Sixth Annual Knowledge Economy Forum Panel 3B Supporting University Spin-Offs via IPR Policies

1. Sixth Annual Knowledge Economy ForumPanel 3BSupporting University Spin-Offs via IPR Policies Cambridge 19 April 2007 Pol van den Bergen Prisma Technology Management

2. Existing situation • Valorisation: Process converting Research into sustainable commercial application • => Deficient process in Europe • European economy fails to promote new/successful innovative firms compared to USA • The current innovation policy is disjointed at the European level. • There is no collaboration between the key players in the European innovation policy.

3. The European Paradox:Knowledge Investment hardly pays off in new Business • In Holland: 40.000 start ups pa • 3 % “high” tech start up = 1200 • 70 % Internet related • 30% = 400 • 20% surviving after 3 years = 80 • Out of those 80: 15 % come from Universities the rest comes from Larger Companies. • 15%= 12 pa. “sustainable” companies…. • No Figures for Business Renewal.

4. Valor Development of an effective joint trans-national knowledge valorisation process and coordinated innovation policy Start date: 1 October 2006

5. VALOR Consortium VINNOVA Pera EAS Dublin BIC IWT NGI PTJ FFG OSEO anvar CDTI ADER JAPTI CCIAA TTGV ADI MATIMOP

6. Strategic Objectives • To develop an effective and coherent coordination of EU policy • => State of the art valorisation process (VP) • To increase valorisation programme efficiency by joint actions • combined good practices from shared experiences • analysis of national programmes and requirements • To support the innovation process through coordinated trans-national joint initiatives • => enhance complementarity between regional/national and European valorisation programmes • To create a network of programme managers for sustained, long-term co-operation between programmes

7. Growing company Research The Policy Problem Valorisation/Commercialization Process • Lack of financing • Lack of competence • Lack of ”Business creation arenas” • Weak incentives • Lack of qualification systems • Lack of Common IPR Rules

8. Valorisation Research Business Example of phases within Valorisation • The challenges are different in each phase • Every phase can go on for a short or long period of time • Each phase requires its own financing instruments, conditions and processes “Identification” “Breeding” “Launch” Valorisation comprises different phases

9. Valorisation Research Business Research based application ideas • with interesting commercial potential • supported by R&D-results with unique properties or functionalities which have a potential to support long-term competitiveness within one or several application areas The Starting Point for the Valorisation Process

10. Knowledge and technology transfer Qualification and Verification Research Business Renewal Valorisation – transfer of research results to an established company

11. Knowledge and technology transfer Business Renewal Qualification and Verification Licensee/Buyer Verified Business Support Technology Transfer • Transfer of research results performed • Knowledge transfer • Technology transfer • Research result integrated in company operations (R&D, production, business development) Transferable IPR Knowledge and Technology Transfer

12. Universities might be the Cork on the Bottle…….The State of Mind is important.. • In the US a Scientist has three personalities. He/She is at the same Time: • A Scientist • An Expert in Finance • An Entrepreneur • In Europe a Scientist is used to a more or less “safe Environment”, He still is a “Researcher made for Research” • Many Times Universities are the Bottle Neck in the Process, defining their Sole Reason of Being in : • Research • Education and not in • “Valorisation”, or: “Commercialization of Knowledge”. • But the Climate is changing; Pressure on Universities to take a more business like Approach in Knowledge and Technology Transfer is increasing; they have to make money too…. • Bit by bit the Professor and his Students become Entrepreneurs be it that the Transfer still is sailing I between Scylla and Charybdis…

13. IPR …Universities’ Approach in case of spin-offs is crucial… • Almost all Countries have a nice Patent Law and I will not dig deeper in the European patent Law History… • Unfortunately in Europe in many Countries there is no clear legislation/Regulation to the further distribution of Rights, this in contradiction to the US where since 1980 the Bayh-Dohl Act is applied. • Legally in most of the countries Universities are the Owners of Inventions made by their Employees. • As a Consequence they are free to sell or license out Anything any Way they like… • Many times they use their own Regimes • So in Holland a “Code of Conduct” is under discussion for several years already

14. IPR in the case of University Spin-Offs.. the ideal Code of Conduct in case of Patent TransferPay back of Costs • Universities have invested heavily to get and maintain patents; estimation for a worldwide patent = € 100.000 • Delft University spent for Maintenance € 500.000 pa in 2004 for all Patents. • These patenting Costs should be paid back; the University should by all Means get a Royalty free License for Research and Education Purposes • Transfer Costs should be paid back • Royalties can be : • A Percentage of the Turn Over / or something like : “The Higher the Turn Over, the lower the Percentage” • A specific Sum per Product.

15. Patent Transfer • The Spin-Off/Start Up pays a Lump Sum for Rights gained • Or Royalty Rights are applied: e.g. the Higher the Turn Over the Lower the Percentage • Agreement that the Amount paid by the Start Up will be spent for Research on the specific Issue by the University • Stock Appreciation Rights [SAR] : claim equals a percentage of Shares issued; no Power no Liabilities • In all Cases the Spin-Off should have the Duty to commercialize…

16. Licensing… • Exclusivity for the Spin-Off is vital • The Agreement should be clear and well defined • Territory should be defined • Time Period should be clear • A Lump Sum/Entrance Fee can be paid • Royalties can be asked for by the University • Minimum Turnover defined: Loss of Exclusivity as Penalty

17. Thomas Jefferson… Quote That Ideas should freely spread from One to Another over the Globe, for the moral and mutual Instruction of Man and Improvement of his Condition, seems to have peculiarly and benevolently designed by Nature, when She made them, like Fire, expansible over all Space, without lessening their Density at any Point, and like the Air in which we breathe, move and have our physical being, incapable of Confinement or exclusive Appropriation. Inventions then cannot, in Nature be a Subject of Property. Unquote Third US president: Ideals of Republicanism 1776.

18. Bayh Dohl • In the US in 1980 Measures such as the Bayh-Dohl Act were introduced. Under Bayh-Dohl “Grantees”/Contractors in Government R&D Contracts get the Ownership of these patents. • But if you don’t use, you lose it…. • The Aim was enhancing Public’s Access to technology funded with Government Money. • As a Consequence many universities established Technology licensing Offices, which accelerated the Tie-ups between Industry and Academia. This Arrangement gave Birth to many new Industries, including Information Technology and Bio-technology. The Collaboration also served as a Catalyst for the Recovery of the US Economy during the 1990s.

19. An Advice might be… • A wise Advice might be : • Do not make the same mistakes as we did • Do not assume that a nice Patent Law is enough • Do not just leave it, seek Things out, the one Way or the Other…. • Give the Spin offs Security; make your Approach reliable and once a Regime is established keep it and maintain it • Do not think a Patent is the solution to all Problems • It is expensive to register, it is difficult to scout infringements and its is even more expensive to defend your Rights • In Micro Electronics some Times you even should abstain, in Medicine you cannot do without • In the InnoNet Valor eventually we will be able to help; you might even join in. • Thank You.