Traditional technology powerhouses will be facing serious competition in the near future for supremacy in the realm of technology transfer from the University.

Technology transfer is the sale and licensing of technologies developed by a school.

The University posted record profit growth for fiscal year 2005 in technology transfer revenue. Profits jumped by 18 percent, or $5 million, bringing total licensing revenues for the year to $16.7 million.

The University's Technology Transfer Office reported 287 inventions, 86 license agreements and seven startup firms this fiscal year. During the past five years, the University's tech transfer efforts have resulted in more than 40 startups. The importance of such endeavors lies in their ability to help the Ann Arbor area soften the blow of Michigan's economic slump during the past five years.

"For 2005, - (tech transfer) went as well, if not better, overall than the last two years," said Kenneth Nisbet, executive director of the Tech Transfer Office. "We have made terrific progress with such a large increase."

But the University still has some catching up to do before it can join the ranks of tech transfer giants. Traditionally, schools such as Stanford and the California Institute of Technology on the West Coast and Columbia University and MIT on the East Coast have dominated tech transfer.

Even though the University has stepped up its efforts, its revenue is still dwarfed by the earnings of programs such as MIT's, which recorded a FY 2005 profit of $46 million. MIT's tech transfer program also reported 20 startup firms for this fiscal year, compared to the University's seven.

"Beyond the initial difficulty associated with licensing technology to such early-stage companies, it's hard to compare with other top universities because resources are such a major problem in the Midwest region," Nisbet said.

Another difficulty confronting the University is how to identify quality partner companies that may become excellent prospects for licensing in the future. Despite limited resources and the risk involved in licensing technologies, the University has become a major technological hub in the Midwest.

Universities like Stanford and MIT have maintained their edge in part because of their location, with Stanford located near Silicon Valley and MIT next door to Boston.

Even with such obstacles, the University managed to make steady and significant progress in tech transfer during the past three years. For the most recent period for which data are available, the Department of Commerce's Patent and Trademark Office reported that the University received the seventh most patents among U.S. universities, at 67.

The California Institute of Technology led the national rankings with more than double the University's number of patents, at 135, and showed no signs of slowing down. Caltech's tech transfer program benefits from a large patent budget that allows the institution to be less selective in applying for patents and aggressive in what technologies it protects.

But even the best universities are concerned about the price tag and viability of patents.

"We still have to be extremely conscious about the cost of protection and whether the technology we are pursuing is a legitimate candidate to be useful in the marketplace farther down the road," said Michael Slessor, licensing associate at Caltech's tech transfer office.

Slessor speculated on what factors make Caltech the leader of the tech transfer pack.

"Every single person in our office of tech transfer has a PhD from Caltech, so we all have very personal relationships with the University's faculty," he said. "Furthermore, we all understand what we do on both a technical and business level, and we remind ourselves to be very hands-on in terms of the licensing process."

With the promise shown by recent gains, the University's Tech Transfer Office is already taking steps to ensure such phenomenal growth will not be an aberration.

"We are strongly committed to keeping our superb staff motivated by challenging them with new, unique projects and retaining well-qualified partners who will be strong assets in the future," Nisbet said.