Decentralized Technology Transfer: A Modern Framework to Empower Scientific Innovation

The transfer of technology (TT) is essential in turning intellectual property (IP) generated from innovative research into real-world applications that benefit the general public. New drugs, materials, and software often take this route on their journey from the lab to the consumer market. As with most legacy systems, leveraging emerging technology will improve this process through which scientific innovation is used for the public good.

Image: Zack West

Breakthroughs in science do not immediately benefit the general public. They must first be ushered from the labs in which they originate into the commercial marketplaces. This essential act of ushering is commonly overseen by a Technology Transfer Office (TTO). The goal of these entities is pure, though their centralized nature of operation has produced significant inefficiencies. Building on the successes of the TTO, a modernized Decentralized Technology Transfer (DTT) system would untether researchers and investors from these inefficiencies to pursue scientific innovation more purely. We will describe DTT fully below but its purpose is to enable the researcher to operate outside of their institution and leverage other institutions’ resources.

Introduction

In 1980, the U.S. Government passed the Bayh-Dole act which stated IP ownership rested in the hands of the institutes receiving federal funding to conduct the necessary research. Between 1998 and 2006, this act saw over 4,000 new products, 6,500 new companies, 280,000 new jobs, and $450 billion in U.S. gross industrial output (DiMasi, 2016). For context, the National Institutes of Health (NIH) invests $32 billion per annum in health-based research. Thus, it could be said that the US govt. recoups what it invests as a result of the Bayh-Dole act.

The success of the Bayh-Dole act brought a new need for institutes to develop proficiency in translating IP generated from research into real-world products that generated revenue (Sampat, 2006). From this need arose the TTO entity whereby IP rights are transferred, licensed, and otherwise made accessible to the real world.

TTOs go by several names and are common among universities and corporations alike. They have helped facilitate this remarkable surge in scientific innovation but, like other legacy systems in need of modernization, now stifle innovation as much as facilitate it. Research suggests that, in some cases, TTOs actively impede the progression of IP getting to market.

For example, a 1997 survey of more than 2,000 life science faculty from 50 universities found that dramatic delays in publication stemmed from concerns over patent rights. More than 400 surveyed researchers described experiencing a delay of at least 6 months to accommodate patent applications, unfavorable results, or even resolve disputes over IP rights. An even more discouraging by-product of the TTO model was described by nearly 200 researchers admitting to refusing to share results with researchers at other institutes for similar concerns (Blumenthal, 1997).

Another concern is the inability of smaller TTOs to establish and maintain a profitable business model. A 2013 report by the Brookings Institution notes that profitable TTOs are statistically the exception — rather than the rule. This report describes a great inequality in gross IP-related revenue generated by top-earning TTOs compared to the average. The top 5% of earners account for 50% of all licensing income from Universities with TTOs. The top 10% account for nearly 75% of total IP-related revenue (Valdivia, 2013). This describes a system in which the majority of TTOs are unprofitable — hinting at what is, perhaps, a flaw in the very nature of the TTO system.

Much like the traditional taxi-driven ride system was revolutionized by ride-sharing companies like Uber; much like the traditional rent-from-an-agency system evolved into companies like Airbnb; much like the talent agency system has been largely superseded by the gig economy; so too is the TTO model positioned for the next stage in its evolution.

Herein, a candidate for such disruption to the TTO model is discussed — the DTT system. With DTT, researchers retain IP rights, a broader range of investors are given access to early-stage research, a network of scientists is empowered economically, and modern technology is leveraged to improve upon the shortcomings of the TTO model. Before we dig into the DTT model, let us first better understand the core issues of the TTO model.

Technology Transfer Offices Take IP to Market

TTOs are billed as the vehicles by which scientific breakthroughs enter into markets for the benefit of the public. TTOs accomplish this by shepherding IP from researchers to an entity, such as a pharmaceutical company. This company can then apply the IP to create, market, and sell products and services on commercial markets.

IP is the “product” of academic research that attracts funding, kindles industry partnerships, and incentivizes innovation. IP is the legal vehicle in which scientific innovation is most likely to be assured of its due economic gain. Drug patents, new materials, and even computer algorithms are all representative of IP generated from research.

Governing bodies such as the United States Patent Office (USPTO) and the European Patent Office (EPO) outline IP rights such that they can be legally enforced. In other words, IP ensures a company can be the exclusive seller or grantor of licenses to sell products resulting from their research and development efforts.

In addition to attracting funding, IP rights can also be used to stimulate greater academic and scientific innovation. A 2003 study of more than 102 U.S. universities found that those institutes paying higher royalty shares to scientists realized more inventions and revenue from generated IP. After performing rigorous statistical analysis, researchers concluded that an increase in royalty share of 10% would increase resulting revenue by as much as 58% in private institutions and 16% among public ones (Lach, 2003).

TTO Structure

TTOs operations embody two primary stakeholders: researchers and management. Researchers are more likely to be motivated by the pursuit of gaining knowledge, recognition among peers, and scientific autonomy. By contrast, TTO management is more likely to be motivated to develop IP-generating projects to drive industry partnerships and royalty revenues (O’Kane, 2014).

The market performance of IP generated by universities, and the magnitude of resulting revenues, can be discussed in the context of these two primary stakeholders. Together, these account for the human, institutional, intellectual, and financial capital that defines the effectiveness of university IP performance (O’Shea, 2005).

Where TTOs are involved — there will always be a struggle against the individual scientists. Managing stakeholders are incentivized to prioritize projects and partnerships deemed best in the strictest economic sense — rather than an academic one.

TTO Performance

The performance of any single TTO can be understood by the relationship between its research and financial-based interests. A TTO more adept at transferring IP to industry is more likely to attract more favorable industry attention, generate larger revenue, and be more effective at supporting research programs (O’Kane, 2014; O’Shea, 2005). Thus, the TTO is incentivized to act in a manner pursuant to the greatest gain for all partners, not just researchers.

The TTO must consider the needs of industry partners, performance metrics, and existing IP needs. In contrast to the TTO, the researcher need only focus on innovation and discovery.

Research has shown that businesses straying from the traditional bottom-line-first model — adopting a more socially-aware model — generate more revenue (Bouichous, 2022). While not strictly related to the TTO model, if the core business model of modern corporations can successfully evolve there’s no reason to believe a more appropriate model for funding research than the TTO can’t also emerge.

Introducing Decentralized Technology Transfer

Inefficiencies in the TTO model arise for many reasons. A TTO either works or does not work based on local stakeholders and office priorities. A common characteristic among all TTOs — ranging from efficient to inefficient — is that they are centralized entities operating without autonomy.

In the traditional TTO system, the TTO itself represents a centralized stakeholder in the system. A TTO acts as an overseer of transfers of fledgling IP to shepherds within the industry or outright licensers of market-ready tech to manufacturers, marketers, or even retailers in some cases. This central authority, by design, makes decisions for individuals with the perspective of the ecosystem in mind. As such, a breakthrough of one researcher might be deemed competitive to another — even within the same university.

The DTT model presents a modernized incentive structure whereby individual researchers, laboratories, and publishers are freed from the bureaucracy and often conflicted interests of traditional TTO processes

A DTT would address the inefficiencies of TTOs through the empowerment of individual researchers. This process doesn’t cast economic benefit aside to favor pure scientific interest. On the contrary — the DTT model presents a modernized incentive structure whereby individual researchers, laboratories, and publishers are untethered from the bureaucracy and often conflicted interests of traditional TTO processes. The DTT makes a bold claim, let’s discuss.

The diffusion of research from private and public institutions is often delayed for indirect reasons such as the demands of industry partners, broader concerns for ongoing patent applications, or even publisher delays. Without discarding the TTO model, DTTs can exist in cases where research diffusion is prioritized. That is — individual researchers can take their research to the public outside of the traditional route via coordinated, decentralized means, while also being compensated.

That last point is essential — DTT does not assert abandoning IP. Rather, DTT is a framework by which IP can be unshackled from the often bureaucratic and opaque pipeline of TTOs and placed firmly among researchers and direct partners.

The Best of Both Worlds

For a decentralized transfer of technology to take place, many aspects of the traditional TTO process need to remain. IP-generating experiments still need to occur — researchers, labs, and even patent attornies are all still integral. The main difference is that actors in a DTT system are sovereign, act in their own interest, and face no indirect pushback. That’s to say — researchers own their IP, decide when something goes to market, and have sole discretion over their research.

Court cases have established that, even in the case of federally-funded Universities, patented inventions vest first with the inventor (pdf). This ruling is contrary to many interpretations of the underlying legal framework used to argue such cases, such as the 1980 Bayh-Dole Act. The history of such IP cases illustrates that, even in the face of what many regard to be clear legislation, IP ownership is uncertain.

The core feature of the DTT is to place research into the hands of third parties such that a university or commercially employed researcher retains IP rights. This is a simple but powerful distinction in how research is conducted in the DTT model. The DTT model opens the doors for broader financial support since the resulting IP can be licensed or shared freely.

Under this model, researchers are no longer bound to the labs of their respective employers, and IP is no longer bound to the bureaucracy of TTOs. This opens the doors for new scientific innovation as well as new opportunities for investors. The next two sections elaborate on these concepts in greater detail — outlining how a DTT might operate and also detailing VitaDAO’s VDP-45 measure to implement a DTT in the real world.

An Example Case of DTT

Consider a research team with an idea for a promising new therapy to help extend the human lifespan. This team intends to rapidly advance an existing therapy and take the resulting research to market as fast as possible to elicit as much benefit to as many people as possible.

Research conducted in the university’s labs is likely to fall under the purview of that university’s TTO. In this case, any resulting IP could be delayed — or even shelved — based on any number of broader concerns. For the DTT model to work, research needs to be conducted in an unbound capacity.

The unburdening of IP from the clutches of the traditional TTO path would make an entirely new ecosystem of research funding opportunities possible in which all actors receive fair compensation for their efforts

A Contract Research Organization (CRO) provides the same robust scientific tooling needed for robust modern research without asserting any ownership on the resulting IP. The CRO gets paid for services rendered and the initial researcher retains rights to any resulting IP. By working through a CRO researchers will, unless stated otherwise in their employment contracts, retain full rights to any resulting IP.

These researchers don’t have the financial resources to contract the CRO however and need to look to outside investors. Since the researcher will retain full rights to the resulting IP, they can incentivize outside investors, such as VitaDAO. For example, the researchers might enter an agreement with VitaDAO to serve as paid consultants such that VitaDAO bears the responsibility for contracting the CRO with partial rights to the IP in exchange.

Under this arrangement, commercial benefit from the resulting IP is shared among VitaDAO and the original researchers. VitaDAO would likely handle the IP by transferring it to a Real World Entity (RWE) holding company whereby it can enforce IP rights within existing legal frameworks that exist today. With these pieces, an entire network can be developed whereby researchers would post projects, scientific advisors would review them, and VitaDAO would vote whether or not to fund them.

The unburdening of IP from the clutches of the traditional TTO path would make an entirely new ecosystem of research funding opportunities possible in which all actors receive fair compensation for their efforts. All this is possible in an on-chain, fully-decentralized, and community-driven system.

VDP-45: Decentralized Tech Transfer

VitaDAO illustrates a possible outside investor in the DTT model. To gain greater insight into how this might work let us consider several aspects of the recently-passed VDP-45 governance proposal.

VDP-45 outlines VitaDAO’s approach for supporting researchers via a DTT model as such:

1. Identifying researchers within projects.
2. Pay the selected researchers as consultants on the project.
3. Use CROs at organizations and universities to which the researchers have no affiliation to ensure IP rights are retained.
4. Providing investment opportunities to outside researchers during the funding process.

VDP-45 notes this approach to DTT could be used to support research in any field. VitaDAO would, however, be more focused on research aligned with its core mission of promoting longevity. Another aspect of VitaDAO’s approach would be the formation of the RWE to hold the resulting IP within an existing legal framework. The text of the VDP-45 also notes that likely outside investors getting “upside” would be community members.

The long-term vision of VDP-45 is to support more automation and less restriction by traditional university-bound bureaucracy. In pursuit of greater automation, a network on which researchers submit proposals, qualified reviewers assess, and on-chain voting by community members help decide funding decisions. Immediately, VDP-45 describes establishing a researcher network and a CRO network.

The research network will be comprised of individuals willing and able to take lead on projects in the DTT model. Above all else, a qualifying point will be that such researchers will have no contractual obligations with existing organizations whereby resulting IP rights would be contested or forfeited.

The CRO network will be constructed in partnership with LabDAO and initially be facilitated via a Master Agreement with the Washington University in St. Louis’ Center for Drug Discovery. This facility supports both medicinal chemistry and high-throughput screening capabilities. The details of the financial terms of such contracts between VitaDAO and LabDAO will be determined by community governance in a later proposal. Check out the Snapshot proposal for more details.

Final Thoughts

The shortcomings of the TTO model should not be thought of as a failure of science, funding, or the institutions in which they’ve been housed. Rather, the TTO model should be looked to for its successes as researchers, investors, universities, and corporations modernize their incentive models.

Autonomy, IP retainment, and globalized research networks are now a very real possibility, more than ever before. The Decentralized Technology Transfer model seeks to leverage innovative new technologies to support the next generation of scientific funding with organizations like VitaDAO and LabDAO leading the way.

Zack West is a marketing professional with 10+ years of experience in design, development, and digital marketing. He holds a BSc in Graphic Communications from North Carolina State University and is currently a BSc Computer Science candidate at Western Carolina University. He is passionate about natural systems and the nature of consciousness.

References

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Bouichou, Said Id, et al. “How Corporate Social Responsibility Boosts Corporate Financial and Non-financial Performance: The Moderating Role of Ethical Leadership.” Frontiers in Psychology, vol. 13, 871334, May 2022, doi:10.3389/fpsyg.2022.871334.

Cohen, Wesley M., et al. “Links and Impacts: The Influence of Public Research on Industrial R&D.” Management Science, vol. 48, no. 1, Institute for Operations Research and the Management Sciences (INFORMS), Jan. 2002, pp. 1–23. doi:10.1287/mnsc.48.1.1.14273.

DiMasi, Joseph A., et al. “Innovation in the Pharmaceutical Industry: New Estimates of R&D Costs.” Journal of Health Economics, vol. 47, Elsevier BV, May 2016, pp. 20–33. doi:10.1016/j.jhealeco.2016.01.012.

Lach, Saul, and Mark Schankerman. “Incentives and Invention in Universities.” National Bureau of Economic Research — Working Paper Series, May 2003, doi:10.3386/w9727.

O’Kane, Conor, et al. “University Technology Transfer Offices: The Search for Identity to Build Legitimacy.” Research Policy, vol. 44, no. 2, Elsevier BV, Mar. 2015, pp. 421–37. doi:10.1016/j.respol.2014.08.003.

O’Shea, Rory P., et al. “Entrepreneurial Orientation, Technology Transfer and Spinoff Performance of U.S. Universities.” Research Policy, vol. 34, no. 7, Elsevier BV, Sept. 2005, pp. 994–1009. doi:10.1016/j.respol.2005.05.011.

Sampat, Bhaven N. “Patenting and US Academic Research in the 20th Century: The World Before and After Bayh-Dole.” Research Policy, vol. 35, no. 6, Elsevier BV, July 2006, pp. 772–89. doi:10.1016/j.respol.2006.04.009.

Valdivia, Walter. “University Start-Ups: Critical for Improving Technology Transfer.” Brookings, 29 July 2016, www.brookings.edu/research/university-start-ups-critical-for-improving-technology-transfer.