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Penn — like universities across the country — is helping more faculty move ideas from the lab to the marketplace through a process called technology transfer. But, some caution that these industry-academy collaborations may compromise publishing and research.

By Susan Lonkevich | Illustration by Franklin Hammond


“THIS IS ACADEMIA here,” says Dr. Louis Berneman, taking a pencil and quickly sketching an oval on a scrap sheet of paper. “And this is industry here.” He draws another oval and looks up from his desk. “Academia is interested in knowledge for knowledge’s sake. And industry is interested in knowledge for profit’s sake. Academia is interested in open discourse and the free exchange of ideas. Industry is interested in restricted discourse and secrets.” 
   Given the gulf separating those two, it’s hard to believe that there could be any common ground between them. But in fact, if you look closer at Berneman’s ovals, you see that they actually overlap. Pointing to their intersection, Berneman — managing director of Penn’s Center for Technology Transfer (CTT) — says, “We’re both interested in new and better products for people that will save lives and reduce suffering and make the country more competitive.” 
   Those two worlds come together in CTT’s office at 3700 Market Street, where Berneman and his staff help to launch new businesses, negotiate industry-sponsored research agreements, shepherd inventions through the patent process, and play matchmaker between companies and Penn’s innovations. 
   Ever since Benjamin Franklin, in his Proposals Relating to the Education of Youth in Pennsylvania, envisioned the University as a place where students would be taught things both “ornamental” and “practical,” scientific advances have been part of the history of Penn — from the Rittenhouse Orrery to Eadweard Muybridge’s motion-picture studies to, of course, the invention of ENIAC, which ushered in the Information Age, but never made a dime for the University. What is different now, however, is the degree to which ideas are being moved from the university laboratory into the marketplace — a process known as technology transfer. 
   It’s a burgeoning field. From the 1993 fiscal year to 1997, the number of invention disclosures made to CTT by Penn faculty has risen from 119 to 173; material transfer agreements arranged, from 123 to 425; commercial licenses negotiated, from 8 to 37; and patents issued, from 28 to 54. With a new leader at its helm and a dramatic reorganization completed in 1996, CTT has also transformed what was once a $1.2 million deficit to what will be a $5 million surplus in fiscal 1998. 
   But even with the recent growth at CTT, Penn is still “playing catch up” to many of its peer research institutions, which Berneman concedes have been more successful at tech transfer. “They’ve been at it much longer. They’ve been under consistent management longer. Those universities made a significantly greater commitment to technology transfer earlier than we did.” For example, Columbia University last year generated more than $60 million in income from technology transfer; Stanford, $50 million; MIT, $20 million; and Harvard, $16 million. Penn, in contrast, brought in about $4 million, slightly less than its expenses. Of course, universities engage in tech transfer not only to generate income for research, but to help reward, retain, and recruit faculty; to generate closer ties to industry; to spur economic growth; and to move research results from the laboratory to the marketplace for the public benefit. 
   Take the research of Dr. Martin E.P. Seligman, Gr’67, for example. The renowned psychology professor was fielding daily pleas for help from companies and people all over the world who knew of his studies and bestselling books on learned helplessness and learned optimism. Seligman was also thinking about seeking the presidency of the American Psychological Association. How, he wondered, could he disseminate his programs on a wider scale, continue his research, and pursue the top leadership post in his profession? 
   Seligman says he mentioned his quandary to then-provost, Dr. Stanley Chodorow, who replied, “We’ve now got this luminary, Lou Berneman, at the Center for Technology Transfer. Let me put you in touch with him to see if he can find a way to do this.” Berneman convinced Seligman to let him put together a business plan. And last fall, with $2.25 million from investors, Learned Optimism Corp. (now Basis Learning) was born in Blue Bell, Pa. Its product — a therapeutic “inoculation” against depression.


PIVOTAL LEGISLATION
   What sparked the increase in technology transfer was the Bayh-Dole Act of 1980, which granted universities the right to own the results of research funded by the federal government in exchange for their commitment to protect and commercialize them for the public good. 
   The number of universities participating in tech transfer increased eight-fold from 1980 to 1995, according to a study released last year by the Association of University Technology Managers (of which Berneman is president-elect). Tech transfer adds close to $25 billion to the U.S. economy and supports 212,000 jobs each year, according to its latest study. It also brought in more than $424 million in royalties to universities in 1995. 
   Before Bayh-Dole, schools like Penn couldn’t own the rights to federally-funded inventions unless they successfully petitioned the government — even though the government had already begun making a commitment to university research funding during World War II. In the 1950s, ’60s, and ’70s, any licensing of inventions took place through Penn’s Office of Research Administration (ORA), with the assistance of an outside, non-profit, patent-management organization. In 1978, Penn decided that it needed to be more aggressive and contracted with a for-profit firm, recalls Anthony Merritt, ORA’s executive director. “That effort was not terribly successful,” he says. “The faculty did not particularly like dealing with an outside organization.” 
   In 1986, Merritt, along with Dr. Barry Cooperman, a professor of chemistry and then-vice provost for research, hired Dr. George Farnbach, V’74, Gr’77, a former faculty member at the School of Veterinary Medicine, to handle tech transfer for the ORA on a full-time basis. Then, in 1989, they set up a modest organization in a separate office that evolved into CTT in 1991, with Stephen Sammut, WG’84, as its managing director. Merritt says it was clear that a separate entity had to be formed because it “had a very different focus from ours. We’re basically a processing office for faculty grants, and CTT is a marketing organization. I think it needs to be recognized as a legitimate activity, and if it has its own organization, it’s easier to get it funded.” Sammut expanded CTT’s operation and left at the end of 1992. Merritt served as acting managing director for almost two years, until Berneman, who had previously headed up licensing and business development for Virginia’s Center for Innovative Technology, was hired in September 1995.


A NEW APPROACH
   The energetic Berneman, a Northeast Philadelphia native who commutes each week from Fairfax, Va., where his son is finishing high school, likes to say he was the only person qualified and crazy enough to do this job. His background as a former education professor at the University of Houston and founder of two technology companies, helps him bridge the worlds of academe and industry. 
   Frank Slattery, L’64, who has been involved with CTT in forming two start-up companies (Transom Technologies, Inc., and Basis Learning) calls Berneman “probably one of the four or five best people at [tech transfer] in the country. He’s able to understand what it is academics fear about business, and to allay those fears. He certainly knows his way through the bureaucratic jungle that is any [university]. And he’s able to deal with venture-capital entrepreneurs, because he’s been there before.” 
   Berneman quickly recruited a new team of people to CTT and re-engineered its programs. One of the first practices to go was the “cradle to grave” approach that Penn — and most other universities — had traditionally taken to tech transfer. In the past, individual managers had handled each step of the process, from reviewing an invention disclosure to marketing and licensing. Berneman decided it would be more productive to assign specialists on his staff to handle each case at a different stage in development — and to function as a team. CTT was the first in the country to have a director of intellectual property (Evelyn McConathy) and a licensing director (Vincent di Felice, GPU’89) dedicated exclusively to start-up companies. “Other universities appear to be watching us and adopting aspects of our new model,” Berneman says. 
   Together, CTT’s full-time staff of 14 could compose one impressively diverse resume: McConathy, for instance, is a cellular and molecular biologist and a patent attorney. CTT’s director of licensing life sciences, Alan Dickason, has a Ph.D. in organic chemistry and founded his own start-up company before coming to CTT. Alfred Glessner, GCh’67,Gr’69, the director of operations and licensing, has a Ph.D. in chemical engineering. In addition to a Ph.D. in physics, Peter Kramer, director of licensing physical sciences, brings to CTT his work experience from a big pharmaceutical company and a small biotech company. The varied backgrounds are an asset, Berneman says, because, “These people have to coexist in two worlds simultaneously. I wish I could think of the word — it’s a sci-fi word. There is a creature that exists — a cyborg, maybe. We have two sets of customers. We have our internal customers, faculty and administrators; we have our external customers, people in the private sector who are investing in these technologies — and we have to understand both.” 
   To decide which new technologies to act on, CTT goes through what it calls “triage assessment,” identifying the cases with the greatest need and greatest commercial potential. But in the unpredictable marketplace, this task can seem more like prophesy than science. “Nine times out of 10,” Berneman says, “we’ll be wrong!” What CTT — and most universities engaged in tech transfer — counts on is being right that one time out of 10. (At Stanford, for example, a single patent on recombinant DNA brought in $200 million for the university before it expired last December. Berneman sometimes wonders what royalties ENIAC — the first electronic, large-scale, general-purpose computer — would have brought the University had it been invented at another time and under different circumstances.) 
   With dreams of hitting such “home runs” in the back of his mind, Berneman says CTT’s goal is to eventually have half of its technologies licensed by the time they’re patented, a process that can take anywhere from two to five years and cost $20,000 to $100,000. To entice potential commercial partners, CTT’s homepage (www.upenn.edu/ctt) includes an online boutique of technologies available for licensing — from “novel therapeutic agents for the treatment of asthma” to “electrostrictive acoustic wave sensors” to “techniques for the detection of illegally altered lobsters.” Licenses are the agreements that define terms and conditions for the right to develop inventions into commercial products.


MARKETING OPTIMISM
   In addition to licensing out technologies to established companies, CTT has recently been helping to develop new businesses around Penn’s technologies, negotiating equity positions in these start-up ventures for the University. CTT’s first spin-off company to go public (in 1996) was Neose Technologies in Horsham, Pa., which synthesizes complex sugars known as oligosaccharides for use in manufacturing baby formulas, fighting infections, and preventing animal-transplant rejection in humans (“Gazetteer,” November 1996). Other recent start-ups include BBI Pharmaceuticals, Xcyte Therapies, Inc., Transom Technologies, Inc., and Basis Learning. 
   Basis Learning, co-founded by Slattery and Tony Jannetta, W’56, will provide training programs to managed-healthcare organizations, corporate development, schools, and the military to immunize high-risk people against depression by changing how they think about events. Seligman’s research shows that a person’s explanatory style — how they “talk” to themselves during setbacks — can affect their academic, athletic, and professional success; their immune system and physical health; and their ability to stave off depression over a lifetime. He and his colleagues have studied insurance agents, children, competitive swimmers, Penn students — and even politicians’ stump speeches — to gain clues into the workings of pessimism and optimism. But more importantly, Seligman has proven that pessimists can use simple techniques to develop a more positive explanatory style — and experience the benefits that natural-born optimists enjoy. 
   Seligman serves on the scientific advisory panel of Basis Learning, but holds no decision-making position, in accordance with the University’s conflict of interest policy. 
   His biggest concern about commercializing his research was quality control. “If the group that Lou had found was the Ringling Brothers, then I would have said no … but the group was not only successful venture capitalists, but people who understood the academic enterprise.” In fact, two of his “star Ph.D.’s” are vice presidents in the company, which means “the academic integrity and quality of this stuff will be first rate.” The company has also allocated $300,000 for research; Seligman hopes it will use some of the money to study whether learned-optimism therapy can actually help reduce healthcare costs. 
   Seligman says this will be a training company unlike any other. His former Ph.D. students have trained other cognitive psychologists to go into school districts, businesses, and other organizations and show “lay” people how to deliver the program to others. Most corporate training sessions only measure how people feel at the end of a session, Seligman adds. “From an academic point of view, that’s laughable. Industry is so hard-headed about so many things and so tender about judging the effects of training. We do a follow-up … The question is, does it improve in the long run?” What he has found is that the benefits of learned optimism don’t wear off with time. In fact, with children, they seem to increase.


WHERE THE MONEY COMES FROM
   In terms of money, tech-transfer revenues represent only a fragment, about five percent, of the University’s $360 million research budget. About 80 percent still comes from the federal government; another 15 percent, from foundations and associations.
    “Most people are surprised by how small the industry part is,” says Dr. Ralph Amado, vice provost for research and a physics professor. “One of the questions you can ask if you’re a thoughtful taxpayer is, ‘Why should the federal government be giving the University of Pennsylvania money to do all of this research?’” The University doesn’t just contribute “hardware and software, but also the peopleware,” he notes. “We [teach] the students who end up becoming the technological leaders of the next generation.” Universities also feed ideas into the marketplace through tech transfer. 
   Though it would be “wonderful” if tech-transfer revenues increased substantially at Penn, Amado says it’s not essential, because federal research funding is expected to increase. “All the budget signs are very positive.” What Amado would like to see is for CTT to “make it easier and easier for our faculty to commercialize our ideas, but do it in a way that does not confuse the culture. The mission of the University’s research is not the same as the mission of the Merck Co.’s research.” 
   In Badler’s view, tech transfer “gives the University a great deal of additional exposure in the external world, which tends to rate things commercially and economically, as well as intellectually. 
   “You have to be willing to let go of your child in a sense,” he says. “I had very much this feeling, and it’s even funnier because of the anthropomorphic nature of [the product], that Jack’s grown up and left home. I’m really happy with that. He’s on his own now, and feeling that Transom is now responsible for his well-being and evolution sits very comfortably with me. I think many faculty members need to feel comfortable with letting their ideas go out and letting other people run with them.”

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