The National Science Foundation has estimated that 28% of the information processing products, 37% of the pharmaceutical processes, and 44% of the pharmaceuticals on the market today derive directly from university research. Single companies create annual research budgets in the hundreds of millions of dollars by allocating to research 2–10% of their revenues, a percentage identical to the typical royalty rate. Yet none of our great research institutions receives royalty income in excess of $15 million, and most receive under $1 million. Certainly, our universities and their faculty could enjoy greater benefit from the transfer of their technology to the private sector. Such expectations account for the explosive growth of university technology transfer programs.

We would define the mission of technology transfer as (1) to bring university inventions into public use with maximum integrity, effectiveness, and speed, and (2) to maximize the financial return to the university and the inventor. This article will describe “active licensing,” an approach to technology transfer that we have found to be more effective and that we feel is more rational than the paradigms in use at most institutions.

Figure 1 presents the commercial value of technology as a function of incremental time and cost investment in development of the technology.