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TTF Convocation

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  • 1. Technology Transfer Facility (TTF) Study: Summary and Implications Stephen M. Sammut Project Consultant
  • 2. Contents
    • Part 1 of slides:
      • TTF Concept, Targets and Phases
      • Core hypotheses
      • Why now?
      • Research/interviews
        • Structure of study and rationale
        • Global Institutions interviewed
        • General findings and implications
    • Part 2 of slides
    • Hypothetical Interventions by the IFC/WBG
  • 3. Basis and Objective for the TTF
    • IFC has a strong and well-performing technology-investing business in information technology, biotechnology and clean technologies
    • The IFC has developed a capacity to deliver financing to small and medium-sized enterprises through wholesaling vehicles and other mechanisms
    • The larger objective of IFC TTF is to develop the capacity and effectiveness of emerging markets institutions, such as universities, to identify marketable technologies they develop, and to commercialize those technologies with private sector partners
  • 4. TTF Project Targets
    • Identify and implement mechanisms and support for commercialization and tech transfer of EM innovation
    • Establish a Facility that:
      • Provides a combination of advisory services to develop technology management capacity of research institutions in emerging markets
      • Applies wholesaling structures, such as credit lines, that would allow IFC to provide early stage financing through trusted gatekeepers
      • Create and monitor economic development goals, monitoring and metrics for the impact of technology transfer .
  • 5. Consistency with IFC Mission
    • IFC’s client countries accelerate growth of tech capacity
    • IFC's business benefits through early association with entrepreneurs and companies that will grow to need additional financing, including equity, to meet their business objectives, as well as corporate governance and other services
    • Coordinate/collaborate with other World Bank Group efforts
  • 6. TTF Phases
    • One: Background analysis and framework report
    • Two: Structure and hold Convocation
    • Three: Establish Emerging Market Technology Counsel
    • Four: Develop a Business Plan for Execution of Interventions
    • Five: Structure and Launch Replicable Pilot
  • 7. Core Hypotheses
    • Universities in Emerging Markets are growing their research platforms
    • National policies are evolving to encourage technology transfer but tech transfer capacity is lagging
    • Industrial relationships of EM research institutions with companies in Part I countries remain limited
    • Professional staffing and training are limited
    • Universities in Part I countries rarely license companies in emerging market or their “master” licensees do not pursue these markets
  • 8. Core Hypotheses (Continued)
    • Motivation in Part II countries included well-articulated development goals and metrics
    • Training support and materials limited
    • The World Bank Group has a role in addressing policies, capacity development, financing of programs and companies, and promotion of international technology flows
  • 9. Is the timing right during a period of economic crisis?
    • Yes
    • Movement towards value-add is critical to development
    • Existing stock of innovation must continue development or be wasted assets
    • Innovation in areas such as food, energy, environment, IT and health will be critical to adjusting to new realities
    • Technology transfer ultimately is the currency of human development
  • 10. Phase One: Study and Conclusions
  • 11. TTF: Research Rationale and Design for Phase One
    • Interview leading or representative institutions to review their internal processes, management issues, performance and needs
    • Identify and review multiple studies of technology transfer activity and best practices texts and training programs exist
    • Develop “straw men” (the Hypothetical Interventions) possible roles for WBG
    • Hold Convocation to “deconstruct and reconstruct” the HIs
  • 12. First, a few digressions to create a context
    • Academia – Industry Relationship and Stakeholders
    • Elements and issues in a license agreement
    • The problem of foreign filings
  • 13. Academia/Industry Relationship and Stakeholders ACADEMIA INDUSTRY Commercialization of New and Useful Technologies Teaching Research Service Economic Development Profits Product R&D Knowledge for Knowledge’s Sake Academic Freedom Open Discourse Management of Knowledge for Profit Confidentiality Limited Public Disclosure
  • 14. What is in University Licenses?
    • Grant rights to patent rights (importantly, a right of exclusion not inclusion – the freedom to operate issue):
      • Established companies
      • Start-up companies (TLOs have varying roles in origination)
    • Not usually assign right and title to intellectual property
    • Contain diligence/ milestone/performance terms terms
    • Bear important non-financial terms such as indemnification and insurance coverage requirements
    • May contain an option to acquire to additional improvements
  • 15. Additional License Provisions
    • Contain a structure of financial consideration which may include upfront fees, maintenance fees, milestone fees, royalties, sublicense fees
    • Often be negotiated alongside Sponsored Research and Consulting Agreements that will be important to the university-startup relationship
    • Typically give “WORLDWIDE EXCLUSIVE RIGHTS WITH RIGHTS TO SUBLICENSE”
      • For countries with patents, but often with
      • Know How for countries not covered by patents
        • Is this right exercised?
      • Sometimes reserve regions for direct licensing
    • Should Part II countries look at licenses differently?
  • 16. Foreign Filing: “I see lots of costs, everywhere”
    • Issues:
      • Costs of preparation and prosecution
      • Where to file in first instance
      • Determination of markets
      • Basis for selection; “history” of the country selection problem
      • Enforceability
        • TRIPS countries still building an administrative legal structure
    • General process:
      • Decision regarding Provisional or Full Filing
      • Select country (usually of origin)
      • Designate entire PCT upon primary filing
      • Find licensee who can cover costs before National Phase under PCT
      • File National Phase in countries selected by licensee
        • Sometimes elect to file other countries
  • 17. Back to the report . . .
  • 18. Evolving Technology Transfer Motivations - USA
    • Circa 1980s
      • Bayh-Dole to drive a return for the country
        • An institutional responsibility
      • Presumed royalty revenue
      • Diversify research resources
      • Establish industrial relationships, particularly in life sciences
    • Circa 1990s
      • Recruitment and retention of faculty
      • Equity revenue
    • Circa 2000s
      • Build on portfolios created in the past
      • “ Mine” existing license portfolio for unpaid royalties
  • 19. Evolving technology transfer motivations (Other Part I Countries)
    • Circa mid 1990s
      • New initiatives to drive research
      • Increased national research expenditures and tech transfer
      • Expansion of industrial base
      • Observations of US experience
      • Faculty (ambivalent) demand
      • Drive towards globalization
      • Reverse brain-drain
    • “ Bayh-Dole is necessary but not sufficient”
      • Ashley Stevens, Past President, AUTM
  • 20. Technology transfer motivations – Part II countries
    • Circa 2000
      • Emulate activity in Part I countries
      • Build capacity
        • Focus limited resources
        • Faculty recruitment and retention
      • Prestige
      • Industrial potential
        • (Technology transfer may also mean transfer – in for new industry)
      • Find revenues from any source
      • Meet indigenous market needs neglected by companies in Part I countries
  • 21. Institutions Visited/Interviewed
    • Argentina -- Ministry of Science and Technology
    • Brazil -– UNICAMP
    • Chile -- CORFO; NEOS
    • China -- Tsinghua University
    • Germany -- Humboldt University Commercial Development
    • India --“STEM”
    • Israel -- Yissum/Hebrew University
    • Japan -- University Technology Transfer Association; Waseda University; Japan Nihonkai Innovation Tech Transfer; Shikoku TLO
    • Malaysia -- Universiti Sains Malaysia; Malaysia Universiti Putra Malaysia
    • S. Africa -- Medical Research Council Innovation Center
    • UAE -- UAE University
    • UK -- Cambridge University Technology Development
    • US -- Cornell University Research Foundation; MIT; Penn; Stanford; Wistar Institute
    • Other countries to be added: Russia and Turkey
  • 22. Part I country Observations: US, Europe, Israel and Japan
    • US technology transfer has been building since the passage of the Bayh-Dole Act (1980)
      • US aggregate royalties: $2 billion
      • 10 year aggregate US university research funding: ~$200 B
      • Invention disclosures rate: roughly 1 per $2 MM
    • European, Japanese and Israeli universities have had growing activity over the last 7 to 10 years
    • Staffing/faculty training
    • Economic development contribution:
      • anecdotally high
      • quantification limited
      • no standard economic development goals
  • 23. Preliminary findings: Part II countries
    • Research in several EM is under expansion
    • “ Bayh-Dole” type legislation relatively recent and untested
    • IP administrative machinery still in development in TRIPS countries
    • Budgets and staffing extremely limited
    • Dedicated, trained professionals are rare
    • Variety of structures: some internal other external
    • Little licensing of any kind; virtually no off-shore
    • Goal is to attract industrial collaboration
    • Limited collaborations with offshore TLOs
    • No articulated economic development goals or metrics
  • 24. Some specific challenges in Part II countries
    • Staffing offices with professionals with requisite skills and experience
    • Financial resources for the establishment and growth of offices
    • Ability to fund the cost of local and international patenting
    • Overall research quality, capacity and output
    • Mechanisms to market and promote available technologies
    • Ready access to licensees
    • Limited legal counsel for contracts and patent support (or limited resources to pay for such services)
    • Immature or developing intellectual property statutes or administrative systems
    • Absence or limited availability of value-added risk capital for the creation and funding of new companies formed around their technologies
    • Little to no cross-collaboration with other universities, either locally, regionally or internationally
  • 25. Capacity Building Implications (Italics are common to Part I and Part II Countries
    • Among innovating countries most have a Bayh-Dole type policy or are moving towards it; policies changes are within last eight years
    • Funding of offices is complex; patents funded separately (no pattern)
    • Largely understaffed
    • Recruitment and training of staff is an emphasis
    • Faculty outreach is a priority
    • Generally disclosures are increasing but from a very small base
    • Revenues inconsistent
    • Diligence and evaluation standards are high (“on paper”); implementation is questionable
    • Identification of prospects and technology marketing are universal problems
    • Valuation of technologies is a near-universal challenge
    • Several offices at major schools carry a huge extramural training burden
  • 26. Additional Summary Observations
    • Investment/funding implications
      • Little to no capital for start-ups as well as “valley of death” gap
      • Scarce entrepreneurial talent for start-ups
    • Economic development implications
      • International licensing is scant and cited by all as a problem
      • Corporate licensees seldom exercise their right to develop products or sub-license their rights for Part II countries
      • Identification of local capability for commercialization
      • Policies that inhibit outflows of technology, e.g., Brazil, South Africa
  • 27. Questions that are a backdrop to the Hypothetical Interventions . . . . . . Issues to keep in the back of your mind
  • 28. Will improved technology transfer systems truly contribute to innovation and commercialization in Part II countries?
    • Provides additional sources of resource funding
    • Creates potential collaboration between investigators in Part I and Part II countries
    • Assists in faculty recruitment and retention; slows “brain drain”
    • Encourages the creation of local companies
    • Builds entrepreneurial resources
    • Expands awareness of export opportunities
    • Forms a basis for foreign direct investment
    • Funds development of high-margin products suited for Part I countries where the funding, capital or profits can underwrite the modification and use in local markets
    • Brings companies in Part I countries a better understanding of market opportunities in Part II countries
    • Creates a bridgework for technologies from Part I countries to be developed and modified for use in Part II countries.
  • 29. Is there a Part I Country Model? Applicable to Part II?
    • Is there a Part I Country Model?
      • Nationally enabled by Bayh-Dole , but
        • Royalty driven?
        • Service driven?
        • Combination? Who decides?
      • Is it scale dependent (minimum research base)?
      • Is it optimal?
      • Is it a dynamic model?
      • Is it cost efficient?
      • Beyond AUTM statistics, can metrics be derived?
        • Institutional
        • Regional economic development
        • National economic return on investment?
  • 30. Part 2: The Four Hypothetical Interventions
  • 31. Hypothetical Intervention # 1 Facilitate integration of emerging markets research institutions into global technology flows and marketplace.
    • Challenge :
      • Markets and innovation, as well as the challenges and needs that generate innovation, increasingly involve emerging markets. Part I and Part II research institutions recognize this, but have not yet developed an infrastructure to support globalization.
    • Solutions from the IFC?:
      • Support development of an international community of TTO professionals
      • Use its convening power to support establishment of a joint organization,
      • Provide early support for design and implementation of programs for Part II countries
      • Assist countries where needed in establishing national policies
  • 32. HYPOTHETICAL INTERVENTION # 2 Target IFC advisory services to building TTO capacity in Part II countries
    • Challenges:
      • Issues associated with the establishment, operation and effectiveness of TTOs in emerging markets include:
        • Issue 1: Enabling culture and environment
        • Issue 2: Operations, management and procedures
        • Issue 3: Marketing innovation licensing and spin-outs)
        • Issue 4: Integration into global technology marketplace
        • Issue 5: Sustainable development
    • Solutions from IFC?
      • How can IFC advisory capacities be supplemented, enhanced and packaged to develop TTO capacity in emerging markets?
      • Collaboration with organization emerging from HI 1 or with existing regional organizations?
  • 33. HYPOTHETICAL INTERVENTION # 3 Provide IFC financing targeted to specific gaps and needs in TLO space
    • Challenge:
      • Institutions universally identify financing of innovation and spin-outs as the single biggest challenge
      • Most locations have very limited sources of capital
      • Many national, state and local governments have investment programs for seed-stage development
        • the level of funding and value add support is severely limited
        • The “valley of death” looms large
    • Solutions from IFC?:
      • Can IFC deliver financial products that meet identified market needs on sustainable (ie, quasi-commercial/DFI) basis?
      • TLO programs have generated financing needs and solutions that mirror IFC product offerings
      • In emerging markets DFI involvement may be required to attract other financing sources, provide value add services such as opportunity validation, market insight, corporate governance guidance and life-cycle financing options.
  • 34. HYPOTHETICAL INTERVENTION # 4 Facilitate flow of products derived from university technology in Part I countries to companies in Part II countries; facilitate flow of products derived from university technology in Part II countries to companies in Part I and Part II countries
    • Challenge:
      • Products derived from university technologies in either Part I or Part II countries are often not developed, modified, manufactured or marketed globally.
    • Solution?
      • Establish a business or facility to support globalization of technology flows, in terms of (a) applying Part I innovations to Part II markets, and (b) incorporating Part II innovations in commercialization “packages”

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