Coupling cash with knowledge for its own sake

"Universities theoretically value knowledge for its own sake," psychology Professor Marianne LaFrance pointed out. But in a financial environment where utility is valued above curiosity, the reality is far more complex. Yale finds itself scrambling for research money from the government, corporations and foundations, sources that all provide critical funding—but with strings attached. Together, these sources of income provided almost $300 million in 1998, $20 million of it from corporations—more than a quarter of Yale's budget and $40 million dollars more than revenue from tuition and fees. These funds help pay for the people, materials and facilities needed to conduct cutting-edge investigations.

COURTESY OFFICE OF PUBLIC AFFAIRS Professor Marianne LaFrance has studied bad hair days for Proctor & Gamble.

When in September a gene therapy test subject at the University of Pennsylvania died, questions arose. "It would be hard to discount a connection between accidents like the problem at Penn and the rush to develop new therapies," Vincent T. Marchesi, MED '57, professor and director of the Boyer Center for Molecular Medicine, said. "Academics are often under great pressure to produce something in order to renew their governmental funding." And just last month, an Atlantic Monthly article attacked a $25 million deal that gave significant control of the University of California-Berkeley's College of Natural Resources to the Swiss biotechnology company Novartis. These and other recent developments have brought the forces driving university research to the forefront. Meanwhile, the cost of university research continues to rise thanks to expensive material and personnel costs—Yale Medical School employs 10 times as many people as it did when Marchesi was a student, while enrollment has remained constant.

Where government fails

Although Yale possesses vast financial resources, "[its] primary purpose is education," Pierre Hohenberg, deputy provost for Science and Technology, explained. Donations to Yale's endowment, Hohenberg said, are usually bestowed with academics in mind, not research. But because the government pays only part of the indirect research costs—administration, facilities, and buildings that are not specific to the research being conducted—Yale finds itself picking up more than a third of the tab for studies conducted here, diverting funds from purely academic pursuits.

It hasn't always been this way. In 1946, the Research Grants Office was created at the National Institute of Health (NIH) following medical successes in World War II, and it grew rapidly. And in 1980, Congress passed the Bayh-Dole Act, allowing universities to patent the results of federally-funded research. But the portion of costs paid by the government has fallen off, Hohenberg said, and it is renegotiated every year.

The instability of renegotiations in turn creates a planning problem. "It does not take into account the liabilities [such as tenured faculty] that universities have," Marchesi said. Corporate funding, on the other hand, is better tailored to serving universities, and such funding is on the rise.

But corporations pay even less of the indirect costs of research at Yale than the government does. Thus, depending on one's perspective, Yale finds itself either subsidizing corporate development or receiving a small contribution toward research it should otherwise be funding on its own. "Corporations—when they're sponsoring research—it's partly philanthropy, and partly procurement of goods, and exactly which of the two it is is often not completely clear," Hohenberg said.

Corporate subjectivity

Multinational conglomerate Procter & Gamble (P&G) at least had a purpose in mind when it recently commissioned LaFrance to study "bad hair days" for an upcoming haircare product. P&G public relations official Tracey Long said the company interacts with universities in a variety of contexts, sponsoring everything from product development to consumer studies where it sees potential benefits.

COURTESY OFFICE OF PUBLIC AFFAIRS Professor Mark Reed feels that corporate research has not endangered his intellectual property.

As LaFrance put it, "[Proctor & Gamble] could get schlock science anywhere." Instead, they went to her—an expert in the psychological effects of physical self-perception—and worked out a mutually beneficial deal. She provided the company with no guarantee of—or control over—her results. "One should be careful of and cautious about taking monies with strings attached," LaFrance said.

Reaching a common ground is P&G's modus operandi. "We believe the key principle to working with academic researchers is to respect their expertise, and to only ask them to do research which we believe is mutually beneficial," Long explained. "The financial commitment we make to fund the study does not impact the research results. That would not be of benefit to either party."

The path of inquiry

What happens when there is no interested second party for a researcher's work? As LaFrance conceded, "It's always difficult to get enough funding to do basic research where applicability is not immediately apparent to anyone." Basic research, theoretically freed of the constraints of practicality, is often thought to be the source of truly revolutionary discoveries—as well as the inherently valuable knowledge that LaFrance describes—but dollars for such hefty gambles are understandably tight.

"Competition for basic research [makes it] difficult to start new things," Marchesi said. Much government funding comes through practical-minded, goal-oriented sources such as the military and NIH. Americans "become so satisfied and delighted by [practical] applications that we kind of ignore the basic," Marchesi said. Those in position to influence the allotment of funding would hardly dare rock the boat—"They feel powerless to do anything about it."

However, electrical engineering Director of Undergraduate Studies Mark Reed finds the distinction between basic and applied research dubious. "In science—especially in experimental fields where laboratory work costs money—the support dollars must come from somewhere," he said. But researchers never entirely abandon ethics. "Most scientists try to blend what they think is right to do with where the available research dollars are."

To an extent, Marchesi agrees that regular supply and demand forces can effectively direct research dollars. Even when companies target their money, "they're generally pretty agile" because they are accountable to shareholders and their boards of directors.

Indeed, a professor changing direction for the sake of funding might yield positive results, according to Marchesi. The scientist's original goal may turn out to be less fruitful than those areas that have funding allocated for them. "It's usually a good thing for both sides," he said, while adding that it may still be "tricky" to get a good but unconventional idea funded.

Professors may even be missing out on some sources of money. Hohenberg explained that although Yale does well enough to find funding, it can still improve. "If we had more resources, we'd be able to do better," he said. "It's a very competitive world out there."

Protecting ideas

Competition could theoretically threaten the free flow of ideas that is a hallmark of scientific innovation, thanks to the presence of nondisclosure agreements and other restrictions from potential sources of funding. In one helpful measure, Yale, unlike other universities, prohibits deals that delay publication of research results. But Marchesi thinks that the real inhibitor of discourse is competition between colleagues.

Reed certainly seeks to avoid such competition. He considers dealing with corporations preferable to dealing with other academics, who often appropriate his ideas—even from grant proposals—without permission or credit. "In an industrial context, one usually defines the boundaries of what can be exchanged and held confidential very well," he said. "In other settings, it's trust and word of mouth."

Soderstrom said those he works with care little for intellectual property. "Most faculty are not interested in getting rich," he said. "Otherwise they wouldn't be here." Instead, they are "turned on" by changing people's lives.

CIARA LACY/YH The Office for Grants and Contracts, and the Office of Cooperative Research sit side by side on the second floor of 155 Whitney Ave.

All the same, what Jon Soderstrom, the director of the Office of Cooperative Research, describes as a system of "checks and balances" insures that professors with less than noble ideals don't compromise the interests of the University. Standing committees watch for conflicts of interest and other integrity infractions. And temptations do abound. Not only do external funds provide royalties and pay for research, they are used primarily to pay year-round salaries at the School of Medicine and a special summer salary at the Faculty of Arts and Sciences.

But ideas may not even belong to the professor at all. Although copyrights on books and articles are not owned by the University for what Hohenberg terms "historical reasons," Yale has first claim on the patentable inventions that result from research. "Sometimes the professors don't completely understand that," Hohenberg noted with surprise. "It's so obvious that the labs and the facilities are Yale's facilities." Now, though, with Versity.com's recent posting of professors' lectures on the Internet, and attempts by various parties to create online classes, the intellectual property (IP) debate has been resuscitated.

The true role of a university

When it comes to the clear-cut territory of patents, Yale encourages professors to cooperate with the University on the patent process by providing them with a share of royalties, plowing the remainder back into research. Yale has done particularly well in this area, thanks in part to an AIDS drug, Zerit, which has generated over $40 million in royalties. Although Yale capitalized on Professor William Prusoff's invention by licensing it to Bristol-Myers Squibb, a suitable client for an innovation cannot always be found.

Reed recently started his own company, Molecular Electronics Corporation, with professors from several other universities, because there is no company suited to exploit his innovation "I think that's exciting," he said. "But it's about the only way you can do it."

As universities around the country increasingly turn to spin-offs for exploiting innovations, Yale has remained conservative about providing assistance to such ventures. But work to improve the availability of lab space for biotechnology startups and support networks for Internet ventures is underway, encouraged by recent interest in New Haven on the part of biotechnology real estate developers and Yale Internet company incubators. "We are actively engaged in working on this," Soderstrom said. Yale has also recently experimented with trading IP rights for stock.

There's plenty of good work being done at Yale, Soderstrom insists, but it's up to a variety of parties—including professors, adminstrators, and providers of funding—to maximize the intellectual capital vested in the University. "There's a tremendous amount of innovation," he said. "How can we make it faster?"

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