Home > Topics > Putting Intellectual Property to Work: Experiences from Around the World > The Making of a Licensing Legend: Stanford University’s Office of Technology Licensing > Editor's Summary, Implications and Best Practices

Stanford University is one of a handful of U.S. universities that pioneered the systematic use of patenting and licensing to achieve technology transfer. This chapter provides an interesting account of the early days of the Stanford University Office of Technology Licensing (OTL) under Niels Reimers—who in many ways was the father of the contemporary model of university technology transfer—as well as current lessons based on interviews with today’s managers at the Stanford office and leaders of the venture community in the surrounding Silicon Valley. After reading this chapter one feels as if they have just paid a visit to Stanford and had a meeting with the OTL to learn about their set up, business practices, and even some of the more elusive secrets of their success as a university licensing operation.

The OTL was shaped and molded by the already vibrant Silicon Valley ecosystem within which it was conceived. Hence, the spirit of entrepreneurial development of technology had already been in place for a number of years. For example, Hewlett-Packard was founded by two Stanford classmates in 1939 and many leading Silicon Valley companies like Intel and AMD were formed in the 1960’s. Yet, it was the invention of recombinant DNA that truly catalyzed the creation of the Stanford OTL in 1970, and it was the OTL that successfully facilitated many of Stanford University’s contributions to the biotechnology revolution. Thus, while Stanford University may have spawned the computer revolution in Silicon Valley, it did so by other modes of technology transfer, and not by patenting and licensing its technologies through the OTL.

Despite, or perhaps because of its favorable entrepreneurial economic environment, the Stanford OTL has had plenty of opportunity to fine tune its practices and find the best possible ways of structuring and running a university licensing operation. In the big picture, success stems from the professionalism and competence of those who work in the office, and the fact that they give first priority to the market, second to the technology, and a distant third to legal matters. Putting the market first means they should be fast and flexible. In order to achieve this, the licensing officers have an extraordinary level of responsibility and autonomy in dealmaking and decision making. The emphasis on technology is upheld by involving the inventors as much as possible in the process. The real action, in fact, lies with the inventors, both inside their laboratories and outside, in their relationships with industry and the venture community. Finally, lawyers are rarely hired by the Stanford OTL, nor is there any obligation to get deals approved by lawyers. The primary rationale is to avoid the culture of risk-aversion that is endemic to the legal profession and to cultivate a culture that is risk-taking. The Stanford OTL understands that technology transfer is a numbers game, and by closing on more deals—by planting more seeds—there are thus more potential royalty-bearing opportunities created and also more technologies that will be developed out there in the economy bearing the mark “Invented at Stanford”.

Key Implications and Best Practices

Given that IP management is heavily context specific, these Key Implications and Best Practices are intended as starting points to be adapted to specific needs and circumstances.

For Government Policymakers

• The example of the Stanford University Office of Technology Licensing (OTL) illustrates how successful development and commercialization of technologies requires a dynamic entrepreneurial culture and serious investment in R&D and IP management capacities.
• The success of Stanford University in establishing many new companies and in licensing a myriad of inventions is due, in large part, to its willingness to take risks. The deals were driven not by legal minds, but by entrepreneurs who saw opportunities, backed by a strong political will to make things happen.
• Understand that technology transfer is a numbers game: even at the technology licensing office of world-renowned Stanford University, only about 10 percent of the inventions have the potential to generate significant income, another 20 to 30 percent earn only a little, and the remaining 60 to 70 percent bring in next to nothing.

For Senior Management (university president, R&D manager, etc)

• Technology transfer is a numbers game. The job of a technology transfer office is to plant seeds: the more seeds, the better will be performance over time.
• Entrepreneurship is a cultural characteristic of a university like Stanford: it is found in academics all the way from the Dean to the faculty, technical staff and students.
• The success of Stanford University in establishing many new companies and in licensing a myriad of inventions is due, in large part, to its willingness to take risks. The deals were driven not by legal minds, but by entrepreneurs who saw opportunities, backed by a strong political will to make things happen.

For Scientists

• At Stanford, venture creation is driven by the scientist. Usually the scientists themselves identify their preferred venture capital partners. Ideally, the office of technology licensing plays a secondary role, providing services that facilitate the relationship, but not providing the relationship itself.
• Scientists can be the drivers of entrepreneurship. Recognizing and pursuing opportunities is fundamental to entrepreneurial success.
• Your role is important in this context. Do not underestimate your influence and the importance of relationships. When you go to conference, make the most of the opportunities and network not only with scientists in your own field, but venture out to entrepreneurs, venture capitalists, and others.

For Technology Transfer Officers

• The Stanford University Office of Technology Licensing (OTL) tends not to hire lawyers and does not require deals to be reviewed by lawyers. The legal profession is by nature risk-averse. In order to succeed, technology transfer officers need to be risk-takers, only seeking the input of counsel for special or unusual situations.
• Stanford University is successful because its deals are driven by business goals, not by lawyers (although licensing executives may well be lawyers, the point here is that the legalities is not what drove the deals).
• The key characteristics of the Stanford University OTL is the professional quality of the staff, including their ability to take a high level of responsibility for individual technologies and their ability to manage connections with people, including Stanford inventors and outside colleagues, licensees, and venture capitalists. This is an example worth emulating.