Collaboration: A Path to Profit

By Emily Tan, China IP,[Patent]

According to statistics provided by the Ministry of Science and Technology of China, 5,100 colleges, universities and research institutions nationwide produce around 30,000 research results each year. But only 20% of these are applied in industrial production and no more than 5% in large scale production. This is consistent with data released by the Ministry of Education, which shows the technology transfer rate of Chinese universities is no more than 20%, and less than 15% of university-owned patents are applied in practice. This compares with commercialisation figures for developed countries as high as 70% to 80%. Such a great gap between China and developed countries on transfer of new technology indicates there is much room for China to improve. In recent years, the Chinese government at all levels is devoting more time and resources to promoting technology transfer and “use” of intellectual property (IP), making a series of incentive-based policies to fully promote the exploitation of IP assets. Most of these policies are designed to encourage cooperation between businesses, universities and other research institutions, encouraging each party to fully utilise their complementary strengths to create an advanced system with a strong integrated performance in research, development and production.

During UK Intellectual Property Office (IPO) Chief Executive John Alty’s visit to China in November 2014, China IP Magazine and the British Embassy co-organized a roundtable meeting to hold an in-depth discussion on research and technology transfer. Professionals from related sectors were invited to share their views and discuss the role of government, universities and businesses.

Government: Providing a Platform
The Beijing Municipal People’s Government released Opinions on Accelerating the Transformation of Scientific and Technological Achievements and Innovation Cooperation of Universities (The Opinion) in January 2014. The Opinion, also known as the “Ten Provisions”, led to great changes to the management system and incentive measures for technology transfer by universities in Beijing. In June 2014, Hubei Provincial People’s Government published the Rules for the Implementation of the Transformation of Scientific and Technological Achievements. These local regulations were followed by national-level legislative changes at the end of 2014 when the State Council (China’s Cabinet) completed a draft amendment to the Law on Promoting Transformation of Scientific and Technological Achievements. Many commentators believe these changes will “untie” technology transfer in China. Taking the Ten Provisions as an example, according to the new provisions the minimum incentive money award to researchers has been raised from 20% to 70% of the total transfer amount of money. Furthermore, by supporting cooperation between universities and businesses, the re-drafted national legislation of late 2014 may further improve information release system of technology results and revenue distribution mechanism, and strengthen the role of business in choosing research direction and projection implementation.

The UK government has always attached great importance to promoting cooperation between universities and businesses. UK IPO Chief Executive John Alty told China IP Magazine that there is a very good record of collaboration between UK universities and businesses. In fact, the collaboration has become increasingly strong over the last 15 to 20 years, because firstly, the UK established and funded technology transfer offices in almost all significant research universities to manage technology transfer. This helped to make it easier for universities to engage in technology transfer. But more generally, the UK has a very flexible IP system and it is a matter for the university and their business partners to decide how they wish to arrange collaboration. To support such cooperation, the UK IPO worked with universities and businesses to produce some model agreements called “Lambert Agreements” to make it easier for businesses and universities to agree on terms for these types of collaboration, and a recent evaluation concluded that the Agreements have been successful.

In addition, the UK government is also looking at the whole process from research to final product and considering what support it can give at different stages. For instance, in medical and life sciences research, there has been some collaboration between different government agencies, with some more concerned with exploitation while some others are more concerned with funding basic research. The government tries to support a holistic system and ensure every chain of the process has the necessary environment to work well, from research to implementation.

Universities: Incubators of Innovative Businesses
Tsinghua University, as one of China’s top universities, is very competitive on scientific research. From basic subjects to engineering and technical disciplines, it always maintains a leading role in these aspects. And its IP assets transfer operations started relatively early in China, and has accumulated rich experience.

According to Lin Lihui, Associate Professor at Department of Management Science & Engineering of Tsinghua University, Tsinghua was one of the first universities in China to establish a technology transfer office in the 1980s. Over the years, it has helped faculty members with technology transfer and collaborative research with businesses. It works successfully due to the strong research capabilities of the faculty members and also the overall strength of the university. Total revenues reached one billion yuan from technology transfer and collaborative research, including the licensing of IP, in 2014 in domestic market. Another half a billion yuan came from overseas markets. However, there is still significant room for the Tsinghua technology transfer offices to improve services and the timing of their involvement in projects. Now the offices are getting more involved at an earlier stage, and providing more services, helping university research staff on negotiation and contracting. Their involvement is getting deeper and stronger. There has been the establishment of more specialized offices, including a collaboration development office and an overseas collaboration office, to provide specialized and effective service at different stages.

Moreover, Tsinghua also established the x-lab in April 2013 to help students collaborate across academic disciplines, learn various business models and achieve social value. After one year, the x-lab established its IP Center, which offers IP-related education and professional legal services and gives business instruction. Tal Badt, manager of the x-lab IP Center shared her experience during the roundtable. She said she had a lot of contacts and communications with students during her work. Some of the students had very valuable innovative contributions. However, since they don’t understand IP well enough, many are left with inventions that perform below potential when they graduate; therefore, the chances of changing their ideas into more competitive products are limited. Besides, some students, especially PhD candidates who use university equipment and resources to do research, have little knowledge on the ownership of inventions they produce before conducting research. Tal Badt suggested that universities should make IP awareness more widespread among students, and should sign agreements with them on problems such as ownership, which in turn could effectively promote understanding and more stimulate trades.

In terms of IP popularization, the UK has taken some measures to educate students and teachers on IP in universities. They are working with the university curriculum and qualification standards to try to ensure proper IP education and training are built into relevant courses. IP education has already been put into practice in certain priority courses, engineering for instance. Besides students, teachers and lecturers are an important group to receive IP training. The UK IPO launched a project to provide teaching materials for professors about IP so that they are able to understand better IP in relation to their research work, and when and how they can get advice from an attorney or other experts when needed.

Universities can make high quality technological achievements, and have the ability to produce great businesses by themselves as well. Universities can start their own businesses to achieve technology transfer instead of working with other businesses. Take Founder Group, a Peking University affiliated business, as an example. It began scientific research on Chinesecharacter laser phototypesetting as early as 1974, after 10 years of basic research, it commercialized the research result and started the company. Being the most typical and successful university affiliated company in China, the Founder Group has greatly influenced the entire industry thereafter. However, it is not easy to duplicate such kind of success, and sometimes it is not necessary for a university to start its own company.

When should a university start its own business? When to choose cooperation with other businesses? What are the pros and cons? Lin Lihui said the situation may change depending on individual technology situations, on a case-bycase basis. Since most of the CEOs of university affiliated companies have backgrounds as professors, they always follow an academic mentality and are quite forward thinking regarding next generation technologies. However, they are not naturally born entrepreneurs and may not be aggressive enough on the commercial aspects of business. Therefore, in most cases, universities still need to cooperate with other businesses in technology transfer.

Business: Funders and Beneficiaries of Research
It is hard to determine whether universities or businesses should play the dominate role during their cooperation. On the one hand, universities need help from businesses in changing its technology into products, and on the other hand, businesses need to use universities’ technology to propel themselves into a leading technology position and to gain advantages against the competition. Huang Jing, IPR Director of Qihoo 360 highly affirmed the cooperation between the two sectors. He said that the universities are acting like big incubators for large companies, for example many large Internet service providers in China such as Alibaba, Baidu, Tencent and Qihoo 360 are all currently having active discussions with Chinese universities and colleges.

In order to realize such collaborations, there are some preconditions that need to be considered. The first is how to strengthen the mutual understanding between universities and businesses. Many Chinese businesses are laboratories of universities to some extent, providing funding and facilities. Some Chinese businesses are eager to be connected with universities, especially overseas universities. With the flattening of the world in the Internet era, both universities and businesses should consider how to use the Internet more effectively in strengthening mutual understanding. Secondly, professors from universities don’t always have a deep enough understanding of IP arrangements when compared to big companies. Most of the time, they know how to file patent applications but have little knowledge of how to exploit and make better arrangements for the patents after grant. Such a situation is not unique in China but also exists in many countries, including the UK and other developed countries. Therefore, Huang Jing suggested that in the future IP offices or agents around the world should cooperate with each other to give lectures to professors on IP arrangements.

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