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A new culture at ORNL blends research with commercialization.
There is no question. Science brought Jeremy Smith to Oak Ridge National Laboratory. Smith, a biophysicist, begins his appointment October 1 as the first joint Governor's Chair appointee at the University of Tennessee and Oak Ridge National Laboratory. A British native drawn to ORNL from the University of Heidelberg in Germany by the Spallation Neutron Source, Smith will use the new accelerator to support his research at the Joint Institute for Biological Sciences, located on the ORNL campus. He also will take advantage of the Laboratory's escalating supercomputing power, using simulation to aid his study of biological molecules. However, Smith's interest in the properties of proteins and enzymes extends beyond the confines of the laboratory. Twice, he and colleagues drew up business plans to commercialize methods they had developed to design drugs computationally. The plans received "very enthusiastic" response from venture capitalists and the techniques "looked quite promising and still do," Smith says. Although in both cases start-up funding was promised, he did not pursue the businesses because circumstances did not permit—and, he adds, "Starting a company takes a lot of time and effort." Smith's desire to see his research applied to the problems of everyday life has become increasingly common among today's top researchers, who often make commercialization part of their check-off list when evaluating a new job. At Oak Ridge National Laboratory, UT-Battelle has been working to develop a technology transfer program as robust as the science the Laboratory seeks to commercialize. "An inevitable outcome of doing world-class science and technology is that commercial opportunities will arise. We should pursue those opportunities with vigor," says ORNL director Jeff Wadsworth. "I am always very interested in how science can be commercialized in different countries with different systems," Smith says. "My impression is that many researchers would like to do that kind of thing if they saw a clear and uncomplicated path. Many of us want to be directly and immediately useful to industry, in addition to doing the conceptual groundwork of basic research." Offering a successful tech transfer program is key to the Laboratory's efforts to attract today's leading scientists and sustain a position among the world's top research institutions, says Alex Fischer, director of ORNL's Technology Transfer and Economic Development office. Fischer spent time with Smith during the recruitment process, taking him to a UT Lady Vols basketball game and chatting him up on the Laboratory's commercialization program. "More often than not today's top recruits are asking hard questions about commercialization. They are asking about the support structure and whether commercialization is something in which the Laboratory really believes," Fischer says. "This group in many ways represents the Laboratory of the future." A Culture Shift For much of the last 63 years, since the Laboratory's World War II beginnings as a cloister for scientists secretly helping the Manhattan Project fuel the atomic bomb, technology transfer was not a mission of ORNL. In 1980 Congress began pushing to move research at Department of Energy labs into the public domain via commercialization. A series of laws, starting with the Stevenson-Wydler Technology Innovation Act and closely followed by the Bayh-Dole Patent and Trademark Act, paved the way for DOE technologies to be commercialized. Subsequent legislation clarified and expanded the tech transfer mission. The most recent was the Energy Policy Act of 2005, which established a technology transfer coordinator for the Department of Energy to emphasize commercialization at its national laboratories. Early initiatives were aimed at creating partnerships with private industry through either cooperative research and development agreements, CRADAs, or work-for-others arrangements. These programs allow private companies to solve technological challenges by using the Laboratory's facilities and researchers. ORNL also began licensing technology to industry. Early successful tech transfers included a super-tough ceramic now used to make commercial cutting tools and corrosion-resistant chrome-moly steel that is now found in utility boilers and oil refinery furnaces that produce unleaded gasoline. In 2000, new ORNL management contractor UT-Battelle brought renewed emphasis on making ORNL not only a first-rate center for scientific research, but business-friendly, as well. The partnership between the University of Tennessee and Battelle married Columbus, Ohio–based Battelle's seven decades of spinning basic research into marketable products—photocopy machines, compact discs, bar codes—with the state of Tennessee's desire to leverage a partnership with the Laboratory into a dynamic asset for technology-oriented capital investment and high-paying jobs. "Two governors, along with the Legislature, have invested a lot of money in the partnership between the university and this Laboratory," Wadsworth says. He cites a $28 million sales tax exemption on construction materials for the Spallation Neutron Source, $30 million to construct three joint institutes in biological, computational and neutron sciences at ORNL, $15 million to equip a Joint Institute for Advanced Material Sciences at UT and $10 million in matching money to establish UT-ORNL Governor's Chairs in the four joint institutes. "The reason they made these investments is not because they want to see new buildings," Wadsworth says. "The Governor and the Legislature, along with many of us, believe that there is an inevitable tie between science and technology investment and economic development." David Millhorn, vice president for research at the University of Tennessee, agrees. "What is really important to the state is to have an environment that will incubate new companies and add jobs," he says. "Education, new jobs, a better quality of life—that is the endpoint. The people own us both, so whatever we do should benefit the people." Robert Brown, chief operating officer for the Department of Energy's Oak Ridge Office, emphasizes that commercialization is part of the agency's responsibility to the local community. "Ethically, I think all of us believe we are indebted to communities that host operations like the DOE and that we need to return any advantage of those operations that we can," Brown says. "It's the right thing to do." UT-Battelle's winning bid to manage ORNL contained a commitment to spin out 10 new companies during the first year of operation. In the six years since, technology transfer efforts have expanded beyond the creation of start-ups. "One of the things we have been discussing is why this region, with such a tremendous collection of technologies, has not become the next Silicon Valley, ‘Nano Valley' or ‘Computing Valley,'" Wadsworth says. "We determined the region lacked three fundamental things." The first is entrepreneurial spirit, a basic culture in which workers expect change and are willing to take risks, he says. The second is venture capital. And the third, Wadsworth stresses, is "opening up the Laboratory in a way that allows people to believe they can work with us. This includes both physical access on site as well as a minimum of bureaucratic hassles." Modernization of the Laboratory's aging physical plant was important to create an inviting, open atmosphere for both researchers and businesses. The most recent addition, the Oak Ridge Science and Technology Park, will create a place for a start-up company, an industrial customer or a university partner to do business adjacent to the Laboratory's facilities and staff. The second challenge is addressed by Battelle Ventures, a private fund spun out of Battelle in 2003 that provides $150 million in venture capital to promising technologies and start-ups connected to labs managed by Battelle. Last year a group of key business players in Knoxville added $35 million to the pot in a tandem investment fund. UT-Battelle has also supported the efforts of Technology 2020, a local not-for-profit dedicated to technology-based economic development. In recent years, Technology 2020 has launched two new venture capital funds and also provides debt and angel funding opportunities for new start-up technology businesses. In addition, ORNL offers start-up assistance through the Center for Entrepreneurial Growth, operated by Technology 2020 with funding from UT-Battelle, as well as part- and full-time entrepreneurial leave. Internally, UT-Battelle has both emphasized and broadened the Laboratory's approach to technology transfer by adding staff to the commercialization office, bringing in experts from private industry and university systems—where tech transfer historically has been more successful than at the national labs (see Playing at the College Level)—and adding programs to encourage entrepreneurship as well as collaboration with existing industry. UT-Battelle and Battelle also support tech transfer within the Laboratory through privately funded technology transfer, which allows for private investment in particularly promising technologies with resulting revenues flowing back, by agreement with the Department of Energy, to the Laboratory and to the local community. "It's not an individual tool," says Fischer. "We've got to do everything we can to make interactions with the private sector easier." Business vs. Science? Tech transfer initiatives are not without critics. Opponents of aggressive commercialization efforts at national laboratories worry that commercial interests will compromise DOE's scientific mission, whether it be by luring away quality researchers or by shifting the focus of basic research programs toward those with greater promise of commercial success. Wadsworth points out that the Laboratory should welcome all comers. "I think a Laboratory like ORNL—a billion dollars a year with 4,000 people—should contain the spectrum of science and technology interests," he says. "It would be a mistake to force people to have economic development and commercialization goals if they are not doing work that can readily find expression in that part of the spectrum." In recent years technology transfer has become an important component of certain research programs at the Laboratory, including the Biological and Environmental Sciences directorate, headed by Reinhold Mann—the directorate in which Jeremy Smith will work. "Our strategic business plan contains a segment on commercialization," Mann says. "In the next five years we want to increase the number of licenses and patents. We also want to increase the revenue stream from commercialization and from licensing. We think we can accomplish these goals." Mann says a proactive tech transfer office has become "increasingly important" in the cutthroat arena of recruitment. "We're competing for the same talent as major universities and other national labs," he says. "A school like MIT is within a mile of probably 40 biotech companies. They operate in an environment that encourages entrepreneurial behavior. Those are the centers we compete with when we recruit, so having a compelling story for technology transfer at ORNL is a very important part of our ability to remain competitive." Mann points to a recent success, the commercialization of an animal scanner by ORNL researchers Shaun Gleason and Michael Paulus. Their company, ImTek, sold to Knoxville-based CTI Molecular Imaging, which subsequently sold to German industrial giant Siemens. "This is a wonderful success story we can tell the next electrical engineer we want to recruit to Oak Ridge," Mann says. Alex Fischer says transition to an entrepreneurial environment, at least for those who seek it, will be slow but is already apparent. "We have started down the cultural journey," he says. "Over the last five years I think the culture is very different here in terms of our researchers' willingness to talk about and engage in commercialization." Imtek founder Shaun Gleason says he saw the change when he was filmed for an ORNL recruitment video specifically to discuss the entrepreneurial environment at ORNL. "When I talk to the people in my research group at ORNL, they seem more interested in doing a tech transfer project and getting something going," he says. The success of a company like ImTek, he adds, "really opens people's eyes to new possibilities."
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