Minister proposes patents, not papers, as basis for research grants

According to Minister for Industry Ian Macfarlane, university researchers should receive government grants based on the number of patents they are granted, not the number of academic papers they publish. On August 7 2014 The Australian published an article, “Show us patents to get uni grants”, in which Macfarlane was quoted as stating:

"[w]e might think about realigning block grants to commercial outcomes, and awarding them to universities not on the basis of how many papers they’ve had published, but actually on how many patents they’ve had registered."

The proposal aims to see an increase in Australian university patenting figures, although such a scheme would require a considerable contribution from the government to get the ball rolling.

Push for patents: publishing papers not a priority
In addressing the Queensland Media Club on August 6 2014, Macfarlane admitted, "I am freelancing a bit here," before announcing the government’s potential new approach to research funding. He stated that basing government grants on registered patents as opposed to published papers "is not rocket science", and that "just about every other country in the world is doing it", and so Australia should do the same.

When he was asked to clarify, Macfarlane said that the existing grant scheme is working alright, but could work better. The current system is "great if you’re into producing papers, but I’m into producing jobs, and I’m into producing products that are commercialised from the IP that scientists or researchers may have developed," he said.

The idea has been rejected by the Australian Academy of Science, with Secretary for Science Policy Les Field telling ABC News that:

"tying grants to patents is simply the wrong way to go. One really has to recognise quality research and research excellence, and recognise that there may well be a commercial outcome to this and you need to facilitate that or make it as easy as possible."

Warwick Anderson, CEO of Australia’s government granting body, the National Health and Medical Research Council, told ABC News that there are other "practical outcomes that you’d be wanting to get out of research as well as patents", although "where there are opportunities to patent and to develop commercially, they should be taken up".

Thomas Barlow, former research adviser during the Howard government, told The Australian on August 8 2014 that Macfarlane’s proposal could see the filing of ‘junk’ patents to bolster research rankings come grant time. In the same article, Australian Research Council executive Aidan Byrne stated that "it is important that one indicator, such as patents, is not considered in isolation to other indicators". Both noted that undertaking world-class research that is published in highly ranked, peer-reviewed journals is closely linked to the commercialisation of research in Australia.

Story of patenting in Australia
Australia’s low patenting rates were identified some time ago. In 2011 IP expert Adam Liberman told The Australian that Australia lagged behind other countries in terms of protecting and commercialising intellectual property. Australia had fallen well behind China, which had identified the importance of intellectual property to its economic success. At the time of the report, Australia had just 3.7 patent applications per billion dollars of gross domestic product, while China had a remarkable 26.8. Accentuating the gap, Australia had just 0.2 patent applications per million dollars spent on R&D, while China had two.

Liberman further referred to 2008 World Intellectual Property Organisation figures which revealed that while Australia published a staggering 3.18% of the world’s research publications, it held just 0.46% of the world’s patents. He called for an increase in the portion of Australian patents to 2% by 2020.

Research performance of university patenting in Australia
Where Australian universities are concerned, the patenting story is perhaps unsurprising given these statistics. The National Academy of Inventors and the Intellectual Property Owners Association in the United States publish an annual ranking of the universities that patent the most in the United States. US universities consistently rank well, with the University of California obtaining almost 400 granted US patents in 2013. Australian universities failed to make the list. Although the differences are staggering, it is not necessarily a fair comparison as, unlike in Australia, US universities receive copious amounts of endowment funding and extensive compensation through industry partnerships.

In October 2013 IP Australia released its pilot assessment of the patenting activity of Australian universities, as well as the impact of Australian university patents. The study was based on a cross-section of 12 Australian universities, and the study identified 4,056 university patent documents relating to 1,293 inventions over the period of the study (January 1 2006 to June 30 2012). Australian university patenting activity averaged 16.58 new inventions per university per year.

Taken together, these two sources of information suggest that while many Australian universities file patent applications, the rate at which they are pursued to grant is low. Given the cost of the patenting process and the financial pressures on Australian universities, who would be surprised by this?

Patents versus publications in practice
It is obvious that patents are expensive. Substantial costs are associated with getting a patent to registration and these costs grow with every country in which patent rights are sought. Do universities have this type of cash? As a former university researcher, I can tell you that they do not.

In many institutions, researchers submit a summary of their research to the university’s business development or technology transfer office, whereupon the commercialisation experts sift through the inventions to find which has the greatest potential for commercial success. This will be the invention to which the university’s minimal patenting funds are allocated. Even then, in the absence of clear commercialisation opportunities, the filed applications are often abandoned long before a patent is granted. The notion of universities financing ‘junk’ patents to registration is highly unlikely.

Conversely, publications are free. They are also peer reviewed. Peer reviewed means that if the research is not of the highest standard at an international level, it will not – or should not – be published. Most importantly, publications are an international standard of measuring research success. Government funding of research is not globally uniform, and so a free system that enables researchers to be ‘ranked’ based on their professional research publications serves as a global indicator of the quality of research being undertaken.

What next?
The minister is correct in identifying that Australia is lagging in its protection of intellectual property. There is merit in reopening the discussion. The simple fact is that Australia is a world-class scientific nation, but with second-tier patenting statistics.

There is a real need to protect Australian intellectual property and one avenue is by patenting inventions. Doing so would facilitate commercialisation, thereby strengthening the Australian economy. As it stands, Australia is at risk of being closed off from international markets because other patent holders may prevent Australians from using and exploiting their innovative research, both at home and overseas.

However, Macfarlane’s proposal is fundamentally flawed. Australian researchers are struggling to find funding for their next three months of employment. Announcing that they may soon receive much-needed government funding based simply on how many patents they can afford to obtain is unrealistic and counterproductive.

Many would argue that radically reforming the Australian research grant process to incentivise patenting with the view of increasing the protection of intellectual property and hopefully commercialisation, all to achieve greater national economic success, is a far more complex issue than Macfarlane has recognised. Simply dangling a carrot – in this instance, research grants – at the end of a stick will not solve Australia’s patenting issue.

Any scheme to increase patenting in Australian universities will require a considerable contribution by the Australian government to get the ball rolling. That is, Australian universities will need to be in a position where they are exploiting several patented inventions and have commercial outcomes before they can self-fund future patenting ventures. Where will the government get this initial cash contribution from? Perhaps by cutting funding for research jobs.

Government contributions, albeit small, fund university R&D in Australia. Offering grants to researchers based solely on their patenting record is funding only development. Inherently, research is necessary for development. It is a simple concept. Without awarding government grants towards university research, there will be no inventions to patent, develop, commercialise and boost the Australian economy. It is not rocket science.

This is an Insight article, written by a selected partner as part of IAM's co-published content. Read more on Insight

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