Duke Leahey 
When and how did you find your way into tech transfer?
In early 1979 A friend asked me to help him with his resume. It was for a role as an R&D contract administrator at Washington University (WashU). He took another job, but I was so interested in R&D contracts, I applied and got the job as head of Contracts and Grants, which also included a role as Patent Administrator. The office was led by Ed MacCordy who was very active in SUPA, the National Council of University Research Administrators (NCURA), and other associations.
What had you been doing prior to making the leap?
I had been working in R&D contracts for the Air Force (Hurricane Hunters), SAIC (Jet Propulsion Lab), and then Emerson Electric (F-15 RF equipment). I was the lead negotiator for each of those organizations and I was attracted by the opportunity to use this skill across multiple government agencies. I was not then yet aware of commercial R&D contracts with universities.
Why did you make the leap?
I thought that being exposed to all the people and technologies produced by WashU would be exciting, the pay was good, and I got free education for my sons in the future as a benefit.
Tell us about the state of tech transfer at the institution you joined.
Ed MacCordy was doing a good job as the Associate Vice Chancellor for Research and as a side duty he was also the Patent Coordinator, and I was the head of Contracts and Grants - meaning that I was at least involved in some way with negotiations with industry when I started working there. While we were well funded on the contracts and grant administration function, our total budget for salary and patent filings was $15,000 per year (yes you read that right). That covered part of Ed’s salary and left about $5000 a year to file patents. That budget was unmoved from 1979 until 1992. It allowed us to file on two patents per year. I think Ed had only negotiated one license when I came on board.
Until Bayh-Dole was passed, we operated under an Intergovernmental Personnel Act (IPA) with the National Institutes of Health (NIH). Other agencies, we had to request they assign IP rights back to the university, which they did on several occasions.
This lack of funding and institutional commitment to tech transfer was also coupled with another issue – at WashU, like at Stanford and somewhat like the University of Wisconsin, faculty owned their own technology, not the university (After regulatory changes requiring the university to take title to new discoveries, every government and industry contract or grant, we had to have every principal investigator (PI) sign a project participants letter agreeing to let the university own any inventions).
Especially in the Medical School, the faculty did not like patents and licensing. They wanted their technology donated to the public. It took over a decade, but we finally convinced the faculty that donated technology took 15-20 years to get into public use, mostly through publications of the innovation, while licensing patented technologies only took about seven with an exclusive license.
And the fact that WashU faculty would get 50% of the royalty income as personal income and 20% would go to their lab, was no incentive for them. In fact, they felt they would be punished by the Med School administration and could adversely affect their tenure. But we convinced them at the time, it wasn’t about money, it was about getting their technology into public use. That’s the argument that won them over.
What was your vision of tech transfer back then?
My early years were focused on getting industry sponsored research and we were successful because of the unique relationship we had at the time with Monsanto. Over a 10-year period, we went from $5M per year to over $20M per year because we marketed the research programs rather than the patent program. We thought licensing would occur naturally as a result of these R&D contracts but that was rarely true. The sponsors mostly wanted answers to questions and to hire graduate students and the inventions were frequently byproduct types, which a sponsor might use, but would not be the manufacturer. So we needed to really form a new technology transfer office, which I started in 1985, while also remaining the head of Contracts and Grants for the university and med school.
What were some of the issues you faced in the early days?
The early days were mostly spent negotiating ownership of IP prior to Bayh-Dole, payment of royalties for unpatented tangible research products (like cDNA clones, hybridomas, etc.), and removal of publication restrictions. In 1980 I negotiated one of the first agreements in ag biotechnology where WashU owned the IP and granted an option for its use (and thus later became my first licensed invention which was virus resistance in plants by Roger Beachy). It was an educational process, rather than a negotiation.
We had three rules – no violations of academic freedom, the company had to pay true costs with full overhead for R&D, and the technology had to be practiced, or we recovered it to license elsewhere.
One other major issue was that the University General Counsel wanted nothing to do with R&D contracts provided that we had a couple of his approved clauses around insurance and indemnification. He was not involved in drafting agreements or negotiations, which was my domain. Ed MacCordy also insisted that we write our agreements from scratch. He would always say that we start with a blank sheet of paper (written on a royal typewriter no less, then later an IBM Selectric I eventually convinced Ed to buy us a computer). But he was against model clauses or model agreements. Every agreement was unique.
What were some of your early successes?
My earliest success was the negotiation of the Monsanto Ag Biotechnology Agreement followed two years later in 1982 by the Monsanto BioMedical Agreement, which for two decades was the largest financial commitment made to a university in an R&D contract. The agreements were the first and second times that Monsanto agreed to allow Wash U to own the intellectual property and pay royalties for unpatented technical developments. These agreements were then followed by additional R&D agreements the Mallinckrodt WashU Hybridoma and the Monsanto WashU Hybridoma agreements. These pre-Bayh-Dole agreements were instrumental in getting the chemical industry to respect the intellectual property rights of universities.
From one of these agreements came the CK-MB (Creatine Kinase MB) and Troponin heart attack diagnostics which became the gold standard with the onset of automated analyzers. After determining that the diagnostics market was permanently fragmented and wanting to get as broad a market penetration as possible, we licensed over 20 companies non-exclusively, giving us 80% of the hospital market, and bringing in tens of millions of dollars which were used to further improve those diagnostic tests. Note, we were heavily influenced by Stanford’s Cohen Boyer non-exclusive licensing approach.
The TMO 5% cut of royalties led the way for filing new patents during the decade after the initial licenses. There were other successes in human and animal health, technologies we licensed in the early 90s which are still in use today, benefiting millions of people. One interesting additional success was a recombinant follicle stimulating hormone which aided in fertility treatment.
Another major success was in July 1985 when we started one of the first university jointly owned venture capital companies – the A/W company – or the Moshe Alafi/WashU company. After a botched negotiation with the University General Counsel, Ed MacCordy and I took over and made sure the agreement met institutional requirements, especially around academic freedom and publication rights. I became the first liaison officer, and we later started five companies, two of which were bought out successfully.
At AUTM several things changed. Meetings got better – more organized, better content, more professionalism. And there were little things – I was the first to have annual meeting sessions recorded and offered for sale; the first to have a band (it was a quartet I hired for a New Orleans meeting), the first to have a rock band (The Infringers).
Some of your early failures?
I don’t see my efforts at AUTM or in my job marketing and licensing technologies. We were a big success when you look at the few resources we had. But, you know, I was like a dog with a bone – never give up. I never prematurely ended a negotiation during my 18 years at WashU. And unlike some of today’s universities, I would never let financial terms get in the way of closing a deal. One VC from San Franciso that we worked with called our process “negication” - negotiation through education. We would sit with potential licensees and work with them until they fully understood university policies, and why certain conditions such as conflict of interest, publication, indemnification, and others had to be met in order to have an appropriate relationship with a university. It is still my main approach to negotiations today.
But my failure, like many in this business, was internal – not managing the expectations of my constituents, the faculty, not convincing university management of the importance of technology transfer. In fact, senior administrators at WashU hated what we were doing – their fear being that NIH would start reducing grants by the amount of royalties received. The Association of American Universities (AAU) and the Council on Governmental Relations (COGR) were helping to spread this fear. We eventually succeeded in getting respect for the TMO function, but it took years. And the administration felt the licensing income was minuscule compared to the 100s of millions in R&D support. To university management, we were creating more problems than the value created by licensing technology.
What was faculty’s attitude to tech transfer back then?
The only people who wanted to participate were from the Engineering School and the Biology Departments. Otherwise, technology transfer was persona non grata in both Arts and Sciences and the Med School. The faculty owned the technology, so it was theirs to give away by publication or through consulting (surgeons were the worst here – they gave everything away for a $5K consulting agreement).
And then there is they typical faculty attitude that we could never do as much for them as they wanted, ignoring the fact that we were underfunded, understaffed, yet unappreciated that the OTM at Wash U were leaders in the field.
When did you start to get involved with SUPA / AUTM?
While I didn’t become a member until about 1984, I went to D.C. for the ‘81 meeting and went to every annual meeting until about 2000 or so. But I started working with Ed MacCordy and others on some Bayh-Dole efforts in 1980. I remember working with people like Howard Bremer, Roger Ditzel, Marty Rachmeler, Ray Snider, Larry Gilbert, Spencer Blaylock, George Dummer, Marv Guthrieand Joe Allen, informally trying to promote our position on university ownership of intellectual property rigths to congress, the federal agencies, and organizations like COGR, AAU, SRA and NCURA, etc.
Who were some of the leaders of AUTM then?
Ed MacCordy, Howard Bremer, Marty Rachmeler, Marv Guthrie, John Preston, Roger Ditzel, Larry Gilbert, Lita Nelsen, Kathy Ku, Steve Atkinson, Teri Willey, Joyce Britton, Ashley Stephens, Karen Hersey and a few others whose names now escape me in my old age 😉.
What were some of the issues the organization was facing?
Externally - Ownership of IP was foremost, followed by publication rights, conflict of interest regulations, right of universities to royalties, insurance and indemnification, the influence of corporate sponsors on academic research.
Internally – The right of the university to own IP (vs faculty ownership), the right of faculty to get a royalty split as personal income, overhead funding for industry funded R&D . Consulting was frowned upon until a good number of Med School Chairs were given very large consulting fees as part of the Monsanto BioMedical Agreement, but then suddenly consulting was OK, however within limits. This also raised some significant conflict of interest concerns, and our office was initially the focal point for resolving conflicts.
What were some of the issues the profession was facing?
Professional development. And this is where I benefitted from AUTM the most, when I became VP of Professional Development at AUTM. There were simply too many holdovers from grant administrators becoming licensing administrators. They did not know how to evaluate an invention, how to value it (John Fraser and I gave one of the first valuation courses at AUTM and LES), they had no experience in drafting agreements or determining royalty rates, etc. With Lou Berneman and dozens of others, we started the AUTM Tools course to teach people the basics of licensing; as head of the planning committee, I reengineered the summer meetings, breaking them into regions, so that lower-level staff could participate in educational sessions; and during the period of 1980-1997 I gave over 150 seminars on subjects such as negotiations, R&D contracts, licensing, patent due diligence, and venture capital based startups.
I also thought there should be model agreements which I both provided to AUTM members as well as the Government University-Industry Research Roundtable, where I was one of the principal writers of their model U-I research agreement, where for the first time, the chemical industry, especially DOW, DuPont and Monsanto among others, finally accepted that universities would own the IP discovered under their sponsorship.
Outreach was a big issue. I gave over 100 seminars and presentations on licensing, university industry contracts, IP filing strategy, valuation, early stage startups, venture capital and marketing inventions. I not only taught licensing courses at AUTM, but to the Licensing Executives Society (LES), NCURA, SRA, and T2 members as well to help cement our progressive issues in every agreement.
Finally, my administration was the first to make a major effort to expand AUTM internationally. We had representatives go to Japan, Australia, Africa and the EU.
Did you decide to get involved with any particular issue?
If there was an issue, I was there. Ed MacCordy would bring me in for every fight. After one particularly difficult negotiation with AAU, which wanted to stop us from publishing the Royalty Survey, and backed by COGR, I was called into a VP Public Affairs office and told that the Chancellor said I could be president of AUTM or Director Licensing, but I could not be both. Well, I stuck it out, AAU came to our way of thinking and history was made. It was the second time I was threatened with losing my job over my AUTM activities and the Wash U administration frequently made it clear that the University did not support AUTM’s initiatives.
What were some of the big Issues in your early day?
Personally, it was getting the education I wanted in all factors of contracts, licensing, and venture-funded startups. It was too piecemeal, and I had to attend conferences at multiple law schools to get want I wanted from my education in contracts and licensing (I used to always have Corbin On Contacts with me)!
Nationally, as I mentioned earlier, it was the right for universities to own IP, the right for faculty to publish, the right to receive royalties, the right for universities to get contracts from industry, etc.
When did you start volunteering with AUTM?
I started working indirectly with SUPA helping Ed MacCordy in 1979, but it was not until 1981 that I think that I went to my first meeting. I started working with the Board in 1984 and became a Trustee r after the famous San Diego SUPA vs AUTM Board Meeting.
What was your first Committee position?
My first committee I think was the Planning Committee in 1988 and then around that time I was Committee Chair for the 15
th Annual Meeting in New Orleans. I planned Annual meetings in New Orleans and later Phoenix when I was President, and scouted meeting locations for three other annual meetings and four reginal meetings.
Your first Leadership position?
I became the VP, Professional Development in 1991.
Your first Board position?
I became a Trustee right after the infamous board meeting in San Diego over the name change.
Who was on the Board with you?
Marty Rachmeler, Lita Nelsen, Joyce Brinton, Walt Haeussler, Karen Hersey, (Howard Bremer? – he might have been there in another role). Sorry, old age has gotten me!
What were Board meetings like back then?
Until the San Diego meeting, I always thought of them as informal and friendly! HA! The SUPA to AUTM name change pitted the old timers against the newbies – it was almost a generational fight. I think the effect made future board meetings a little more formal and organized.
What were some of the issues the Boards you were on wrestled with?
The big one was the result of a special board meeting I called as President in 1992 to review AUTM’s long-term vision and mission. I especially wanted to promote the education of new members, which we had started with the Tools course and then recognizing in the Tools course, there were no standard teaching materials, no books to read that focused on university tech transfer. This became the idea then to develop the AUTM Manual, which had been discussed previously at board meetings. It was a huge undertaking with contributions from over 50 people. Then I wanted to update the Royalty Survey to something more useful than listing the royalties. I wanted workload and success metrics. How many people in TT, what’s your budget, how many contracts/licenses, what royalties did you receive, etc. All this was followed by a new Benefits Survey to show what technologies universities had commercialized for the benefit of the public.
There was quite a bit of pushback from the Board due to workload issues, but Walt Haeussler helped me champion these causes, and we convinced the Board that we were on the right track.
The Manual became the biggest seller of all time (sadly my name is not associated with it). And the Survey became controversial, because we did not really analyze the data for workload metrics, and royalties seemed to be a better way of tracking success, rather than public benefit.
What are the biggest changes you’ve seen in the profession since you entered it?
The movement of licensing from Contract and Grant administration offices to independent technology management offices. One thing that emerged, and that I heavily promoted, was that tech transfer was a perfect home for women, for PhDs in various sciences, for MBAs looking for startup opportunities. The transition from grants professionals to licensing professionals over a 10-15 year period was a true boon for the profession. This allowed universities to perform due diligence on new inventions as we gained scientific expertise in the TTOs.
The negative I have seen though, is by compartmentalizing technology transfer – a part of government or industry R&D – is that it is too focused on licensing, on financials, or royalties, rather than things that benefit the university more – i.e., paying faculty salaries on industry contracts and getting full overhead – is much more important to a university than getting royalties for instance. And multiple times I have had a university walk away from a negotiation because they could not get a 5 or 6% royalty, when clearly industry standards were much less. Before this I had never ended a negotiation over royalty rates or milestone payments. The companies then went on to license other technology and frankly, those universities, now years later, never licensed the technologies that they overpriced.
What do you wish might have turned out differently?
The Royalty Survey being used as royalty competition. It seems too often that it's all about the money now. And you could see that over the years at the Board level. Recall, past presidents were invited to board meetings, and we had a strong “it's about public benefit” influence. We were allowed to speak up during the meetings. Then in the mid-90s, we were allowed to attend the board meeting, but not speak until spoken to, sort of thing. After a particularly difficult session about corporations funding our annual meetings, and past presidents staunchly against that, we were disinvited to future meetings but would be briefed after board meetings on the discussions. Somewhere along the way, AUTM lost its people of conscience. That was in the 90s but not having attended for some years, I do not know that state of board meetings today.
Where do you see the profession in the next ten years?
I have been out of the profession for too long to know, but I expect more professionalism, more people with industry and venture capital experience in tech transfer roles.
What is the biggest challenge on the horizon you see for our profession?
It’s always been the same thing – matching of interests. With information becoming more widely available, matching technologies with the right company can only improve with experience and available data. The other issue is valuation. While there are moves to provide more access to royalties, milestone payments and equity data, small and medium sized universities do not have consistent access to comparable transactions making negotiations difficult.
Describe the main challenges either internal or external to the Association.
In the past we were challenged by the Department of Commerce, attempting to reverse the Bayh-Dole Act, or limiting the right of universities to own industry sponsored IP. AAU, COGR, and others fought us over publication of the Royalty Survey, believing that NIH would reduce grant awards by the amount of the royalties received.
Current challenges include too much emphasis on money and not enough on public benefit, especially faculty inventors, department chairs, and deans. Universities investing in their own startups presents some interesting conflict of interest issues. Federal government’s potential decrease in R&D funding under the Trump Administration.
With the new federal administration, the biggest worry is cuts to traditional sources of research support including overhead and this may put more focus and pressure on technology transfer and industry sponsored research support going forward, while at the same time, cutting the OTM budgets.
Were there particular people/viewpoint/mechanisms that were important to frame the Issues and offer options for responses?
Yes, you can look at the list of early influencers and board members for the viewpoints that helped build technology transfer internationally. The big influencers were the TMO leaders at MIT, Stanford, Wisconsin, Penn, Harvard, Mass General, Northwestern, UC. Wash U was in that league early on.
What was the outcome?
Today, Universities own their technologies. Local economic impact became part of the mission of each university. NIH did not penalize grantees by subtracting royalties from grant awards. As tech transfer policies because ubiquitous, companies and VCs became comfortable having universities as partners.
What advice would you give future Boards if the Issue arose again?
AUTM has a significant role in helping educate our main constituents about the economic impact of technology transfer, from elected officials to government agencies, to the public.
There is a financial crisis at universities and research institutions today because of the actions of the current U.S. Administration. It’s time for AUTM to take on a significant lobbying role to educate our elected officials to the catastrophe about to befall universities.