Most university technology transfer offices in the US make money when their patent portfolios mature and they have sufficient research expenditures to draw from. An analysis of 99 technology transfer offices found that 72% were breaking even or better, with offices over 20 years old and from universities with over $100 million in research more likely to make money. While technology transfer is a complex subject with many variables, the analysis suggests most offices will become profitable given time for their patent portfolios to mature and access to sufficient research expenditures.

1. Do US University Technology
Transfer Offices “Make
Money”?
Gerald Barnett
Research Technology Enterprise
Initiative

2. Claims and Findings

Claims



Technology transfer does not make money
Most technology transfer offices lose money
Findings


Technology transfer does make money
Most technology transfer offices make money


When their patent portfolios mature
When they have sufficient research to draw on

3. A Complex Subject



Recovery of investment vs. annual positive
income
Investment relative to research services and
community services associated with licensing
activities
Developing a cost and income profiles

4. Cost Profile Includes

Compliance activities





Invention disclosures
Invention reporting, grant closeout
Training programs
Technology transfer requirements of grants
Service activities




Advising investigators and administrators
Community outreach
Connecting companies with university talent
Advocating for entrepreneurship and TBED

5. Income Profile

Licensing income


Settlement income




From infringement, contract disputes
Equity and milestones


Reimbursements, fees, royalties on sales
One time payments may be removed from reported
licensing data, reinvestments following liquidation not
reported
Gift income
Ancillary sponsored research income
Services income (consulting, direct sales)

6. Costs in Office



AUTM STATT provides self-reported, nonaudited data on licensing income, legal costs,
and legal reimbursements per reporting year
Does not report operational costs of office
Operational costs may vary wildly

One time costs



Litigation
Attorneys submitting delayed billing invoices
Settlement payout

7. Operational Costs

Legal expenditures



Staff salaries (including benefits)




Are patent attorneys on staff?
Are settlement and contract dispute costs recognized in
legal costs reported?
Include senior supervisory administrators?
Related personnel such as venture center or incubator
staff?
Interns and student (MBA, law) clinics?
Operations


Off campus lease?
Travel and communications?

8. Creating an Estimate


Look specifically at “break even” in reporting
year
Estimate operations costs




Used AUTM Salary Survey
Used staff lists to separate licensing officers and
staff
Added $10K overhead per FTE
Use STATT for income and net legal

9. Scope

Reviewed 99 technology transfer offices
represented in the AUTM 2006 survey





Over $100m in annual research expenditures
Yale and Columbia did not participate
SUNY, Missouri, and California report as systems
Constructed cost estimates for each
Developed a “break even” analysis



3:1 return or better as high performing
1:1 to 3:1 better than breakeven
Less than 1:1 below breakeven

10. Estimated Breakeven Results

Of 99 offices



With 3:1 return or better



Ave office age is 25.8 years
Ave research expenditure is $487.1m
Between 3:1 and breakeven



71 are at breakeven or better (72%)
28 are below breakeven (28%)
Ave office age is 22.0 years (15% younger than 3:1+
offices)
Ave research expenditure is $362.0m (26% less)
Below 1:1


Ave office age is 17 years (34% younger than 3:1+ offices)
Ave research expenditure is $218.5m (55% less)

11. Office Age

Offices >25 years (24 offices)



Offices 20 to 24 years (27 offices)



22 (81%) are breakeven or better
12 (44%) are 3:1 or better
Offices 15 to 19 years (25 offices)



22 (92%) are breakeven or better
10 (42%) are 3:1 or better
13 (52%) are breakeven or better
6 (24%) are 3:1 or better
Offices 10 to 14 years (21 offices)


13 (62%) are breakeven or better
4 (19%) are 3:1 or better

12. Research Expenditures

Offices with $500m+ research (22)



Offices with $300m to $499m (24)



20 (83%) are breakeven or better
13 (54%) are 3:1 or better
Offices with $200m to $299m (16)



20 (91%) are breakeven or better
11 (50%) are 3:1 or better
12 (75%) are breakeven or better
9 (56%) are 3:1 or better
Offices with $100m to $199m (37)


19 (51%) are breakeven or better
5 (14%) are 3:1 or better

13. Some Observations

Performance correlated with age

Offices 20+ years (51)


Offices under 20 yeas (46)


86% are breakeven, 43% are 3:1+
56% are breakeven, 22% are 3:1+
Performance correlated with research

Offices at $200m+ (62)


84% are breakeven, 53% are 3:1+
Offices $100m to $199m (37)

51% are breakeven, 14% are 3:1+

14. Leads to These General Findings




At universities with over $100m in research funding,
most technology transfer offices are “making
money”.
Offices 20 years old or more are “making money.”
Younger offices may need to get older—this is very
possible! Just keep working at it!
Offices at smaller institutions need more research to
draw on—this may take partnering or will depend on
institutional objectives

15. Perhaps




In 10 years, on age of portfolio alone, we might
expect over 80% of offices in universities with over
$100m in research expenditures in the 2006 AUTM
survey to be breakeven or better
It takes about one patent term (20 yrs) from the start
of an office to go to breakeven
Bayh-Dole would appear to be a 30 year
experiment, still more to do
The money isn’t everything—but criticizing
performance based on money also makes income
more important than perhaps it is

16. Qualifications

A coarse estimate of annual income over costs








Salaries, benefits, and operations are estimates—there are
various ways to do this
Legal costs are accounted differently across organizations,
so hard to compare
Offices vary in their scope and emphasis, so actual costs
could be very different in a given office
Annual income or costs in a given year may not reflect
practices in proximate years
One good year can cover many poor ones
A “big hit” can swamp out all other deals for 20 years
Other income is not reflected in these estimates
Check my work—put together your model