| By Barbara Hale
Public Information |
Inventors lauded |
The commercialization of faculty research has allowed Penn State to put close to a half million dollars in a fellowship endowment fund for graduate students in the Department of Chemical Engineering.
"People sometimes think of technology transfer and the development of intellectual property as something that only benefits faculty members. In fact, more often than not, success at commercialization leads to greater opportunities for our students as well," said Eva J. Pell, vice president for research and dean of The Graduate School.
The funds for the new fellowships came from the sale of stock that the University received in a license agreement with a new company started by David Edwards, former associate professor of chemical engineering. The technology, developed by Edwards with a Penn State/Massachusetts Institute of Technology-led international team, is a new type of dry aerosol mist that can deliver medication that will remain longer in the lungs and be better tolerated.
After the University patented Edwards' intellectual property and he published his work, Edwards went to Boston, where he had been an MIT post doctoral fellow, to start his own company. Penn State took stock in the company, AIR Inc., as partial payment for licensing a bundle of rights to the technology. Edwards' company was eventually bought and the stock held by Penn State was converted to publicly traded stock -- which Penn State sold. The proceeds were distributed in the usual 40-40-20 split among the Penn State Research Foundation (PSRF), the college/department and the inventor. Edwards, however, waived the right to his 20 percent share which was given to the College of Engineering and PSRF, a non-profit foundation. PSRF will use its share to fund patent and intellectual property administrative activities.
"The money for the fellowships represents the college's share of the proceeds from the sale of stock as well as the share that would normally come back to the department. When we told the dean what we had decided to do with the money, he gave us the college's share too," said J. Larry Duda, professor and head of the Department of Chemical Engineering.
The first fellowships will probably be offered in fall 2001. The University invests fellowship endowment funds and uses only part of the annual income. The remaining income is returned to the principal to protect it from inflation.
"It's often helpful to entrepreneurs for the University to take stock as payment rather than cash," said Thomas J. Monahan, director of Penn State's Intellectual Property Office. "The company can then focus cash resources on developing the technology."
Monahan said Edwards' story illustrates the value of protecting intellectual property.
"Because Penn State took a patent position in Edwards' technology, venture capitalists were motivated to invest in it," he said. "Intellectual property has to be protected to be commercialized."
Companies would not be interested in making the significant financial investment to develop a commercial product unless the investment offers a competitive advantage and the probability of financial return, Monahan explained. This is not generally possible without the legal protection that a patent provides.
In 1998, according to the Association of University Technology Managers report, the Penn State Intellectual Property Office filed 190 invention disclosures -- the first step in the patenting process -- ranking Penn State second in Pennsylvania, third in the Big Ten and sixth among all universities in the country.
However, Duda thinks the total number of patents and the $3 million in income they produced in 1999 could be higher based on Penn State's total research expenditures of $393.4 million. A distinguished researcher who is about to step down after 17 years as department head, Duda said "Most people from my generation don't think about patenting their work -- and when we do, we think investors will beat a path to our door.
"None of my patents, for example, make money," he said. "Once you get the patent, you are just starting. You need to do development and you need to do marketing. Younger faculty members, like Edwards, seem to be more attracted to doing this; although increasing numbers of people of all ages from throughout the University are trying it."
Recently, for example, a new company called EIEICO Inc. was established based on licenses to three patented Penn State agricultural inventions. That effort offers a new model for technology transfer in which related inventions are bundled into the same start-up company. The concept offers those who invest in EIEICO a higher likelihood of seeing a winner.
Gary Weber, assistant vice president for research and director of technology transfer, said it's important to remember that Penn State encourages and supports research because it's part of its land-grant mission, it helps the people of the Commonwealth and research returns value for the tax dollars invested in the University. In the case of Edwards' intellectual property, the returns will be directly aiding the University's teaching function.
"Unless we protect and develop the intellectual property created here so that it can be used by the community-at-large, it won't reach its full potential to make people's lives better," Weber said.
More than 100 faculty, staff and students from throughout the University were honored by Penn State and the Penn State Research Foundation at the second annual Penn State Inventors Reception in late April, in recognition of the 46 patents their work produced during 1999.
The Penn State Research Foundation is a nonprofit organization dedicated to fostering and advancing scientific research within Pennsylvania and to supporting the development of inventions at Penn State. PSRF is a wholly owned subsidiary of The Corporation for Penn State.
Gary Weber, assistant vice president for research, director of technology transfer, and secretary of the PSRF, congratulated the inventors on the significant increase in patent disclosures, patents granted and royalties obtained in the last few years. He also emphasized the significant number of new businesses being grown from Penn State inventions.
For a full listing of those who were honored and their inventions, visit the Web at http://www.research.psu.edu/ipo/.