technology transfer between public research and industry – laws, models and policy options thomas...

Technology Transfer between Public Research and Industry – Laws, Models and Policy Options


Thomas Gering



The views and opinions expressed in this presentation are those of the author and they do not represent the position of the European Joint Research Center or the European Community at large

Intellectual Asset Management in the Public Research Enterprise Intellectual Asset Management in the Public Research Enterprise

Maximizing Public Good (social return) or maximizing financial (private) return

Internationally, the leaders in tech transfer have managed to create revenues of up to 5 % of their research expenditure

> There are in fact social returns that should be weighed in the overall analysis

Intellectual asset management by PROs


Technology Pool

Coop. R&Dmature companies

Licensing Start-Up Companies

Link to Venture Capital

Non-excl.Who owns what?

Quasi-excl.Field of Use

Exclusive

Joint Venture

Equity

Which way should Public Research Organisations PROs (incl. universities) go ? Which way should Public Research Organisations PROs (incl. universities) go ?

Historically, little co-operative R&D in the US More focus on licensing and start-ups

(beginning in about the mid 1980s); an effect of Bayh-Dole

In Europe much more interest in project based co-operation with the private sector > one example is the European Framework Research Programmes

However, limited IP and licensing infrastructure at European PROs

In recent years, both sides are trying to adopt some of the features of the other model


Historically, little co-operative R&D in the US “Throughout most of the 1960s and 1970s,

the business community was the source of 3% of total research performed in universities.”

“By the mid 1980s this had risen to 6 % and in the 1990s to 7 %”

Source: Wendy H. Schacht, CRS Report for Congress; R&D Partnerships and IP, Implications for US Policy, December 2000


“The preferred mechanism of German industrial support for academic research is a research contract with clearly defined deliverables. In the US, most industrial funding of academic R&D takes the form of grants, more open-ended arrangements without specifically defined research deliverables……..”.

Source: Technology Transfer Systems in the United States and Germany, Lessons and Perspectives, German American Academic Council Foundation, National Academy of Sciences 1997


“….the panel judges university-industry research interaction in Germany to be more heavily oriented toward short-term, incremental problem solving than university-industry linkages in the United States.”

Source: Technology Transfer Systems in the United States and Germany, Lessons and Perspectives, German American Academic Council Foundation, National Academy of Sciences 1997


Some European Research Universities now receive up to 40 percent of their research budgets from private sources on a project contract basis

Example: RWTH Aachen Total budget (excl. hospital):

367 Mio € Research Budget: 142,5 Mio €

Source: RWTH Drittmittelreport 2003

Private Funds

Government

EU

German ScienceFoundation


This particular university currently lists as assignee (or co-assignee) on 42 patents

Hits: 42 (Total hits: 42) 2 DE000020313514U1 [DE] Chirurgische Haltevorrichtung 3 DE000019850026A1 [DE] Verfahren und Vorrichtung zur

Herstellung texturierter Garne aus ... 4 DE000019813887A1 [DE] Verfahren und Vorrichtung zur

Herstellung von Nähnähten 5 DE000019750523A1 [DE] Verfahren zur Herstellung

verrippter Bauteile nach der Gasinjektionstechnik ... 6 DE000019715630C2 [DE] Vorrichtung und Verfahren zur

Bestimmung rheologischer Werkstoffdaten

Source: DEPATISnet, German Patent Office


Chirurgische Haltevorrichtung ApplicantPA Aesculap AG & Co. KG, 78532 Tuttlingen, DE ;

RWTH Aachen, 52062 Aachen, DE InventorIN Application dateAD 26.08.2003 Application numberAN 20313514 Country of applicationAC DE Publication datePUB 15.01.2004 Priority dataPRC IPC main classICM A61B 19/00 IPC subclassICS F16M 11/12 ; F16M 11/14 IPC additional information on descriptionICA A61B 1/00 ;

A61B 17/16

Source: DEPATISnet, German Patent Office

Intellectual asset management – Which focus at RWTH?

Intellectual asset management – Which focus at RWTH?

Technology Pool






Exclusive

Joint Venture

Equity


RWTH chose Collaborative Research almost as its only path to commercialisation

RWTH is claiming involvement in over 200 start-up companies since 1995 but they never held equity or any IP that was important to these start-ups > no IP, no licenses

Source: RWTH Drittmittelreport 2003

Which way should Public Research Organisations PROs (incl. universities) go ? – Some Data on the US


Research budget of 200-400 Mio $ Columbia University (407.4 Mio $

sponsored research) 191 US patents filed in FY 2002 55 new licenses/options in FY 2002 155.6 Mio $ gross license income 60 US patents issued 8 start-up companies formed

Source: AUTM Licensing Survey 2002



University of Florida (369.25 Mio $ sponsored research

207 US patents filed in FY 2002 59 new licenses / options executed 31.6 Mio $ gross license income 62 US patents issued that year 5 start-up companies formed


Which way should Public Research Organisations PROs (incl. universities) go ? – Some aggregate US Data

Which way should Public Research Organisations PROs (incl. universities) go ? – Some aggregate US Data

Gross license income received: 1.337 billion $

10,866 licenses yielding income Invention disclosures received: 15,573 Total US applications filed: 12,929 New US applications filed: 7,741 US Patents issued: 3,673 Start-up companies formed since 1980:

4,320; still operational: 2,741


Intellectual Property Licensing by PROs in

Germany

Intellectual Property Licensing by PROs in

Germany

Fraunhofer, and to a lesser extent Helmholtz and the universities, focus heavily on collaborative R&D

IP positions regularly compromised as a consequence Only Max-Planck (Garching Innovation GmbH) and Fraunhofer Patent

Center achieved maturity (major revenues, involvement in litigation, management of big portfolios) in IP licensing

With the abolishment of the Professor´s privilege in 2002, 18 regional IP licensing companies were founded with federal sponsorship

These companies each work with a number of universities in the regions

These programmes have remained marginal so far Both industry as well as some public research organisations are trying

to undermine these activities by the universities

Patent applications of German PROs

Patent applications of German PROs

0

200

400

600

800

1000

1200

1400

1600

1800

2000

year

nu

mb

er

Universities

Max Planck Society

Helmholtz Association

Fraunhofer Society

Source: Turning Science into Business, OECD, 2003

Which way should Public Research Organisations PROs (incl. universities) go ?Which way should Public Research Organisations PROs (incl. universities) go ?

No University licensing data available in Germany

Reason: Up to 2002, licensing was mainly done by the individual inventors because of the Professor´s privilege

However, our 1996 study for the Federal Ministry of Science showed that 60 % of the inventions were assigned to industry partners – in most cases without or with minimal compensation

Source: Becher, Gering, Lang, Schmoch: Patentwesen an Hochschulen, BMBF 1996

Which way should Public Research Organisations PROs (incl. universities) go ? - UK

Which way should Public Research Organisations PROs (incl. universities) go ? - UK

Commercialisation activities in the university sector have substantially increased in the last five years

Many universities only created technology transfer offices in the late 1990s

Staff numbers are still rising by almost 25 % per annum Internationally, the UK lags behind the US in its expertise

in technology transfer, although the UK is ahead of much of the rest of Europe

Lack of clarity over IP in research collaborations A minimum of annual investment in research needed in

order to justify a technology transfer office; only 25 % of UK universities seem to have such critical mass, yet 80% are now running their own offices

> Still struggling with restructuring after BTG disappeared as the sole solution in 1985Source: The Lambert Review of Business-University Interaction, Dezember 2003

Which way should Public Research Organisations PROs (incl. universities) go ? – Other notable models

Which way should Public Research Organisations PROs (incl. universities) go ? – Other notable models

Chalmers University in Gothenburg, Sweden Privatized the whole university; now operates as an AB Technology transfer is a huge operation being responsible

for all contract research, an incubator, a technology park, etc.

But Sweden lived under a Professor´s privilege system which is still very much defining the mindset

Private IP exploitation company in the incubator

University of Twente, the Netherlands Probably the European University concentrating most on

spin-off creation very early on (1980s) But again, IAM on behalf of the University is not at center

stage in this effort

Which way should Public Research Organisations PROs (incl. universities) go ? – Legal basis - USA


Bayh-Dole Act P.L. 96-517 as amended Stephenson Wydler Technology

Innovation Act P.L. 96-418 Bayh-Dole: Doing away with 26 different regulations

used by public US research funding bodies

For the first time, a uniform policy was implemented that provided the contractor with the opportunity to elect to retain title to inventions



“…to replace the existing melange of 26 different agency policies on vesting of patent rights in government funded research….with a single, uniform national policy designed to cut down on bureaucracy and encourage private industry to utilize government funded inventions through the commitment of the risk capital necessary to develop such inventions to the point of commercial application.”Source: House Committee on the Judiciary, 1980



If contractor retains title, obligation to exploit arises; reporting requirements

Although there was university patenting before Bayh-Dole (IPAs), patenting and certainly licensing rose by about 20 times in the last 20 years

Government has march-in rights and can require a non-exclusive license for its own purposes

Just giving ownership to industry contractors does not necessarily stimulate use in the markets

Which way should Public Research Organisations PROs (incl. universities) go ? – Legal Basis

Which way should Public Research Organisations PROs (incl. universities) go ? – Legal Basis

In the EU, concern that different national laws re the ownership and exploitation of IP from PROs, especially at universities, may create barriers to international collaborative research

Austria, Denmark, Germany and Norway have recently introduced new legislation to grant universities title to IP resulting from publicly funded research

In Finland proposals to the same effect In Japan and Korea, recent reforms in funding

regulations to this effect These policy trends echo the landmark US Bayh-

Dole Act of 1980Source: OECD, Turning Science into Business, 2003

Which way should Public Research Organisations PROs (incl. universities) go ? – Legal Basis internationally

Which way should Public Research Organisations PROs (incl. universities) go ? – Legal Basis internationally

Either there is employer-employee law defining ownership (Germany, Austria)

Or there is just common law/case law/individual agreements (US)

Or there is some regulation in patent law defining rights of the employee (UK, France)

And then there are research sponsorship agreements (do not affect employer-employee relation but define ownership and exploitation framework in projects funded with certain - public – funds)

On the European level (research framework programmes) such sponsorship agreements can become extremely complex as these are generally consortium deals involving numerous partners

Today’s Technology EnvironmentToday’s Technology Environment

Key Factors

The Starting Point: Defining InnovationThe Starting Point: Defining Innovation

Invention v. innovation

Sustaining v. disruptive innovation (aka incremental v. radical)

Characteristics of Disruptive TechnologyCharacteristics of Disruptive Technology

Less profitable in the early years

May need long periods of time before market introduction (health care)

Need mass market acceptance to achieve full value

Cheaper, smaller, simpler, more convenient

The Knowledge EconomyThe Knowledge Economy

Protected knowledge now at the core of company valuation

Intangibles are now driving market cap Asset Management maintains the lead

for up to two decades – sometimes even longer

No diminishing returns

The Knowledge EconomyThe Knowledge Economy

In certain industries, patents significantly raise the costs incurred by non patent-holders wishing to use the idea or invent around a patent – an estimated 40 % in the pharma sector, 30 % for major new chemicals, and are thus viewed as important.

However, in other industries, patents have much smaller impact on the cost associated with the imitation (e.g. in the 7 – 15 % range for electronics) and are considered less successful in protecting investment. Source: Mansfield, Imitation costs and Patents, in The Economics of Technical Change, 1981

Technological Change –Technology Push versus Market Pull

Technological Change –Technology Push versus Market Pull

Entrepreneur

Emerging Customer Segments

Unsatisfied Existing Needs

New Customer Needs

New Methods of Manufacture &

Distribution

Technological Change

Higher Productivity &

Economic Growth

Technology Push: Looking for a ProblemTechnology Push: Looking for a Problem

Intellectual asset management – Technology Push versus Market Pull

Intellectual asset management – Technology Push versus Market Pull

Technology Pool






Exclusive

Joint Venture

Equity

Speech Recognition – what are the real customer needs? Or as Ozzy said: Radio ON!!

Speech Recognition – what are the real customer needs? Or as Ozzy said: Radio ON!!

Primary Disruptive Technologies for Next Decade

Primary Disruptive Technologies for Next Decade

Gene Therapy

Nanotechnology

Wireless

Other ??

Why are Disruptive Technologies Important?Why are Disruptive Technologies Important?

Importance of radical innovationImportance of radical innovation

Because it was in disruptive technologies that productivity growth was highest over the last 4 decades

ICT

Biotech

Most of this productivity growth achieved by new players, not by existing companies

PROs well suited to drive radical innovation

The Technology Transfer Process at PROs

The Technology Transfer Process at PROs

How to position a PRO in the marketHow to position a PRO in the market

What is the customer base?

Are the customers prepared, able and willing

to do R&D collaborations?

Does this apply to all technology sectors the

PRO represents?

Or do you have to use a custom approach in

different technological fields?



Technology Pool






Exclusive

Joint Venture

Equity

Local, Regional Customer baseLocal, Regional Customer base

Mainly SMEs ? High Tech ?

Multinationals ?

Incentives available ? Government co-

financing ?

Taxes ?

Local, Regional Customer baseLocal, Regional Customer base

What do you do if there is no such thing ?

Multinationals ?

Engage in company formation and

business development ?

But that changes the requirements

completely !

RequirementsRequirements

What is it? Tech commercialization is a parallel process of radical and incremental innovation, the determination of technical and business feasibility, the creation of intellectual assets, and the development of a plan to enter the market.

Why do it? To build sustainable companies

RequirementsRequirements

You will only be able to attract investors if your Intellectual Asset Management (IAM) approach is effective

IP in general, trade secrets and confidential know-how are the building blocks for such an IAM programme

That makes the national legal system re ownership and exploitation of PRO results so important > If you cannot manage your assets effectively for the sake of the investor you will have no business !

ConclusionsConclusions

• Technology Transfer, IP management and licensing by PROs has to be seen in the broader perspective of how the individual, national research and innovation system is structured• More collaborative research and research funding by

industry will make it more difficult to maintain freedom to operate• If freedom to operate exists for PROs, mature programmes require significant lead time and professionalism• OECD 2003 (Turning Science into Business): On average, PROs engaged in Intellectual Asset Management need more than seven years to break even• US-Policy considerations: Jobs created (more than 300000), 3 billion in taxes generated (1 billion royalties), source:AUTM

Thomas Gering Ph.D.Thomas Gering Ph.D.

[email protected]

technology transfer between public research and industry – laws, models and policy options thomas...

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