Concepts familiar from grade-school algebra have broad ramifications in computer science.
Harvesting a bumper crop of technology licenses and new company startups that were seeded in the last 10 years, the Technology Licensing Office (TLO) reported a record $21 million in revenues during fiscal 1997.
Coming on the heels of a $12 million year in fiscal '96 which itself was 20 percent above projections, the 1997 performance was fueled in part by a significant increase in royalties on three products and the sale of stock in three startup companies which was taken in lieu of royalties when the original license agreements were made.
"We don't expect to match this next year," said Lita Nelsen, director of the TLO. The previous record for revenues was $16 million in 1991.
RSA Data Security Inc., founded in 1983 by E.W. Webster Professor Ronald L. Rivest, now associate director of the Laboratory for Computer Science, and Adi Shamir and Len Adleman, both of whom were on the faculty of the Department of Mathematics at the time, was a two-time winner for the TLO in fiscal 1997. The firm, which has developed the most widely used key encryption technique for computers, earned substantial royalties for MIT and was acquired last August by Security Dynamics Technologies Inc., of Redwood City, CA. MIT profited from the acquisition by selling its company stock.
"The Technology Licensing Office has done a wonderful job of working with the inventors and their startup company to see that their technology was developed, marketed and licensed effectively," said Professor Rivest. "The technology and its applications are complex, and the TLO was up to the task of structuring arrangements appropriate to this complexity. The efforts of the TLO have been an essential ingredient in the success of RSA."
Two other companies along with RSA produced significant royalties for MIT.
One was Cardiolite, a heart imaging agent sold by the duPont Merck Pharmaceutical Co. which was developed by MIT Professor of Chemistry Alan Davison, Dr. Alun Jones of the Whitaker College of Health Sciences and Technology, and Michael Abrams, who received the PhD in chemistry from MIT in 1983. The company recently received NIH approval for a breast imaging agent called Miraluma.
The other was Richard and Judith Wurtman's Redux,ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½ï¿½an obesity treatment drug brought to the market by Interneuron Pharmaceuticals Inc., of Lexington. Dr. Richard Wurtman is a professor in the Department of Brain and Cognitive Sciences, and his wife is a research scientist in the same department.
Virtual Machine Works Inc., a startup based on programmable gate array technology developed by Anant Agarwal, a professor in electrical engineering and computer science, and graduate students Jonathan W. Babb and Russell G. Tessier, was acquired by IKOS, a public company in Cupertino, CA. Again, MIT sold the stock received in the transaction.
Cambridge Heart of Burlington, MA, founded in 1992 by Professor Richard J. Cohen of the Harvard-MIT Division of Health Sciences and Technology, received a patent for a sophisticated EKG technique. The company, which issued an initial public offering last year, is exploring ways to identify candidates for heart disease at an early stage and those at risk of sudden cardiac death.
The TLO, with a staff of 25, receives about 350 applications a year and grants 60-80 licensing agreements. Last year, it granted 66 licenses.
"The large number of licenses that are granted means that we can expect a fair number of winners over the years," said Ms. Nelsen, who added that it takes five to eight years for a license to mature into a profitable product. "Our emphasis on moving as many technologies as possible into the marketplace, rather than trying to maximize our return on any single one, is beginning to pay off both in products and in financial return.
"Even more satisfying than the financial returns are the 75 products now on the market and the 120 companies which have resulted from our licenses," Ms. Nelsen said.
The TLO was reorganized in 1986 to create a vehicle that would make technological breakthroughs more available for the public's benefit. The office has 455 active licensing agreements.
A version of this article appeared in MIT Tech Talk on July 16, 1997.