Four years ago, Herbert Boyer, a biochemist at the University of California at San Francisco, realized that this then-obscure field, genetic engineering, someday might have commericial application. So he and a colleague formed a little company consisting of themselves and not much else.

Today, their company -- Genentech -- is worth $600 million. Boyer has more than $70 million in stock. And other firms getting ready to use Genetech processes anticipate raking in millions.

But so far, the university in whose facilities it all began has earned nothing. If it does eventually benefit from the Boyer-Genentech boom, it is unlikely to be on the scale that others will.

Similarly, at Yale, a weak patent policy has let many profits fall to others for work done at the university or based on work done there, said Frederic Richards, a Yale molecular biologist.

"Yale has missed the boat on a number of patenting chances in recent years," he said, "particularly on one process that greatly simplified the synthesis of one anticancer drug . . . . That drug now has a scale of something like $50 million."

Stories like these can be heard at almost any major university research center. And they are getting increasing attention from adminstrators of these centers, many of whom are chronically short of funds and more inclined to feel entitled to a better return on technological advances springing from their laboratories.

Until five years ago, Harvard never attempted to patent any of its research. It was all freely available for exploitation by companies without having to give Harvard a penny. At the same time, its professors could earn huge sums bases on work done in Harvard labs. In fact, one biochemistry professor was recently offered "millions of dollars, literally," he said, to work in a biotechnology company.

Now, in what appears to be developing as a national trend, big universities -- including Harvard, Yale, MIT and Stanford -- have decided to try to plug these profit leaks and find new ways to make money from their research. t

But predictably, the desire for money and the purity of scholarship have clashed. At Harvard, a furious debate has begun over the boldest of the university plans: to found a genetic engineering company and earn profits from it. The company would stand virtually on campus and have Harvard faculty as some of its officiers and consulting researchers.

Opponents say a commercial undertaking such as Harvard's might "change the whole character of the university," turning it into what Kingman Brewster, a former president of Yale, called "service station academics" -- research with the aim of selling products or services to the public.

Those favoring Harvard's plan see it as a good way to earn money from work done by Harvard, as well as a way of making basic research available quickly to the public. Under the jargon title of "technology transfer," the government has been urging all universities to find better ways to get their families to industry and the marketplace.

"The problem is to get greater rewards for the research which goes on in the university's very expensive facilities, and to connect our brains with commercial technology," said Walter Cabot, head of the Harvard Management Corp., which manages all Harvard investments. "The traditional way of getting a reward for research is to get royalties on a patent license.

"With a royalty, you just give away research for a small price. The question is, can you get more out of situation where you get not only royalties, but have an investment, and keep some control of the process?" he said.

But he added that such an action does raise many questions of academics vs. commercial interest.

The fireworks at Harvard began at a faculty meeting Oct. 21, when President Derek Bok told the 200 or so professors that he would like opinions on the proposed business. He said he wanted to make a decision by the end of the month, according to a professor who was at the meeting. Bok presented the case as one that was not going to set precedent, or cost Harvard space or money.

Though the decision is not in the hands of the faculty, many reacted with dismay or anger at the proposal. A deputation among the proposal. A deputation among the science faculty has begun exchanging memos arguing against the plan, and, according to one professor, "The people in science plan to pull out all the stops, including enlising all the Nobelists they can find, to stop the plan."

In general, many have said the university's mission is to carry on scholarship, its aims determined only by the excitement of the questions it raises. They fear that linking a commercial enterprise to the university could draw research off in directions more profitable than scholarly.

Another decision is that the free exchange of information that has characterized research would be altered by the kind of secrecy necessary in bitterly competitive commercial markets.

Since many professors already work for outside companies or have companies of their own, creation of a company on the Harvard campus, some say, would create "uncompletely mad" situations in which researchers would be forced to compete against the university, trying to steal away the best reserchers from Harvard's company for their own, or keeping a lock on research to prevent colleagues with competing affiliations from using results.

Harvard's plan, although it has evolved and changed greatly the last six months, is to start a genetic engineering company to compete with those extraordinary successful ventures such as Genetech and Cetus in California and Biogen in Switzerland. Those companies have been the front-runners in the race to make such genetically engineered products as human insulin and the antiviral agent called interferon.

Under current plans, Harvard would set up the company, then become a minority stockholder. There would be a close link between the biochemistry department and the new company, with some Harvard faculty becoming leading officers and researchers in the company.

It apparently would be the first time a major university would have taken direct ownership in a commercial company at the same time its faculty is closely tied to the work of the company. The university does have indirect ownership in companies, including the genetic engineering firm of Biogen. In addition, Harvard faculty members have strong ties to Biogen.

But each of these relationships is between Harvard or a Harvard professor and an outside concern.

The major advantage to the university in setting up such a company would be to earn revenues directly for work done at Harvard. Another advantage citied by one of the architects of the plan is that the company, with its high-quality research equipment, and staff, would bring the university an extra complement of new techniques and information. In addition, a healthy company might help provide funding for research projects.

At Yale, a major reappraisal of the role of applied research is under way. During the 1960s, the university, under Brewster's leadership, moved deliberately away from applied fields -- to the extent of terminating some projects that seemed to have overly direct connection to the "real" world. Now a committee, under the direction of biologists Richards, is examining new ways to fund and use research.

One of Yale's most serious concerns is that 85 percent of the university's research funds come from government grants. This means the university can do only "obvious, mainstream" research, since the government does not fund anything else, and it means the university could face a crisis if government priorities change unexpectedly, according to Richards.

Yale has announced that it would like to develop and sell some of its research work, but would like to leave commercial development to others.

At the same time, a strong incentive to think more commercially has come from the fact that Olin Corp. is setting up a 60-acre science park nearby, offering Yale an opportunity to make new ties to the business world or even establish a company of its own.

But many scientist at Harvard and elsewhere worry that an "inhouse" company could "change the whole character of the university and the way it works in that area," according to Philip Sharp, a biochemist at MIT who is on the board of Biogen. Sharp said the common arrangement, whereby researchers consult with or serve on the boards of private companies, "at least keeps an arm's distance" between biology and business.

Walter Gilbert, a Harvard biochemist, a recent Nobel Prize winner and one of the founders of Biogen, had even stronger criticism:

"I think the idea is extraordinarily unwise . . . . It seems to me that it is a fantastic distortion of the purpose of a university.

"I have my own company," he said, "and I would resent being put in the position of having to compete against Harvard for the best people and the best work. I might be forced to push Harvard to the wall in some cases of competition. That shouldn't have to happen.

"With the way things are going, it could soon get to the point that 10 people in a lab would be working for 10 different companies, and you can imagine the one from Harvard jumping up and saying, 'I'm the Harvard one, I am the one who has the true line around here,'" he said.

He added that "by extension of the idea, you might begin to convert other areas of the university over to profit-making ventures: start a law firm in the law school, have the English department write advertising copy, develop a way for the doctors to earn extra profits at the medical school . . . . The idea is completely mad at a certain level."

Nonetheless, the plan is being watched by other universities, said Everett Mendelsohn, historian of science at Harvard, and, "If Harvard decides to go with this plan, it will open floodgates all over the country."