Wednesday, December 22, 2010

Stanford's ideas generate $65.1 million in revenues

A new report card for one of the nation's most powerful innovation engines shows that Stanford-based inventions generated $65.1 million in income for the university in 2009 despite the recession -- up from $62.5 million the previous year.
Stanford's total earnings from inventions were $1.1 billion during the past four decades, with more than half coming from just two inventions: the hypertext searching used by Google and groundbreaking DNA-splicing technology, according to an annual survey by the Association of University Technology Managers.
No longer isolated "ivory towers," schools like Stanford harvest great ideas and then try to send them out in the world. There they can be turned into commercial products -- and reward the campus with royalty income from licensing rights.
The two most lucrative inventions are decades old and are no longer producing revenue. Recombinant DNA, a 1974 invention, creates artificial DNA through gene splicing and brought in $225 million; Google's "PageRank" tool, patented in 1996, brought in $336 million.
Every school dreams of the next Gatorade -- a simple mixture of water, sugar, lemon juice, sodium, potassium, and phosphate that has yielded the University of Florida more than $80 million since 1973.
But instead of bringing home the bacon, many universities throw money into the void with little hope of return.
There's a chasm between a good idea and a product, termed "the valley of death."
Patents are expensive, with fees and legal costs involved in obtaining a single patent range from $20,000 to $25,000. Because it takes so long to bring a product to market, the royalties are based on license deals done 10 to 15 years ago.
Stanford ranks 10th in annual earnings among the nation's campuses, according to the new survey. By comparison, the University of California system had 47 startup companies and $103 million in royalties.
Nationally, scientific research from about 150 universities created 555 startup companies and resulted in more than 4,500 patent optioning and licensing deals last year, earning $1.8 billion in payouts.
Stanford's royalty revenue in 2009 came from 517 different technologies, generating from $3 million to $38 million. Its current big money-maker is an antibody invention, which led to the development of many valuable drugs.
But the statistics are sobering: After Google's PageRank and recombinant DNA inventions, "the rest of it is a bunch of technologies that generated much less income," said Katharine Ku, Stanford's Director for Technology Licensing, in a rare public presentation to the school's faculty senate last year. Only 19 inventions brought in more than $5 million. About 58 earned about $1 million, she said.
Fewer than half of the 300 research universities actively seeking patents have managed to break even from technology transfer efforts. Instead, two-thirds of the revenue tracked by the association has gone to only 13 institutions, including Stanford and UC.
Stanford's other best ideas, among the 7,400 inventions total, are FM Sound Synthesis, which led to the ringing of cell phones; recombinant DNA, used to make vast amounts of proteins like insulin, among other products; MINOS, an optimization software program; functional antibodies and DSL, which provides digital data transmission over the phone wires.
Ku recalled when Stanford engineering students Larry Page and Sergey Brin took their research project, based on a new search technology, to her office in hopes of finding a company interested in licensing their invention. Stanford marketed it to every potential licensee it could think of -- without success. So Page and Brin created their own company, and licensed the PageRank tool from Stanford. In exchange, Stanford was given Google stock.
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