IP strategist: Mind the (cultural) gap
While more and more corporates are looking to academia for innovative solutions, there remains a challenge managing the gap between the differing wants and needs of companies and universities
In many respects, the culture, objectives and perspectives of large corporates and universities are fundamentally different. Universities exist primarily to undertake research and teaching, with the generation of commercial value a secondary objective – albeit one that is of increasing importance. For industry, achieving commercial success and maximising shareholder value are the main priorities. Companies take calculated risks in order to seek returns, often needing to maintain flexibility and the ability to move forward quickly. Academic performance is measured by the publication of research, whereas companies typically strive for confidentiality to help sustain competitive advantage.
While academia and industry might appear inherently incompatible, there remains a strong mutual incentive for collaboration. Universities can provide unique, innovative solutions while industrial research funding and the ability of companies to provide expertise and resources needed to develop and commercialise early-stage IP is of great importance to universities. Technology transfer offices (TTOs) – set up to commercialise output from academic research – play an important role in building partnerships with industry and investors to develop new products and services for the benefit of society. The potential rewards to both industry and academia make it worth developing a deeper understanding of these differences in order to promote successful and long-term partnerships.
There follow some examples of areas in which the university TTO and its commercial partner should invest time in order to achieve a successful outcome.
The ‘valley of death’ is a well-reported challenge: industry can justify investing only in technologies that have been sufficiently ‘de-risked’ (ie, those where there is an acceptable proof of concept), while TTOs typically deal in very early-stage intellectual property and lack the substantial funds necessary to enable further development. However, if the risk of adopting early-stage technology is too great for companies, there are increasing options for bridging this gap, such as industrially sponsored research, joint translational funding, academic consultancy and investment in spin-out opportunities. Understanding the strength of the business need and the university’s technical capability early on will enable the development of relationships which build confidence and provide a basis for thinking creatively about suitable partnership structures.
TTOs are tasked with enabling commercialisation of their institutions’ technologies while managing and minimising associated risk. University intellectual property is not generated within a commercial infrastructure and universities typically have charitable status. TTOs are therefore careful to:
- conduct due diligence on the nature of a prospective licensee; and
- avoid exposing the university to contractual liabilities which might undermine its more tangible assets.
Hence, TTOs are often resistant to providing the types of warranty and indemnity expected in commercial licensing agreements. This contrasts with companies, which can typically verify the facts being represented or warranted more confidently and are therefore more comfortable with the associated risk exposure.
Companies often prefer to develop multiple technologies in parallel, to retain optionality and develop the most competitive solution for the market. On the other hand, universities, if bound by exclusivity, can place only one bet for each IP asset. It is thus important for TTOs that licensees are committed to take a technology to market and cannot simply shelve a technology that competes with an internal programme. The opportunity cost here for the university is high, as lack of commitment to development could jeopardise not only the successful development of the technology, but also future funding for core research. TTOs need to have confidence that their commercial partner is committed – ideally through a robust contractual diligence obligation – to developing the intellectual property into a commercial product.
Corporates are often structured into market-focused business units and/or functionally aligned along specialist skill sets. TTOs do not typically have the resources to employ market specialists for each technology area and technology managers are frequently required to operate in generalist roles, managing multiple stakeholders, broad portfolios of technologies, complex patent prosecution, business planning and complex commercial contract negotiations.
Therefore, if industry can demonstrate a collaborative approach to sharing information and provide visibility of the internal business case to inform licensing discussions, this will in most cases help to reach agreement more efficiently. This can be very effective in avoiding the overvaluation of technologies for which TTOs are sometimes criticised.
Given the rate of progress and development of new technology in the marketplace, more and more corporates are looking to academia for innovative solutions. Academia receives billions of pounds of research funding, which generates new discoveries across many fields. Governments and universities are also increasingly seeking to maximise the impact of academic research activities on society, and the commercialisation of new products and services is a vital component of this. TTOs are uniquely well placed to identify complementary opportunities for companies and facilitate mutually beneficial partnerships; but this requires early engagement, an understanding of each other’s needs, relationships based on trust and a greater understanding of how respective differences can be navigated to find win-win solutions. And of course, this ultimately leads to solid, well-developed IP assets.