The Unfair Advantage at RIT: Sponsored Research Services

An interview with RIT President Bill Destler and PAETEC ASG President Jack Baron

• By Dian Schaffhauser
• 04/24/08

When Bill Destler was named president of Rochester Institute of Technology in March 2007, he summarized his vision for the Rochester, NY school this way: "Take advantage of your unfair advantages."

What he saw when he began looking around the campus, he recalled recently, was a lot of faculty with corporate experience and a lot of students doing applied work. That's when the nugget of an idea came to him: developing a program whereby corporate sponsors could hire the school to do research and development.

But unlike most such university programs around the country, this one has a few twists: First, the sponsoring company can keep the intellectual property developed in the course of the R&D work. Second, the pricing scheme is quite simple: $20,000 per quarter for every student and faculty member assigned to the research project. And, third, the legal fodder to set up the structure--forms, agreements, and contracts--are freely available on a public Web site.

In October 2007, shortly after he assumed the top post, Destler put together a small working group to establish the model he had in mind. In January 2008 the program launched as "Corporate R&D at RIT" and two months later had its first corporate sponsor: Rochester-based telecommunications firm PAETEC.

Recently, Destler and Jack Baron, president of PAETEC's Advanced Solutions Group, spoke to Campus Technology about the program.

Campus Technology What was the genesis for the partnership?

RIT President Bill Destler: RIT has been looking to try to take a leadership position in defining a new way for corporations and academic institutions to work together on research and development projects. We came up with this idea--what we're calling "Corporate R&D at RIT"--which I presented for the first time at an RIT board of trustees meeting. Arunas [A. Chesonis, PAETEC chairman and CEO] was at the meeting and said, "Sign us up!"

CT: Why was a new structure necessary?

Destler: For many reasons. For one, the attempts by university faculty researchers and researchers at companies to work together on topics of mutual interest have been stymied for many years in this country in large measure because the lawyers can never agree on the contract.

Almost inevitably the stumbling block is on who will own what. Companies aren't interested in spending their corporate cash funding research and development and then having to turn around and pay more money to license the technology they funded in the first place from the very university they worked with.

It occurred to me that universities need to remember that they are tax-exempt public service organizations. We have a certain duty to try to perform services for both the private and public sectors, and that we might do well to offer a more flexible approach to the question of who would own what as a result of joint research and dev efforts.

Jack Baron, president of PAETEC's Advanced Solutions Group: There's been a model for many years around higher education, and it kind of stems from what happened so many years ago with the Florida Gators and Gatorade. The Gatorade story has become the Holy Grail in higher education because so much money has come back to the University of Florida as a result of the patents associated with Gatorade itself.

If you look across higher education and partnerships that have or have not occurred between business and higher education, a lot of those relationships have sought to become the next Gatorade for the university, with the university focused on obtaining royalties for many years to come. But the dream hasn't been realized.

Destler: Very few universities or colleges have even made enough money off of their intellectual property royalties to pay for their intellectual property office!

There are just a few examples of schools that have extraordinary success in one or more areas. Usually it's the pharmaceuticals.

It struck a lot of us as being strange that we weren't trying to be more cooperative. Under the plan we offer at RIT, the companies do pay a modest upfront fee--to sort of compensate in advance the university for any intellectual property generated under the contract even if there isn't any intellectual property generated. We get an upfront payment in lieu of future royalties.

CT: What are the basics of the partnership between RIT and PAETEC?

Destler: We'll try to identify areas where they have ideas that they'd like to advance that will require additional research and development before they can be turned into real new products and services. We'll see if we have any expertise that could help them move toward that direction. Then we will basically agree on a statement of work and work with their people to carry out the research and development and try to further the development of new products and services to come out of PAETEC

We're offering our faculty, students and facilities at what we feel is an attractive rate. There's included a small upfront payment for any IP generated from the project which might normally be argued about between eh two organizations. In return for that small upfront payment, we agree in advance that PAETEC will own any IP coming out of that work.

Baron: There are two goals coming out of the program. To streamline the negotiations that often slow collaboration between universities and companies like ours while still having some very measurable results. And from a business perspective, we now have access to some extraordinary minds at RIT, many of whom are perfect for PAETEC long term in terms of hiring. We have over a 100 RIT grads working at PAETEC now. We have access to the faculty as well. Ideally it's going to be at a much lower cost than people we'd bring in from the outside. We'll still do R&D as well with employees we hire. This represents an opportunity to use some of that IP more efficiently.

CT: This is a million dollar agreement. What's that pay for?

Destler: It's a pledge by PAETEC to work with RIT to identify projects, and each project would be separately funded based on the requirements of the project, how much time it would take, how many people would need to be dedicated towards it, and any costs of supplies or materials or equipment that might be needed for the project...

Baron: The first project [RIT is] going to work on for us is mobile devices--PDAs, and cell phones and managing the usage in the plans associated with those devices. That's been a big issue for us... We have customer advisory boards in over 40 of our markets nationally. Just as a result of our most recent acquisition, we're in 82 markets across the country...

One of the biggest problems they bring up with us is the difficulty they have in managing those mobile devices--all the plans associated with those devices from various carriers, as well as the devices and applications on those devices. This software the RIT folks are going to be working on with us, for us, will help address those concerns and those issues.

CT: PAETIC has a research division already.

Baron: Within this area that we're talking about, specifically, the PAETEC software group, we've got 16 software engineers inside that group. The issue is that they are very busy full time working on new features and new product enhancements for our existing product. This opportunity is really a new path we're charting in the mobility realm. This is a way for us to gain access to some of the great intellect at RIT and not have to take that kind of work inside and divert some of our existing engineers to that work.

Destler: RIT probably has 150 faculty and a thousand students working in areas of interest to PAETEC. That represents an intellectual reservoir that PAETEC can access at relatively modest cost. The institution is already paying the academic year's salary to these faculty. The students working on these projects are typically either advanced undergraduate or graduate students, and they tend to come fairly cheaply. It can be a cost-effective way for PAETEC to operate and to ensure that our faculty and our students work on the most interesting problems as well.

CT: The pricing structure is fairly straightforward: $20,000 for one student and one faculty advisor. Is that money going towards the financial support of that faculty person and that graduate student?

Destler: Some of it, yes. It's shared between the faculty, the student and the institution. If there are other direct costs, for example, if we need to purchase some computers, that's covered as an additional fee. Supplies and equipment that we need to purchase, PAETEC would have to reimburse us for. The basic agreement for personnel is fairly simple.

CT: Does the company get veto power over the student or faculty member?

Destler: They don't have to agree to anything. The faculty and students don't have to agree either. This is totally voluntary on all parties. The goal is to get people together who are excited to work together, who think the projects are interesting, and who think they can make a contribution...

CT: It's such a new model. Can you point to any other school that has structured something as plain and straightforward as this?

Destler: Not that I know of, and that's why we did it. We want to try to put forward a new paradigm. I think the model will make some schools nervous. The schools most covetous of their intellectual property from their research activities are the ones with medical schools, because the greatest promise is for pharmaceutical and other medical specific devices, in terms of making money on them for institutional purposes.

I've already gotten a lot of interest in this program, not so much from other educational institutions, but from other companies who are increasingly saying, "Why wasn't this available five years ago?"

CT: What do faculty and students think?

Destler: The typical faculty reaction is one of great enthusiasm: "It's about time." Many of them have had experiences where they had worked out an agreement to do some work with a company and found the lawyers wouldn't sign the contract. So it's been frustrating them. In a few cases, [we have] faculty with well established research programs funded by the federal government. Under those circumstances, they get to keep the intellectual property, and they say, "Why should I give it up?" Our answer: This is an entirely voluntary program. We're not forcing anybody to do anything. We're providing another alternative to working with industry that will have attractions to academia and to industry. It's one of the arrows in our quiver.

CT: There are a number of documents on the web site, such as non-disclosures and other forms. Were these developed by RIT or was PAETEC involved?

Destler: We got feedback from companies. PAETEC being the first signer has been very important in helping us develop these kinds of agreements. But we have also talked with other companies to try to make sure we had in there what they thought they needed in terms of protection of their own intellectual property. We had what we thought we needed. For example, we're basically an open place. We eventually want to be able to report on the work we do. So we have agreements in there about how a company can request a delay in our publicly announcing the results of our work. But the delay cannot be infinite and will be negotiated...

One of the things that corporations have always had a hard time dealing with in academic institutions is the area of the longevity of projects. Traditionally, universities have thought of sponsored research project as being appropriately timed as the period of a PhD thesis--which is about three years. That's usually a much longer timeframe than a corporation that's in a competitive environment can allow, especially if they're working on ideas of some current interest.

Because we happen to have a very large number of advanced undergrads and applied master degree students who are looking for projects that are year's duration or less, we feel like we are ideally suited to work with companies on shorter duration projects...

CT: How involved does the sponsoring company get in the day to day or weekly management of the research?

Destler: The model we've adopted is that the student would be co-advised by a faculty member who would be the official academic advisor of the student on campus and a corporate staff member. This student would be really interfacing on at least a weekly basis with both the company and the faculty supervisors.

CT: Do you have more than one project going right now?

Destler: I'm not at liberty to announce names, but we have several that we've signed up.

CT: Will other universities adopt this?

Destler: I hope so.

CT: So you're not hanging out there by yourself?

Destler: I don't mind hanging out there by myself. I think it'll give us some competitive advantage. The country would be better served if we were able to make better use of the research and development assets in our universities and colleges to the benefit of our economy. The way that has to happen is through interaction with the private sector...

I had a meeting with a large number of faculty to discuss this program not too long before the actual announcement we had with PAETEC, and I asked the faculty to raise their hand if it was something they'd consider doing. Almost everybody raised their hands. One or two said, "I already have a big research project funded by the federal government. I don't need to get involved in this." That's understandable.

Baron: As you can tell, this is very innovative. RIT really has a history of innovation.

Destler: So does PAETEC, by the way.

Baron: We've had a great relationship with RIT for a long time. But it really came out of Bill Destler's mind. I think it's going to be embraced by other progressive universities around the country.