Policy makers at all levels, federal and state and local governments, are depositing great faith in innovation as a driver of economic growth and job creation. In the knowledge economy, universities have been called to play a central role as knowledge producers. Universities are actively seeking to accommodate those public demands and many have engaged an ongoing review of their educational programs and their research portfolios to make them more attuned to industrial needs. Technology transfer is a function that universities are seeking to make more efficient in order to better engage with the economy.

By law, universities can elect to take title to patents from federally funded research and then license them to the private sector. For years, the dominant model of technology transfer has been to market university patents with commercial promise to prospect partners in industry. Under this model, very few universities have been able to command high licensing fees while the vast majority has never won the lottery of a “blockbuster” patent. Most technology transfer offices are cost centers for their universities.

However, upon further inspection, the winners of this apparent lottery seem to be an exclusive club. Over the last decade only 37 universities have shuffled in the top 20 of the licensing revenue ranking. What is more, 5 of the top 20 were barely covering the expenses of their tech transfer offices; the rest were not even making ends meet.[i] It may seem that the blockbuster patent lottery is rigged. See more detail in my Brookings report.

That appearance is due to the fact that landing a patent of high commercial value is highly dependent on the resources available to universities. Federal research funding is a good proxy variable to measure those resources. Figure 1 below shows side by side federal funding and net operating income of tech transfer offices. If high licensing revenues are a lottery; then it is one in which only universities with the highest federal funding can participate. Commercial patents may require a critical mass of investment to build the capacity to produce breakthrough discoveries that are at the same time mature enough for the private investors to take an interest.

Figure 1. A rigged lottery?

High federal research funding is the ticket to enter the blockbuster patent lottery

Source: Author elaboration with AUTM data (2013) [ii]

But now, let’s turn onto another view of the asymmetry of resources and licensing revenues of  universities; the geographical dimension. In Figure 2 we can appreciate the degree of dispersion (or concentration) of both, federal research investment and licensing revenue, across the states. It is easy to recognize the well-funded universities on the East and West coast receiving most of federal funds, and it is easy to observe as well that it is around the same regions, albeit more scattered, that licensing revenues are high.

If policymakers are serious about fostering innovation, it is time to discuss the asymmetries of resources among universities across the nation. Licensing revenues is a poor measure of technology transfer activity, because universities engage in a number of interactions with the private sector that do not involve patent licensing contracts. However, this data hints at the larger challenge: If universities are expected to be engines of growth for their regions and if technology transfer is to be streamlined, federal support must be allocated by mechanisms that balance the needs across states. This is not to suggest that research funding should be reallocated from top universities to the rest; that would be misguided policy. But it does suggest that without reform, the engines of growth will not roar throughout the nation, only in a few places.

Figure 2. Tech Transfer Activites Depend on Resources

Bubbles based on Metropolitan Statistical Areas and propotional to size of the variable

Recently the University of Massachusetts Amherst courted controversy when it announced that it would not admit Iranian students into some programs in the College of Engineering and in the College of Natural Sciences. The rule sought to comply with sanctions on Iran, but facing strong criticism from faculty and students the university reversed itself and replaced the ban with a more flexible policy that would craft a special curriculum for Iranian students in the fields relevant to the ban. It is not yet clear how that policy will be implemented, but what has become patently clear is that a blanket ban on students by national origin is a transgression of the principles of an open society including academic freedom. Very rarely will the knowledge created and taught at universities present a security risk that justifies the outright exclusion of an entire nationality from participating in the research and learning enterprise.

A controversial ban

Section 501 of the Iran Threat Reduction and Syria Human Rights Act of 2012 explicitly denies visas to Iranian nationals seeking study in fields related to nuclear engineering or the energy sector. After the controversy and in consultation with the State Department, the university replaced the ban for a policy of “individualized study plans” for Iranian students in the sanctioned fields. Questions remain as to the practicality of crafting study plans that exclude the kind of knowledge Iranians are not supposed to learn. One can imagine the inherent difficulty of asking some students to skip a few chapters of the textbook or to take a coffee break outside the lab when certain experiments are conducted.

In a recent column, philosopher Behnam Taebi reminded us of a similar controversy when the Dutch government tried to restrict admission of Iranian students. He offers a valuable lesson from both experiences: “the Iranian academic community has traditionally been a bastion of reformism—a tendency Western governments and universities have every interest in encouraging” and correctly concludes that a ban of Iranian students is self-defeating.

Universities export knowledge and values

The costs of constraining technology transfer could indeed outweigh the benefits of study programs that entail technical and cultural exchange at the same time. American universities export knowledge and technology but also they export American values.

Surely, not all values for export are exactly the height of civilization. Skeptics may point out that conspicuous consumption and reality TV are not worth disseminating but these critics would do well recalling that neither social posing nor voyeurism were invented in the U.S.; what we see here are just new bottles for very old wine. In contrast, the best values for export are those of the American political tradition. Living in the U.S. affords international students a regular exposure to that tradition in informal settings such as community life and churchgoing, and in more formal ones, through the stupendous collections of university libraries and the campus curriculum on American history and political thought.

Aside of the lofty and the frivolous, however, there are a few values that are inherent to university life. Of course, the U.S. does not have a monopoly on those values—they are inherent to all universities in stable democracies—but they are certainly part of the experience of any international student. Consider these three:

Stability: Students appreciate the relative quietude of university life. In the U.S., most campuses are physically designed as a refuge from the frantic pace of modern life and provide the peace and safety necessary to allow the mind to concentrate, grow, and discover. Students coming from countries troubled by political instability and conflict are able to stop worrying about questions of subsistence or survival and can devote their attention to solve the puzzles of nature and society.

Meritocracy: Another value characteristic of academia is meritocracy. The system has its flaws but academia more than other walks of life assigns rewards based on clear standards of performance. There are systemic problems and no absence of prejudice, but hard work and talent tend to be given their due.

Social awareness: A third value is a collective concern with public affairs in the local, national, and global spheres. Not everyone in the academic community is socially engaged, but within campus there is a steady supply of debate on contemporary issues and ample opportunity for voluntary work. Visitors will find it easy to engage friends and colleagues in relevant debates and join them in meaningful action on and off campus.

Technology transfer is good diplomacy

Many international students remain in the U.S. after concluding their training but they also keep ties to their families and scientific communities in their countries of origin. Others return home and may seek to reproduce there the stability, meritocracy, and engagement with social issues that were constitutive of their time at an American university. Some will seek reform within their own universities and a few will go further and press for reform to their country's political system. Spreading the values of academic life in democratic societies is a legitimate and powerful approach to spreading democratic values around the world.

Technology transfer as a term of art has evolved to recognize the two-way exchange of knowledge between research and industrial organizations. Likewise, values move both ways and international students enrich American life by injecting their spheres with their own values for export. The policy of American universities of remaining open to all nationalities is both instrument and symbol of an open society. Technology transfer by means of advanced training is indeed good diplomacy.