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July 26, 1999
Bose And Bose Vs MIT
M J A Shenoy in Cambridge
Vanu Bose is cordial and enthusiastic while chatting with a reporter but the 34-year-old entrepreneur wishes he could be with his colleagues discussing how to make his company's software radio a worldwide success.
Instead, Bose has to spend many hours discussing his bitter battle with the Massachusetts Institute of Technology where he earned his bachelor's, master's and doctoral degrees - like his father Amar G Bose.
Bose Corp, a leading producer of sophisticated acoustics, grossed over $600 million last year. It was founded at MIT about 34 years ago, with MIT letting Amar Bose have the patent for nothing.
But it is a different world today, Vanu Bose, the cofounder of Vanu Inc, says MIT wants to have a good hold over the business accruing from the research carried out by its students.
"It is not just the discussions with the reporters and the time I am spending with the media that worries me," says Bose. "It is the time we have been spending with our lawyers, and the MIT lawyers - and the bad taste the whole episode is creating that is worrying me.
"But then I am convinced it is a just fight," he says, referring to the fight that stared a few weeks after he visited MIT's Technology Licensing Office 15 months ago to discuss the plans for his company. He wanted to make a deal, he says, that benefited MIT too. For the software radio program had started as his PhD project at MIT.
"The way I see things, my partners and I should have the privilege of being associated with MIT, and give back to the school whatever we want to," he explains. "And it would be substantial, if we do well." His father has donated about $6 million to MIT, which has also invested in Bose Corp.
MIT initially asked $1.25 million from Vanu Inc, over the next eight years in licensing fees and 10 per cent royalties in licensed services. It also demanded royalties of 10 per cent on software the firm developed, four per cent on computer hardware and six per cent on software situated in hardware. And then it asked six per cent ownership of the company.
Vanu, backed by his father, rejected the MIT demands. The negotiations became tougher and MIT boasted that other student-inventors have agreed over the years that the technology developed at MIT belongs to MIT. Lita L Nelson, the director of the TLO, declared, "The grippers are the exceptions."
"That is not true," says Vanu Bose. "There are many student inventors who are dissatisfied and disgusted the way they are treated. I hope they will come forward now that this fight is getting a lot of exposure in the media."
A few weeks ago MIT, admitting that its initial licensing officer was inexperienced and his proposals were "too tough", toned down the demand for licensing fee from $1.25 million to $70,000 over eight years. It sought three per cent of equity in the company, plus one per cent royalties on hardware, five per cent on software, two per cent on firmware and three per cent on licensed services.
Vanu Bose says things do not look anywhere as simple as MIT's proposals. "When we meet with them, one becomes totally confused. I do not know how long this will go on."
His father's efforts to intercede on his behalf have not helped, Vanu Bose says. Amar G Bose has been intensely proud of his connections with MIT, and the education his son Vanu and daughter Maya, have received from that school. But he called the protracted negotiations his son is undergoing "painful".
Amar Bose says that student-inventors are far less sophisticated than the technology licensing staffs at schools such as MIT. The fight he is backing would benefit students not only at MIT but at schools nationwide, Bose says.
John Guttag, an MIT professor who was Vanu Bose's PhD adviser, is now a negotiator for him with MIT.
Initially, he was "astounded" at MIT's demands, he says, echoing Vanu Bose's contention that the TLO's licensing policy places an unreasonable demand on any start-up firm. Now he feels that TLO and MIT are being foolish and harsh in their characterization of Vanu Bose's demands.
He says MIT officials should realize that increasing the profits of TLO (and by extension of MIT) is not the same as getting the best benefits from its students who have set up their own businesses. TLO last year grossed about $18.6 million, according to The Wall Street Journal. MIT, whose annual budget of $1.2 billion is raised partly through endowments and government funds (which have been steadily dropping) considers TLO a good cash cow.
"One could say that it is much more important than the revenues from the licensing is the earning the long-term goodwill of our students," Bose said in an interview.
"They might make more in charitable contributions to MIT than from a licensing deal."
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