In an article in the Financial Times (subscription required) earlier this week, professors Thomas Allen and Rory O’Shea discussed the role of technology transfer offices at universities and specifically some of their shortcomings in promoting commercialisation and technology dissemination. Allen and O’Shea argued that the tendency to focus on generating revenue rather than promoting innovation has limited the effectiveness of tech transfer offices. In fact, they say that the offices can act as ‘roadblocks’ especially when they demand too much, such as overly large chunks of equity and unreasonable financial terms. These issues, the authors note, are often found at European universities. Other problems, more common in the United States, include having too much of a ‘home-run mentality’ and aggressive and unrealistic valuations.
The metrics for tech transfer offices bear out these concerns about tech transfer office performance. According to a 2013 study by Walter D Valdivia of the Brookings Institute, only 13% of the offices in American universities generated enough revenue to offset their costs.
Despite these shortcomings, there has been rapidly growing interest among institutions such as universities and hospitals in monetising and commercialising their innovations. Given the increasing importance of intellectual property in Asia, institutions out here are now also looking for ways to solve this puzzle.
Speaking with Managing IP, Yong-Sun Kim of the Korean Intellectual Property Office (KIPO) said that this is an issue that he has been investigating. He pointed out that while Korea is one of the world’s biggest investors in R&D as a proportion of GDP (The biggest in fact, at 4.04% in 2011, according to the last year data was available at the World Bank), there is concern that the return on investment has not been particularly strong.
Furthermore, he said that the issue seems to be particularly acute with small and medium-sized businesses, as well as research institutions and universities. The concern, he noted, is not with large companies such as Samsung or LG.
A model from China
Korea is not the only country in region looking into the issue of encouraging monetisation. Institutions in China in particular are making progress in streamlining and encouraging commercialisation. The Jiangsu Provincial Hospital for example seems to have implemented a system that touches on some of the issues in Allen and O’Shea’s article.
For example, as explained by Jie Wang of Jiangsu Provincial, inventor employees at the hospital can retain up to 90% of the ownership rights to patents they get for work-related inventions, depending on where the filing fee money comes from. Furthermore, the inventors also retain the right to decide licensing issues. Both of these policies are in contrast to the issue that Allen and O’Shea raise, namely that some tech transfer offices sometimes demand too much equity or control.
Jiangsu Provincial also seems to be taking a longer-term approach to promoting innovation. Rather than putting too much focus on generating short-term revenues, the relatively generous terms of the hospital’s innovation programme, such as giving considerable freedom to the researchers to choose their topics and providing relatively long window for funding assistance (three years), mean that it seems to be aware of the need to give researchers time to pursue lengthier projects rather than just short-term licensing opportunities.
Wang noted that Jiangsu Provincial’s model has had some success and colleagues from other Chinese hospitals are keen to learn more about it. While institutions like his are making progress, universities and hospitals (and probably even many companies) around the world are still working on this issue.
What do you think? What obstacles are there in your organisation in commercialising innovations?
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