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U.S. patent director, an alum, says new approach needed for tech transfer

By Dave Jones on May 14, 2010 in University News

In transferring technology from the laboratory to the marketplace, universities must champion a new approach based on long-term relationships with commercial partners, an Obama administration official and UC Davis alumnus told campus officials recently.

David Kappos, who received a bachelor’s degree in electrical and computer engineering at UC Davis in 1983, serves as undersecretary of commerce for intellectual property and director of the U.S. Patent and Trademark Office.

On April 18, he met here with a group of deans and vice chancellors and with members of two blue-ribbon committees that are reviewing research and technology transfer. Chancellor Linda Katehi appointed the panels in December.

Kappos’ visit to his alma mater also included a dinner at the Chancellor’s Residence.

“We're in the middle of a major shift in the mode of tech transfer,” Kappos said.

Rather than focusing on licenses for individual patents, he said, the new approach aims to simplify negotiations and quickly introduce inventions into the community, while companies would boost support for university research. A large company might commit to supporting a major area of basic research, while a small start-up company could contract for research in a campus lab.

This approach, already being implemented by UC and other universities, including Stanford and the University of North Carolina, can generate much more funding than if the universities relied on "blockbuster" patents to pay off, Kappos said.

"There is no perfect model for university tech transfer, but there is a new model that can work alongside traditional tech transfer," he said.

Not every invention is a blockbuster

Katehi said blockbuster patents are rare and most start-up companies have a low probability of success. Despite this, she said, most universities tend to negotiate as if every invention is going to be a blockbuster.

"We have to approach this in a way that emphasizes a broader relationship," she said.

In a competitive world, it is more vital than ever for universities to protect their intellectual property, whether in agriculture, pharmaceuticals, genetics or materials science, Kappos said.

The challenge for the United States in the 21st century will be to compete with countries where manufacturing costs far less, he said.

"The only competitive edge we have left is in intellectual property," Kappos said.

In February, Kappos and Katehi attended a National Academies of Science meeting where major universities, corporations and government agencies came together to discuss tech transfer. Kappos' office is now organizing regional meetings with universities and colleges around the country to "get the word out," he said.

Intellectural property and relationships

Protecting intellectual property (IP) does not mean that it has to be inaccessible to the world's poor, Kappos said. "But without IP protection, you do not have any leverage."

Professor Andy Hargadon of the Graduate School of Management asked Kappos about the balance between the value of intellectual property and of relationships. In the 19th century, he noted, America took innovations from Europe and used them for industrial growth.

"IP should not be a point of contention between partners, but you have to protect IP or foreigners will take it for free," Kappos replied.

Kappos' agency is working on "humanitarian IP": innovative licensing models, for example, in crop science or pharmaceuticals, that make products available at low cost. He cited the San Francisco Bay Area’s Gilead Sciences, which has licensed Indian companies to manufacture Gilead’s anti-human immunodeficiency virus drugs for export to Africa, while charging a minimal royalty payment.

"This is a model that is really working," he said.

The United States and China

Counterfeiting and piracy of U.S. intellectual property remains a formidable problem, especially in China, Kappos said. Before joining the Obama administration in 2009, Kappos served as vice president and assistant general counsel for intellectual property at IBM, and lived and traveled extensively in Asia and the People's Republic of China.

Kappos noted that technology exports to China are likely to be “appropriated,” and enforcement of intellectual property claims is spotty in that country, Kappos said.

However, he noted, Commerce Secretary Gary Locke and his Chinese counterpart chair a joint committee on trade and technology that has been working effectively on these issues.

Therefore, Kappos said, filing patent applications in China is still worth the effort, on the assumption that the situation will improve.

Chinese companies are beginning to file patents in the United States. On a recent visit to Asia, Kappos heard from executives of automaker BYD that they aim to be the third largest filer of U.S. patents by 2012. The Chinese are also making a strong play in genomics, noted Ken Burtis, dean of the College of Biological Sciences.

A recent court decision could have a big impact on patents in biotechnology and genomics. In March, a federal judge in New York struck down patents held by Myriad Genetics Inc. of Utah on genes linked to breast and ovarian cancer, ruling that the genes were "products of nature."

The decision could have a significant impact on the biotech industry, Kappos said. The Patent and Trademark Office has issued more than 20,000 patents for products purified from nature, including some 4,000 on isolated DNA sequences. Tens of thousands more patents in pharmaceuticals, chemistry and materials science could be at risk if the decision is upheld.

Improvements in the works

Alexandra Navrotsky, interdisciplinary professor of ceramic, earth and environmental materials chemistry, said intellectual property issues can paralyze research contract negotiations, even before there is anything patentable. She asked Kappos what he could do.

Kappos agreed that inventors must be able to concentrate on research and discovery, and therefore is considering the following improvements to the system:

• A 12-month extension to the provisional patent application period.

• A "post-grant" mechanism to go back over patents after they are issued to ensure that they are secure.

• A "small claims court" that could settle patent disputes quickly and cheaply without litigation.

• An electronic system for third parties to file documents supporting or contesting patent applications. The existing procedure, which accepts only hard copy submissions, is complex and little used.

Congress is debating legislation to address some of these issues, Kappos said. If passed, the bill would be the first significant reform of the U.S. patent system in almost 50 years.

Recalling his undergraduate years

After doing his undergraduate work at UC Davis, Kappos went on to receive a law degree from UC Berkeley in 1990 and spent most of his career with IBM before becoming undersecretary of commerce for intellectual property.

"I'm very proud to be an alumnus," he said. "UC Davis is a great place to get a great education."

"I was a diligent student, and that has served me well as a life skill — I work harder than anyone else," he said. "You get the best results in any deal not because you're the smartest or the flashiest, but because you are the last one standing, and I learned that here."

Kappos, who grew up in Southern California, said he arrived at UC Davis with a good grade-point average. But, he recalled, his high school advisers had told him not to set his sights too high.

During his first quarter at UC Davis, he took a chemistry class with Professor Dino Tinti, now emeritus. Kappos scored an A-plus, way above the rest of the class, and Tinti took note.

"He wrote to me and said, 'You could have a future.' That was the first time an academic in a position of authority had said that to me and that had a big impact on me," Kappos said.

The United States still leads the world in moving research from university labs to industry start-ups, but more can be done, Kappos said. The government's role is to get people together to make that happen, he said.

"I believe university research is fundamental to another American-led century, and I will do anything I can to make you successful."

Andy Fell is a senior public information representative with the UC Davis New Service.

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Media contact(s)

Dave Jones, Dateline, 530-752-6556,