Involving Researchers in Spin-offs FITT (Fostering Interregional Exchange in ICT Technology Transfer)

2 | Name / Event Involving Researchers in Spin-offs “The Innovation law”& the mobility for researchers  French Law for Innovation and Research of 1999 aims at fostering the creation of innovative companies and the transfer of public research towards industry.  The scope of the law is wide and covers 4 main items: Mobility of the human resources Cooperation between public research organization and enterprises Fiscal framework for innovative companies Legal framework for innovative companies  Focus here on the mobility part i.e. a legal framework to incite researchers to participate in the creation or development of innovative companies.

3 | Name / Event Involving Researchers in Spin-offs A substantial change for the employees of public research organisations  Really favourable conditions for public research employees to be involved with private companies exploiting their work !

4 | Name / Event Involving Researchers in Spin-offs 4 schemes for researchers to be involved with an innovative company

5 | Name / Event Involving Researchers in Spin-offs  The employees of a PRO who want to be involved with innovative companies according to the conditions described in the 1999 Innovation law must comply with the following generic principles: The company must exploit the research work of the employee Respect of the interests (moral & material) and functioning of the public research organisation (PRO) Respect of the research or technical mission of the employee Absence of risks endangering the independency and neutrality of the PRO Drafting of a contract between the company and the PRO Prior authorisation of the PRO the national Commission of Deontology for public service The National Commission of Deontology must be informed on the contracts and partnerships signed between the company and PROs (duration of the authorisation + 3 years) A few requirements

6 | Name / Event Involving Researchers in Spin-offs 1) Creation of a company Initial position in the PRO Ask for the autorisation of organisation and Commission of Deontology BEFORE creating the company Yes No Quit prior activity in the PRO (derogation possible for part-time teaching activities) Contract between employee and research organisation Contract between company and PRO on management of Intellectual Property) Position of « détachement » or « mis à disposition », to work for the company The employee can be a partner or manager of the company Quit prior activity in the PRO (derogation possible for part-time teaching activities) Contract between employee and research organisation Contract between company and PRO on management of Intellectual Property) Position of « détachement » or « mis à disposition », to work for the company The employee can be a partner or manager of the company After 2 nd and 4th years Ask for the autorisation of the PRO & Commission of Deontology Stay in the company and quit the PRO Return to PRO (put an end to cooperation with company within a year) Return to PRO (put an end to cooperation with company within a year) After 6th years (maximum possible) Yes No Articles L to L413-7 of the Code of Research (formerly article 25.1 of the Law of Innovation dated from July 1999 ): Procedure if an employee of a public research organisation wants to create a company to exploit technologies that he developped.

7 | Name / Event Involving Researchers in Spin-offs Work for the PRO 2) Consulting activities (“Conseil scientifique”) Initial position in the PRO Ask for the autorisation of the PRO and national Commission of Deontology Yes No -Contract between employee and company (on content of consulting activities, duration, remuneration…) -Contract between PRO and company about intellectual property matters -Scientific activity only (no management) -Consulting activities must be done outside the laboratory -No participation in the negotations between PRO & company -Not more than 20% of the time -Maximum remuneration fixed at € per year (Gross income) -Contract between employee and company (on content of consulting activities, duration, remuneration…) -Contract between PRO and company about intellectual property matters -Scientific activity only (no management) -Consulting activities must be done outside the laboratory -No participation in the negotations between PRO & company -Not more than 20% of the time -Maximum remuneration fixed at € per year (Gross income) Every 5 years, as long as the company valorizes the research work of the employee Ask for the autorisation of the PRO and Commission of Deontology Yes No Articles L 413-8, L and L of the Code of Research (formerly article 25.2 of the Law of Innovation dated from July 1999 ): Procedure if an employee of a public research organisation wants to provide scientific support for a company exploiting his research work whilst remaining in the public sector

8 | Name / Event Involving Researchers in Spin-offs 3) Participation in the administrative or advisory board of a company Work for the PRO Initial position in the PRO Ask for the autorisation of the research organisation and national Commission of Deontology Yes No -Only remuneration possible is director’s fees (« jetons de présence »). The maximum is determined by decree. -Obligation to inform the PRO about the revenues resulting from the director’s fees, dividends or the selling of titles. -Not compatible with consulting activities (« Concours scientifique ») -The participation in the capital of the society and voting rights cannot exceed 20% -Only remuneration possible is director’s fees (« jetons de présence »). The maximum is determined by decree. -Obligation to inform the PRO about the revenues resulting from the director’s fees, dividends or the selling of titles. -Not compatible with consulting activities (« Concours scientifique ») -The participation in the capital of the society and voting rights cannot exceed 20% Every time the term of office is finished. Ask for the autorisation of the research organisation and Commission of Deontology Yes No Articles L to L of the Code of research (formerly art of the Law of Innovation dated from July 1999 ): Procedure if an employee of a public research organisation wants to participate in the decision board of the company. When the authorization has ended, the employee has 3 months to give up his rights in the company. If he wants to keep them, he must quit the PRO Giving up the rights Keeping the rights

9 | Name / Event Involving Researchers in Spin-offs 4) Participation in the capital of a society Work for the PRO Initial position in the PRO Ask for the autorisation of the research organisation and national Commission of Deontology Yes No -In the exercice of his activity, the employee should not have had a position of control over the company or have been involved with contracts between the company and public research services in the last 5 years. -Not possible to have a position in the top management of the company (but compatible with consulting activities) -Limit : 49% of the capital and 49% of the voting rights -Obligation to inform the research organisation about the incomes related to the participation in the capital of the company. -Contract PRO/company about technology transfer and between employee/company about the condition of participation in the capital -In the exercice of his activity, the employee should not have had a position of control over the company or have been involved with contracts between the company and public research services in the last 5 years. -Not possible to have a position in the top management of the company (but compatible with consulting activities) -Limit : 49% of the capital and 49% of the voting rights -Obligation to inform the research organisation about the incomes related to the participation in the capital of the company. -Contract PRO/company about technology transfer and between employee/company about the condition of participation in the capital Every 5 years, as long as the company valorizes the research work of the employee Ask for the autorisation of the PRO and Commission of Deontology Yes No Articles L 413-9, L41310 and L of the Code of research (formerly art of the Law of Innovation dated from July 1999 ): Procedure if an employee of a public research organisation wants to have a participation in the capital of a society exploiting his research work When the authorization has ended, the employee has 1 year to conclude his participation in the capital of the company.

10 | Name / Event Involving Researchers in Spin-offs When?  Law n° of July12, 1999 published in French “Journal Officiel” dated from July 12, 1999, modifying the art. 25 of the law n° of July 15, 1982 (Orientation and Programmation for technological Research & Development) djo06v_3?cidTexte=LEGITEXT &dateTexte=  Also included in the of the Code of Research (articles L and following)  The content has been slightly modified since : - “Loi de programme pour la recherche” n° (18 avril 2006): the limit regarding the participation in the capital of a company went from 15 to 49%. - “Loi de modernisation de la fonction publique” n° (2 février 2007): creation of a specific commission for research-related decisions.

11 | Name / Event Involving Researchers in Spin-offs Who?  Researchers, teachers-researchers, engineers, PhDs, technical and administrative staff  Who is concerned by the law: Credit: Microsoft Office

12 | Name / Event Involving Researchers in Spin-offs  Applicable in most public research organisations: -EPST (Etablissements Publics à caractère Scientifique et Technique) such as CNRS, INSERM, INRA, INRIA -EPSCP (Etablissement Publics à caractère Scientifique, Culturel et Professionnel) including universities and public engineering schools developping their own research. -EPIC (Etablissements Publics à caractère Industriel et Commercial) such as CEA are not concerned. Where?

13 | Name / Event Involving Researchers in Spin-offs Pros & Cons PRO’s  Strong incentive for Technology Transfer : allows researchers (and other empoyees) to engage in TT activities outside their laboratory whilst keeping the advantages of public service.  Measures to promote mobility of the staff can be adapted at a institution level (not necessarily a law). Lobbying towards decision-making persons is a decisive point. CON’s  Because it is a law, this plan relies on the government’s agenda.  The law is supposed to prevent the employees who are involved in starting up companies from being penalized in terms of research careers but since there is no concrete measures, there is a risk that this principle is not put into practice.

14 | Name / Event Involving Researchers in Spin-offs Why?  Why was the Law established? The French government was not satisfied by the transfer of the results of public research to industrial products or services. The Innovation Law was adopted to reverse this trend and provide a legal context that fosters the creation of innovative technology companies, notably by young people, whether they be researchers, students or employees.  What was the context? The law fit in a more general governmental action to stimulate the dynamism of enterprises in the field of research. The 1999 Innovation Law introduced other measures alongside the mobility of researchers : decision to create incubators and Technology transfer offices in each university, improvements for research tax credits... In 1999 the national award for creation of innovative companies and thematic seed funds were also introduced by the government.

15 | Name / Event Involving Researchers in Spin-offs From 2000 to 2006 (7 years) Nbr of referralsNbr of agreements% of the total Art Art Art Total Average for a year 9683 Source : Etat de la situation et bilan au 31 décembre 2006, Ministère de l’Enseignement supérieur et de la Recherche, DGRI, Juin 2007 Applications to Commission of Deontology and decisions between 2000 and 2006  Between 2000 and 2006, almost ¾ of the cases targeted consulting activities, nearly ¼ pertained to the creation of start-ups while the participation in the management of the companies was less common. The number of civil servants eager to create a company based on their research work has dropped significantly: from 30 cases/ year in average to approximately10 since Staff from PROs seem more reluctant to quit their status of civil servant and consider in priority other ways to transfer technologies. Outcome

16 | Name / Event Involving Researchers in Spin-offs Total Nombre d’avis % of the total 14% 20%17%10%14%11%100% Source : Etat de la situation et bilan au 31 décembre 2006, Ministère de l’Enseignement supérieur et de la Recherche, DGRI, Juin 2007 Evolution of the number of decisions of the Commission of Deontology  After 4 years of increase, the number of referrals (i. e civil servants from PROs asking to benefit from one of the schemes : creation, consulting activities, participation in the capital or in a board) has decreased and tends to stabilise. Outcome

17 | Name / Event Involving Researchers in Spin-offs Job categories Number of referrals% of the total number of referrals Number of agreements delivered by the Commission of Deontology % of agreements according to the job cathegory University professors University « Maîtres de conférence » Research Director « Chargé de recherche » Research engineers Others Total Source : Etat de la situation et bilan au 31 décembre 2006, Ministère de l’Enseignement supérieur et de la Recherche, DGRI, Juin 2007 Repartition of the decisions according to job categories in 2006  Applications come from different backgrounds careers levels. Quite logically, researchers are predominant in this classification, with 84% of the total for this year. The remaining 16% represent applications coming from administrative and technical staff. Outcome

18 | Name / Event Involving Researchers in Spin-offs Plans for the future  Will the best practice be continued/changed/adapted?  If so, in what way will it be continued/changed/adapted? The Innovation law is a result of a governmental action and the French Ministry of Higher Education and Research has not announced changes of the law in its current form. However, the Ministry has recently commissioned the Académie des Sciences to perform a study of this scheme and to draw recommendations to improve it. The conclusions of the Académie des Sciences were issued in February 2010 (see Suggested Readings). The law may be modified in the future.

19 | Name / Event Involving Researchers in Spin-offs Lessons Learned  Looking back now, what would you … … do different? … improve? … recommend to others? The Innovation law is a result of a governmental action and this information is not available.

20 | Name / Event Involving Researchers in Spin-offs Suggested Readings  Link to bibliography G.D. Markman, P.T. Gianiodis, P. H. Phan, D.B. Balkin, Entrepreneurship from the Ivory Tower: Do Incentive Systems Matter? Journal of Technology Transfer, Vol.29, no 3-4, August 2004 Académie des sciences, Rapport du groupe de travail sur la loi du 12 juillet 1999 Innovation et recherche, 1st February Ministère de l’Education supérieure et de la Recherche, Recherche et développement, Innovation et partenariats, Rapport Ministère de l’Education supérieure et de la Recherche, Innovation et recherche technologique, état de la situation et bilan au 31 Décembre  Link to code book Mobility; Law; Entrepreneurship; Career; Spin-off; Consulting activity; Motivation  Link to related websites  Integral text of French Code of Research (see articles L and followings)  Webpage on the 1999 Law on Innovation and Research, Ministry of Higher Education and Research