Firm hand steers MIT tech transfer – Patent licensing has wide impact on Mass. Economy

It’s 9:30 on a Monday morning in MIT’s temple of technology transfer, and Lita L. Nelsen is well into her second meeting. She is swiveling in her red-cushioned chair, peeking out the window at the bleak winter landscape of Kendall Square, and debriefing the troops.

By Robert Weisman, Globe Staff

http://www.boston.com/business/technology/articles/2004/01/26/mits_technology_matchmaker/

Five biotech licensing officers dubbed the BioBunch sit, scribbling notes, in a half circle around Nelsen, 60, the no-nonsense director of the MIT technology licensing office. One updates her on the progress of a materials research consortium he is putting together, gingerly noting the members are squabbling over how to proceed.

"Get one round of feedback and then say, `This is the way it’s going to be,’ " Nelsen declares without hesitation.

Two others report they are arranging a session with the principals of a biotechnology company that is licensing MIT technology but is past due on its royalty payments. Nelsen says she wants to come. "I’ll give you backbone," she promises. "I’m perfectly happy to put my gorilla suit on. A nice gorilla suit, with perfume."

By marrying the assets of one of the nation’s top research universities to the resources of venture capitalists, Nelsen has quietly become the gatekeeper to MIT’s technology riches and a builder of the technology-business ecosystem that is key to the economic growth of the Boston area. She and her team have padded MIT’s coffers by raking in royalties and cashing in stock in high-flying companies such as Akamai Technologies Inc. In the process, they’ve drawn the ire of some inventors rankled by their licensing terms and hard-nosed bargaining.

Last year alone, the office managed 484 new inventions from MIT labs, received 152 patents from the US government, and collected royalties of $26.8 million, according to figures released last week. In fiscal 2002, the most recent year for which national data is compiled, MIT received more patents than any other school (though it ranked second to the nine-campus University of California system as a whole). Over the past 15 years, MIT and two affiliates, the Whitehead Institute and Lincoln Laboratory, have licensed technology to nearly 300 start-up companies.

Nelsen, who joined the office in 1986 and became director in 1993, is the stoker of the tech-transfer engine, thrusting technologies out of MIT laboratories into the marketplace. Her efforts have rippled through the economy, spawning businesses ranging from Akamai, the Internet content delivery company, to Peppercoin Inc., a start-up marketing Web "micropayments" software, to Alnylam Pharmaceuticals, a company developing therapeutics that disable harmful genes. With large companies scaling back on basic research, such start-ups pioneer technologies that are likely to form the underpinnings of the future economy.

MIT-seeded businesses have taken root across the country and abroad, but many are clustered within blocks of Nelsen’s office.

"When you look at the reason many companies are here in Massachusetts, it’s because of MIT," said Scott D. Sarazen, senior vice president for MassDevelopment, the state’s economic development authority. "It’s a direct result of technology that started at MIT."

Nelsen’s office is one of dozens that sprang up at US universities after the Bayh-Dole Act of 1980 gave them title to inventions stemming from federally funded research, which makes up the great majority of research done in academic labs. The licensing offices are referees, balancing the interests of researchers and the groups that fund them, as well as potential investors and the financially pinched universities for which licensing has become a source of income.

Among their challenges is knowing when to negotiate for stock — MIT has had some successes, most notably Akamai, which netted the school a tidy profit of $50 million — and when to grant start-ups "exclusive" rights to technology, a calculation determined largely by whether substantial investment is needed to bring it to market.

The role of Nelsen and her technology licensing office, tucked in an office building above Legal Sea Food, is largely invisible to the public — but looms large for inventors seeking to commercialize their science and investors hoping to capitalize on it.

"What Lita’s really great at is matchmaking," said Irene Abrams, a licensing officer who has worked with Nelsen for 13 years. "People come by — VCs, entrepreneurs, people looking for technology. And she’ll introduce them to the inventors and get them talking."

Nelsen, who earned chemical engineering and management degrees from MIT, can speak the language of all the parties. She retains the street smarts she acquired growing up in the blue-collar Ozone Park neighborhood of Queens, N.Y., where she graduated from public high school before winning the National Merit and General Motors National scholarships that brought her to Cambridge. She wasn’t allowed into the prestigious science high school in Brooklyn that her brother attended. "In those days, they didn’t let the girls in," she recalled.

And she doesn’t mind the matchmaker analogy. "We do have people beating on our doors saying, `What’ve you got that we might be interested in?’ " Nelsen agreed. "And that can be existing companies or venture capitalists looking to invest in the next new thing. . . . We say, `You ought to go talk to Professor X, because he has a technology on which we have a patent. If you fall in love, then we’ll negotiate a license agreement.’ Sometimes we call ourselves a high-tech dating service."

Not everyone is happy with the results. Vanu Bose, the founder and chief executive of Vanu Inc., a Cambridge software radio systems start-up, said he negotiated for two years with Nelsen and her office over his rights to a technology he developed as a doctoral candidate at MIT. The office helped Bose get a patent, but demanded licensing fees, royalties, and a stake in the company. Ultimately, they reached a settlement that gave MIT fees, cash, and royalties — but no equity.

"They’re definitely tough negotiators," said Bose, son of Amar Bose, founder of Bose Corp. of Framingham. "What leaves a bad taste with a lot of people is, at the first meeting, it’s `we’re here to help you,’ but after that it quickly becomes all business. This was very different from anyone else I’ve dealt with at MIT."

Bose said he sees an "inherent conflict of interest" between the office’s dual roles of helping inventors get patents and negotiating licenses with them. "They’re great if you’re a student and you have a patent you want to license to IBM," he said. "But if you want to license it for your own company, you’re sitting on opposite sides of the table."

Nelsen disagrees, and sees the dispute with Bose as "an absolute aberration" atypical of her dealings with inventors. "Vanu’s work was done under federal funding," she said. "And under federal law, MIT owns the technology. We protect our intellectual property but give preference to the inventors to license it. There’s no conflict of interest. Our goal is to get technology into the marketplace."

MIT’s technology licensing office also has its fans. "They negotiate hard, but they know when to stop," said Axel Bichara, senior partner at Atlas Venture of Waltham. "Relative to other universities, they have a sophisticated knowledge of how to get a deal done that makes sense for everybody. You can only do that if you understand the start-up environment."

Officials at MIT downplay the notion of financial benefit to the university as a top motivator for licensing. "The mission is part of our service to society," said Alice P. Gast, the MIT vice president for research. "In the process, we help to bring our inventors’ ideas into the marketplace, and they might benefit monetarily from that."

Gast said Nelsen, who spent 20 years in industry, working for such companies as Amicon Corp. and Arthur D. Little Inc., brings multiple perspectives to the job. "She understands the technology quite well, and also understands the commercial sector," Gast said.

Nelsen is also well connected within the small community of university licensing offices; some of the most important are headed by women. Three — Nelson, Joyce Brinton, director of the Harvard University office, and Kathy Ku, director of the Stanford University office — are friends who have formed what they call the Big Girls’ Club, getting together at least once a year to compare notes.

"People have asked to join, and we say no," Nelsen said, laughing out loud. "Usually it’s guys."

Robert Weisman can be reached at [email protected].
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