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Research fails to create profit, study suggests

Common wisdom dictates investing in research will bring economic rewards. Such thinking may be wrong, according to a new report published by Think Tank DEA

Does university research really translate into cold, hard cash?

Think Tank DEA, a non-profit organization providing insight on research, education, and innovation, thinks that it doesn’t. DEA recently published a study reporting that danish universities have difficulties translating the knowledge gained from research into profit.

“Commercialization of academic research comes from a desire to increase the societal pay-off from public investments in academic research,” says Dr. Maria Theresa Norn, author of the report, ”The push was also motivated by an expectation among politicians and policymakers that universities would be able to turn a profit that, in time, would make a significant contribution to universities’ total funding.”

Transfer of knowledge, not income

Danish research policy is based on the idea that investing into university research will lead to economic returns. This belief led to the Researcher Patent Act that gives universities the right to patent inventions from publicly funded research. Danish universities, however, have failed to create a direct and documented financial profit from such transfer efforts.

“It is important to remember that technology transfer — i.e. transfer of intellectual property rights from the university to established firms or new spin-out companies, represents just the tip of the iceberg when looking at universities’ overall contribution to innovation and growth in industry,” says Thorn.

Research is not always the same as innovation, as needs of universities are different than those of businesses. According to the Prorector of University of Copenhagen, Thomas Bjørnholm, the aim of the university is to promote the transfer of knowledge, rather than to generate income.

Lack of revenue

Unfortunately, policy has focused more on sale of patents and companies stemming from universities, rather than helping to foster long-term cooperation between the universities and businesses. Universities usually only make money on a handful of these patents — industry-changing inventions don’t occur very often.

“American studies show that very few universities make money off of their research. The University of Stanford is an example of a university that has been successful in this respect, but it’s important to remember that it took them 15 years to break even,” says Dr. Norn.

The University of Copenhagen (UCPH) receives DKK 2 million annually from licensing agreements, and an additional DKK 2.5 million from reimbursed patent costs from. However, the university also receives around DKK 1 billion in external funding each year, making the revenue from technology transfer insignificant in comparison.

Collaboration is integral

The Technology Transfer Office of UCPH signed 21 license agreements in 2011, and 16 in 2012, the highest figure for patented inventions for Danish universities. UCPH can sell patents, but they prefer to license them instead, to ensure that technologies can be used by a wide range of companies.

DEA does not expect this report to affect future funding for university research. “We hope to spur a discussion of where the money to fund technology transfer should be coming from, and how it is put to the best possible use,” says Dr. Norn. “We have to adjust our expectations about the kind of money that will come out of this.”

Many patents are now being developed in close collaboration with companies and buyers, increasing their potential value. Prorector Bjørnholm hopes that more students will become inspired to work with companies, and will see this collaboration as an integral part of their research.

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