### Management of Intellectual Property in Publicly-Funded Research Organizations: European Guidelines ####

1. World Bank Seminar in cooperation with Ministry of Economyand Latvian Investment and Development AgencyJune 9th 2004, Riga Management of Intellectual Property in publicly-funded research organisations: Towards European guidelines Thomas Schwing Managing Director of IMG Innovations-Management GmbH, Germany Opinions and views expressed in this presentation are those of the presenter Innovation Relay Centre - IRC Hessen / Rheinland-Pfalz

2. Structure of the presentation • Background • European Situation and Research Policy • Towards European Guidelines • Models of IP-Management • Conclusions and Recommendations

3. How is Knowledge transferred between PROs and Industry? • Graduated students • Industry-funded research • Publications & presentations & Internet! • Informal & collegial networking • Consulting by Faculty Staff • Sharing of biological research materials • Intellectual Property – Licences • Spin-off companies • …

4. The European situation • Only a few countries have adopted Bayh-Dole like regulations • IP-Management is poorly recognised and funded • No compatible legal framework in Europe • No compatible good practices in European PROs • Not enough professionals for technology transfer/licensing • Licensing (linear) model does not work well – not enough uptake by industry (SMEs) • Partnering with industry works but needs developing into “responsible and fair partneship” • Not enough spontaneous spin-out creation: the process must be assisted

5. The European innovation scene • 1/3 of all R&D in Europe is performed by PROs • 2/3 of all pre-competitive Research is performed by PROs • Industry tends to concentrate on Development • Development uses more resources than Research • 70% of all patents based on PRO results • There is no Development without seeding from Research • But a large part of research results is not used for innovation

6. IPR & innovation issues in European research policy • Political issues : • The Lisbon objective of becoming the most competitive knowledge economy • 3 % action plan (Commission Communication “Investing in research : an action plan for Europe”) • Commission Communication “The role of universities in the Europe of knowledge” • Practical issues in Sixth Framework Programme: • IPR provisions • Innovation-related measures

7. IPR & innovation issues in European research policy - 3 % action plan 2003 • Commission Communication “Investing in research : an action plan for Europe” aiming at raising R&D investment to 3 % of GDP by 2010, with 2/3 from private sector • Improving the regulatory environment for R&D in Europe concerns not only R&D per se but also human resources, fiscal & financial issues, etc. … and IP/TT issues • Broad support from Member States, industry, Commission presidency (new “Initiative for growth”), ... • 46 new actions/recommendations to be implemented by the Commission, Members States and/or relevant stakeholders (universities, …) • 5 of which relate directly or indirectly to IPR

8. IPR issues in publicly-funded research Increased attention: • at international level: e.g. recent OECD survey/report “Turning science into business” • at national level: e.g. abolition of the “professors’ privilege” in Germany (2002) • at EU level: • recommendations in the 3% action plan • statements in the Communication on the role of universities • EURAB recommendations • On-going activities in DG Research and DG Enterprise (Expert groups, studies, ProTon network)

9. Towards European Guidelines • Group of experts (Industry, Research, IP-Managers) assembled by the EC • Conclusions published in the report: http://europa.eu.int/comm/research/era/pdf/iprmanagementguidelines-report.pdf • Endorsed by Valencia statement of ProTon Europe (Public research organisations Technology offices network-Europe) • Will serve as the basis for producing a manual and developing guidelines and tools

10. Main topics • Should universities and other PROs take an active role in the innovation process, or should they leave that role to Industry? • How can this be done most effectively in Europe? • Which models of IP-Management are useful? • Why is strategic partnering with Industry so important? • What can we do to improve it?

11. R E S E A R C H UNIVERSITY Industry Sponsoring Public Funding Education programs Donations RESEARCH Discoveries Infrastructure Scientists Ownership Open Science Model PUBLICATION UNIVERSITY + I N D U S T R Y INVENTIONS I N N O V A T I O N Public Funding Economic Programs EC FP PROTECTION Intellectual property SEED CAPITAL SCIENCE INCUBATORS COLLABORATIVE RESEARCH with INDUSTRY PROOF OF PRINCIPLE Innovation Model D E V E L O P M E N T I N D U S T R Y SPIN-OFFS & CAMPUS COMPANIES New Products New Services Licences Royalties Spin-out Model Interaction Model License Model

12. The Open Science Model • University (PRO) does not retain any IP rights (no patent applications) • No need for active IP management • Little incentive to invest in applications of inventions • Often no direct impact on regional economy • Still the most widespread model in Europe • Innovation rests on Industry • Most inventions from PROs are not turned into innovations • Responsibility of Inventor for IP

13. The Licence (linear) Model • PROs can select to own inventions (and other IPRs), but must diligently protect IP and seek licensees • Early (Strategic) patenting important because reconciles publication with investment • Requires professional IP management in PROs • PROs can grant exclusive licences • Widespread in the USA since Bayh Dole Act (1980) • Very successful in the US, in terms of: • License revenues for PROs and inventors • New products for licensees • New companies created spontaneously • But does not work so easily in Europe (except U.K.)

14. 1 license produces > $1M 15 licenses produce < $1M 16 licenses produce income 34 licenses produce license issue fees 50 inventions not licensed 50 inventions licensed 100 patent applications filed 300 inventions rejected Terrence Feuerborn, Former Executive Director University of California System, Office of Tech Transfer

15. What prevents the licence model from working in European Union? • Ownership of results by PROs missing (IP-laws) or not recognized as good practice in Europe • Patenting costs are prohibitive (compared to US) • No grace period in Europe • Non uniform IP laws across Europe • Not enough uptake by European industry • Most licensing deals are with non-European partners: does not really benefit the European economy

16. The interaction model • Builds on the Licence Model and IP management • Proof of principle is made in partnership with industry • Demonstration funded in part by public money (example EC framework programs) • Fosters innovation as interactive process • Compatible with PROs missions: • Contributes to Science • PRO can capitalize on foreground • Fair share of returns • Contributes to regional economy • Starts to works in Europe, but could work much better

17. The Spin-out Model • Also Build on the licence model and IP management • Background technology is used as platform to develop new business concepts • Proof of principle by the researchers themselves • Development funded by seed capital and funding (difficult) • Only alternative when no industry partner in sight • Contributes to regional development with labour • Contributes to European and national economy • Slow process: more than 10 years for mature companies • Works in Europe, but not spontaneously (shareholder?) • Often more support and help from PROs necessary

18. Consolidation: the « Innovation » Model • Innovation is not a linear process. It is the “conversion of new knowledge into economic and social benefits – now acknowledged to take place as the result of complex long-term interactions between many players »(Source: Cordis glossary of innovation) • PROs can contribute effectively to innovation only by the combination of the 3 models: • IP management & licensing as common core • Interaction with industry as a basis for medium term innovation and development of the economy • Support for creation of new companies as long term investment and rejuvenation of the economy.

19. Conclusions for PROs • PROs should seriously consider taking a pro-active role in innovation by managing IPR from research. • Main objective is maximize benefits for society. • Returns for PROs are attracting students, retaining good scientists, funding research. Not an alternative source of funding. • Straight licensing is not sufficient. More interaction with industry and creation of spin-outs are necessary • Staffing and training professional KTOs is the key.

20. Why is strategic partnering withIndustry so important? • Can be the most effective form of knowledge transfer • Fosters innovation through interaction • Benefits for the regional economy • May bring sizeable benefits (for research results) in a reasonable time frame • Makes European based companies more competitive • Interaction is good for industry and science (new ideas and research topics)

21. Most common problems • Ownership of results • Project management and performance • Compensation of indirect costs • Volatility of relationship • Others listed in the workbook with tentative solutions • Unfair or „bad“ contracts • Danger also from involvement of third parties (inexperienced technolgy transfer offices) • Unprofessionel/inexperienced PRO-administration

22. How to develop responsible partnering? • Understanding and accepting each other’s constraints and objectives and find ways to align interests and create a win-win-situation • Define mutually acceptable guidelines with representative professional associations • Implement clear policies at company and PRO level on « responsible » partnering, consistent with such guidelines

23. Conclusions for Industry and PROs 6. Closer partnering is needed to achieve medium term measurable effects of innovation on the « knowledge economy ». The existing relationship needs be revisited, allowing a more active role of PROs 7. Industry and PROs should adopt and implement by mutual agreement voluntary codes of conduct and guidelines

24. IP and Technology Commercializationin Latvian PROs • Recommendations (3-7) of World Bank report „Creating a 21st Century National Innovation System for a 21st Century Latvian Economy • Recommendations and pilot activities of RIS Latvija Project (finalized in 2004) • Partnerships and best practise exchange with other European Regions and Technolgy Transfer (Licensing) Centers/Offices • Participating in European and Professional Networks (PROTON, ASTP, LES, AUTM)

25. THE END! Thank you for your attention! Paldies! Danke! For more information: http://europa.eu.int/comm/research/era/ipr_en.html http://europa.eu.int/comm/research/era/3pct http://www.ipr-helpdesk.org