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State law already requires that the financial proceeds of inventions resulting from research at UC labs be split with the university. But critics argue that the state has not spent enough money to keep track of professors and their inventions and often gives away millions of dollars in potential royalty revenue because the university's so called "technology transfer" offices are understaffed.

"Faculty work with these public/private labs, and they will have the best equipment and technicians and access to students' help," warned Jaffee. "If they want to continue that existence, they had better learn how to make someone happy. That someone is probably going to be in a corporate boardroom someplace."

Enter Dr. Larry Smarr, a UCSD professor of engineering and the newly named director of the California Institute for Telecommunications and Information. Smarr arrived here in a blaze of publicity from the University of Illinois at Urbana-Champaign last year. The announcement of Smarr's pending appointment to run the institute here was hailed in a New York Times story that credited him with helping create the Internet and inventing the Web browser.

"He founded the National Center for Supercomputer Applications at the University of Illinois at Urbana-Champaign in 1985, and helped to develop a network that linked it to the nation's other four supercomputer centers," noted the Times. "Yet those advances pale beside the fact that seven years ago, a small group of student and faculty researchers working at Dr. Smarr's center created the first graphical Web browser, Mosaic, igniting the World Wide Web and the electronic-commerce explosion."

But Marc Andreessen, one of Smarr's former associates, who went on to become a billionaire by founding Netscape, was quoted as complaining that Smarr's lab "had a hard time bringing innovations to the marketplace." Andreessen was able to start Netscape by licensing the institute's Mosaic technology, but only after overcoming the university's resistance.

"What they never got at NCSA [National Center for Supercomputer Applications] what they never had, was a culture of entrepreneurial spinoffs," Andreessen told the paper. "If he can add that at the new institute, a culture that permits people to go off and start companies, then I think he will really have something."

For his part, Smarr was quoted as saying he had headed west to "more fertile ground for what he calls 'I.P.O. Capitalism.'" He added, "Based on the electronic-commerce boom that followed the development of the Mosaic Web browser, I realized that a new model of growth was emerging. I knew I had to get to a place where there was an explosive private sector."

Smarr's much-heralded arrival has made critics even more skeptical about the university's ability to monitor and control the effect and consequences of private funding on the flow of "intellectual property" from the university to industry. According to the university's conflict-of-interest office in Oakland, no steps have yet been taken to establish personal financial-reporting requirements for Smarr or his deputies at the new institute.

Under state law, most executive employees at the university are required to file such annual disclosures. For example, Robert W. Conn, dean of UCSD's engineering school, a major backer of the proposed institute who helped shepherd it through the governor's selection process, reports that he owns a one-man consulting company, Conn Engineering and Consulting, based in his Del Mar home, whose clients include Science Applications International Corporation, a participant in the new institute.

Conn reported that during 1999, the latest year for which information is available, he was paid more than $10,000 by SAIC as well as the Los Alamos National Laboratory in New Mexico. He also reported owning a total of more than a million dollars' worth of stock in a variety of high-tech companies, including SAIC, Broadcom, Microsoft, and Mission Ventures. All of these firms, according to the university's website, are involved with the new institute.

According to a news release on the website, "Mission Ventures will provide counsel on prospects for commercialization of innovations created by [the institute], as well as future investments in technologies developed by [the institute] if appropriate." Conn's statement of economic interest describes the nature of his greater-than-$100,000 interest in Mission Ventures as "Limited Partner Affiliate."

Interviewed by phone from his office at UCSD, Smarr argues that the influence of private money on the policies of his new institution has been overplayed. Describing a cornucopia of potential services and devices to be created by the institute, from remote measuring of chromium pollution in Mission Bay to warnings of sewage in the city's storm drains, Smarr insists that the public welfare is his top priority.

As for when the conflict-of-interest code for the new institute would be ready, Smarr said, "I think they're working on that. I'm not even sure I'm director officially yet. Because I've got to fly up and give a six-minute talk to the regents on Thursday, I guess. And so until the regents okay everything, I'm not even sure.

"I fully intend to file all the disclosure papers. Everything I do with industry is very publicly known; it's on Web pages or press releases about it, and everything is out there. As an incoming faculty member, as I understand it, my first reporting would be in August at the end of my first year.

"But I suspect that I would just go ahead and work with the university and do it sooner than that, but I'm waiting for the final designation that I'm director, and they presumably will ask me to fill a bunch of stuff in, and I intend to fully disclose everything."

Smarr says his personal holdings include interest in a company called WebEx that is included on a list of institute sponsors. Smarr says he is on the company's advisory board. He adds that the firm's participation in the institute is limited to contributing its Web-conferencing software.

"They are a participant; they are making their software available to the institute. That's the interesting thing about this. Most of the companies that are providing things, there are only a few of them who are actually asking for sponsored research, and obviously that's not with me; I don't get to do any research anymore.

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