Changes to enable profit from research

February 25, 2000

Kam Patel reports on the white paper on innovation

Public-sector research establishments could be handed control over their own intellectual property under proposals being considered for the government's forthcoming white paper on innovation.

The Department of Trade and Industry believes that such a move could improve the capacity of these establishments to commercialise their work and provide employees with a financial incentive to protect their intellectual property more diligently.

The initiative has been inspired largely by the recommendations John Baker made to the Treasury in his report Realising the Economic Potential of Public Sector Research Establishments, published last year.

Mr Baker said he had found several instances where the ability of public research institutions to exploit research was being "seriously compromised" by the parent government department's insistence on retaining the ownership of the intellectual property and the authority to assign it to third parties.

Departments with major research establishments include trade and industry, defence, health and environment. Under the scheme, an establishment's parent department would be free to decide whether to hold a direct or indirect stake in any royalties from spin-offs or licensing deals resulting from its research.

"Some departments may feel that if they have direct income from their stakes it will be gobbled up by the Treasury. They may opt instead to reduce funding for the establishment in line with their royalties," said a source.

The government is also considering allocating a percentage of departmental research spend to schemes aimed at boosting research and development in small firms. The initiative would require departments with substantial research spend to earmark about 5 per cent of their R&D budget for the initiative. Departments likely to be affected include trade and industry, defence, agriculture, health, and environment, transport and the regions.

The government is also considering a substantial strengthening of the "third leg" of funding for universities to encourage stronger links between academics and local communities and industries. The Higher Education Funding Council for England and the DTI want to make Pounds 100 million a year available for this. Sources stress, however, that this will only be possible if ongoing talks with the Treasury for new money to allow the expansion are successful.

A slimmer, less frequent research assessment exercise may be signalled in the paper. A source said a consensus is building up in government that the RAE is too cumbersome: "The feeling is the RAE should maybe take place once every five years."

Further encouragement of clustering of industrial R&D activity could also be on the cards in tandem with the regional development agencies. The government is thinking about creating a fund, possibly worth Pounds 50 million, to which RDAs can bid for support for clustering initiatives in their region. These could include coordinating the development of incubators on university campuses to increase the number of spin-offs.

Government concerns over the health of the manufacturing sector may be addressed in the paper with a proposal to set up regional "manufacturing centres of excellence". The centres, which could be based at universities with strength in teaching and research in manufacturing-related disciplines, would aim to build a network of industrial and research partnership to underpin leading-edge technological research and industrial production.

A possible university model for the centres is the Warwick Manufacturing Group, the largest academically based manufacturing group in Europe. Launched in 1980, the WMG has 350 staff and a Pounds 35 million turnover, of which less than 5 per cent is from Hefce. Its research and teaching programme involves working with more than 500 companies. WMG trains nearly 4,000 industry managers each year.

The white paper is due to be published in the next few months.

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