Janet Napolitano Hopes UC Can Cash In on Companies, Not Just Research

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UC Berkeley students walk through Sproul Plaza on the UC Berkeley campus in April 2012. (Photo by Justin Sullivan/Getty Images)
UC Berkeley students walk through Sproul Plaza on the UC Berkeley campus in April 2012. (Photo by Justin Sullivan/Getty Images) (Justin Sullivan/Getty Images)

By Sam Harnett 

When Google went public, Stanford University made millions. The windfall came because Stanford had equity: not only Google's intellectual property but also the company itself. This kind of direct investment in a startup was not allowed at the University of California — that is, until now. UC President Janet Napolitano made the change possible by removing guidelines for industry-academic relations. Her action is raising questions about ethics, funding and the future of basic research.

UC Berkeley grad Rachel Haurwitz has an unusual passion: RNA — those molecules that work with DNA to, well, make life work. “I thought RNA was wacky and weird and sounded super-interesting,” Haurwitz says, “and that is what I wanted to study in school.” Now that study is starting to pay off.

While researching RNA at Berkeley, she and her professor discovered a new inexpensive way to edit DNA. It involves manipulating the immune system of bacteria. (Yes, bacteria also have immune systems -- they, too, have to fight off viruses.) Anyway, they realized this innovation could change the biotech industry and make bundles of cash. Haurwitz says, “This is just a fantastic example of how funding even very basic research can lead to translational work that you never would have anticipated.” After graduating, she and her professor started a company called Caribou. But that wasn't always the plan.

Jennifer Doudna is Haurwitz's old professor and current business partner. “I was just a curious scientist investigating what I thought could be an interesting pathway in bacteria,” Doudna says. Her lab has been studying RNA for more than 20 years. She says people would have thought her crazy if she set out with the goal of creating Caribou’s technology. “Initially,” she says, “I wasn't thinking of applications at all.”


Doudna says this is how America has made big science breakthroughs for decades — not by chasing products but by curious investigation. And for decades, schools like UC Berkeley have made money through patents on the intellectual property or IP. (Well, more precisely since 1980. That is when the government passed the Bayh-Dole Act, which lets universities keep profits from patents developed through governmental funding.) Now, however, the University of California hopes to make money in a new way—from the success of the companies themselves.

Carol Mimura is from UC Berkeley's office of Intellectual Property & Industry Research Alliances. She says Napolitano's new policy will allow UC to invest directly in companies that come out of its schools. This is already done at private universities such as MIT, Stanford and Cornell, which, by the way, takes this one step further by turning postdoc pay into a form of angel investment. Company equity can yield bigger returns, such as with Google, but it’s more tied to corporate success than to intellectual innovation.

Napolitano made direct investment possible by removing the 1989 set of industry-academia guidelines. The rescission has roiled faculty — not only because of the change but also because of the abrupt way she did it.

Robert Clare is a physics professor at Cal and chair of the University Committee on Research Policy in the Academic Senate. It’s the representative body where faculty can weigh in on issues like this. He says there was no indication of these sweeping changes and that the official statement made it sound completely benign. “They said that these are just some technical and trivial changes,” he says, “and it is not even going to be brought up to the Senate.” That was in October, after Napolitano had been president for two weeks. She declined to comment for this story.

Clare says the changes are not trivial. He is concerned they will divert resources from basic research — the kind that eventually leads to really big breakthroughs. “I am really worried at a fundamental level that the office of the president is spelling research: T-E-C-H T-R-A-N-S-F-E-R.” Tech transfer — that is, innovations that can be sold to corporations. “We are supposed to be the producers of knowledge,” Clare says, “much more than the producers of widgets.”

The tension between intellectual and commercial pursuits in universities is nothing new. Back in 1918, Thorstein Veblen wrote about how corporate intrusion threatened academia in his memorandum on “the Conduct of Universities By Business Men.” Today, there are tech transfer offices and startup incubators right on school campuses. Faculty members feel the pressure to develop patents, not just publish papers. According to the Chronicle of Higher Education, over two dozen institutions now have policies that award promotion and tenure to faculty that generate patents that sell.

Chris Newfield is a UC professor and author of "Unmaking the Public University." College is increasingly portrayed as a place to train workers and churn out startups, he says. Public schools like the University of California are feeling pressure to keep up, especially amid huge budget cuts. The UC system lost almost a billion dollars in funding between 2008 and 2013. “The public university is becoming more dependent on private revenues,” Newfield says, and subsequently “it is becoming more interested in serving private interests.”

The long-term worries over Napolitano's removal of academic-industry guidelines stem from immediate concerns about conflicts of interest — things like departmental favoritism, or the use of graduate students as labor for commercial research. Boundaries could blur.

Consider Professor Doudna's position. Her graduate students are working on research related to Caribou, a company she co-founded that could profit from that research. School guidelines prohibit the private lab and the school lab from working together, but that is a fine line to walk, especially with the injection of more money into the environment.


Caribou was born before direct investment was made possible. UC Berkeley does not have equity in the company — only its patents. So, if the startup does not hit it big with that intellectual property, Cal won't cash in. Then again, if Doudna's lab had been focused on commercial products for 20 years instead of curious science, there may not have been any breakthrough at all.