28 May 2003 OECD Breakfast Series 1

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Turning Science Into Business:
Patenting and Licensing at Public
Research Organisations
OECD Breakfast Series
in partnership with NABE
Bndicte Callan & Mario Cervantes
28 May 2003 OECD Breakfast Series 2
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Todays Themes
(1) Policy Background
(2) Methodology
(3) Legal & Regulatory Frameworks
(4) Survey Scope and Findings
(5) Lessons learned
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(1) Policy Background
As funders of public research, govts are
held accountable for results
local economic impacts? costs and benefits?
PROs aim for mission balance
commercial activity v research, teaching
Effects on access to, efficiency and
orientation of research
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Project Objectives
To document the laws and regulations that affect
the protection and licensing of innovations by PROs
To measure actual PRO IP activity
To assess impact of changing practices on OECD
scientific, industrial and economic performance
To identify best practices for framework conditions
and IP management, in an effort to balance PRO
commercial objectives with research missions
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A Focus on Licensing
No intl comparisons of licensing income
Better commercial proxy than patents
Captures broader range of IP activity
License clauses reveal information about PRO
public mission
License info helps create new indicators:
efficiency, income skew
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(2) Methodology
2 surveys administered by participating countries
1
st
to national governments on legal framework
2
nd
(modelled on AUTM and national surveys) to PROs
on patents and licenses
13 countries administered questionnaire (00 or 01)
Belgium, Canada, Denmark, Germany, Italy, Japan, Korea,
Netherlands, Norway, Spain, Switzerland, Russia, USA
Questionnaire responses not directly comparable
Mix of univs and PROs dependent on country
Response rates & % of valid responses variable
Normalisation by PRO size or research intensity not possible
2 countries used existing survey
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(3) Legal Frameworks for IP at
PROs are Complex
Intellectual Property Legislation
Employment Laws
Law/rules on government research funding
Contract Law
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Diversity of rules within and between
countries resulting from research funding
structures and historical tradition
Some countries inventors/researchers retain right to
academic patents; in others the institution or the
government!
In a few countries, more than 50% of public R&D
carried out by public labs and applied research
institutes as opposed to higher education
institutions
Central versus regional governance of higher
education institutions - e.g. national rules in
France but different rules on IP ownership at
universities across provinces in Canada or Cantons in
Switzerland
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Do countries need a Bayh-Dole Act?
Emulation of Bayh-Dole
- Japan; Germany; Korea
Reform of Employment Laws abolishment of
Professors Privilege at Universities
- Austria, Denmark, Germany, Norway
- Issuance of National Codes of Practice or
IP policy guidelines
- Canada, Ireland
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Trends in regulations
IP policies are not well disseminated, including
among faculty and students
Administrative or legal requirements to
disclose inventions, protect and work
inventions are lacking
Royalty sharing rules sometimes set
nationally, but move to greater autonomy at
institutions
Non-IP barriers remain:
Government limits to keeping royalty revenue
Public pay-scales that limit hiring of tech-transfer
professionals
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(4) TTO Survey Scope
Technology Transfer Office organisation
Nature of IP portfolio
Stock & flow of patent applications, grants, non patent IP,
licenses
Licensing Practices
Types of licenses and clauses negotiated, technology
sectors, exploitation requirements and other safeguards for
public missions
Licensing income & expenses
Income, litigation, skew of income earners
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TTO Organisation & Managment
Most TTOs are less than 10 years old
Most have less than 5 FTE staff
Most univ TTOs are integrated into the
university but not dedicated to tech transfer
Informal relations are main channel of tech
transfer (own or researcher contacts)
Licensing-in technology is less frequent than
licensing-out
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Most TTOs less than 10 years old, less
than 5 FTE staff
Germany
Italy
(Univ.)
Italy
(PROs)
Korea
(Univ.)
Korea
(PROs)
Japan
Russia
Norway
Switzerland
(Univ.)
Switzerland
(PROs)
0
10
20
30
40
50
60
70
80
90
100
0 20 40 60 80 100
Structure with less than 5 FTE
(% responses)
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Most TTOs are internal to the univ but not
dedicated to tech transfer
Denmark
Germany
Korea
(Univ.)
Korea
(PROs)
Norway
Japan
Italy
Netherlands
(Univ.)
Netherlands (PROs)
Russia
Switzerland
(Univ.)
Switzerland (PROs)
0
20
40
60
80
100
0 20 40 60 80 100
Internal TTO
(% reporting to be integrated into the PRO)
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Patent Data
Data refers to patents assigned to
institutions
Stock of technically unique patents
smaller at univs than at other PROs
(<20)
Number of patents granted per year per
PRO is <10
Most patent applications are in health
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Stock of patents and renewal
of portfolio
30 58 43 47 78 40 18 38 54 33 20
0
20
40
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80
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Less than 10 patents Less than 50 patents
Renewal of the portfolio
(less than 10 applications)
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Licensing Practices
Great variability in number of licenses
negotiated, IP type and technology
sector
Licensees more often small than large
firms, more often domestic than foreign
PROs uneven in their use of safeguards
in licensing agreements
No consensus yet on what are good
licensing practices
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Average # of licenses negotiated per PRO:
1-24 per year
0
5
10
15
20
25
30
United
States -
Univ.
Germany
PROs
Netherlands -
ALL
Korea ALL Russia ALL Australia
Univ
Japan ALL Switzerland
ALL
Italy ALL No
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% of licenses negotiated by IP type
Univ% PRO% No. % Univ% PRO%
Patented inventions 8% 8% 9 6% 11% 26%
Patent pending 12% 9% 16 11% 17% 23%
Non-patented 52% 41% 12 8% 14% 29%
Copyrighted material 24% 42% 106 73% 42% 23%
Industrial designs 0% 0% 3 2% 5% --
Plant breeder's rights 1% 0% 0 0% 1% --
Other 2% 0% 0 0% 12% --
Total 100% 100% 146 100% 100% 100%
All
Netherlands Norway Switzerland
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License requirements (all apart from the NRLs)
0
5
10
15
20
25
30
35
Requirement to work
the invention
Requirement to work
the invention in the
country
Right f or licensee to
delay publication of
papers
Reach-through
clauses f or the
institution
Licensor has right of
first refusal f or f uture
inventions by the
licensee institution
%

r
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p
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All Some None
PROs do use safeguard clauses in licenses
to protect mission, but do so
inconsistently
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Licensing Revenues
Gross license income per PRO varies from 10k - 10m
Euros per year across OECD countries
Wide variety in the number of licenses at PROs that
are earning income: 1-90 per PRO, median or 0-5
license earn income
In most countries, only 10% active patents in a PRO
portfolio are ever licensed and earn revenue in a
given year
Cost of patenting and licensing not well documented
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Gross licensing revenue by type of
PRO in (1 000s)
Year All Univ PRO currency
Australia 2000 99 525 79 834 19 691 USD
Belgium 2001 240 - - EUR
Germany 2001 - - 46 468 EUR
Japan 2000 1 397 - - EUR
Korea 2001 3 822 1 032 2 790 USD
Netherlands 2000 11 400 - - EUR
Norway 2001 - 2 000 7 700 EUR
Spain 2001 961 - - EUR
Switzerland 2001 5 650 2 800 2 850 EUR
United
States
2000 - 1 297 452 69 600 USD
Russia 2001 1 375 - - EUR

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In most countries, 10% active
patents are ever licensed and earn
revenue
Italy Japan Norway Spain
PROs All Univ PROs All Univ Univ PROs
Total # of active
patents
515 432 277 247 114 781 914 270
% Ever licensed
19% 21% 19% 51% 40% 8% 17% 36%
% Currently earning
income
8% n.a. 7% 13% 23% 4% 8% 9%
Netherlands Switzerland
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How many academic spin-offs/start
ups in 2000/2001?
Academic spin-offs/start-ups activity is low
yet widespread across countries
Most PROs create less than 1 spin-off/start-up
per year
US exceeds with 2 per institution per year
Multiple factors influence spin-off/start-up
creation :
the licensing strategy (license to firm or start-up a
company?)
pool of entrepreneurial researchers
access to capital
linkages to larger firms
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(5) Lessons Learned
Legal action can stimulate tech transfer, but national
context matters
A change in mindset is needed: more can be done to
increase awareness of IP policies and rules at PROs
Monitoring of IPR activities at PROs is ad hoc and weak
Critical size of TTOs larger than present average
No one-size fits all model of TTO organisation
University vs. non-university PROs in most countries have
taken very different approaches to tech transfer
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Lessons Learned
IP protection and licensing differs by
field/sector
Too much focus by policymakers on
patents as outcome hides large variety of IP
activity at TTOs
PROs are experimenting with different
models of TTO (regional vs. sector)
Good licensing practices need better
identification and dissemination
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Ultimate Goal of Tech Transfer
Too much focus on patenting as opposed to
spin-offs or other channels of tech transfer
Unpredictable nature of financial returns
Tech transfer capacity takes time and skills,
not just money
Evaluation of short vs. long term benefits of
tech transfer is necessary
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How can governments support IP
management at PROs?
Need to establish a clear and coherent IP
framework for PROs
Need to provide incentives for PRO reporting
and disclosure by inventors
Set example for conflict of interest rules
national research guidelines help
Mobilize National Patent Offices to disseminate
information to universities; training to tech
transfer professionals
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How can governments support IP
management at PROs?
Subsidizing Patenting and licensing costs at
PROs
- Denmark (8 million EUR over 2000-2003)
- Germany (50 million EUR to develop TTOs)
- Japan (exempt TLOs from patent fees)
BUT avoid capture and dependency culture
TTO Networking Initiatives
- UK (around hospitals)
- Germany (regional networks)
- Korea (sectoral)
Training & Awareness
- United Kingdom
- Leveraging Patent Offices (US, Denmark, Japan, UK)
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How can governments support IP
management at PROs?
Encourage data collection
International co-ordination of surveys is
necessary, especially OECD-wide
Need to protect confidentiality of
individual institutions
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Thank you!
Benedicte.callan@oecd.org
Mario.cervantes@oecd.org