RESEARCH UNIVERSITIES AND PRIVATE INDUSTRY CAN BOTH BENEFIT FROM A BETTER RELATIONSHIP.

Ties to industry are important for engineering colleges. They provide exposure to real-world problems, job opportunities for engineering graduates, an opportunity for faculty members to apply their expertise and of course, research support. But right now universities aren’t getting the research dollars from such a relationship. Of the $284 billion spent on research annually in the United States, 63 percent comes from industry and 30 percent from the federal government, according to the National Science Foundation. Yet, only 5 percent of the research expenditures at the nation’s universities come from industry. How can we be missing out on such a potentially significant source of research revenue?

The great majority of research support from industry is in the form of single contracts arranged between an individual faculty member and a scientist at the company. This type of industry-funded research is short-term, intellectually shallow, high-risk and not connected with either the university or the company’s programs. And the contracting process is unnecessarily cumbersome. While 75 percent of the 6,963 federal grants (accounting for $536 million in research in FY ’04) at my own institution were awarded using two agreement templates, the 1,173 industry contracts worth $32 million required essentially 1,173 templates. It’s not surprising that neither industry nor universities are excited about investing time and money in such sub-optimal arrangements.

The good news is that universities and industry want the same things: a sizable program, commitment by both parties, bright graduate students and a focus on the company’s core research mission. And both sides are beginning to realize that fewer, larger, deeper and more-focused research programs are to their mutual benefit. But that’s only half the battle.

The other half is figuring out how to set up the contract. Universities are accustomed to retaining title to innovations made under federally funded programs as provided by the Bayh-Dole Patent and Trademark Act of 1980 and expect similar treatment from industry. But since they put up the money, companies usually expect exclusive rights to the innovations developed by university researchers. As the Hewlett-Packard vice president for worldwide university relations put it in a speech earlier this year, “Given that negotiations with an American university can take more than a year, the idea is often valueless before an agreement can be reached, and the company often spends more in legal expenses than it would be able to pay in royalties. This can lead to a company just walking away from the negotiation and declining to sponsor any further research at that university.” In fact, many companies are seeking relationships with European universities in order to avoid the IP hassles they face with U.S. universities.

So what should universities do differently to improve their success with industry? First, they should focus more on the company’s research objectives since research programs are easier to sell to higher-ups if they address the company’s core missions. Engineering colleges also need to demonstrate the benefits of broad programs: access to renowned experts focusing on the company’s key research challenges and graduate students as potential employees. But universities shouldn’t expect industry to treat intellectual property the same way the federal government does. Universities should think about viewing the real payback as the enhanced reputation created by the exposure and the societal benefits derived from their technological achievements—both can pay handsome dividends in the long run. And companies need to respect the rights of faculty members to protect their innovations, publish their results and preserve their ability to work in the area beyond the immediate project.

As with any relationship, the path to success is paved by the mutual understanding of each party’s needs. And that makes it a win-win proposition for both sides.

Gary S. Was is professor and associate dean at the University of Michigan’s College of Engineering.