Universities and Patents From Open Science to Open Innovation Gilles Capart Chairman of ProTon Europe

Ethical Forum, November 22, 2005Universities and Patents2 Most pre-competitive R&D in Europe is performed by PROs n 70% of all pre-competitive R&D is performed by PROs (Public Research Organisations) n 70% of all US patents based on PRO results (probably less in Europe) n Only 5% of innovations are attributed to PROs in Europe Knowledge transfer is not efficient in Europe

Ethical Forum, November 22, 2005Universities and Patents3 Public Funding Education programs Donations Industry Sponsoring Infrastructure Scientists RESEARCH Discoveries PUBLICATION RESEARCHRESEARCH INNOVATIONINNOVATION DEVELOPMENTDEVELOPMENT Ownership Open Science Model The Open Science Model n University does not retain any IP rights (except citation and certain copyrights). n No incentive to invest in applications of discoveries because of lack of protection. n Contribution to innovation is indirect only. n Innovation rests entirely on Industry.

Ethical Forum, November 22, 2005Universities and Patents4 Should universities take an active role in innovation? n Growing pressure from the government authorities n Most countries in Europe have adopted Bayh Dole like laws encouraging patenting and licensing by universities n An increasing number of funding programs are oriented to possible economical applications (e.g. the FP programs of the EC, the IOF program in Flanders, the “Marshall” program in Wallonia, etc. n In the UK, the research assessment exercise will include knowledge transfer indicators. This trend is there to last. The recognition and sustainability of the research function are at stake.

Ethical Forum, November 22, 2005Universities and Patents5 Public Funding Education programs Donations Industry Sponsoring Infrastructure Scientists RESEARCH Discoveries INVENTIONS PROTECTION Intellectual property PUBLICATION PROOF OF PRINCIPLE COLLABORATIVE RESEARCH with INDUSTRY SCIENCE INCUBATORS SPIN-OFFS & CAMPUS COMPANIES SEED CAPITAL Public Funding Economic Programs EC FP RESEARCHRESEARCH INNOVATIONINNOVATION DEVELOPMENTDEVELOPMENT New Products New Services Licences Royalties Ownership Open Science Model The (Open) Innovation Model

Ethical Forum, November 22, 2005Universities and Patents6 The role of patents n Discoveries and ideas cannot be protected by patents. Only their technical applications (inventions) can be protected during 20 years. Disclosure must be enabling. n Patents serve 2 roles: u Protect investments in the development of the applications u Publish the inventions to permit improvements and research (research exemption). The registry of patents is the most useful and comprehensive source of technology

Ethical Forum, November 22, 2005Universities and Patents7 Why is patenting essential to innovation from universities? n Cannot rely on trade secrets. n Must publish without delay to participate in worldwide open science network n Cannot exploit directly inventions, must licence n Most inventions are early stage and need improvements to become economically attractive. Patenting is the only way to reconcile publication with innovation

Ethical Forum, November 22, 2005Universities and Patents8 Conditions for using patents as instruments of knowledge transfer 1.Should increase the probability that the applications of a discovery be developed 2.Active search of licensees and license terms compatible with public benefit (diligence, exclusivity terms) 3.The returns must support innovation and knowledge transfer (motivation of inventors and of research teams) 4.The management of Intellectual Property and patents must be carried out professionally.

Ethical Forum, November 22, 2005Universities and Patents9 The overwhelming US Patent advantages for universities n First to invent concept, inventors rights are protected. n Grace period of 1 year in case of disclosure by inventors. n Continuations in part: improvements can be added w/o being opposed prior filings. n Provisional patent applications n Inexpensive, with wide market coverage. n Easier to enforce. European universities would be better off filing patents in the US only!

Ethical Forum, November 22, 2005Universities and Patents10 Comparison between USA and Europe Output per institutionUS (n=218) 2002 EU (n=107) 2002 EU (n=92) 2003 Patents filed/yr Active licensing contracts Licence revenues (m€)6, Spin-outs/yr SourceAUTMITTEProTon

Ethical Forum, November 22, 2005Universities and Patents11 The licence model  Very successful in the US since Bayh Dole Act (1980) & because of different environment u License revenues for PROs and inventors u New products u New companies  Does not work well in Europe: 1.Ownership of results by PRO not yet recognized as best practice in most countries 2.Patenting system much less efficient for universities in Europe. 3.Not enough uptake by European Industry, most deals are with non-European licensees: does no support the European economy.

Ethical Forum, November 22, 2005Universities and Patents12 The interaction model n Fosters Innovation through Interaction. n Supports existing business models n Uses other forms of IP, such as know-how and research tools n IP is used to leverage the research capability of PROs n Compatible with University mission when: u Contributes to Science u University can capitalize on foreground u Fair share of returns

Ethical Forum, November 22, 2005Universities and Patents13 Most results from Public Research are melting down (published) in the Ocean of Knowledge Intellectual Property available for licensing Collaborative Research Opportunities Ocean of Knowledge

Ethical Forum, November 22, 2005Universities and Patents14 The Spin-out Model n Builds also on IP management and patents n Background technology used as platform to develop new business concepts n Proof of principle by the researchers themselves n Development housed in company structure funded by seed capital and virtual capital (state aid) n Contributes to rejuvenating the economy n Contributes to regional development n Slow process: more than 10 years for mature companies n Works in Europe, but can be improved

Ethical Forum, November 22, 2005Universities and Patents15 The two main routes of knowledge transfer in Europe Interaction modelSpin-out model Existing business modelsNew business models Improve interaction with existing companies Support creation of new “spin-out” companies Responsible Partnering Medium term development <10 Years Long term rejuvenation >10 Years

Ethical Forum, November 22, 2005Universities and Patents16 The Innovation Model for PROs n Knowledge Transfer from PROs in Europe can be made effective only by the combination of 3 policies: u IP management as common core u Interaction with industry for medium term development u Creation of new companies for long term rejuvenation of the economy. n Consistent with Open Innovation n From Licensing to Business Development n Very complex to manage and entails the development of the knowledge transfer profession in PROs.

Ethical Forum, November 22, 2005Universities and Patents17 From Open Science to Open Innovation 1.Universities are getting organized to manage their IP. First ownership of IP is becoming good practice in Europe. 2.Innovation process is becoming interactive and organized in networks. More outsourcing from Industry. IP is much more complex to manage. 3.Technology is overabundant, business model is becoming more important than technology lead.