Why technology transfer leads to innovation success
Over the last few decades, innovation has become fundamental to the economic growth of developed countries. It has created jobs, increased competitiveness, supported sustainable development and improved the standard of living for citizens. What many people do not realise is that, for numerous innovations we use today, the journey began in the research labs of universities or research organisations. In fact, the science and knowledge generated in publicly funded research labs has been the foundation of many revolutionary innovations on the market today.
The history of technology transfer
Technology transfer is the process by which basic scientific discoveries and inventions are developed and transformed into practical and commercially relevant innovations, that reach the market and benefit society. It bridges the gap between research and innovation, known as the technology 'valley of death', where early-stage inventions often fail. The concept of technology transfer was first developed in the United States, with the introduction of the Bayh-Dole Act in 1980. Before this, inventions generated from publicly funded research were owned by the federal funding agency. However, because they lacked the technical know-how and capabilities to develop those early-stage inventions, many breakthroughs were shelved and failed to reach the market.
The introduction of the Bayh-Dole Act changed this. It allowed recipients of federal research grants (ie, universities, research organisations and SMEs) to own the rights to the intellectual property they generated, and to license those rights to private sector partners so that they could develop and commercialise their inventions. This model led universities and research organisations to establish technology transfer offices (or 'knowledge transfer' offices in Europe), to facilitate this process and to foster public-private partnerships. The result was a remarkable success. Over the last 40 years, the licensing activity driven by the Bayh-Dole Act has contributed over $1.3 trillion to US economic growth, supported an estimated 4.2 million jobs in the United States and generated over 11,000 new start-up companies from universities alone, making it probably the single most important piece of legislation for driving innovation-based economic growth in the United States since the 1980s.
Many countries around the world recognise this, and have since passed their own national legislation and policies to stimulate innovation. Singapore is the leading example of an economy that has focused government efforts to successfully establish itself as a global IP and innovation hub in Asia. Following this, the United Arab Emirates issued its own National Innovation Strategy in 2014, which seeks to build the United Arab Emirates as an innovation hub in the Middle East by developing the right regulatory framework, infrastructure and ensuring the availability of investment.
The new technology transfer model
Shifting the IP ownership model in the United States was instrumental in incentivising universities and the private sector to collaborate and invest in technology commercialisation. However, it is important to recognise that, without proper technology transfer processes and resources to support development and implementation, an invention will inevitably end up in the valley of death.
Traditionally, technology transfer followed a so-called 'technology push' approach. This occurs when inventions are created without a specific need, and are used to drive new consumer demands. Technology transfer offices were tasked with figuring out how to market and monetise these inventions. The research, often led by the principal investigator, focused more on development than on market need or solving industry problems, which meant that some inventions did not receive licensing interest or go to market. If a licence was successfully negotiated, a university would receive a modest licensing income, which would usually be distributed to the inventors, faculty and university, and fed back into further research. Once in a while, the university receives a breakthrough invention that generates millions of dollars in licensing income. The traditional technology transfer model is still the norm in many parts of the United States and in other countries, including the Gulf Cooperation Countries that are investing heavily in R&D.
Recently, technology transfer offices have been taking a more proactive approach in developing so-called 'market pull' inventions. This occurs when technical solutions are produced in response to market forces or customer needs. Usually, there is a need or a problem faced by industry that causes companies to seek a technology from an external source. Market pull inventions have a higher probability of being successful innovations in the market because the market opportunity has been validated, which justifies pooling in greater resources to expedite technology development and commercialisation. The speed of technology transfer, fuelled by demand, means that products and services can reach consumers much more quickly and the organisation can guarantee a return on its research investment.
More advanced technology transfer offices are using IP analytics to identify areas of opportunity (or hotspots) for creating market pull inventions, before feeding this information back to researchers. An IP landscape analysis covers existing patents, patent applications, publications and market reports in a given technology space, to determine who owns core intellectual property while identifying the latest technology trends. By analysing patent-filing trends and competitors' patent portfolios, it is possible to determine the direction in which a technology space is headed and whether the patent landscape is overcrowded. In some cases, regulatory requirements or other technical or commercial barriers may impede commercialisation. Identifying these risks early can help navigate research towards more attractive and commercially viable technology areas.
Implementing essential tech transfer practices
If you are establishing a research programme at your organisation, it is crucial that you consider instituting some basic technology transfer practices to create value from your research investments. Since ownership of intellectual property can be contentious down the line, it is important to ensure that any collaborative R&D your organisation participates in or funds is governed by agreements clearly setting out the IP position. This includes access to background intellectual property, ownership of foreground intellectual property, rights to use or commercialisation. IP provisions in any development agreements, including consulting or contracting agreements, also need to be aligned with that IP position.
Creating an organisational IP policy framework early on can encourage employees to disclose inventions in advance and help the organisation protect its intellectual property. Since novelty is required to obtain a patent, it is crucial that employees understand that public disclosures before filing can be harmful for IP protection and commercialisation. Executing IP assignments are also necessary to ensure that intellectual property remains with the organisation, even when employees depart. To help increase awareness among employees, some organisations distribute employee IP handbooks summarising their policies and guidelines.
If you want to stay ahead of the competition, investing in IP analytics is always a good idea. It reveals what your competitors are doing, which technology licences are necessary to give you the freedom to operate, who you should partner with and essentially help you define your IP strategy. Such information should also feed back into your research strategy to guarantee that your research creates high-value commercialisable intellectual property.
The pathway to innovation success
Technology transfer has been instrumental in reshaping economic growth in the last 40 years. Companies are increasingly relying on open innovation to develop intellectual property more quickly and economically, to stay ahead of the competition. Universities, research organisations and SMEs play a crucial role in supplying intellectual property, and supporting research that will build the innovations of tomorrow. With rapid advancements in technology, they need to ensure they have the right frameworks and processes in place to navigate the IP landscape they are investing in, if they are to give their innovations the best chance of success.
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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