Technology Transfer
between Public Research and
Industry – Laws, Models and
Policy Options
Thomas Gering
Technology Transfer between Public Research and
Industry – Laws, Models and Policy Options
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
 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
Link to
Venture Capital
Technology Pool
Coop. R&D
mature companies
Licensing
Non-excl.
Who owns what?
Start-Up Companies
Exclusive
Joint Venture
Quasi-excl.
Field of Use
Equity
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
Which way should Public Research Organisations PROs
(incl. universities) go ?
 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
Which way should Public Research Organisations PROs
(incl. universities) go ?
 “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
Which way should Public Research Organisations PROs
(incl. universities) go ?
“….the panel judges university-industry
research interaction in Germany to be more
heavily oriented toward short-term,
incremental problem solving than universityindustry 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
Which way should Public Research Organisations PROs
(incl. universities) go ?
 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 Science
Foundation
Which way should Public Research Organisations PROs
(incl. universities) go ?
 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
Which way should Public Research Organisations PROs
(incl. universities) go ?
 Chirurgische Haltevorrichtung
 ApplicantPA Aesculap AG & Co. KG, 78532 Tuttlingen, DE ; RWTH
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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?
Link to
Venture Capital
Technology Pool
Coop. R&D
mature companies
Licensing
Non-excl.
Who owns what?
Start-Up Companies
Exclusive
Joint Venture
Quasi-excl.
Field of Use
Equity
Which way should Public Research Organisations PROs
(incl. universities) go ?
 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
Which way should Public Research Organisations PROs
(incl. universities) go ? – Some Data on the US
 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
Source: AUTM Licensing Survey 2002
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
Source: AUTM Licensing Survey 2002
Intellectual Property Licensing
by PROs in Germany
 Fraunhofer, and to a lesser extent Helmholtz and the universities,
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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
2000
Universities
Max Planck Society
Helmholtz Association
Fraunhofer Society
1800
1600
number
1400
1200
1000
800
600
400
200
year
Source: Turning Science into Business, OECD, 2003
00
98
96
94
92
90
88
86
84
82
80
78
76
74
72
70
0
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
 Commercialisation activities in the university sector have
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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 1985
Source: The Lambert Review of Business-University Interaction,
Dezember 2003
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
Which way should Public Research Organisations PROs
(incl. universities) go ? – Legal basis - USA
“…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
Which way should Public Research Organisations PROs
(incl. universities) go ? – Legal basis - USA
 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
 In the EU, concern that different national laws re
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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 1980
Source: OECD, Turning Science into Business, 2003
Which way should Public Research Organisations PROs
(incl. universities) go ? – Legal Basis internationally
 Either there is employer-employee law defining
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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 Environment
Key Factors
The Starting Point:
Defining Innovation
 Invention v. innovation
 Sustaining v. disruptive
innovation (aka incremental v.
radical)
Characteristics 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 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 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
Emerging Customer
Segments
New Customer Needs
Technological
Change
Entrepreneur
Unsatisfied Existing
Needs
New Methods of
Manufacture &
Distribution
Higher
Productivity &
Economic Growth
Technology Push: Looking for a Problem
Intellectual asset management –
Technology Push versus Market Pull
Link to
Venture Capital
Technology Pool
Coop. R&D
mature companies
Licensing
Non-excl.
Who owns what?
Start-Up Companies
Exclusive
Joint Venture
Quasi-excl.
Field of Use
Equity
Speech Recognition – what are the real customer
needs? Or as Ozzy said: Radio ON!!
Primary Disruptive Technologies for
Next Decade
 Gene Therapy
 Nanotechnology
 Wireless
 Other ??
Why are Disruptive Technologies
Important?
Importance 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
How 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?
Intellectual asset management by PROs
Link to
Venture Capital
Technology Pool
Coop. R&D
mature companies
Licensing
Non-excl.
Who owns what?
Start-Up Companies
Exclusive
Joint Venture
Quasi-excl.
Field of Use
Equity
Local, Regional Customer base
 Mainly SMEs ? High Tech ?
 Multinationals ?
 Incentives available ? Government co-
financing ?
 Taxes ?
Local, 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 !
Requirements
 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
Requirements
 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 !
Conclusions
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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@iam-corp.net