The following article appeared in the Arizona Daily Star on December 5, 2008... or go to our Newsroom for more of HJ3 in the media!

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UA tech-licensing revenue slips
By Dan Sullivan
ARIZONA DAILY STAR Tucson, Arizona | Published: 12.05.2008

The University of Arizona reported lower revenue last fiscal year from licensing its technologies but saw an increase in patents issued and startup companies based on UA-grown technology.

Licenses and options were up 27 percent in the 2008 fiscal year ended June 30, and patents issued are also up 36 percent, a report from the UA Office of Technology Transfer shows. But licensing income fell 25 percent, according to a report to be formally presented today to the Arizona Board of Regents.

Invention disclosures — declarations of potentially patent-worthy discoveries by faculty — are also down 4 percent, while patent applications fell 7 percent in 2008. U.S. patent application dropped 7 percent this year, even though they steadily increased from 2004 to 2007.

Research and development expenditures, a key measure of research funding from government and industry, rose this year to $544 million from $532 million in 2007.

The UA set a record this year with six new startups based on UA technology. The startups are companies that have licenses with the Office of Technology Transfer for foundational intellectual property owned by Arizona Board of Regents.

One successful UA tech spinoff listed in this year's tech-transfer report is HJ3 Composite Technologies, a Tucson-based company that markets a material that strengthens structures against earthquakes, blasts and environmental damage.

Patrick Jones, director of the UA's tech-transfer office, said technology transfer is important to Southern Arizona's economic development and has contributed to the development of companiessuch as Ventana Medical Systems.

Ventana, an Oro Valley-based maker of laboratory instruments and tests, was acquired by drug giant Roche Holding AG earlier this year for $3.4 billion.

Leslie Tolbert, UA vice president of research, graduate studies and economic development, said royalty licensing is measurable, but it's harder to measure all the other ways the UA has an impact on society.

"Licensing and patents are not what drives us," Tolbert said. "The driver is to share new knowledge in whatever way is practical."

Tolbert said the Office of Technology Transfer is working to follow the recommendations of an auditor general's report released in May that said the UA must increase the number of innovations disclosed.

To do so, Technology Transfer hired Nancy Smith as director for corporate and business relations, to help improve the relationship between the business community and researchers.

There are also two new licensing associate positions, in optical sciences and engineering.

Other observers said revenue is not a good indicator of how well tech transfer is doing.

Lawrence Hecker, a longtime Tucson corporate attorney who is active in local high-tech economic development, said the fall in revenue may be related to the troubled economy. He also said there is a lag in payment for investments the UA made years ago.

"The Office of Technology Transfer has not received payment yet for investments it made years ago," Hecker said. "Where the real dollars come in is in future revenue."

The startups being developed today aren't going to see revenue for a few years, and revenue is always going to fluctuate, Jones said.

Mike Cusanovich, director of Arizona Research Laboratories at the UA and a former UA vice president of research, said the licensing-revenue figures are less of a worry than losses of innovative faculty to other schools.

Cusanovich said the UA lost two of his lab's top patent generators in 2007 when they were lured to the University of Louisville. Some of the university's best people have been picked off by other institutions who lure them with high salaries and new buildings, he said.

The Office of Technology Transfer has been around since 1988, but the university's support for it was modest until 2001, Jones said, adding that the office was able to grow because of sales tax revenue allocated by Proposition 301.

The office had a budget of about $1.7 million in 2008, Jones said, but he said he is seeing budget cuts because of the decline in sales tax.

© 2008 The Arizona Daily Star