Professor Start-Ups: Hedging Your Bets with a Hybrid License

A discussion on the Techno-L forum reminded me of an answer Fuentek came up with a few years ago to the question most commonly facing university offices of technology management (OTMs):

What do you do when professors-inventors want to form a start-up based on their innovations?

When no existing company is interested in the technology, this is usually a no brainer—though we can have a whole separate blog on the ROI of these ventures.

But what do you do when there is some licensing potential or interest among existing companies, but the professor is demanding the intellectual property (IP) for a start-up?

It’s a sticky situation. The stats on start-ups are pretty bad. Few start-ups survive five years, let alone get to the point where they provide royalty revenue to the university. Yet the political realities are such that OTMs feel pressure to foster start-ups.

Our solution to this seemingly no-win situation is to take a hybrid approach to licensing whenever possible. Such an approach sections off the fields of use between the start-up (i.e., those aspects that need further investment and development because they are still too risky) and an existing company (i.e., what the company identifies as having value and potential). Then both the professor’s start-up and the existing company can have a partially-exclusive (or non-exclusive if they will take it) license.

This approach minimizes the risk to the university while still allowing for the OTM to support professor start-ups.

John McEntire (formerly of the University of Illinois at Urbana–Champaign, now with Pacific Northwest National Laboratory) presented a case study of this approach at the Technology Transfer Society Conference in October 2009.

Has anyone else tried this approach?

–By Laura A. Schoppe

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Posted by Laura Schoppe

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