Companies test drive U technology

A new program lets companies try out inventions before buying.
February 06, 2014

A patented chemical that helps purify water runoff could still be sitting in a University of Minnesota lab today if American Peat Technology didn’t license it last year.

But those negotiations took more than a year and racked up about $60,000 in legal fees for the company, which President and CEO Doug Green said was frustrating.

The University is expanding its Minnesota Innovation Partnerships, which launched in 2011, to offer a Try and Buy program aimed at helping existing University technologies get more exposure.

This could allow the University to profit off the more than 300 unlicensed technologies sitting unused, and it could make them more appealing and less risky for potential buyers.

The new program showcases registered technologies by offering discounted rates for Minnesota companies, simplified trial periods and preset licensing terms intended to speed up negotiations and streamline the inventions’ entry into the marketplace.

“We’re trying to reduce the risk in investment on the company side in the earlier stage so that they will try out more things,” said Rick Huebsch, associate director for the Office for Technology Commercialization. “Then more of our University technology gets in the hands of companies, where it has a larger chance of becoming a commercial success.”

Previously, Huebsch said, the University didn’t have specific approaches to pitching technologies to companies — they’d just sit down and start negotiating the cost from scratch. This often took a long time when parties disagreed on the value of a technology and its licensing fees and royalties. On top of that, he said, companies were often unsure whether the technology would be successful.

Raj Udupa, who manages more than 40 technologies for OTC, said he thinks the new program will help shorten what he sees as a costly and painful negotiation process.

As the name suggests, companies buy the invention directly or try it for a predetermined trial period and see if it fits their needs, he said.

American Peat Technology President and CEO Green said he was happy he was able to reach an agreement with the University on the water purification chemical. He said he wants both the companies that license the technologies and the researchers who develop them to profit.

One of the reasons the negotiations took so long was that he wanted the researchers to see a larger share of the revenues, he said.

“The University takes too much,” Green said. “They don’t give it to the researcher. That’s a flaw in the program.”

Under current policy, University researchers receive one-third of royalty profits after commercializing their technology. For example, if the royalty rate of a technology is 5 percent and the company makes $100,000 from it, the researcher only receives about $1,700. Another third goes to the researcher’s college and department, which often means a reinvestment in research equipment and laboratories.

Mechanical engineering professor Susan Mantell did research for a specialized roofing panel that’s registered under the Try and Buy program. As a researcher, she said, she’s somewhat shielded from the business side of things. But she doesn’t do it for the money, she said.

More than 200 University technologies have registered in the Try and Buy program, and Huebsch said that many more will register soon.

Dr. Seyyed Hossein Fatemi also did research for a technology registered in Try and Buy. His protein diagnostic test may help identify if people have schizophrenia, autism, depression or bipolar disorder.

While his test is registered in the program, he’ll have to wait until it’s licensed and commercialized before he gets any royalties. But he’s not interested in the royalties, he said.

“I didn’t spend almost 15 to 16 years on this topic just to get royalty,” Fatemi said. “If it helps patients, I’ll be happy.”

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