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UA News
Gov. hopefuls favor letting colleges invest

By Rachel Williamson
Arizona Daily Wildcat
Friday October 11, 2002

When Nasser Peyghambarian, chair of lasers and photonics for the optical sciences center started a company based on his invention in optical fiber amplifiers, he was willing to offer the university shares in his company.

Instead, he's paying the UA a $50,000 a year licensing fee.

For Peyghambarian and other researchers, a clause in the Arizona State Constitution stands in their way.

And while Peyghambarian said he can afford the agreement, he would rather partner with the UA to help fund his company while strengthening its research arm. But that might change.

Gubernatorial candidates Janet Napolitano, Democrat, and Matt Salmon, Republican, favor an amendment that would allow Arizona universities to own shares of companies started by researchers like Peyghambarian. Whether such an amendment would generate significant revenue for UA is up for debate.

Currently, when researchers want to profit from their invention, they start a company that sells and markets the product, said Greg Fahey, associate vice president for government relations.

Since the university owns the research, it sells the researcher a license to start a company that markets the patented invention.

Every year, about seven UA researchers form companies, said Dick Powell, vice president for research.

So far, only a couple of those companies have been successful, but never to the point that their success would return millions of dollars to the university under shared ownership, Powell said.

"I don't think people should have false expectations that this would make this university rich," he said.

Most of the companies' income goes toward operational payments, into the inventors' pockets and into an account set aside for the researchers' labs, Powell said.

And before the researchers' departments ever see this money, a company's income must be at least $500,000 and above, according to the Interim Intellectual Property Policy.

If the company's income is between $500,000 and $1 million, 5 percent of the money is set aside for the researcher's department and 5 percent is for the college.

Peyghambarian's company, which was founded in 1998 and licensed with the UA in 2000, has generated about $100,000.

Napolitano and Salmon agree that allowing universities to share a part of the companies will create more jobs in Arizona and start more Arizona-based businesses, while helping both the university and the researcher profit from the invention.

The change will encourage research that leads to marketable inventions, said Kris Mayes, Napolitano's spokeswoman, adding that this opportunity will attract high-profile faculty that, in turn, will attract students.

Jim Morse, policy adviser for Salmon, said nothing is wrong with how things are done, but universities should be given a choice in whether they accept stock or a licensing fee from researchers who start companies. He points to schools like Stanford University, which helped spur Silicon Valley's success. But cases like Stanford are rare, Powell said.

Katharine Ku, director of Stanford's Office of Technology Licensing, said the university's financial benefit from the profit sharing is not significant.

"I think it's nice, but it's not important," Ku said.

The local community, on the other hand, occasionally benefits from Stanford's research, said Geoffrey Grant, Stanford's associate vice president for research administration.

"There is a direct benefit to the economy from the technology that spins off from faculty stepping out and starting businesses," Grant said. "Some are successful and some are not."

Powell said the UA is already promoting researchers to market their discoveries.

"The spinning off of technology into a new company creates jobs and local companies," Powell said. "But we are already doing that right now with this licensing of technology."

The amount of revenue that this option would bring is impossible to determine right now, said Noah Kroloff, policy director for Napolitano.

"I think it just depends on what the company is and what the market is," Kroloff said. "It's not possible to answer until we give it try."


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