Intellectual Property

28 May 2010

How Do We Stop the Engines of Growth From Stalling?

The CRI Taskforce report released in March has been positively received by both CRIs and the private sector. The Government has endorsed the Taskforce's recommendations and primed the 'engines of growth' for implementation - a task to be led by MoRST, who will consult with CRIs and other Government agencies on relevant work streams. Most changes are expected to be in place by 1 July 2011.

The implementation of the Taskforce's recommendations will be supplemented by the changes heralded in the research and science component of the Budget released this week, and the related Igniting Potential policy document.

What will be the impact on technology transfer?

One of the recommendations of the CRI Taskforce related to technology transfer. Prior to the review, CRIs were, rightly or wrongly, accused of closeting away their IP. While one suspects the image of 'dust gathering IP' was more illusory than real, there was uncertainty as to whether the mission of CRIs was to be collaborative or competitive with business.  

The Taskforce recommendations provide a welcome clarification of the intended role of CRIs in technology transfer:  

1. CRIs develop stronger, long term partnerships with New Zealand businesses. Each CRI should describe its business engagement strategies in its statement of corporate intent and support these strategies through core purpose funding.
2. CRIs develop, invest in and manage IP with the intent of moving that IP into the private sector as soon as possible.
3. Technology transfer will be a core and measurable responsibility for all CRIs, so that the benefit of their ideas contributes to the wealth and well-being of New Zealand.

Where to from here?

There are many of examples of existing (and successful) partnerships between CRIs and the private sector, including through the provision of contract research services by CRIs in response to discrete requests from the private sector. These partnerships will continue.  

The focus of the Taskforce's recommendations is on improving the translation of publicly funded research into economic growth. The recommendations provide an imperative (and an opportunity) for CRIs to show leadership in the creation and implementation of a revised technology transfer model. 

Open innovation model

As a starting point, better engagement with New Zealand businesses and longer term partnerships are more likely to result from open rather than closed innovation. In a closed innovation model, research and development is kept secure and confidential within a company until an end product is ready for launch.  

An open innovation model encourages the early and pro-active engagement of the private sector or other public organisations (such as Universities) in product research, development and commercialisation. It recognises that it is possible to achieve more in partnership than operating alone. These partnerships should be fostered at an earlier stage in the research and development process, with a paramount focus on driving economic growth from CRI research (as opposed to successful commercialisation by and for the CRIs themselves). This will include discussions with scientists at the inception of a research programme in order to identify the end customer demand for research outcomes and tailor or shift the focus of any research in line with this demand. The drive for early and pro-active engagement between the private sector and CRIs is also supported by the introduction of the $20 million technology transfer voucher system in the Budget.  

For many CRIs, the adoption of an open innovation model is likely to require incremental changes in their approach to technology transfer. For others, the changes may be more pronounced. The private sector will also need to be realistic in their engagement with CRIs. Open innovation is not the same as open source. Open source, a concept which has gained significant momentum in the software industry, focuses on value creation, not value capture. Open innovation does not require the giving away IP for the greater good without a commercial return or sharing IP without strict obligations of confidence. However, getting a realistic commercial return may be best achieved by 'showing your working' earlier in the development process.  

'Low risk, low value' technology transfer

The drive to get IP quickly out the door and into the private sector suggests a possible shift to 'low risk, low value' technology transfer. This is likely to mean the commercial return for CRIs from technology transfer will be based on IP sale or licensing or service based consultancy, including staff secondments. An equity stake in separate companies is likely to be the exception rather than the norm. The Taskforce report states that CRIs should be discouraged from investing in commercialisation activities for profit maximising purposes - such as new start-up companies. The reality is that, in the past, the nature of a contestable funding model coupled with the emphasis on commercial return from CRIs may have left many CRIs with little choice but to pursue commercialisation in this way.  

Although the Taskforce report suggests that CRIs may have to be prepared to accept less revenue from their technology transfer activities, the Government also has to play its part in setting a realistic rate of return on equity. If meeting the rate of return on equity requires 'high risk, high value' technology transfer and competition rather than collaboration with the private sector, what will have changed?  

The Taskforce report is silent as to whether a revised approach to technology transfer will involve structural change. The Igniting Potential document addresses this issue. In particular, the Government will explore opportunities and mechanisms to help existing technology transfer offices network and co-ordinate more effectively and is refining concepts for the establishment of one or more national centres of excellence in technology transfer. The Government will invest $11 million in support of this activity.  

A CRI response

While the sharing of expertise between technology transfer offices has merit, proposing (and funding) national centres of this nature may be premature pending a CRI led response to the Taskforce's recommendations. The risk of duplication of effort and resource seems very real, and is something that will need to be addressed between the CRIs and the Government as this initiative is progressed.  

And perhaps that is the critical point. The Taskforce report and Igniting Potential document are, possibly deliberately, short on detail on this issue. By considering and engaging on a revised technology transfer model, CRIs will have the opportunity to show leadership, and have the best prospect of influencing the implementation of the Taskforce's recommendations and Government policy on technology transfer.  

Published: National Business Review May 2010