Academics in technology fields are benefiting more than ever before from licensing deals and the sale of spinoff companies, new research has found.

Universities in the UK have increased their income from intellectual property (IP) by 18.5 percent year on year (YoY), pulling in £155 million during 2014-15, research data by the Higher Education Funding Council for England shows.

istock cambridge university gordonbellphotography
Cambridge University © iStock Photo: gordonbellphotography

The findings show that UK universities are becoming savvier than ever when it comes to licensing IP, with income from licensing deals alone rising 25 percent YoY to a total of £103 million. This compares to the £53 million made in shares from the sale of spinoff companies over the same time period.

The difference between a licensing deal and a spinout comes down to ownership of the core IP. With a licensing deal the university maintains ownership of the IP and licenses it out. Think of it as IP-as-a-Service.

A spinout sees the IP transfer over to the buyer and will usually see a leading academic follow the IP as part of the deal. Think how Demis Hassabis joined Google parent company Alphabet as part of the DeepMind deal.

IP protection

The important part here is how UK universities are protecting their IP better, and using the rewards to further their research efforts. The study shows that the higher education sector as a whole received almost five times as much income from licensing and spinoff equity in 2014-15 as it spent on IP protection.

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Joanna Thurston, partner and patent attorney at intellectual property law firm Withers & Rogers said: "A few years ago, just a handful of universities were actively filing patents or registered designs, but now such activity is commonplace, particularly in sectors such as life sciences, software and consumer electronics.

"More universities understand that licensing deals and opportunities to profit from spinout businesses can only be secured if the right IP protection is in place; providing reassurance that inventions cannot be copied by competitors."

How universities protect their intellectual property

Practically, academics have to work with the tech transfer office to protect and commercialise their ideas. Thurston's first piece of advice is a simple one: "You need to avoid disclosing the idea before you seek a patent."

Then you must lay out a clear route to market. This will make the process of drafting a patent document simpler.

Thurston admits that it is expensive to protect IP, and "there is always a risk, but the attorney and technology transfer office will do pre-analysis to minimise those risks".

Finally, one key decision is where to file the patent. Thurston says that "you can tie up the world with US, Europe, Japan and China" protection.

Investment in UK IP

US tech giants like Google and Apple have already spent hundreds of millions of dollars on UK startups that developed their intellectual property within UK universities.

Demis Hassabis, cofounder of Deepmind - which Google acquired in 2014 for $600m - developed the deep learning techniques which underpin the company while studying at Cambridge and University College London. It remains unknown how much UCL was paid for any owned IP resulting from this deal.

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In late 2015 Apple acquired Vocal IQ, a Cambridge University spinout for its AI-driven natural language processing prowess. A lesser-known case is Arria NLG, a natural language processing startup that was spun out from the University of Aberdeen in 2009 and was valued at £160 million in 2013.

The one constant here is the rise in AI- and machine learning-related activity in the sector. The complex technology behind AI and machine learning lends itself to academia, and with the rise of interest in AI from the tech sector and enterprise this sort of activity isn't a surprise.

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It is difficult to know if this is sustainable or a recent boom though. What is clear is that the technology sector is catching up with life sciences when it comes to seeing the value in academic IP.

The Spin Outs UK annual report noted: "For four out of the past five years, more than half the new spinouts created have been in the life sciences sector. In 2015 the ICT and digital sector accounted for 30 percent of spinouts."

Jonathan Harris, editor at the Spinouts UK Project told Techworld: "The market sector codes in which we would expect to find AI/machine learning companies do appear to have experienced an increase in numbers over the past two years."

Startups not spinouts

Spinouts may be benefiting more than ever from the market, but the number of university spinouts in the UK is actually declining. Harris said: "Spinouts have been declining for a number of reasons. One is that the peak period for spinout formation followed the creation of the government-backed University Challenge Funds."

Harris also explained that universities recognise that creating a viable spinout is time and money intensive, "Some universities do not see this sort of commercial preparation as being either their responsibility or their area of expertise," he said.

On the other hand, growing numbers of university staff and graduates are building startups of their own, "especially from computer science and similar departments, because they can get to market more quickly, have fewer costs to reach a marketable product, and don't have to negotiate transfer of IP," said Harris.

Leaving the ivory tower

Thurston from Withers & Rogers sees the shift as more cultural, with academics no longer viewing licensing deals as 'selling out'.

She explained: "It was seen as a negative thing to pander to industry or make money from research. You would encounter academics that give you a hard time when you encourage them to protect their innovation.

"Now, because of tech transfer offices, collaboration is seen as a good thing because they have come round to the fact that it is great to see a real-world result of that research."

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Alice Jacques, senior data scientist, consumer insight at Channel 4 sees the ties between researchers and business as more of a necessity than an evolution. "My sense is that the links are becoming more common, especially as government funding becomes more difficult to obtain," she told Techworld.

Jacques also had a word of warning against this level of cosiness: "Naturally there are risks associated with the relationship between industry and academia becoming too close," she said. "Business-sponsored research has a skew towards the applied, so perhaps a less long-term view."

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