Most of the time the system works as intended. The researchers do their research on public money, most of what they do becomes public knowledge through papers, if something noteworthy is found, it's patented and licensed and the university gets its cut. The system kind of fails sometimes at giving the researchers (in plural, not just the tenured rockstar) its due, but many times are the scientists the ones that open an enterprise to work it out.
In this case, it's not that system that has failed, it's that different universities are fighting over who has the right to license it. I have no horse in this race, but this it's probably going to become even more common, as improvements on existing technology become smaller and it's harder to tell who deserves the full credit.