Cambridge suffers a blow to its international reputation

Partners lost confidence as licensing decision hurt commercial prospects. Melanie Newman reports

May 8, 2008

The University of Cambridge has suffered "substantial damage" to its international reputation over its attempts to commercialise technology developed by one of its academics, according to the results of internal tribunals.

A number of outside business partners - including the US Navy - "lost confidence" in the ability of the university's technology-transfer arm, Cambridge Enterprise (CE), to manage the commercial exploitation of an invention by Derek Fray, a professor of materials chemistry.

CE's handling of the licensing of the technology forced a spin-off company into administration and left investors facing "substantial losses". The move also lost potential contracts with Nasa and led to angry protests from the US Naval Research Laboratory.

The long-running case is described in two internal tribunal judgments just released by the university. One, by the University Technology Referee, dates back to September 2006; the other, by the Technology Appeal Tribunal, is more recent. The appeal tribunal found that the university had not acted in accordance with its rules governing the exploitation of the intellectual property of its academics.

Professor Fray co-invented the FFC Cambridge Process, which is a cheaper and easier way of producing titanium and other metals.

To exploit the technology, he established, with the help of CE, two companies. One, BTi, was established to apply the process to titanium, which is important to the defence industry. Another company, Metalysis, was set up to apply the technology to other metals.

CE handed Metalysis the "head licence" to the process for all metals in 2005. Professor Fray gave his consent to this on the condition that BTi's rights as a sub-licensee would not be affected. But when Metalysis subsequently asked CE to terminate BTi's sub-licence, CE commissioned advice from a private consultant, John Lee of Odyssey Ventures, and agreed to Metalysis's request.

CE delayed telling Professor Fray about the proposal to terminate BTi's licence for "months", denying him the chance to raise considered objections, the appeal tribunal said.

In addition, Professor Fray was not allowed to see the consultant's report that recommended termination, denying him a further chance to raise detailed objections, it said.

"Professor Fray was not informed as early as he should have been ... was not informed of the major factors which were to be taken into account ... and was not allowed any reasonable opportunity to put forward alternative possible methods of exploitation," the appeal tribunal ruled.

These "failings" meant that CE had not "co-operated fully with Professor Fray" as required under the university's rules.

The termination of BTi's licence against Professor Fray's wishes had significant effects. The original technology referee said: "It is not disputed that the ... termination of the BTi exclusive sub-licence has had disastrous effects for that company.

"A number of investors have written to the vice-chancellor expressing their dismay that the university consented to the termination ... which has caused them substantial losses."

The US Naval Research Laboratory had written to "express disappointment at the actions of CE, given the very considerable investment in BTi and the University of Cambridge by the US Government", the referee reported. The US letter described the licence's withdrawal as a "devastating detour" for the FFC Process, "which can only benefit the competition from competing forces to develop both conventional and rival processes".

The termination also meant that Nasa had put contracts with BTi "into abeyance".

"The general tenor of all the comments from third parties is that the actions of CE have caused substantial damage to the reputation of the University of Cambridge because of the loss of confidence in its stewardship of this technology," the referee said.

As well as damaging the university's reputation, the referee also accepted Professor Fray's claim that the events had "a substantial adverse impact on his professional reputation and as a university staff member".

The appeal tribunal said that while Professor Fray would acquire no practical value from his success at tribunal, "moral satisfaction and vindication should not be dismissed as without value".

Professor Fray told Times Higher Education that the publication of the judgments could deter organisations from supporting Cambridge's research in future. The US Government, he said, was already "somewhat disenchanted" and had subsequently supported similar research at Imperial College London.

He said he understood that the exploitation of the technology at Cambridge had subsequently stalled. "The team with the greatest expertise and success has been disbanded, and contacts who could quickly turn laboratory research into industrial practice are now working on other processes," he said.

A university spokesman said the case related "to a now-outdated policy on intellectual property rights (IPR).

"While we accept this verdict, it is important to stress that the university has published a new IPR policy since the matter first arose," the spokesman said.

"There is now an equitable and flexible framework in place for all individuals involved in academic work, which provides clear guidelines on IPR ownership. It is our hope that this will enable us to avoid disputes in the future, while safeguarding the interests of academic staff and students.

"Cambridge Enterprise manages more than 340 such agreements to commercialise such inventions. This is the only one in dispute."

melanie.newman@tsleducation.com.

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