Incentivizing German Universities to Capitalize on Their Intellectual Property

In a recent position paper, SPRIN-D, an innovation agency of the German government, proposed that universities license their intellectual property (IP) to university startups in return for virtual shares. This approach is suggested as a practice to work around universities who stall startup licensing deals due to unrealistic assumptions (e.g. lump-sum upfront payment). The problem being solved, however, is only at the end of a long chain of necessary changes, before the specifics of a licensing deal even become relevant.

Let me get at it backwards then. What is keeping German universities from utilizing their IP is that they have no or little incentive to do so. There are no performance goals that require they self-fund from licensing income, and they’ll fight to avoid it because, if they had to, other established and guaranteed state funding would likely fall away.

Universities are expected to create startups. However, the only measure I have ever seen in public performance goals is the number of startups, not the money made from licensing. So those universities are creating startups, as required, but since it is irrelevant whether there are any licensing revenues, these startups are mostly created by Master students (where, in the German system, no licensing takes place).

Startups from the university’s own research are inefficient towards a performance goal of driving up the startup count.

Only if a university’s performance goals would include actual revenues from licensing to startups, would judicious support of those be properly incentivized.

The focus on Master student based startups is not entirely a university’s fault: The easily available EXIST Gründerstipendium, a grant by the German government, is driving up numbers, but in my book is hurting a startup’s chances of success rather than helping them. But that’s another story.

In June this year, I will hold an intensive-track workshop for the Falling Walls foundation, for twenty selected female science talents, on how to fund your startup from public grants. Managing intellectual property and how to negotiate with the university will be part of it. I expect to provide my program to technology transfer units of universities who are interested in it.

One Reply to “Incentivizing German Universities to Capitalize on Their Intellectual Property”

  1. Hi Dirk,

    Thank you for your exciting article. I read with great interest your observation, that universities in Germany are not dependent on such royalty income returns. In your opinion, is this different elsewhere, for example in USA? Possibly because there e,g, students such as bachelor students or master students assign all rights to their university upon enrollment?

    Despite the above-mentioned independence in my daily work (on the side of the licensor university), I experience it as a complex challenge at the interface between German university and industry companies e.g. such as start-ups to develop well, thoughtful, individual (not based on virtual shares) license agreements with the respective customer/company/startup, which on the one hand bring returns to the university and on the other hand enable the founders to get off to a good start at fair conditions but that are also in line with „market conditions“.

    Against this background, I am also interested in your part in this regard at your Falling Wall event.

    Have a pleasant week and greetings from Karlsuhe 🙂

    Dirk F.

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