Friend or Foe? – Publicly Funded IP

Posted on Sep 25, 2012

Friend or Foe? – Publicly Funded IP

The introduction of the new IPR from Publicly Funded Research and Development Act is a significant milestone in empowering local universities in their negotiations with industry partners around research funding and managing the results flowing out of such research.  The importance and value of intellectual property, which until recently was a vague term in the language of most academics, was highlighted and prominence was given to it at all levels of the University.  The Technology Transfer Office (TTO) made use of the opportunity to educate academics and to increase the disclosure rate at our university, which we have successfully achieved.

We experience that the majority of researchers understand and buy into the rationale of the Act and abide by it.  However, there are cases where research funding is lost due to probably unforeseen and unintended consequences of the Act.  Researchers are increasingly expressing that the Act is sometimes working against them in a manner that does not support the overall objectives of the legislation.  This concerns a wide range of research funding instruments, including the Department of Trade and Industry’s THRIP funding incentive program which is geared toward facilitating university-industry interaction.

Researchers argue that the university’s core function is research and not commercialisation.  They also feel that a critical element of a research agreement with industry should be an academic footprint and not a commercial outcome.  However, they agree that, where it makes sense, the small portion of research agreements that result in possible commercially viable intellectual property, this should be dealt with in a different manner than the much broader research agreement pool.  Another reality is that many universities are increasingly dependent on third stream income and in some cases federal funds (which accounts for more than 60% of research income at some universities) do not have a commercial focus.

This principle is highlighted by a case where a researcher applied for funding from an established international non-profit organisation. The organisation’s contractual intellectual property-related clauses were drafted to ensure that research outcomes were made available to poor and needy communities to support their own charitable objectives, while simultaneously giving the university an opportunity to commercialise those outcomes. The research funding opportunity was lost to competitors at an African university due to IPR Act compliance requirements. In many cases a university is obliged under the IPR Act to negotiate intellectual property issues with such funders.  This places pressure on them to edit funding clauses to comply with the IPR Act, leaving them little choice to award the funding to competitors that are willing to comply with their strict rules and deadlines with the result that the university loses these opportunities.

The intellectual property in the majority of these cases is not of such a nature that a TTO can ever commercialise it, but negotiating these agreements to bring them strictly in line with the Act consumes serious capacity and time, with the end result that it creates distrust with faculty members.  It also delays signing of contracts and it annoys the funding bodies. As a result, a TTO loses face. TTO staff members are spending nearly all their time negotiating often highly irrelevant intellectual property clauses in charitable research grant agreements, to the detriment of the commercialisation of the very small portion of commercially viable intellectual property at a university.

Another consequence of this serious problem is that researchers are fingering blame at the TTOs for the loss of funding opportunities which have very important and significant strategic value for them and the university in many instances. Incidents like these are used as damaging examples at Faculty meetings, creating an impossible situation for a TTO to fulfil its role and function within the university.

A possible solution would be to identify and ring-fence specific parameters and types of research agreements that will empower a TTO to make fast decisions to allow certain intellectual property clauses even thought they don’t technically comply with the Act in its current form and that take the research funder’s context and intentions into consideration. Examples of these parameters include where there is clearly zero commercial value to be gained from the research outcome. and where the funding time frame and/or the situation prevents us from negotiating the issue and where the intellectual property clauses are specifically drafted to ensure the furtherance of the non-commercial objectives of the funded research.

An example scenario where this could be applicable is when the funder requires copyright on a report detailing interventions that will reduce teenage pregnancies in poor communities, which will allow the funder to distribute the information as widely as possible to the benefit of the community that the information will make the biggest impact.  Currently, such approval cannot be granted freely by a TTO if the project is not funded on a full cost basis.  A resolution of this nature will truly empower TTOs that are regarded by researchers as bureaucratic and inflexible obstacles in their quest for research funding applications.

There is a misconception that university intellectual property is generally highly profitable and has great commercial value.  The opposite is true. Only a very small percentage of university-developed intellectual property is commercially feasible. In a recent meeting to discuss the commercial potential of a promising invention, we were schooled by our business partner in the dynamics of the niche technology market dynamics that would influence the deal ahead. These factors were regardless of the technical merits or benefits of the underlying technology.

In the USA, where the Bayh Dole Act (which differs from the IPR Act in that it involves significantly less types of intellectual property) has been implemented for more than three decades, only 16% of TTO’s break even or make a profit. In South Africa I expect that number to be smaller due to the nature of research being conducted here and the level of funding support from both industry and government for research.

Our research efforts are mostly aimed at reducing social and health problems specific to the South African population and far less funding is available for high technology breakthroughs.

Due to the early-stage nature of university intellectual property and the long lead times required to commercialise some University innovations with understaffed TTO’s who spend significant resources managing and negotiating intellectual property clauses in research agreements, we should not be surprised if university management start questioning the additional burden that a TTO places on their ever increasing budgets. This is especially true for Universities that have recently established TTOs as an outcome of the application of the IPR Act.

This is unfortunately the reality we face as TTO’s in South Africa.  However, we believe that the Act will become a powerful tool in our TTO’s resource kits once it has been streamlined to achieve its intended objectives.  We are highly committed to working with the National Intellectual Property Management Office to achieve this.

 

Anita Nel

Anita Nel is the CEO of Innovus, Stellebosch University’s technology transfer company. A former investment manager at a venture capital company, Anita has served on the boards of various young companies in different technology-based fields. She went on to manage a socially responsible investment fund and a small research company. With vast experience in human resources, marketing, negotiations, strategy and general management, Anita is well equipped to understand entrepreneurship and the many challenges facing start-up companies.