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Universities Selling Out Important Research to Corporate Overseers

UC Regents recently approved a new corporate entity that will likely give a group of well-connected businesspeople control over how academic research is used.
 
 
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This story was originally published here in the East Bay Express. 

In a unanimous vote last month, the Regents of the University of California created a corporate entity that, if spread to all UC campuses as some regents envision, promises to further privatize scientific research produced by taxpayer-funded laboratories. The entity, named Newco for the time being, also would block a substantial amount of UC research from being accessible to the public, and could reap big profits for corporations and investors that have ties to the well-connected businesspeople who will manage it.

Despite the sweeping changes the program portends for UC, the regents' vote received virtually no press coverage. UC plans to first implement Newco at UCLA and its medical centers, but some regents, along with influential business leaders across the state, want similar entities installed at Berkeley, Davis, Santa Cruz, and other campuses. UC Regents Chairwoman Sherry Lansing called Newco at UCLA a "pilot program" for the entire UC system.

The purpose of Newco is to completely revamp how scientific discoveries made in UC laboratories — from new treatments for cancer to apps for smartphones — come to be used by the public. Traditionally, UC campuses have used their own technology transfer offices to make these decisions. But under Newco, decisions about the fate of academic research will be taken away from university employees and faculty, and put in the hands of a powerful board of businesspeople who will be separate from the university. This nonprofit board will decide which UC inventions to patent and how to structure licensing deals with private industry. It also will have control over how to spend public funds on these activities.

Newco's proponents contend that the 501(c) 3 entity will bring much-needed private-sector experience to the task of commercializing university inventions. Ultimately, it will generate more patents, and thus bigger revenues for UC through licensing deals and equity stakes in startups, they claim. UC administrators also say they have established sufficient safeguards for Newco and that UCLA's chancellor and the regents will have oversight over the entity.

But if last month's regents meeting in Sacramento is any indication, UC oversight of Newco may be less than robust. Several regents, in fact, objected to creating an oversight committee that would keep tabs on the new entity. The debate over the issue concluded after Regent Norman Pattiz suggested that "it shouldn't be called the Regents Oversight Committee. It should be called the Regents'-Encouragement-and-Finding-You-the-Dough Committee."

Critics of Newco say the scheme won't work, and that it will lessen transparency in UC research while undermining the public mission of the university. Putting a board of businesspeople in charge of the university's tech transfer operation also will create conditions ripe for cronyism, they fear.

In fact, that may already be the case. Records show that wealthy investors and influential businessmen with close ties to UCLA and one of the UC Regents — Alan C. Mendelson — are financially invested in companies that currently license university-owned patents under exclusive financial arrangements. Mendelson, who also is a trustee for the UC Berkeley Foundation and has investments of his own in businesses that profit from university-produced research, was one of the main backers of the Newco proposal and cast a vote in favor of it.

The Newco program also could benefit companies like the ones Mendelson and his network of friends and investors own and work for. Many of the UC Regents are also close friends of investors who want greater access to university inventions under more favorable terms, and who want the university to subsidize early-stage business expenses and take financial risks by investing in technology startups.