Economic Development | Non-State Funding | Technology Transfer | Start-Up Companies

The Technology Transfer Process

The SmartState Program advances South Carolina’s economy by supporting state research universities’ role as engines for economic development through technology transfer.
Technology transfer converts the groundbreaking scientific discoveries of researchers—in this case, the SmartState Endowed Chairs and their research teams—into tangible, marketable products and services.

Technology transfer spurs the creation of knowledge-based jobs—both high-paying R&D jobs to support the commercial development of the technology, and, once a product or service is put on the market, skilled manufacturing jobs for workers who make and sell the product or provide the service. Additional jobs are created in marketing, sales, IT, human resources, and other professional areas.

Such jobs are often established close to where the original discovery took place—in this case, close to our state's three research universities. That’s why the SmartState Program is so crucial to the future health of South Carolina’s economy. The SmartState Program recruits the world’s best researchers to Clemson University, Medical University of South Carolina, and University of South Carolina and puts them in charge of research programs designed to yield the kind of discoveries that will translate into marketable, real-world applications through the technology transfer process. Because these discoveries are taking place in South Carolina, there is a greater likelihood that the resulting jobs will be created in South Carolina.

The technology transfer process can be quite long, taking several years or more. However, the benefits to South Carolinians—in terms of better career opportunities and an improved standard of living—are well worth the wait.

Discovery and Patent

When a SmartState researcher makes a scientific discovery that university technology transfer staff believe may have commercial possibilities, the researcher’s university will file for a patent—a set of exclusive rights granted by the United States government to an inventor (or an assignee) for a certain period of time. In the case of the discoveries made by CoEE endowed chairs and other university researchers, the patent is awarded to the university or universities for whom the researcher is working.

Clemson University, the Medical University of South Carolina, and the University of South Carolina each have a technology transfer office to handle the patent process, as well as the marketing and licensing of scientific discoveries (also called “intellectual property”) that are made by SmartState Endowed Chairs and other researchers working at the universities.

A patent allows the owner of the patent to, among other things, bring the patented invention to market without having to worry about others copying the invention. This means that the inventor or patent holder can recoup and profit from his or her investment in the resources and infrastructure that made possible the invention that led to the marketable product. Often with high-tech products, only the exclusivity provided by a patent will provide enough financial return to justify the sizable investment required to place a product on the market.

Once the patent expires, others can use the invention in their own products or services, or use the patented invention as a foundation for further advancement or refinement, which can result in a new product or service. In this way, the patent process strikes a balance between rewarding inventors for their work, and ensuring that scientific discoveries are eventually made public to allow them to be used by others for further advances that may benefit society.

The patent process can be lengthy and expensive, sometimes taking five years or longer. In addition to U.S. patents, institutions can seek international patents that secure invention rights in all major industrialized countries.
SmartState Endowed Chairs have applied for 605 U.S. and international patents for their discoveries since the program was established in 2002. They have received a total of 89 U.S. and international patents to date.

License and Marketing

Universities seek to license out their discoveries, including those from the SmartState program. With a license, a university grants the right to practice the patentable invention to a commercial entity that will invest the resources required to place a product on the market. The license is acquired by people or companies who will pay to use the intellectual property of the university to manufacture a product or provide a service and then market that product or service, either to a very specific market (e.g., a medical treatment used in patients with a certain type of cancer) or to a broader market (e.g., a device that makes automobiles safer and is used by auto manufacturers to make their cars more appealing).

Often, the parties who purchase the license will start a new company based on the newly developed product or service—this is a “start-up” company. Sometimes the people who license the intellectual property from the university are the people involved in the original discovery or otherwise affiliated with the university. This is sometimes referred to as a “spin-off” company. Still other times, an existing company will choose to license the intellectual property and produce the new product or service, which often leads to a more robust relationship with the university and the region. Thus university technology transfer can lead to economic development for our state.

Product Income

One aspect of the value of university technology transfer is the income the university can generate and then reinvest in resources for future discovery. The university license gives the commercial entity permission to use the intellectual property to make and sell a product or to sell a service. The company that licenses the intellectual property may pay the university for the license through up-front payments, equity in the company, royalties on sales of the product or service, payment of patent expenses, or other means.
Selling licenses for the use of intellectual property can be very lucrative for universities.

According to the Milken Institute, for every $1 a university invests in technology transfer, the university receives, on average, more than $6 in licensing income in return. The inventor of the intellectual property (the researcher) is also entitled to a percentage of the licensing revenue by law if federal funding was used to create the intellectual property.

While the SmartState Program is relatively young in terms of intellectual property generation, USC, MUSC, and Clemson combined already have 55 licenses based on intellectual property from the research of SmartState Endowed Chairs. The universities have received a total of $800,000 in license income to date.