An overview of University Industry Technology Transfer

An overview of University Industry Technology Transfer : Bayh-Dole Act and EU experiences Devrim Göktepe, Ph. D Lund University Max-Planck-Institute of Economics Entrepreneurship, Growth and Public Policy Group Jena Germany

We know… Ø Scientific research is accepted as one of the important driving force of modern industrial development and long-run growth. Ø Universities, the seed-beds of scientific research, contribute substantially to the competitiveness of industries both in the long -run and short-run Ø Consequently, most economies at the national and regional levels aim to bring the scientific and commercially oriented research together. Ø How UITT can be achieved?

Background A substantial amount of literature on University Industry Technology Transfer • TTOs, Bayh-Dole, Start-ups, Venture Capital etc…AUTM Data, US-dominated picture • So-called “European Paradox”: Europe is not receiving an adequate return on its investments into research and technology because of less and slower commercialisation of research results. • Swedish Paradox: High scientific investments and high scientific results are not utilized in innovation ° Is this altruism true? ° ? ? ?

2 views… Ø Optimistic view: The university is undergoing a cultural transformation to play a significant role in the knowledge-based society as an entrepreneur…Widely exemplified with US universities, and MIT, Stanford …in particular (see H. Etzkowitz); & regional growth impact Stanford, MIT) have aided growth of high-technology regions (Silicon Valley, Route 128). Ø Pesimistic view: Academic capitalisim, end of academic values, open science, and freedom of research. . . (Slaughter, P. David, R. Nelson, D. Mowery. . . )

Tech. Transfer Mechanisms

Questions? • Can universities be entrepreneurial? • Can UITT be achieved on an ad hoc basis between friends? (e. g. professor and his/her former students employed in industry, former colleagues etc…. ) • Or should UITT be institutionalized & professionalized? • If yes, how it should be institutionalized? ° US-system is a role model? Can we emulate Bayh-Dole Act in Europe? ° Do we really need Bayh-Dole Act in Europe to stimulate patenting, licensing and spin-off activities? ° Has Bayh-Dole been the main reason behind the rise of entrepreneurial activities at US universities? ° What are the (intended and unintended) consequences of such a trend?

US-System • USA System: • Famous/infamous Bayh-Dole Act: • The BDA, rationalized and simplified federal policy toward assignment of patent rights, licensing. • Emulation of Bayh-Dole Model • Debates or initiatives in Japan, Italy, Canada, Denmark, Norway, Germany, nearly all of which refer to Bayh-Dole

US-System • The number of U. S. academic patents quadrupled from approximately 800 in 1988 to more than 3, 200 in 2003. • Universities then license the patent to industry, which will further develop and market the invention. • Universities may grant either exclusive or nonexclusive licenses to industry. ° An exclusive license gives a single company the sole right to develop and sell the invention. ° A non-exclusive license allows many companies to use and sell the invention. • In either case, universities hope to receive royalties and/or other payments in exchange for the license.

US-System • Universities and industry interact through diverse, interdependent channels: (depths of the iceberg) • Training and industry employment of scientists and engineers. • Published research, consultancy; conference-based and other informal interactions with industry researchers. • Establishment of new firms by faculty, graduates, and other researchers. • Patents and licenses for university inventions (tip of the iceberg) • Surveys of US industrial R&D managers indicate that (outside of pharmaceuticals), patents are relatively unimportant channels of interaction. • Interaction with industry typically is concentrated among a few fields or departments within universities, which vary across universities.

Outside US • Many European & Japanese, universities now emphasize a “patent-centered” model of technology transfer. • Not always one-to-one adoption but an “emulation” of the “Bayh-Dole model. ” ° E. g. Germany, Denmark, Norway, Finland, Austria, Italy, Japan… ° UK and Israel have always similar systems to BD-Act

EPO State Member AT Austria Current Legal Framework University ownership, 2002 BE Belgium University ownership since 1990’s (both Flanders/Wallonia) BG Bulgaria [to follow] CH Switzerland Czech Republic Complex situation: Non-binding Guidance in laws and regulation Depends on employer- employee contracts an d provision in agremenets between funder of research and No explicit university legislation Employer owns rights DE Germany University ownership since 2001 DK Denmark University ownership wef 2001 EI Eire Employment law provides for employers to retain title to inventions by employees except as otherwise agreed in contracts EL Greece No specific regulations appear to exist ES Spain Spanish patent Law (1986) indicates that universities will apply for patents resulting from research of their professors Obligation to disclose and declare intent to commercialise w/I three months FI Finland Until this year professor’s privilege. A distinction is made between open research and collaborative research. The HEI is entitled to acquire the rights to the Invention that is made in collaborative research within six months from the disclosure of the invention (sec. 7). When the HEI has acquired rights in the invention, the inventor will be entitled to obtain reasonable compensation for the invention (sec 9). The HEI also has the competence to make contractual arrangements with third parties concerning patentable inventions that may be made within research projects. The entitlement to inventions resulting from open research will remain with theinventor. Such inventions, however, are covered by the duty to inform Legislation is general, i. e. universities are considered as employers, which will own the rights on inventions made by staff. “France adopted a legislation very similar to the Bayh-Dole Act in the US”. Concerning patents, the HEI about the invention. university professors are treated as “civil servants” by the national legislation, and the IPR belongs to the State. Revenues resulting from patent licensing are shared in equal parts between the university, the department which sponsored the research, and the team of researchers and professors who produced the invention. Individual scientists are encouraged to patent their inventions, while the university itself promotes all the efforts to pursue an effective transfer of patented technologies. In the case of CNRS, patents are either licensed to external firms, or sold in return for funding. 1977 Patent Act and 1998 Copyright Act indicate that IP generated in the normal course of employment shall belong to the employer Guidelines by the UK PO reaffirm that IP generated in publicly funded research should generally be vested in the organisation that does te research. FR France GB Kingdom United HU Hungary Universities own the rights to faculty inventions (recent change: Act CXXXIX of 2005 on Higher Education wef 2006) IT Italy Article 7 of National Law No 383 of 18 Oct 2001 assigns title of inventions at universities to researchers 2005 - the rules have changed again: the title of all the invention coming from externally funded research, and developed within a public institute, given to the institution, leaving to the researcher the possibility of a title only for research funded by the intra-institution source. No special legal framework for patenting at universities in Lithuania. There can be internal regulation within the universities. Universities could claim ownership as employers LT Lithuania LV Latvia NL Netherlands No special legal framework for patenting at universities in Latvia. There can be internal regulation within the universities. Patent law stipulates that if the State commissions particular scientific research or design relating to its sovereignty or security, the right to inventions, which may result while the contractor fulfills this work, shall belong both to the State institution and the contractor and the provisions of use for such inventions shall be determined by a specific contract. Legislation is general, i. e. universities are considered as employers, which will own the rights on inventions made by staff. (Van Looy et al. , 2007). However, possibility of deviating agreement between parties (OECD, 2003) NO Norway [not an EPO member] Norway has a specified Bill regarding innovation at public research organisation: University ownership, Teachers’ exemption repealed in 2001 PG Portugal No clear legal situation - Universities tend to claim ownership to faculty inventions The patent will in principle belong to the organisation in which the discovery is developed, unless it decides not to pursue a patent (but those researchers who are patent inventors may receive a share of the royalties derived from their patented discovery). PL Poland There is no special legal framework for patenting at universities in Poland. There can be internal regulation within the universities. ROM Romania [to follow] SE Sweden Professor’s privilege. SLK Slovak Rep There is no special legal framework for patenting at universities in Slovak Republic. There can be internal regulation within the universities. Universities may claim ownership as employers of inventors. SLO Slovenia Employment related inventions Act of 25 July 1995( as in force from 13 January 2007 as last amended on 18 December 2006) allows university institutes to claim right to employees’ inventions TR Turkey There is UK United Kingdom legislation is general, i. e. universities are considered as employers, which will own the rights on inventions made by staff. no clear-cut rules, but Funding agency,

Germany • Repeal of Hochschullehrerprivileg: Germany (2001 Reform of Employee Law): IPRs now belong to the university and not the individual inventor anymore. • As a consequence, the German government supports financially the setting up of Patent Valorisation Agencies (Patentverwertungsagenturen/PVA). Each PVA commercialises research potential and results on behalf of a number of universities, university colleges and research institutes. • Nearly all German Universities have bonds to one of the 20 PVAs.

Denmark • Denmark (2000, Act on Inventions at Public Research Institutions) • Mixed results: Bio-tech patents started to decrease in the aftermath of the introduction of the BD-act like institutional set-up, compared to Sweden where “teacher’s exception” is intact.

Norway • In the Norwegian case legislative changes (BDAct) went into effect in 2003 expressly to encourage greater commercialization through patenting research results. • This policy ambition faces the problem that no record of the patenting activity of academic researchers is available before 2003 when the country's "professor's privilege" was phased out.

Japanese BD-Act • In the past, the Japanese government, as a rule, acquired ownership of all intellectual property that was produced by the universities funded by the government. • However, in 1999 that long-standing policy was abandoned in favor of a new system whereby the government would transfer any intellectual property produced by government-funded R&D to the private sector. • This new system, which was established in Article 30 of the Industrial Revitalization Law, is known as the Japanese Bayh-Dole clause (hereafter referred to as JBayh-Dole) after the United States Bayh-Dole Act.

Italy • Shifts between abolishment and introduction of University Teacher’s Exception along with the establishment of a number of TTOs aiming to commercialize university research results. • Italy (2001 Legge Finanziaria …Article 7 of National Law No 383 of 18 Oct 2001 assigns title of inventions at universities to researchers • 2005 - the rules have changed again: The title of all the invention coming from externally funded research, and developed within a public institute, given to the institution, leaving to the researcher the possibility of a title only for research funded by the intra-institution source.

A Detailed view on Sweden • IPR awareness campaigns Sweden (1994; University holding companies and jointly the creation of “Innovationsbro /bridge Foundations”) • Can university scientists patent without Bayh-Dole Act? • If yes, why & how do university scientists patent without Bayh-Dole Act?

Empirical Research • Stage-1: Identification of Inventors at a Swedish Research Intensive University ° Name and address matching between EPO & University Personal Records ° 250 faculty members are identified as inventors at EPO ° More than 400 patents have at least one Uni-inventor • Stage-2: Survey of Inventors • Stage-3: Interviews with selected Inventors & TTOs

Distribution of Patents on 5 -year basis t ha ct W fe ef

University-invented Patents • Inventors’ data as a unique source for tracking not just “university patents”, but all of “academic patents search by inventor, not just by applicant!!! • (Goktepe 2008 see Meyer 2003, 2005)

Mapping of Patenting at LU

Gambro Automatic Alfa Control-17 Laval Sternby Ericsson Communication Ericsson Systems-10 Ahlfors Switch Core Computer Science-5 Akenine. Ericsson Möller, T. Electrical Measurements-30 AZ Laurell Erysave Gambro Gyros Telia SCS Electro Ericsson Science-25 Shousheng Infineon LTH Information. Siemens Technologies 45 Goalart Smeets Ericsson Larsson JE Mathematics-41 Gambro Lindoff Ericsson Cellavision Lundonia Heat & Power Bayer. Eng. 2 Volvo Denovastella Chemical Roche Center-36 Johansson, B. Sterner. Ericsson Hahn-Hägerdal Forskar Helsinborg Patent ENG-3 Biotechnology 27 Thomasson Sanodor Protista Mattiasson Applied Biochem-25 Physics-44 Spectracure Heidari Obducat BTG-int Mechanics-10 Telia Cedell Cellavision Industriell Electronic-28 Alakula ABB Gertmar IGEN Mosbach Food ENG. -19 PROBI Molin Immunology 18 Alligator Bio-invent Borrebaeck Energy & Building Design -9 Diolog semiconductors Nilsson, J. 2 Acoustics Dalloz Safety Hammer Building Science-5 Alsmarker Södra Timber

Medical Faculty Experimental Medicine Sciences-21 Clinical Sciences 86 Cell-Biology-8 Johansson Hansa Neuroscience-4 Heptahelix GS-dev Schouenborg Berglund Nilsson. JSteen Jolife Ortopedi- Bone Lidgren. Derma-13 Support Kopylov Clinical Physiology-9 Bengmark Leandersson. Actinova Thrombosis Coagulation Dahlbäck Björk, LAffitech. NO Arctic Partner-FI Actinova AGY-US Exp. Brain Research-6 Tumor Immunology. Wieloch 17 BM-Oxigine Pero 'Bristol. Myers Argmed KB Bacteriology-Asto carotene 12 Creal. Base Wadström Arla Probi Inflamation Microbio-24 Amersham Lilja Molecular Hansa Pathogenesis-21 Prolight Diognostic Surgery-5 Torsten Clinical Chem-22 AZ Ascension Handdevelop Ortp Immunology 9 Abbot labs-US Medicine-20 Cardiology-7 Vitrolife Camurus Physiology- Laboratory Medicine 102 Svanborg Medscand Foods Nordicbio

NATURE Astronomi Chemistry-27 Esytech Anal-chem. Mathematics-1 Marko 10 Svendenius Fagerhults Belysning AZ Norberg Thordarson Akzo Geography Eco-system Ecology Geology Pysical-chem-Nobel 3 Lindman Berol Thuresson Nobel Forskar Patent VTT-FI Bio-chem. Pharmacia 8 Esperion Persson Tjerneld Therapeutics-US Amersham Environment Computer Org-chem. Oxigine 6 Ek Folkesson Ekberg Larsson Sufucell. DE Physics-3 Theoretical Physics Peterson Agrovison Cell-Organism Biology-2 Jarl-Suneson Sandoz- Gene CH/DE Widegren invent

Skewed Distribution of Inventors 2 main Modes of Commercialization of Patent • Licensing to existing companies ° Giving or selling the patent to the company • Start-up formation

Mode of Commercialization Non Spin-off=Passive versus Spin-off=Active Inventors Typology TYPE-3 Occasional-Active Inventors TYPE-4 Occasional-Passive Inventors TYPE-1 Serial-Active Inventors TYPE-2 Serial-Passive Inventors Frequency of Patenting Have less than 3 versus 3 or more patents

Findings-i… • Swedish university scientists also contribute a number of patents. • What differs are ownership patterns & institutional features of national innovation and academic systems • Informal relations with industry, existence of teacher’s exception (Goktepe 2008 see Meyer 2003, 2005)

Findings-ii • University scientists who were involved in competence centers, like Bioseperation, Swegene, Functional Food Center, or in joint centers of different faculties were listed as inventors more often than non-participating scientists. These platforms also provide a substantial number of patents and spin-off companies. • A substantial amount of the patents resulted from the individually initiated relations with industry, we see bottom-up motivations. • UITT is resulting from the synthesis of bottom-up (individual) and top-down (government) initiations, instead of following a single mode. ° E. g. abolishment of university teachers’ privilege law, and adoption of Bayh-Dole model will not increase relations between these actors.

Findings-iii • We identified 4 -different types of inventors • Each type of inventors have similar but also different needs, motivations and expectations • This may imply customized approach according to their needs ° Universities should aim to integrate and utilize these different types rather than marginalizing any of them • The system provides the inventors with multiple channels and multiple organizations. ° Higher dependence on the industrial partners makes the system vulnerable! ° A change in the system may lead to backlash ° Catch-22 for TTOs

Discussion-i • Patenting or commercial activities: voluntary & instinctual behaviours or transformation of academics • A kind of transformation in an evolutionary way, rather than total transition to entrepreneurial activities ° This transformation is unlikely to be achieved by topdown revolutionary changes, e. g. reforming the university system.

Discussion-ii • Individual ownership of IPR and alternative 3 rd Agents create positive motivations for university scientists to patent their inventions. • Current system provides the inventors with multiple channels and multiple organizations • But, none of the path is not clear enough for some!!! • What matters: Nature or Nurture • Innovation & creativity is difficult to be legislated but possible to be protected and nurtured

Questions… • Who are the serial inventors in the university? To whom /how do they transfer their research results? • The Decision to Participate in Technology Transfer is Influenced by ° Imprinting: Where and When an Individual Trained. ° Social Learning: What their Chairman Does; What Others Like Them Do. ° Boundary people, multiple-tasks ° Build/Define Culture Act as Role-Model—Can TTOs learn from them? • Would they resent TTO’s activity or cooperate with it? • How do the local industry react to the role of TTOs? ° UITT is not only patenting and spin-offs