Research
has an important role to play in the development of a technology-based society,
and this role will continue to grow. Should universities' approach to problems
be determined by practical factors or internal scientific considerations? MIT
has demonstrated that it is possible to combine utility and scientific
excellence. A university which generates added value for its environment without
comprising its scientific aims and integrity is generally referred to as an
entrepreneurial university. It is essential that procedures are put in place to
identify and resolve conflicts between commercial interests and education or
research at an early stage, in order to ensure that there is no negative impact
on scientific quality and that commercially successful researchers within
universities are given the respect they deserve and can function as role models
and mentors. The commercialisation of research results in the form of company
spin-offs and licensing is one of the many indicators that a university is
providing added value for society. Studies have shown that the central
mechanism which allows a university to generate added value for its environment
is employee mobility.
Discussions
on universities which generate added value for society began in Sweden as early
as the 1940s, and resulted, amongst other things, in university expenditure on
research and development as a proportion of GDP being the highest in the whole
of the OECD (twice as high as in the majority of countries). At the beginning
of the 1960s INFOR, the institute for the utilisation of research results, was
founded. The institute was granted initial funding equivalent to SEK 170 million
at today's values, for use in the first phase of commercialisation of
university research. The eleven holding companies set up in 1993-1994 received
a total of SEK 64 million. When compared with INFOR, the total capital base of
the holding companies should have been around SEK 500 million, in order to
ensure their long-term survival. During the 1970s so-called "R-units"
were created by the Swedish Board of Technical Development (STU). These units
provided a service for inventors and innovators in universities and elsewhere
during the first phase of commercialisation. The services included general
advice, an initial examination of ideas, evaluating innovativeness and
patentability, assessing markets and profitability, financial contributions,
consultancy and drawing up contracts with commercial partners, including
licence agreements. The costs of the services provided for university research
amounted to around SEK 50 million per year. One socio-economic calculation
showed that three genuinely successful projects (out of a total of 2000)
received all the funding from the Swedish Board of Technical Development for
new projects during the 1970s (the state's earnings from a variety of taxes
during the life cycles of the products under development exceeded the investments
made by the Board in this area). Studies of investments made at Stanford
University and in the UK follow the same pattern.
The Swedish
Board of Technical Development committee, which was appointed in 1974,
advocated that basic research should be combined with innovative thinking and
that these two strands should be regarded as being of equal importance and
should develop a close symbiotic relationship. This is reflected in many of the
opinions expressed by VINNOVA's reference and expert groups. These two parallel
strands have long been an integral part of the internal culture at MIT and
Stanford.
By the end
of the 1970s there were two Swedish universities where technology-based
enterprise in general and research-based enterprise in particular were being
studied (Chalmers and Linköping universities). At the beginning of the 1980s
many countries were hit by an economic crisis. In order to improve the economy
of the universities and the country as a whole, investments were made in new
research-based companies and in suitable locations for the companies such as
technology parks. Studies carried out at the end of the 1980s showed that the
government's hopes for rapid and obvious growth in employment resulting from
the commercialisation of innovations produced within universities or research
projects were very far from being fulfilled. The positive outcome was that a
large number of research-related companies were set up and that they seemed to
be generating significantly more growth for their customers than within their
own organisations. It became clear that research-based knowledge companies with
a business concept which involved transferring technology and knowledge from
the research system by means of productisation acted as an effective complement
to the research and development activities of large companies. A study was
carried out which compared research-related companies (firms based in
technology parks, other spin-offs from universities or companies formally
collaborating on research and development with universities) and companies
employing technical staff (at least one employee trained in research into
technology/natural sciences and/or at least four other academics with a
background in technology/natural sciences). Growth levels in the companies
employing technical staff were significantly higher. There were few examples of
company spin-offs from research institutes. Other studies indicated that the
institutes played an important role as a link in the flow of trained
researchers between universities and industry.
The
experience gained by Chalmers and Linköping universities began to spread to
other universities. At the start of the 1990s, a comparison carried out between
universities in Europe to identify those which were developing entrepreneurial
ideals showed that many Swedish universities were leading the way. In recent
years a number of different entrepreneurial activities have been initiated
either within universities or in organisations with close links to them.
In 1988,
the Swedish Board of Technical Development launched a programme to support
research-based spin-off companies, known as the "technopol"
programme, which provided funding of SEK 15 million per year to eight firms.
The technopols provided support for training, consultancy (patent and licensing
issues, company start-ups and development), mentoring programmes etc. INFOR,
the R-units and the technopols all shared the aim of developing the skills
needed for the first phase of commercialisation of university research.
The economic
crisis in 1991 influenced the work on the government's 1993 research bill.
Increasing efforts were made to find ways of rapidly creating more jobs from
university research, whilst at the same time the state funding was being cut
back. The 1993 research bill proposed that new collaborative organisations
should be set up outside the universities because the driving forces within the
universities were not sufficiently effective. The Swedish parliament decided to
establish "collaborative foundations" linked to technology parks. The
foundations received funding of SEK 1 billion, in the form of shares in
state-owned companies. The returns were estimated to be SEK 50 million per year
in total. The Swedish parliament also decided that universities should be entitled
to carry out research within company-type organisations, and as a result eleven
holding companies were established. Each foundation was to have between SEK 4
million and SEK 8 million available for investment, because it was felt that
seed capital was already available from other sources, including NUTEK (the
successor to the Swedish Board of Technical Development). All the initial
support for researchers in their efforts to commercialise their research by
setting up new companies or licensing their products was to be provided outside
the universities in technology parks or technopols. In contrast, at Stanford
University which was the original role model, this type of support is provided
within the university itself.
It is now
clear that the holding companies developed in a quite different way to that
planned in the 1993 bill. In cases where the technology bridge foundations
supported the holding companies, these in their turn were able to provide
researchers with support in the initial stage of the commercialisation process
(verification, market assessments, patenting). The Stanford model, which was
the starting point for the discussions at the beginning of the 1990s, had
become accepted by a number of universities. Nowadays, resources for
initiatives during the early stages of commercialisation have run out. At the
same time, there has been a dramatic reduction in the availability of seed
capital, and venture capital companies now rarely put their money into
high-risk investments. Projects or companies in the early stages of development
with products which have not been exposed to the market are always regarded as
being a high risk.
A survey of
researchers was carried out between January and March of 2001 by the Swedish
National Audit Office. The survey was sent to around 10,000 researchers and
responses were received from 2640.
A number of
the questions in the survey covered the topic of universities' responsibility
for collaboration with industry. Around half of the respondents felt strongly
that universities should promote the commercialisation of research results. The
majority of the researchers were not in favour of universities taking
responsibility for the evaluation of patenting to the same extent as for the
publication of results. However, a clear majority felt that universities should
provide support for new companies based on research results produced by the
universities, for example in the form of incubators. The majority of the
respondents were opposed to the idea that universities should invest seed
capital in newly established companies, for example by becoming part owners via
their holding companies.
A number of
the questions concerned universities' investments in collaboration and
commercialisation. A majority of the applied researchers felt that these
investments should be increased. A minority of those involved in basic research
were of the same opinion. A significant majority were uncertain about the
attitude of university management.
The majority
of applied researchers had experience of collaborating with companies on
research, whereas this applied only to a minority of the basic researchers.
Ninety percent of the applied researchers from technical universities were
involved in collaboration with companies at the time when the question was
asked.
A clear
majority of medical researchers felt that the so-called "professor's
privilege" (the right of Swedish university lecturers to own their own
research results) contributed to the commercialisation of a larger proportion
of research results. Twelve percent held the opposite view, that is that the
professor's privilege definitely did not help commercialisation, and in the
case of respondents from technical universities, the figure was twenty percent.
A very
large majority felt that better information must be provided to help
researchers in their contacts with industry. There was also a clear majority in
favour of information about the commercialisation of research results being
included in researchers' training.
The
majority of applied researchers were of the opinion that collaboration with
industry should be regarded as an additional qualification. A minority felt
that researchers' freedom would be threatened if too much emphasis were put on
cooperation with external players.
Almost 350
of the approximately 2600 researchers who responded to the Swedish National
Audit Office's survey had had experience of commercialisation. For between 35
and 40 percent of them, this took the form of a company which they wholly or
partly owned. Ten percent of respondents stated that they intended to become
involved in commercialisation in the near future. Half of them felt that they
needed a large amount of support in the patenting process. A further 40 percent
said that their research had commercial potential. Only 35 percent knew
anything about the opportunities offered by the holding companies.
Part of
VINNOVA's activities in this context involved interviewing nine entrepreneurs
who had successfully commercialised the results of their research. The
interviews demonstrated that support in the initial stage of the
commercialisation process was of crucial importance. The successful
entrepreneurs made the general point that the first phase in the project should
involve understanding the business and market potential of the product. They
also explained that the major problem in implementing the project was to find
competent staff, in particular a managing director. The entrepreneurs generally
had a positive attitude to the professor's privilege.
There are a
number of incentives for researchers to commercialise the results of their
work, including the fact that they will see their own research being used and applied,
the creation of personal networks and financial profits both for themselves and
for the institution or university where they work. If the university management
and other managers have a positive attitude, and if the researcher is familiar
with the commercialisation process, then the incentives are even greater. The
university's qualification guidelines, amongst other things, will give an idea
of the attitude of university management. The qualification process can also
take into account an individual's ability to work together with external
bodies. Additional demand can result in increased incentives. The SBIR
programme in the USA is an example of successful demand-led commercialisation
of research results. In addition, it must be possible for researchers to
continue their research work during the commercialisation process. The right of
ownership of the research results forms part of the researcher's financial
benefits.
Universities
have a financial incentive to commercialise research results, even given the
existence of the professor's privilege. Universities can sign agreements with
individual researchers concerning profit-sharing arrangements. However, the
university must be able to make the researcher a good offer during the course
of the negotiations in order for an agreement to be reached. One problem is
that any profits made by the holding company cannot automatically be used to
fund education and research at the university in question without the
government's consent. If consent is not given, any profits will be paid
directly to the treasury. However, foundation universities have full control
over the profits made by their subsidiary companies. Universities which do not
have a holding company and which are not foundations do not have any legal ways
of making financial profits. However, there are still a number of incentives
for these universities in the form of indirect profits. The commercialisation
of research results can lead to the development of a network of contacts with
industry which may attract researchers, students and additional external
financing. During 2002 the Swedish Royal Institute of Technology's spin-off
company carried out thirty percent of the research which the institute
commissioned from private companies. However, there are few incentives for
universities in current legislation. The task of collaborating with industry is
described in only one sentence in the university act and none of the twelve
sections of the university ordinance cover collaboration. It is not clear to what
extent and in what way collaboration involves the commercialisation of research
results. However, it is clear that only those universities with holding
companies can legally become involved in commercial activities. There are also
no sensible means of ensuring that inventions, secret material provided by
companies in the context of the collaboration with the university and
applications to organisations which finance research remain confidential. One
very powerful incentive was advocated by the rector of the Karolinska
Institute, Hans Wigzell: It is unethical not to make every effort to ensure
that the results of medical research are commercialised, because this is the
only way in which medical developments can be used for the benefit of the
population as a whole. Where there is an issue of ownership rights, it is
likely that this type of right would increase the university's incentives to
encourage the commercialisation of research results.
As early as
the 1980s, the Swedish Board of Technical Development carried out a study which
showed that public authorities' support for the commercialisation of new,
research-based ideas was to a large extent socio-economically profitable. The
calculation was based on the additional taxes paid by a few genuinely successful
new businesses during the lifecycles of their products. In addition, projects
which attract venture capital before the products involved have been launched
on the market also generate additional tax.
Regardless of
whether the professor's privilege is abolished or not, it is essential for
university innovation systems to develop expertise and provide reasonable
financial resources for the first stage of the commercialisation process. This
will help to extend the commercial use of university research results. Given
that researchers in general are in favour of the professor's privilege,
abolishing it may have the opposite of the desired effect. Instead of
supporting the process, it could become source of conflict or an obstructive
factor. It may be better instead to concentrate efforts and financial resources
on the important changes which are needed.
VINNOVA's
proposal is therefore not to give universities the legal right to ownership of
patentable inventions, software and other innovations. This type of solution
would give all universities the responsibility for commercialising new
products, even those who have neither the expertise nor the interest in doing
so. A more appropriate solution would be to focus on developing universities'
skills in supporting the first stage of process of commercialising research
results.
The advantage
of abolishing the professor's privilege is that it would undoubtedly make
agreements between the parties simpler. If universities are given ownership
rights, they would be likely to take on increased responsibility for these
issues. The disadvantage is that this may prompt university staff to request
that their salaries be reviewed. One problem is that the current system does
not promote cooperation between individuals at research group level. How much
of the earnings are generated by the individual researcher's contribution and
how much by the knowledge base developed by the research group as a whole? The
abolition of the professor's privilege would probably help to resolve this type
of problem. Even if the professor's privilege is abolished, it is essential
that skill levels are raised. Currently all universities with holding companies
and all foundation universities have the option of drawing up agreements to
transfer the ownership rights in employees' innovations to the university (or
holding company) and to give the researcher a share of the profits in return.
This only makes sense if the university has the expertise and organisation in
place to handle the innovations. If this is the case, then the majority of
researchers will approach their own university, even if no agreement has been
signed and even if the legislation is not changed.
Increasing
the professionalism of universities will give them the opportunity to acquire
the ownership rights to innovations, providing that the individual university
has the necessary skills and resources. The objective of a university with
entrepreneurial ambitions must be to draw up employment contracts which give it
the right to control its employees' innovations and provide for a share of the
profits to go to the employee.
In order to
set the process in motion, we propose that the professor's privilege is
modified in such a way as to give researchers the right to report patentable
inventions and software in return for an offer from the university,
confidentiality and the right to be acknowledged as the inventor/originator.
The final decision on ownership rights can only be made by a court. However, an
acknowledgement from the university, with its knowledge of the research which
resulted in the invention, can have a significant impact on the remainder of
the commercialisation process. At the same time it will allow the results which
the researcher wants to keep confidential to be separated from the rest. If the
researcher does not report the results, then they will be made openly
available.
It may also
be appropriate to consider whether the university should automatically be given
rights to part of the net earnings if the researcher chooses to commercialise
the research results himself. This would strengthen the university's position
in negotiations with the researcher. If the right to compensation is
introduced, then there must also be an obligation on researchers to report
patent applications, otherwise it will not be possible to pursue claims for
compensation. Italian universities have a right to compensation, and the
professor's privilege has recently been introduced there. In countries where
the professor's privilege has been abolished, universities have this right
either in the form of a legal provision or by virtue of their strong
negotiating position, based on the transfer of ownership rights.
VINNOVA has
surveyed the innovation systems of eleven universities. There are significant
differences between them, which are the result of different circumstances such
as the attitude of university management and of researchers, whether or not the
university has a holding company, the history and origins of the university,
the academic fields it is involved in, whether or not it is a multi-campus
university and regional variations, such as the types of local industry. The
conclusion of the survey is that it is not possible to recommend one system to
suit all universities. Each individual university is best equipped to decide on
the structure of its own innovation system and above all to determine the role
which the university itself will play in the system. The university may take an
active role in developing an innovation system within the organisations it owns
(as happens at Stanford University, at MIT and in the UK) or it may choose to
outsource the commercialisation process (as in Germany).
The survey
identified a number of ingredients which are essential for a successful
university innovation system. The management is of crucial significance for the
functioning of the commercialisation process and for ensuring its legitimacy
within the university. It is also essential that the innovation system is
easily accessible and that expertise in assessing financing agreements is
readily available. Employee mobility can result in researchers meeting people
with complementary knowledge and experience who can form a project group to
develop an idea and then found a company. It is absolutely crucial that the
university, or the organisation appointed by the university, has the necessary
skills for the commercialisation of university research. In addition, it seems
that mechanisms are needed to resolve conflicts of interest and to develop
strategies for managing patents and other intellectual property rights of
research groups. Other important ingredients are start-up agencies, incubators
and technology parks.
Increased
collaboration between the academic world and research institutes is one method
of ensuring the commercialisation of more research results. In simple terms,
the university contributes knowledge and the institute identifies possible
problems. Institutes develop their own expertise through research and
development work in areas which are thought to have future strategic
significance, without a specific customer for the work being involved. They
also carry out problem-oriented research and development in collaboration with
companies, universities and other research organisations, and are commissioned
to do research. In general terms, the work is based on existing knowledge which
the institute develops, refines, combines in new ways or applies to new
situations and problems. The concept behind the institute is to convert
research and development results into profits. This is done primarily by
transferring the results on an ongoing basis to existing Swedish companies, but
also in some cases through spin-off companies. In recent years there have been
a total of around 10 spin-offs from the 18 IRECO institutes, the majority of
which have come from ACREO AB.
The
institutes own the rights to their employees' inventions. Where university
staff are involved, an agreement is made to set aside the professor's
privilege. If companies form part of the group, they often have the main rights
to the research results. In the case of commissioned research which is funded
by a company, the research results normally become the property of the client.
The problem of the researcher's need to publish the results is generally
resolved by means of so-called "delay clauses".
The
institutes are not responsible for commercialising universities' research
results. Their role is to improve and refine in some way the research results
produced by universities. It is more appropriate in this case to refer to
"joint R&D projects" or "joint R&D results".
Universities
must have the personnel and financial resources to be able to turn commercially
viable research results and research-based concepts developed by their
researchers or research groups into a package which can easily be taken on by
an external licensee, seed capital company or other commercial external party
and which is protected under intellectual property legislation. For
entrepreneurial universities, "commercialisation" in the full sense
of the word is part of their core business. Just as a company would never
transfer control over and development of its core business to an external
organisation, so a university which aims to take on an entrepreneurial role
cannot either. In addition, entrepreneurial universities must make a conscious effort
to use their research capital carefully and avoid investments which risk making
"good researchers into poor entrepreneurs". On the other hand, one of
the key tasks for these universities is to ensure that their good researchers
generate added value for society by using new work structures and incentives to
encourage them to think in commercial terms during the planning and
implementation of research.
The
problems related to seed capital and the availability of venture capital must
be resolved.
A large
number of small research companies which in theory have strong patents, in
practice lack the financial resources to protect themselves against
infringements of these patents by large companies. A study carried out in
Denmark showed that if European legal expenses insurance for patent
infringements were available, Danish companies would earn an additional 100 to
340 million Euros.
In order
for an innovation system to grow and develop, it must be constantly monitored
and assessed, and the effects of its activities must be measured. In this
context indicators for important result variables and critical factors are of
central significance.
|
Current
opportunities for universities Universities
already have powerful tools at their disposal for providing support and
strengthening the incentives for the commercialisation of research results.
These incentives can be further reinforced if the university management has a
clear and positive approach to commercialisation. Role models can also play
an important part in increasing the incentives for researchers to
commercialise the results of their work. |
|
Conclusion
concerning qualification issues No
additional assessment criteria or detailed regulations are needed. |
|
Proposal
to increase demand In order to promote the development of
expertise, stimulate growth in small and medium-sized companies and increase
demand for the results of research from universities and research institutes,
we propose that a programme similar to the SBIR (Small Business Innovation
Research) programme in the US be set up (for a more detailed description, see
appendix 10). |
|
Proposal for financial incentives for
universities Universities
should be given the right to dispose of holding companies' profits. The
government should permit the funds from universities' holding companies to be
used to establish foundations with the aim of promoting education and
research in the university in question, in accordance with the terms of the
ordinance on the provision of capital (1996:1188). |
|
Proposal
for legislative incentives Section 1,
§ 2, paragraph 2 of the university act should be changed to read: "Universities
must also play a role in the development of society." Addition to
the university ordinance: Collaborative
(or development) tasks must be described in the university ordinance, in
order to clarify the university's responsibility for supporting the
commercialisation process. In addition, the need for regulations in the
university ordinance to resolve conflicts of interest must be investigated. |
|
Proposal for
addition to the secrecy act/ordinance Regulations
on secrecy should be introduced to cover 1)
protection of the intellectual property rights of research results for
the benefit of the owner of the rights employed by the university 2)
company secrets which are
supplied to the university, outside the context of commissioned research, if
the information is supplied under the proviso that it must not be disclosed In
addition we propose that the words "and research" are added to section
8, § 6 of the secrecy act, as also suggested by the NYFOR committee. Finally,
we propose that section 8, § 6 of the secrecy act should also be applied to
research foundations such as SSF and MISTRA. |
|
Proposal
concerning the right of ownership of research results The
professor's privilege should be retained. Individual researchers should have
the right to report their patentable inventions and software to the
university where they are employed. This right must be linked to a regulation
on secrecy, which will be under the control of the researcher, and to the
right to be acknowledged by the university as the inventor/originator. Consideration
should also be given to granting universities the legal right to receive
reasonable compensation from the net earnings from a patentable invention, if
work on the invention was carried out using the university's resources. If a
right to compensation is introduced, there must also be an obligation on
researchers to report their patent applications. |
|
Conclusions
on universities' innovation systems Each individual university must take
responsibility for designing its own innovation system. The following factors are characteristic of
successful innovation systems: -
clear approach to
commercialisation on the part of management -
clear access to the innovation
system -
mandatory legal review of research
funding contracts -
availability of ideas -
opportunities to test out ideas -
opportunities for university
researchers and industrial researchers to work in each other's environments -
the opportunity to set up a team -
expertise -
method for resolving conflicts of
interest -
strategy covering research groups'
patents and other intellectual property rights -
holding companies which are fully
under the universities' control, in a similar way to foundation universities'
subsidiary companies -
incubators, start-up agencies etc. -
technology parks -
indicators |
|
Funding proposal We
propose a programme to allocate funds to universities for the initial phase
of the commercialisation process. The starting point should be the model used
by MIT, Stanford University and UK universities for the commercialisation of
research results. A total annual contribution between SEK 50 million and SEK
75 million seems reasonable when compared to similar programmes in other
countries. We propose that technology bridge foundations should calculate the
grants to be made to universities' innovation systems and the investments in
unlisted companies, as a means of repaying their capital to the state in
accordance with § 21 of their foundation ordinance. A
matching fund similar to the Israeli Heznek fund should be set up. In
addition, VINNOVA and the Swedish Industrial Development Fund should be
commissioned to issue a proposal and set up an effective structure and
working methods for seed capital in later phases of the process and for
start-up funds in accordance with the proposal made by the Swedish Trade
Union Confederation. Under the heading "Proposal to increase demand" above,
we proposed that a programme similar to the SBIR programme in the US should
be introduced. This could also make a contribution to funding in the early
stages. |
|
Proposal concerning legal expenses insurance
for patent infringement cases The Swedish government must work together
primarily with Denmark and the other Scandinavian countries to raise this
issue in international forums such as the EU, EPC and WIPO. The government must enter into direct
discussions with the commission on patent infringement, in order to initiate
measures via the EU which could result in a solution. In addition, the
government must introduce changes into certain parts of the regulations on
state support, in order to allow state support to cover the costs of legal
expenses insurance for patent infringement cases. While a solution is being developed, as
described above, consideration must be given to a government initiative to
provide better protection for patents which are owned or financed by the
state, including the "background" research funding. One possibility
is for the state to commission the Swedish Legal, Financial and
Administrative Services Agency to design a legal expenses insurance policy
for patent infringements, which will cover legal expenses up to a certain
limit in return for the payment of premium, but will also ensure a greater
level of commitment in cases where the state is an interested party. VINNOVA is prepared to change the terms under
which it provides support to development projects, so that the funding can be
used to pay the premium for legal expenses insurance for patent
infringements. |
|
Proposal on indicators We propose that VINNOVA, in collaboration with other central research
and innovation authorities, is commissioned to publish a bi-annual report on
the development of the commercialisation of research in Sweden, which is
based on the evaluation of indicators. The report must as far as possible
compare developments in Sweden with equivalent developments in other
countries. |
|
Proposal for the remainder of the process The remainder of the process must take the
form of in-depth discussions, conferences, seminars and hearings with the
parties involved. VINNOVA is prepared to take part in this. The aim is to
continue the work to produce data for the future research policy bill in
2004/2005. Chalmers Technical University, the Swedish
Royal Institute of Technology and Stockholm University are prepared to host
certain testing activities. The problem with seed capital in Sweden will
not be resolved by means of VINNOVA's proposal. In accordance with the directive
issued by the body commissioning the report, VINNOVA has instead focused on
structural issues. In addition industry research institutes have
not been a central focus of the work. Further work is needed to throw light
on the interaction between universities, institutes and companies, and to
propose measures which could extend and develop this interaction in the
interests of the country as a whole. |