Faculty inventions generated $11.6 million in licensing fees and royalties for the region’s three research universities during fiscal 2004 and enabled the schools to launch 19 start-up companies. The figures from the University of Pittsburgh and Carnegie Mellon and Penn State universities show a 38.1 percent jump over the $8.3 million earned in 2003 and a 58.3 percent increase over the 12 start-up companies spun off that year. The schools stood well behind New York University, which led the nation in 2003 what it earned from licensing its inventions — $86 million, according to a survey from the Association of University Technology Managers. The University of California system stood second at $61 million and Stanford University third at $43 million. Schools don’t have to just rely on licensing and royalties to profit from their research. Pitt and UPMC got a big boost Wednesday by selling one of their startups, Stentor Inc., to Amsterdam-based Philips Electronics for $280 million. Stentor is a San Francisco firm that stores, manages and distributes digital X-rays and other scans. UPMC made $36 million from the stock sale and Pitt, $10 million. Inventing new technology gives universities another source of money besides tuition, spurs economic development and leads to products that improve people’s lives. “Our goal is to get good university technologies made into products that help people,” said Mark Malandro, interim director of Pitt’s Office of Technology Management. The money Pitt spends on research, mostly from outside sources, has grown from $235.1 million in 1995 to $558.9 million in 2004. Penn State devoted $344.3 million to research in 1995, and $606.5 million in 2004. Carnegie Mellon spent $152 million in 1995 and now devotes $282.1 million. Officials say schools can’t count on a jackpot, but sometimes find a gold nugget. Fueled by the energy drink Gatorade, the University of Florida made $35.3 million in royalties in 2003. When Google went public last year, Stanford University owned nearly 1.7 million shares of stock in the search engine titan, which uses the school’s technology, the Wall Street Journal reported. The stock’s value today: $503.6 million. Carnegie Mellon made $40.8 million during the late ’90s from just one product — the Web search engine Lycos. The university still owns a license that Lycos uses, but CMU will not disclose what its earn from the license. The university sold its stock in the company to build Newell-Simon Hall in 1999. Local schools each are working to overcome disadvantages in the research race. Carnegie Mellon lacks a medical school that can develop money-making medicines and therapies. Pitt created its technology office in 1996. The University of Wisconsin, by comparison, established its research office in 1937 and earned $37.5 million in 2003. Inventions in the life sciences, a key component of Pitt’s research, typically are subjected to rigorous clinical trials and take longer to develop products than software. And the region lacks the venture capital and startup managers needed to launch a lot of companies, Malandro said. The Stentor sale, however, gives the region new hope, and technology managers are encouraged by their prospects. Pitt researchers Joe Ahearn and Susan Manzi developed a test to diagnose the disease lupus. The test is used by StageMark, Inc., a privately held medical laboratory in South Oakland and one of 10 firms that Pitt launched last fiscal year. “This test is better at not saying someone has lupus when they don’t and at not missing when they do,” Malandro said. The new companies generally are very small and employ a handful of people. Eventually they might have as many as 50 employees. Six of the 10 are based in Pennsylvania, and the university does not own stock in any of them. “We don’t take stock as a matter of course,” Malandro said. “We take stock when we’re convinced it serves as an adequate method of compensation for the university.” Another Pitt spin-off, Northhaven Chemicals in Harmarville, uses technology from the laboratory of engineer Eric Beckman. His invention strengthens wet paper so that homemakers won’t have to toss in the paper towel so quickly. The technology is still in the development phase. At Carnegie Mellon, researchers have developed software to better train operators of hand-held land mine detectors. The computer-controlled tracking device lets operators know if they missed a spot when sweeping an area. The university hopes the system will save lives. The university licensed the technology to Florida-based ECI, a division of General Dynamics. Bloomfield-based BlueBelt, a CMU company launched last year, commercializes a hand-held tool used to accurately cut bone in joint replacement surgery or other bone repair. The tool can detect healthy and unhealthy bone and will stop cutting when it reaches healthy bone. Pitt hopes to bring to market a sonic flashlight developed in the laboratory of Dr. George Stetten, a bioengineer. The device allows health care workers to see above and below the skin simultaneously — making it easier to find a vein when drawing blood. “Ultrasound is becoming more common and inexpensive,” said Stetten. “More procedures are going to use ultrasound.” The university probably won’t decide until later this year whether to license this technology or launch its own company, Malandro said. He said Pitt weighs four criteria in deciding whether to spin off a company: the technology’s ability to generate many products, a strong management team, adequate seed money and a partnership with a large company. Penn State changed its policy five years ago so that the university could own stock in start-up companies. Since then, it has averaged about five start-up companies a year, said Ronald Huss, the director of the university’s Intellectual Property Office. University technology leaders are concerned that proposed changes in patent law and lower increases in federal research grants could slow the pace of development. “If there’s effectively less money going into our labs, there will be fewer inventions,” said Robert Wooldridge, director of CMU’s Center for Technology Transfer. “Fewer inventions means fewer start-ups and fewer technologies moving to U.S. companies.” A U.S. Senate Appropriations subcommittee last month forwarded to the full Senate a bill with a $5.5 billion budget for the National Science Foundation in 2006, an increase of only 1 percent. The money the National Institutes of Health gives universities had been growing at about 10 percent a year for a decade, but is now approaching a plateau, said Mark Crowell, president of the Association of University Technology Managers, an Illinois-based trade group. “All universities are competing for a pie which is not getting bigger,” said Crowell, associate vice chancellor for economic development and technology transfer at the University of North Carolina. Congress also is revamping the country’s patent system. Under the current system, the first person to invent gets the patent. Under the proposed approach, the first person to file gets the patent. “We are so used to the first-to-invent mode that changes could be kind of dramatic for us,” Huss said. “It might create pressure to apply for patents more quickly.” He said researchers might apply for patents before they fully understand their technology and then have to apply for more patents later, adding to the university’s legal fees. An idea becomes cash A university researcher comes up with an idea or discovery. The researcher fills out a university form to disclose the invention. The university’s technology office evaluates the idea. When the technology office determines the idea is ready, it applies for a patent. The office markets the invention. The university licenses the invention to an existing company or launches a new company to produce it. Source: Tribune-Review research Additional Information:

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Leading university technologies Stanford University — Google University of Florida — Gatorade Stanford and University of California — Cohen-Boyer patents for the basics of recombinant DNA Florida State University — Taxol, best-selling anti-cancer drug University of Wisconsin — Warfarin, most widely used blood thinner

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