1. © IMG GmbH, T. Schwing, 2004WB-Seminar 09.06.2004 / Folie 1 IMG Innovations-Management GmbH World Bank Seminar in cooperation with Ministry of Economy and Latvian Investment and Development Agency June 9th 2004, Riga Management of Intellectual Property in publicly-funded research organisations: Towards European guidelines Thomas Schwing Managing Director of IMG Innovations-Management GmbH, Germany Innovation Relay Centre - IRC Hessen / Rheinland-Pfalz Opinions and views expressed in this presentation are those of the presenter

2. © IMG GmbH, T. Schwing, 2004WB-Seminar 09.06.2004 / Folie 2 IMG Innovations-Management GmbH Structure of the presentation Background European Situation and Research Policy Towards European Guidelines Models of IP-Management Conclusions and Recommendations

3. © IMG GmbH, T. Schwing, 2004WB-Seminar 09.06.2004 / Folie 3 IMG Innovations-Management GmbH How is Knowledge transferred between PROs and Industry? Graduated students Industry-funded research Publications & presentations & Internet! Informal & collegial networking Consulting by Faculty Staff Sharing of biological research materials Intellectual Property – Licences Spin-off companies …

4. © IMG GmbH, T. Schwing, 2004WB-Seminar 09.06.2004 / Folie 4 IMG Innovations-Management GmbH The European situation Only a few countries have adopted Bayh-Dole like regulations IP-Management is poorly recognised and funded No compatible legal framework in Europe No compatible good practices in European PROs Not enough professionals for technology transfer/licensing Licensing (linear) model does not work well – not enough uptake by industry (SMEs) Partnering with industry works but needs developing into “responsible and fair partneship” Not enough spontaneous spin-out creation: the process must be assisted

5. © IMG GmbH, T. Schwing, 2004WB-Seminar 09.06.2004 / Folie 5 IMG Innovations-Management GmbH The European innovation scene 1/3 of all R&D in Europe is performed by PROs 2/3 of all pre-competitive Research is performed by PROs Industry tends to concentrate on Development Development uses more resources than Research 70% of all patents based on PRO results There is no Development without seeding from Research But a large part of research results is not used for innovation

6. © IMG GmbH, T. Schwing, 2004WB-Seminar 09.06.2004 / Folie 6 IMG Innovations-Management GmbH IPR & innovation issues in European research policy Political issues : –The Lisbon objective of becoming the most competitive knowledge economy –3 % action plan (Commission Communication “Investing in research : an action plan for Europe”) –Commission Communication “The role of universities in the Europe of knowledge” Practical issues in Sixth Framework Programme: –IPR provisions –Innovation-related measures

7. © IMG GmbH, T. Schwing, 2004WB-Seminar 09.06.2004 / Folie 7 IMG Innovations-Management GmbH IPR & innovation issues in European research policy - 3 % action plan 2003 Commission Communication “Investing in research : an action plan for Europe” aiming at raising R&D investment to 3 % of GDP by 2010, with 2/3 from private sector Improving the regulatory environment for R&D in Europe concerns not only R&D per se but also human resources, fiscal & financial issues, etc. … and IP/TT issues Broad support from Member States, industry, Commission presidency (new “Initiative for growth”),... 46 new actions/recommendations to be implemented by the Commission, Members States and/or relevant stakeholders (universities, …) 5 of which relate directly or indirectly to IPR

8. © IMG GmbH, T. Schwing, 2004WB-Seminar 09.06.2004 / Folie 8 IMG Innovations-Management GmbH IPR issues in publicly-funded research Increased attention: at international level: e.g. recent OECD survey/report “Turning science into business” at national level: e.g. abolition of the “professors’ privilege” in Germany (2002) at EU level: recommendations in the 3% action plan statements in the Communication on the role of universities EURAB recommendations On-going activities in DG Research and DG Enterprise (Expert groups, studies, ProTon network)

9. © IMG GmbH, T. Schwing, 2004WB-Seminar 09.06.2004 / Folie 9 IMG Innovations-Management GmbH Towards European Guidelines Group of experts (Industry, Research, IP-Managers) assembled by the EC Conclusions published in the report: http://europa.eu.int/comm/research/era/pdf/iprmanagementguidelines-report.pdf Endorsed by Valencia statement of ProTon Europe (Public research organisations Technology offices network-Europe) Will serve as the basis for producing a manual and developing guidelines and tools

10. © IMG GmbH, T. Schwing, 2004WB-Seminar 09.06.2004 / Folie 10 IMG Innovations-Management GmbH Main topics Should universities and other PROs take an active role in the innovation process, or should they leave that role to Industry? How can this be done most effectively in Europe? Which models of IP-Management are useful? Why is strategic partnering with Industry so important? What can we do to improve it?

11. 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 License Model Spin-out Model Interaction Model Innovation Model UNIVERSITYUNIVERSITY UNIVERSITY+INDUSTRYUNIVERSITY+INDUSTRY INDUSTRYINDUSTRY

12. © IMG GmbH, T. Schwing, 2004WB-Seminar 09.06.2004 / Folie 12 IMG Innovations-Management GmbH The Open Science Model University (PRO) does not retain any IP rights (no patent applications) No need for active IP management Little incentive to invest in applications of inventions Often no direct impact on regional economy Still the most widespread model in Europe Innovation rests on Industry Most inventions from PROs are not turned into innovations Responsibility of Inventor for IP

13. © IMG GmbH, T. Schwing, 2004WB-Seminar 09.06.2004 / Folie 13 IMG Innovations-Management GmbH The Licence (linear) Model PROs can select to own inventions (and other IPRs), but must diligently protect IP and seek licensees Early (Strategic) patenting important because reconciles publication with investment Requires professional IP management in PROs PROs can grant exclusive licences Widespread in the USA since Bayh Dole Act (1980) Very successful in the US, in terms of: –License revenues for PROs and inventors –New products for licensees –New companies created spontaneously But does not work so easily in Europe (except U.K.)

14. 300 inventions rejected 50 inventions not licensed 34 licenses produce license issue fees 100 patent applications filed 50 inventions licensed 16 licenses produce income 15 licenses produce < $1M 1 license produces > $1M Terrence Feuerborn, Former Executive Director University of California System, Office of Tech Transfer

15. © IMG GmbH, T. Schwing, 2004WB-Seminar 09.06.2004 / Folie 15 IMG Innovations-Management GmbH What prevents the licence model from working in European Union? Ownership of results by PROs missing (IP-laws) or not recognized as good practice in Europe Patenting costs are prohibitive (compared to US) No grace period in Europe Non uniform IP laws across Europe Not enough uptake by European industry Most licensing deals are with non-European partners: does not really benefit the European economy

16. © IMG GmbH, T. Schwing, 2004WB-Seminar 09.06.2004 / Folie 16 IMG Innovations-Management GmbH The interaction model Builds on the Licence Model and IP management Proof of principle is made in partnership with industry Demonstration funded in part by public money (example EC framework programs) Fosters innovation as interactive process Compatible with PROs missions: –Contributes to Science –PRO can capitalize on foreground –Fair share of returns Contributes to regional economy Starts to works in Europe, but could work much better

17. © IMG GmbH, T. Schwing, 2004WB-Seminar 09.06.2004 / Folie 17 IMG Innovations-Management GmbH The Spin-out Model Also Build on the licence model and IP management Background technology is used as platform to develop new business concepts Proof of principle by the researchers themselves Development funded by seed capital and funding (difficult) Only alternative when no industry partner in sight Contributes to regional development with labour Contributes to European and national economy Slow process: more than 10 years for mature companies Works in Europe, but not spontaneously (shareholder?) Often more support and help from PROs necessary

18. © IMG GmbH, T. Schwing, 2004WB-Seminar 09.06.2004 / Folie 18 IMG Innovations-Management GmbH Consolidation: the « Innovation » Model Innovation is not a linear process. It is the “conversion of new knowledge into economic and social benefits – now acknowledged to take place as the result of complex long-term interactions between many players » (Source: Cordis glossary of innovation) PROs can contribute effectively to innovation only by the combination of the 3 models: –IP management & licensing as common core –Interaction with industry as a basis for medium term innovation and development of the economy –Support for creation of new companies as long term investment and rejuvenation of the economy.

19. © IMG GmbH, T. Schwing, 2004WB-Seminar 09.06.2004 / Folie 19 IMG Innovations-Management GmbH Conclusions for PROs 1.PROs should seriously consider taking a pro-active role in innovation by managing IPR from research. 2.Main objective is maximize benefits for society. 3.Returns for PROs are attracting students, retaining good scientists, funding research. Not an alternative source of funding. 4.Straight licensing is not sufficient. More interaction with industry and creation of spin-outs are necessary 5.Staffing and training professional KTOs is the key.

20. © IMG GmbH, T. Schwing, 2004WB-Seminar 09.06.2004 / Folie 20 IMG Innovations-Management GmbH Why is strategic partnering with Industry so important? Can be the most effective form of knowledge transfer Fosters innovation through interaction Benefits for the regional economy May bring sizeable benefits (for research results) in a reasonable time frame Makes European based companies more competitive Interaction is good for industry and science (new ideas and research topics)

21. © IMG GmbH, T. Schwing, 2004WB-Seminar 09.06.2004 / Folie 21 IMG Innovations-Management GmbH Most common problems Ownership of results Project management and performance Compensation of indirect costs Volatility of relationship Others listed in the workbook with tentative solutions Unfair or „bad“ contracts Danger also from involvement of third parties (inexperienced technolgy transfer offices) Unprofessionel/inexperienced PRO-administration

22. © IMG GmbH, T. Schwing, 2004WB-Seminar 09.06.2004 / Folie 22 IMG Innovations-Management GmbH How to develop responsible partnering? Understanding and accepting each other’s constraints and objectives and find ways to align interests and create a win-win-situation Define mutually acceptable guidelines with representative professional associations Implement clear policies at company and PRO level on « responsible » partnering, consistent with such guidelines

23. © IMG GmbH, T. Schwing, 2004WB-Seminar 09.06.2004 / Folie 23 IMG Innovations-Management GmbH Conclusions for Industry and PROs 6. Closer partnering is needed to achieve medium term measurable effects of innovation on the « knowledge economy ». The existing relationship needs be revisited, allowing a more active role of PROs 7. Industry and PROs should adopt and implement by mutual agreement voluntary codes of conduct and guidelines

24. © IMG GmbH, T. Schwing, 2004WB-Seminar 09.06.2004 / Folie 24 IMG Innovations-Management GmbH IP and Technology Commercialization in Latvian PROs Recommendations (3-7) of World Bank report „Creating a 21st Century National Innovation System for a 21st Century Latvian Economy Recommendations and pilot activities of RIS Latvija Project (finalized in 2004) Partnerships and best practise exchange with other European Regions and Technolgy Transfer (Licensing) Centers/Offices Participating in European and Professional Networks (PROTON, ASTP, LES, AUTM)

25. © IMG GmbH, T. Schwing, 2004WB-Seminar 09.06.2004 / Folie 25 IMG Innovations-Management GmbH THE END! Thank you for your attention! Paldies! Danke! For more information: http://europa.eu.int/comm/research/era/ipr_en.html http://europa.eu.int/comm/research/era/3pct http://www.ipr-helpdesk.org