Commercialisation of the University education

1
Commercialisation of the University education

• Ing Petr Holec, CSc
• CTT VUT Brno
• holec_at_ro.vutbr.cz

2
Mission of a University

• Teaching and training of specialists
• Research (in our country still used more as a
  teaching tool)
• Share on the regional economical development
  (supported by legislation in many places of the
  world, e.g. the obligation of universities to
  commercialize research outcomes in Sweden, more
  often by cutting budgets though)

3
Innovative settings in Europe

• Lisbon Agreement (a myth?) create the European
  economy on the basis of knowledge economy,
  increase the competitive strength on a worldwide
  scale
• Entitle state-governed research institutes
  (including universities) to 70 of
  pre-commercialized research as
• 70 of patents are based on their results
• but only 5 of innovation is accredited to these
  institutes
• Necessity to render the transfer of knowledge
  more efficient!

4
Statistics from Denmark

• Danish Product Idea Support Scheme, 1985-1990
• 5000 ideas from public research
• 350 (7) recommended for further exploitation
• 94 with positive evaluation (patent potential,
  companies interested in obtaining licences) 
• 30 products launched on the market
• only 15 products still produced in 1991
• USA the threshold of economic development is not
  driven by the number of ideas, but by the number
  of successful commercial implementations
  
  
  

5
How can knowledge be transferred?

• research institutes

industry
RESEARCH
DEVELOPMENT
education
graduates
transfer office
knowledge
publication
public domain
6
Rate at which knowledge is transferred to real
life

• Laissez-faire 1 to 5 generations
• First major attempt to apply goal-directed
  science in real life USA, Manhattan Project,
  1941
• Today procedures and mechanisms aimed to shorten
  the time to market
• Key issues different culture and different
  language applied in the world of research and in
  the world of industry, interface needed

7
Current situation in our country

• Universities do not strive for any intellectual
  property (IP) (except for the right to quotations
  and printing rights)
• No necessity to take care of IP management
• Low incentives to invest in exploitation
  (unfavourable culture as well as inefficient
  protection)
• No or inefficient checking of results (unless
  used by somebody else)
• Low direct impact to economy
• Innovations depend entirely on industry

8
In the US licence (linear) model

• The research institute claims its property rights
  to patents and other industrial rights, though it
  must work hard to protect them and to seek for
  licence users
• (Strategic) patenting is important as it aligns
  publications to investment
• Requires professional management of intellectual
  property
• Research institutes may grant the licences
• Largely applied in the US since 1980 (Bayh-Dole)
• Very successful in the US (revenues from licences
  both for the institute and the inventor, new
  products, new companies)
• It does not work in Europe

9
Interactive model

• Based on the Licence model and IP management
• Tools for primary development are background
  technology (i.e. cumulated know-how) patents
• Functional sample made in cooperation with
  industry
• Demonstration of results partly paid from public
  funds (see e.g. EC Framework Programmes)
• Does not contradict the mission of a University
  if

• it helps to scientific knowledge
• the University obtains revenues from patents
• profits are equitably distributed

10
Why is the strategic partnership with industry so
important?

• Can become the most efficient way to transfer
  knowledge
• Strengthens innovation through cooperation
• Helps the economy in the region
• Can yield major benefits in short time span
• Helps to improve competitive strength of European
  companies

11
Research subcontracting
Subcontracted

• At the turn of the century, almost all research
  was done outside of the company
• Golden Age of company research, only about 3 of
  research given to independent research
  organisations
• 3. Balance between internal and external
  research, assessment, selection and exploitation
  of purchased research and technical elements,
  now on a global scale

1st generation 2nd generation 3rd
generation 4th generation
20 15 10 5 0
1
3
2
1900 1920 1940 1960
1980 2000
12
Frequent problems in collective research

• Property rights to the results
• Project management and outcome quality of
  research institutes
• Method to calculate indirect costs
• Frail relationship
• In case of success, just distribution of
  revenues
• Lack of workmanship on both sides

13
Strategic partnerships key features to success

• Most of them are long-term (strategic!)
• Help scientific knowledge (publications, doctoral
  theses)
• In most cases industrial property rights (IPR)
  belong to the research institute, but they are
  restricted in some cases (options, right of first
  refusal)
• Both parties clearly benefit from the interaction
• Wide range of innovative forms, from collective
  research to joint ventures

14
Conscientious partnership

• Application of knowledge based on the principle
  of maximization of benefits from knowledge
  generated by research institutes for the public
• Quality of research results
• Protection and exploitation of intellectual
  property
• Conscientious use wilful respect to the
  principle of maintaining the research function of
  the institute and prevention of ill use of the
  generated knowledge
• A handbook was published (ProTon, EIRMA, EARTO
  and EUA, autumn 2005)

15
Incremental and radical innovations

• Incremental innovation innovatory movement,
• improving the existing products (price,
  properties)
• easily grasped by existing companies
• Radical innovation major changes, high risks
• new business models, new customers, need to
  implement key changes in the company, often
  cannibalization of the existing technology
• not supported by existing companies
• mechanism of spin-out establishment and
  development
• new industries created, economy rejuvenates,
  state assistance needed

16
Spin-out model

• Companies established on a commercial principle
  using new knowledge success presumes 3 elements
• Technological platform developed during the years
• Team of entrepreneurs including some research
  workers (efficiency of knowledge transfer) the
  team generates a business model and a business
  plan up to 50 of research funds provided from
  public funds in order not to thin the
  proprietary structure (a so-called virtual
  capital)
• Seed capital (final financing of development)
• The strategic partner, or risk capital, enters
  into the company after 2 to 5 years only

17
Typical time history of the spin-out process
Research Incubation from feasibility study
(pre-seed type financing) until the establishment
of the company approx. 2
years Functional sample (proof of concept) from
the establishment of the company until the
verification of the functional sample (seed type
financing) approx. 3 years Early phase of
company development product development, product
launched on the market

approx. 5 years Exit of risk capital from the
company, company growth
18
Spin-out model

• Based also on the licence model
• Controlled technology (not only the new one) is
  used as the basis for the development of new
  business concepts
• Functional sample made by research workers
  themselves
• Development outsourced and financed both from
  seed capital and virtual capital
• Helps to rejuvenate the economy
• Helps to develop regional economy
• Slow process companies mature more than 10
  years
• Works in Europe but it could work better

19
Ways to support the establishment of viable
spin-out companies

• Spin-out companies are founded spontaneously by
  entrepreneurs
• A suitable mix of incentives can increase their
  number many times
• Seed and pre-seed type capital
• Scientific incubators
• Training and guidance of entrepreneurs
• Credit and business culture
• Sustainability remains to be an issue
• Approach to talented people
• Strategic partnerships
• Access to markets
• Access to risk capital (in particular for
  projects ranging from CZK 5 mil. to CZK 50 mil.)
• Spin-out companies represent a key tool to
  long-term rejuvenation of economy

20
Conclusions of the EC expert team for PRO

• Research institutes should seriously consider to
  adopt a pro-active approach by managing the IP
  since the development.
• The key objective is to maximize benefits for the
  society.
• PRO benefits cover attractiveness to students,
  sustenance of high quality scientific workers,
  research financing. It is not an alternative
  source of finance!!!
• Direct licensing is not sufficient. More
  interaction with industry and establishment of
  spin-out companies are needed.
• The key factor is selection of TT employees and
  their special training.

21
Knowledge transfer office (TTO, KTO)

• Also under different status a University
  department, a separate limited liability company
• Mission improve the chance that knowledge
  acquired in research will be transformed to
  useful products and services to the benefits of
  the society
• A very difficult position requiring
• Expertise (science, IP management, enterprise
  development, legal etc.)
• Talent (negotiations, psychology etc.)
• Experience (both academic and business).

22
Function of knowledge transfer in Europe

• Poor results except for some countries (UK,
  Finland, Sweden)
• Underfinanced, insufficiently recognized
• Legal framework missing or inconsistent
• Well-proven experience is not divulged
• Lack of experts
• Major need for training
• In the Czech Republic also incompetence of State
  and local Authorities
• Insufficient financial tools

23
Visions of the ProTon Europe project

• Establish a KTO expert association represented in
  all the European countries
• Help to implement common European directives,
  high ethical standards and improve the
  recognition of Knowledge Transfer Offices
• Increase the transfer of knowledge by
• Professional training
• Divulging well-proven procedures and tools
• Exchanges and mobility (in particular in foreign
  countries) of employees
• Networking
• Represent its members on the European level and
  interacting in the knowledge transfer and
  innovation policies

24
What is at stake?

• Recognition and sustainability of research in
  research institutes
• Keep and motivate good research workers
• Get sufficient funds for research
• Competing position of our industrial partners and
  sustaining strong research activities in Europe
• Success of the European Research Area (ERA)
  project
• Europes goal is no longer to catch up and
  overtake the US but to survive in the
  competition with China and India

25
Lisbon a myth or a challenge?

• The only option in order to achieve major
  progress before 2010 is to engage pro-actively
  all public research organisations (PRO).
• The network of European universities and research
  institutes is one of our last competitive
  advantages.
• If we fail, lets get ready to earn money by
  showing our historic monuments to Chinese
  tourists.