Stanford University President John Hennessy is the founder of MIPS Computer Systems and an IEEE Fellow. He's also a very upbeat individual and as seemingly relaxed as the sunny Palo Alto campus that he oversees – a lovely place where it's hard to believe anyone is ever stressed out about anything.

I was delighted to have a chance to talk with Dr. Hennessy in his office on the Stanford campus in early May 2004. To find the Office of the President, you need to go to the Central Quad, stand in front of the chapel, and then look around – far off your left shoulder. Those were the directions I was given in advance of my appointment and those directions worked.

Hennessy and I chatted for about an our. Our conversation would have run longer, but for the clamour and clatter of the (infamous) Stanford band which suddenly went marching by beneath Hennesy's open office window.

It wasn't clear to me or to Dr. Hennessy where they were going on that spring morning – or why. The only thing we could tell is that they were making enough noise to wake the dead, and that they succeeded in bringing a far-ranging conversation to an abrupt, albeit cheerful conclusion.

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John Hennessy has been on the Stanford campus since 1977, but in speaking to him you'll still detect a bit of a New York accent. That's probably not surprising, because even though he's been gracing the University with his proven talents for over 25 years, he was born, raised, and educated on the East Coast. His BSEE is from Villanova, and his PhD in computer science is from the State University of New York at Stony Brook.

Hennessy says that when he finished his PhD, he wanted to pursue a career in teaching. To that end, he interviewed with numerous universities looking for a faculty position in engineering and computer science. Stanford was actually the 14th school that he looked at in his search, but he arrived on campus for his interview on a balmy March day in 1977 and knew then and there that Stanford was the place for him. He never looked back, and what followed has been a highly distinguished, well-documented career in education and technology.

John Hennessy has been a Professor of Electrical Engineering and Computer Science at Stanford, chair of the Computer Science Department, Dean of the School of Engineering, Provost of the University, and now President. These things alone are enough to warrant respect, but in the great tradition of Silicon Valley, Hennessy is also a widely revered technologist and entrepreneur, evidenced jointly by his successful role as co-founder MIPS Computer Systems and his having received the 2000 John Von Neumann Medal, among many other accolades. As well, Hennessy has published numerous books and papers, and is considered the "father" of the RISC architecture.

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There were many things I would have enjoyed discussing with Dr. Hennessy, but for the sake of time, we restricted our conversation to a topic near and dear to the hearts of the EDA industry: How do bright and innovative young people, working in a university setting, take their ideas and successfully commercialize them, while giving back to the place where the original R&D was performed the appropriate levels of revenue and financial reward?

This is a very complex question and Hennessy's comments were not meant to be comprehensive. But in reading them, I believe you will better understand how a great university and its leadership attempt to sort through the subtleties inherent in the issue.

President Hennessy said, "How you view your intellectual property licensing is dependent on your technology transfer office. Our simple insight here at Stanford is that at many universities, much technology fails to transfer because the licensing office views itself as a hurdle, or as having power for exaggerating the maximum dollars out of the licensing, while unfortunately at the same time they often don't want to take risks."

"If a university says, 'My technology licensing office's primary claim to fame is to balk at enabling,' there will be far less technology transfer out of that university, and the results can be insidious. People start to bypass the system to get their technology out into industry. In so doing, they don't violate the letter of the law, but they violate the spirit of the law and the institution ends up empty handed in the process."

"As universities, we need to emphasis flexibility, and appreciate the good things that happen when technology transfers. And the ultimate reward to a broad-minded institution consists of the long-term goodwill and philanthropy, and must always be the greater reward for a university -- above and beyond the revenue."

"Jim Gibbons [formerly Dean of Engineering] liked to say, 'At Stanford, we never got a license from Hewlett or Packard for the technology developed here. But, even had we actually charged them for those licenses, those dollars would have only been one one-thousandth of the donations that HP eventually gave back to the university.'"

"Importantly, we try to distinguish here at Stanford between an innovation that is patentable, versus that which is non-patentable. Patents have a clear and protectable position. This is certainly the case in the biomedical world, for instance."

"I believe there exist two sub-groups. One is the instance where a patent is fundamental and it is right to license that patent widely. Those licenses should be made available to a wide range of companies to generate a revenue stream. Intellectual property in the area of recombinant DNA certainly falls into this sub-group."

"With patents in the other sub-group, we may see there exists a requirement for significant follow-on investment [to commercialize the IP]. In that case, it's appropriate to license the IP to only one or a small number of companies to maximize the royalties on the patent."

"Of course, outside these two sub-groups is the type of IP that is not intrinsically patentable. The innovations for the original Cisco router or the design for the original Sun workstation were not patented by the university, although the fundamental work was done here. In those cases, you had IP which had value, but which could be designed around for commercialization. That was also true for the original Yahoo database."

"In any case, you can't establish a patent position if the university is going to become extremely insistent on extracting more revenue than exists. You only end up creating animosity between the university and the company's founders."

"I would cite the case of Mark Andreeson and the University of Illinois. They could have licensed his work on the Netscape browser, but they insisted on a more aggressive position. The end result was that the founders of Netscape became embittered and felt forced to go away and re-invent the technology. This was regrettable, particularly for the university."

"I'll tell you, fundamentally the difference between universities and many corporations is that we don't believe we own what's inside a person's head. Our product – what we produce at a university – is a group of smart young people who go out into the world with a lot of insight and a fairly full of set of knowledge."

"Consider also the case of Jim Clarke who licensed the technology for Silicon Graphics from Stanford. We did have some royalty stream from that license, but we chose not to take an equity position. We might have done slightly better if we had, but Clark's eventual gift of $90 million to the university far exceeded anything we might have received had we taken a different route."

"As an aside, with the downturn we have started to suggest that donations be moved into a foundation, and the university receive the benefits out of that foundation paid out over a set schedule, rather than making a donation in stock. An equity gift to the school can sometimes be disappointing [if the stock valuation declines markedly]."

"Meanwhile, it's interesting to compare our procedures with those at the University of California. The differences that we see are mostly as result of the size of the bureaucracy at U.C. They have centralized licensing for all of their campuses. In that situation, making a policy change or a decision to react to a simple situation can be very difficult. An organization of that size has difficult reacting with nimbleness."

"In actuality, in every university when you're in a position of leadership, you utilize what are essentially linear decision making skills. A university is a very deliberate place and if a decision can't be made, it's put aside for consideration at a later date. Even more importantly, when policies are finally put in place in a university, they're there for a long time. It takes a lot of time and thought before they can be changed or discontinued."

"The world of academia moves at a slow and measured pace, particularly in comparison to industry. Three to six months in academia is comparable to a lifetime in industry, particularly for start-ups. I certainly learned that during my time at MIPS. I learned more in my 15 months there about leadership and making timely decisions than I have learned in all of my time at Stanford."

"In any case, if you hold back licensing approval for a small company negotiating for venture capital, you will cause them to fail. If a university says they want to maximize their control over some IP, the VC will ask the small company, 'Why should I put $20 million into your venture only to find myself potentially subjected to the whims of the university?'"

"We feel that the venture community knows that here at Stanford we are willing to work with our innovators to facilitate the process of technology transfer. We believe we know how to make things happen, and I believe this has been our strength."

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It was at this point in our conversation that the Stanford Band chimed in and our discussion was clearly over. As I was leaving, however, I did have a chance to ask President Hennessy, over the din, what he liked best about his involvement at Stanford.

President Hennessy was extremely enthusiastic in responding: "The best part of the president's job is the breadth of engagement I am allowed to have, with so many different people doing such incredible work across this campus. From archeology, to biomedical science, to law and IP - the opportunity to engage with these people and see their issues is so rewarding."

"But the best part of all is interacting with the bright young minds here. I think that being with them and working with them is a wonderful way to stay young. It's true -- what professors find by teaching at a university is nothing short of the fountain of youth!"

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Editor's Note: An edited version of this article first appeared on-line in in Play in EDA in May 2004.

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Big Game Week 2004

Peggy Aycinena owns and operates EDA Confidential. She can be reached at peggy@aycinena.com

Copyright (c) 2004, Peggy Aycinena. All rights reserved.