Stake Holders in Technology Transfer

If the EU embraces knowledge and innovation as a key policy area, the input of Irish Universities and Colleges will be pivotal.

Much has been written in recent months about the transfer of technology from Universities and Colleges to Industry. Technology transfer from Universities is often mooted as one of the ways in which investment by the state can drive the creation of an ‘innovation economy’.

There are many parties who have a stake in the technology transfer process. The college when commercialising its research is a stake holder whose interest is to secure a fair return for the researchers who created the technology and to cover some of the costs incurred in the development and protection of the invention.

The second stakeholder is the receiving party in the transfer, the licensee, who can be 1) an entrepreneur who hopes to use the invention to start a company or 2) an extant company who wishes to add to its product portfolio. The entrepreneur wishing to form a spin-out will want to secure a licence which will pay the minimum in royalties and fees to the college in order to maximise revenue and help ensure future growth. The company which is already generating revenue (whether it is a multinational company or smaller indigenous company) is less likely to be strategically dependent on the university’s technology but similarly will wish to minimise the fees and royalties it pays for the licence.

The third stakeholder, ultimately the most important, is the taxpayer whose ‘tax dollars’ originally funded the research. How is their interest best served by technology transfer and does the process in Ireland give them a reasonable rate of return on their investment?

Technology transfer from Universities involves companies which maintain a policy of open innovation and thus obtain licences for technologies created elsewhere - rather than developing everything in house as was traditionally the case. For example the iPhone is composed of technologies which originated outside of Apple and were licensed in for purpose. Negotiations for such licences ultimately come down to the valuation of the technology. How much is it worth and what are you willing to give me for it? Valuation of technology, business to business, is relatively straightforward and assessed either on how much it would have cost the receiving party to develop the technology independently or by projecting the revenue that the technology will generate over a number of years.

University technology transfer offices (TTOs) do not use these criteria when valuing inventions as they would put most technologies beyond the reach of start-ups and limit the ability of cash strapped entrepreneurs to create significant value for themselves. Rather, the mission of TTOs is more holistic in service to the tax-payer and attempts to maximise deal flow over upfront financial return. Since 2008 Irish Universities have had their technology transfer function potentiated by the Enterprise Ireland ‘Technology Transfer Strengthening Initiative’. Under this scheme licensing professionals with extensive experience in both Industry and Universities outside of Ireland were recruited to commercialise technologies, to date they have successfully increased deal flow by offering softer terms than would be available had the technologies been valued on a full commercial basis.

This is evidenced by the low revenues generated from licences between Universities and Industry relative to similar licences business-to-business. On occasion the University’s requirement to generate revenue for itself (to reward inventors and cover non recoupable costs) has generated frustration amongst inexperienced entrepreneurs who as first-time licensees do not recognise the ‘soft terms’ as such. This can exasperate both parties and negotiations can become fraught with licensees claiming that Universities overvalue their technologies. In fact Irish Universities undervalue technologies in comparison to business-to-business licences, but also when compared to TTOs in leading Universities in the US and UK .

But do these soft terms benefit the Irish tax payer? Irish universities anticipate that multiple start-ups using publicly funded innovations will help foster an entrepreneurial culture heretofore absent in Ireland. These start-ups and the entrepreneurs who are facilitated by the University TTOs will hopefully generate jobs and create a return to the tax-payer that will outweigh any remuneration which they would have received from a licence which better reflected the true value of the technology.