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EDITOR'S EDGE: Penn State Can Transcend Scandal With Groundbreaking IP Policy Shift

Hank Foley
Hank Foley
In the weeks since the Jerry Sandusky sex abuse scandal ripped open the very heart of Happy Valley, it has understandably been difficult for many to find reasons to feel good about Penn State University.

The tragedy involving the 50 counts of child sex abuse with which Sandusky is charged is multifold: always foremost, the alleged victims; betrayal from such a trusted authority; an 84 year-old father figure's tarnished legacy; a divided campus; a lost season; shame.

Still, every day since, students go to class. Professors grade exams. Athletes lift weights. Researchers label test tubes. Administrators chart courses. They try to transcend.

"It's been a tough five or six weeks," admits Penn State Vice President of Research Henry "Hank" Foley, who received his graduate degree in University Park in 1982.

Perhaps sadder still is the scandal itself has effectively stifled the one piece of news that could help the entire Penn State community -- including its network of 19 branch campuses across the Commonwealth and its legion of 557,000 alumni in 160 countries -- begin to transcend one of the most troubling sex abuse cases in American history:

Foley revealed to Keystone Edge in a phone interview earlier this week that beginning this fall, Penn State University will no longer mandate ownership of intellectual property associated with industry-funded research. The real value is not in IP ownership, Foley contends, but rather in the contact students and faculty have with real problems in the world.

"We're moving to the position where if a corporation sponsors research with us, they own it. We prefer it," says Foley. "We're looking to get the interactions, the relationships and the ability to work on more pressing problems."

In a May 31 memo to Foley titled Core Council Recommendations Regarding Research (OVPR) from then Executive Vice President/Provost and current University President Rodney Erickson, it is clear that IP was becoming a drain on the Office of Vice President of Research, which has a budget of around $46.5 million (excluding a separate budget for the Graduate School).

From the memo, which was posted on an Office of the Executive Vice President and Provost webpage and recommended redirection of resources within OVPR:

- "The focus of the office is to help turn faculty ideas into patents and licenses with royalties flowing back to Penn State, while at the same time trying to help faculty monetize their ideas. But the realities never seem to live up to the potential."

- "Entrepreneurial faculty who want to start companies to commercialize Penn State intellectual property (IP) complain of being deterred by too much oversight and busy-work."

- Penn State is among the worst of its peers when it comes to royalties received from patents and licenses, ranking no better than 80th, right behind Eastern Virginia Medical School.


- The Core Council recommends to "explore an entirely new approach that will make Penn State a friendlier environment for industry-sponsored research, knowing that the companies themselves usually bring a considerable amount of their own IP to the projects."

- The Core Council considers negotiating higher facilities and administrative rates for industry research partner contracts.

The news is significant in that it is believed Penn State is the first major American university to take such a stance, going against 30 years of established protocol and, some might argue, good fiscal sense. Prior to 1980, universities could not patent results of research. The Bayh-Dole Act changed that, and university IP has been a hotly debated topic all along.

"In a sense, Penn State is favoring its academic (mission) over commercial (interests)," says Michael Carrier, a lawyer and professor who teaches IP law at Rutgers School of Law-Camden.

Penn State goes a step further than the University of Minnesota, which last week announced a new approach to IP licensing that simplifies the process. Penn State's change, which comes after two years of analysis and discussion on campus, was made earlier in the fall, but it was suddenly buried when news of the Sandusky charges surfaced.

Instead of approving a news release announcing the decision last month, Foley was writing a letter expressing shock and sadness related to the scandal that was issued to stakeholders of the Greater Philadelphia Innovation Cluster, for which Penn State serves as the lead institution and Foley serves as director. Foley says he felt a responsibility to the $122 million regional energy efficiency hub's many corporate, government and foundational partners.

"It was something we felt we needed to do to get the word out, and the response was nothing short of amazing," says Foley. "Not one negative response. There was an enormous amount of understanding.

"It was a surprise and a good feeling."

We Are….Still Smart
Research expenditures have nearly doubled at Penn State in the last decade to $770 million. Industry-funded research makes up about 25 percent of research at Penn State, which ranks fourth in the country in that category. A high-profile example is the school's clean coal technology efforts courtesy of $17.5 million over five years from Chevron. When it comes to science, technology, and engineering, all breeding grounds for innovation, Penn State is quite strong. Think national defense and security, plus a whole lot of energy efficiency. Within the life sciences it's personalized medicine. In the material sciences, it's electro-optics. By the school's own estimation, its basic sciences (math, biology) rank seventh in the nation according to National Research Council data.

There's also the Lunar Lion project, a privately funded challenge project for the Google Lunar X Prize with an end goal of landing a robotic spacecraft on the moon that will involve undergrads and faculty.

It is probably naive to believe merely shifting focus to this immense arsenal of world-changing brain power and innovative spirit will overcome these hard times, if even possible. These achievements and lofty goals, however, certainly provide points of pride and reminders of Penn State's ultimate mission.

Foley says he and Erickson have been on the same page. In July, Foley's office announced the merger of Penn State's existing Industrial Research Office and Intellectual Property Office to form the new Office of Technology Management. That was the first step, according to the university, in "realizing an aggressive new vision at Penn State for technology development and translation to the market."

A large portion of the new OTM's efforts involve fostering corporate partnership and marketing of Penn State's IP, including "more vigorous licensing." Sans the conditions of Penn State's financial stake in IP ownership, corporations will no doubt be more likely to make a gift like the one worth $9 million in software and content announced in June from leading enterprise architecture service provider Armstrong Process Group to the College of Information Sciences and Technology's Center for Enterprise Architecture – a gift that will enhance the planned Master of Professional Studies in Enterprise Architecture and is part of For the Future: The Campaign for Penn State Students, which aims to secure $2 billion in private support by 2014.

While the school's IP policy shift is driven in part by a less than stellar track record, Foley believes there's too much at stake not to make a change. There is a desperate national need for innovation, and universities are best suited for that task. And it could open the door to other larger, long-term opportunities with industry partners.

"If we don't give on this issue, there is a lack of fluidity in transferring technology from the laboratory to the marketplace," Foley says. "We think this (decision) will give a big lift and I think other schools will follow suit."

That could happen considering the heavy cost burden of executing technology transfer on campus, coupled with tighter overall budgets, says Leonid Kravets, a patent attorney in Philadelphia who has also worked for the United States Patent and Trademark Office.

"Clearly we're going to see universities shift how they approach IP," says Kravets. "I don't think everyone will be as radical as Penn State, but I could see certain universities going that route."

Foley acknowledges IP ownership has been a boon for other universities – MIT, Cal, Stanford and Texas have seen the most profit -- and that there will likely be controversy concerning Penn State's new position, but that ultimately, it makes sense in State College.

"That's the independence we have and we're asserting our independence," Foley says. "No one would ever accuse me of lacking in assertiveness."

Good thing, because that's a quality that has been sorely lacking in key areas around State College. After all, if more people had been assertive in the years leading up to Sandusky's recent arrests, many tragedies may have been averted.

That may prove to be the ultimate lesson in this sordid tale.

Assertiveness also might be the best path to true innovation, and in the case of Penn State, the best path to transcendence.

JOE PETRUCCI is managing editor of Keystone Edge. Editor's Edge is a column reflecting Petrucci's opinions and are not necessarily shared by the parent company, Issue Media Group, or any Keystone Edge partners. Send feedback here.
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