I believe some universities make exceptions for open source projects, which seems fair. Basically if you want to give something away then you can, though the university will still own the copyright. I'm not 100% sure how patents work at such institutions, but I believe they can potentially be licensed for free to open source projects and their derivatives (e.g. they won't demand that Apple pay royalties if they use your open source software in an iPhone, as long as they abide by the open source license terms.)

If you want to make it closed source/proprietary and sell it, then the university wants license fees (but you get a cut of those fees, so it's sort of a kickback scheme, but the university picks the fee and there is a set percentage that you get.)