom the inventions are sold to.

The proposal has put many Cambridge dons into a tizzy. They argue that the plan would spoil an 800-year-old tradition of intellectual freedom, hinder innovation and even undermine "Silicon Fen" -- the cluster of software and biotechnology companies around Cambridge that's often described as England's answer to Silicon Valley, and which lives in part off of researchers' inventions.

The change would "slowly strangle the flow of good ideas from Cambridge to industry," warns Ross Anderson, a computer science professor, who is leading the charge to fight the plan. "Some academics will leave; others will not take up posts here in the first place; and those who stay will be less likely to patent anything."

Cambridge disagrees. It argues that its plan will help it catch up with its counterparts in the U.K. and U.S., many of which have already set up internal units to commercialize intellectual property created by employees. "We're conservative, and have been slow to change," says David Secher, director of research services at Cambridge. "This puts us in line with other universities."

Cambridge -- which projects a deficit of £12 million ($18.4 million or €18.8 million) for 2002 -- could certainly use the revenue. Lacking the huge endowments of prestigious U.S. universities, it struggles to retain its brightest professors who typically earn lower salaries and have less research money at their disposal. It currently gets some $1.5 million (€1.5 million) annually in invention-related revenue. By comparison, Massachusetts Institute of Technology reaped $33 million in 2001.

Commercialization has certainly been good for academic coffers in North America. U.S. and Canadian universities, research institutes and teaching hospitals reported revenue of $1.26 billion in 2000 from licensing and options related to academic research, according to a survey of 190 such institutions conducted by the Association of University Technology Managers, a nonprofit group in Northbrook, Illinois. Such research also gave rise to more than 454 new companies and 347 new products that year, according to the survey.

But critics say that doesn't prove there is a need to change the rules at Cambridge. Indeed, academics from the English institution have a strong record in turning ideas into profit. One of the first Cambridge-related commercial spinoffs was a company founded by Charles Darwin's youngest son in 1881 to develop a seismograph.

Since the 1960s, many Cambridge academics have marketed their discoveries and become millionaires. Two well-known figures are Hermann Hauser, who went on to co-found personal-computer maker Acorn after receiving a physics degree from the university, and Michael Lynch, founder and CEO of software maker Autonomy PLC. Once-sleepy Cambridge now houses more than 1,000 high-tech companies, together generating more than $3 billion in annual revenue. Even Bill Gates couldn't resist: Microsoft Corp. has built a research center on the university grounds, and Mr. Gates has donated $210 million to its scholarship program.

Mike Clark, an immunologist at Cambridge, warns that the new plan could drive away scientists who are also keen to make a buck. Several years ago, Dr. Clark was awarded eight different patents for various drugs. One of those -- a leukemia treatment -- is now the main source of royalty revenue for Cambridge. Cambridge sees a profit from the drug only because Dr. Clark volunteered it. In the past, the university typically claimed nothing. And with each of his patents, Dr. Clark got to decide how the product was to be licensed, marketed and sold.

Not so under the new plan. "A future scientist at Cambridge who invents something won't have legal rights of ownership that I was fortunate to have," Dr. Clark says.

Under Cambridge's proposal, if an invention brings in £100,000 or more in profit, the amount is equally shared among the inventor, the university department, and the university itself. If the profit is less than £100,000, the inventor gets more. (Other universities have similar plans, although the profit-sharing amounts vary.)

Formal arrangements aren't fool-proof, though. The University of Pennsylvania and University of New Mexico are among universities that have sued their own faculty members in patent disputes. One high-profile case involved Glaxo Wellcome Inc., now a part of GlaxoSmithKline PLC. In 1999, the drug giant agreed to pay the University of Minnesota royalties on the company's global sales of Ziagen, an AIDS drug. The agreement settled a lawsuit brought by the university in which it claimed that the Ziagen compound had first been patented by one of its professors and subsequently licensed to Glaxo.

MIT has one of the most sophisticated sets of rules for "technology transfers," but even its policy has holes. The rules state that any invention that used a significant amount of MIT funds or office equipment belongs to MIT. The trouble is that the policy was set more than 15 years ago when personal computers were less common and not necessarily considered "office equipment."

The upshot: MIT doesn't necessarily own every piece of software written by an MIT scientist on one of its computers. Disputes over such scenarios "happen all the time" at MIT, acknowledges Lita Nelsen, director of the university's technology licensing office. "It needs fixing," she says.

Ownership rights concerning software can be especially contentious. Unlike biologists or geneticists, software engineers tend to use few physical facilities at a university. To a large extent, the success of Silicon Fen has occurred because of software start-ups launched by a researcher's invention. Under the University of Cambridge's new rules, Mr. Anderson says, "even if you have an idea in your bath they can claim" ownership of it.

University officials say that in such cases common sense would apply. "It isn't as if somebody will necessarily snatch the idea away," says Simon Jones, head of Cambridge's research collaboration office. "We see ourselves as facilitating [commercialization], not taking it over."

Another problem area: open-source software, or program code that is made available publicly and at no cost. Some universities dislike the practice, partly because they would prefer to patent the software and sell it for royalties.

In the case of Cambridge, Prof. Anderson worries that university's close links with Bill Gates might undermine the free distribution of software. The software tycoon is a big donor to the university, and his father, William H. Gates, Sr., also sits on a university board.

"So long as we control our own research work individually, most of us will be able to ignore" Bill Gates's views, writes Prof. Anderson in an online plea against the new plan. "But if the copyright in our software falls under the control of the central bureaucracy, they will have every motive to accommodate Microsoft."

Dr. Secher says the university recognizes the value of open-source software. He dismisses Microsoft-related fears as "total paranoia."

The university's new approach to intellectual property has already been subjected to several informal debates by various university committees. In October, it will be submitted to a vote by senior faculty members, who have the final say. But its critics still hope to defeat the plan.

"The one reason we're in academia is because we have an abhorrence of control," says Dr. Clark, the inventor of the leukemia drug. "We don't thrive in an environment where we're told what to do."

Write to Gautam Naik at gautam.naik@wsj.com

Updated August 16, 2002