Divisions of work ensure profitable partnerships

January 25, 2002

Academics do research; industry does business. Collaborations should play to each's strength, writes Paul Leonard.

Britain's universities receive far more from industry for research and development than the £1 billion of government funding distributed through the research assessment exercise.

Research departments in areas such as chemistry have benefited scientifically, and have secured better equipment and infrastructure, from effective research collaboration with industry.

Industry does not spend money on research, it invests it. In pharmaceuticals, biotechnology and other heavily R&D-dependent industries, companies are valued by their technical prowess and the likelihood of innovation in a market.

Patents are there to protect companies' investment and to provide an incentive and a financial reward for innovation. Without these, companies would be unable to operate. But if intellectual property considerations are not handled through mutual agreement and understanding, industrial interaction with universities can appear exploitative.

The question of ownership, however, is overplayed. More emphasis should be placed on benefits than on ownership. On the relatively few occasions where collaborative research between a university and industry results in a major product innovation, the first consideration should be how the invention can best be exploited for maximum commercial gain.

After the parties have agreed on how to maximise the financial benefits, they must consider how they will share them. In many cases, it is best for the company to own and work the patent and to deliver an appropriate proportion of the profits to the academic partner.

It may be best for the academic partner to own the results, but to license the commercial rights exclusively to the industrial partner. Maximum financial gain often results from working the patent through a series of licences for specific uses, which may involve a number of companies apart from the original collaborator. The general rule is that 2 per cent of a well-worked intellectual property is worth more than 100 per cent "ownership" of a poorly exploited right.

Disclosure can be a problem in collaboration between industry and university. The desire to publish is understandable. But examples of lost commercial opportunities due to disclosure of important work abound. If the work is carried out entirely by academe, there is no problem. But it is different if the work is collaborative with industry and a company had spent hard-earned cash on it only to watch its investment seep away.

In the United States, academics are free to publish research results. If it becomes clear that there is potential for a useful patent, they have time to file their right after the disclosure. Should such a grace period be introduced for patents in Europe? Probably not. By blurring the rules for establishing a priority date for the patent right, there is simply more to argue about and more room for dispute. The costs of filing and maintaining patent rights are already quite high, but they pale into insignificance next to the costs associated with litigation.

Intellectual property rights are commercial rights, and companies are usually more canny than universities in using them successfully. Disclosure before rights are secured gives the competition a distinct advantage. Clever operators may file a series of rights around the invention, rendering the invention far less valuable than it might have been.

I cannot see universities winning such battles, which will ultimately be fought at great cost in the courts. It would be better to understand how our system works and avoid losing through disclosure than to change the system and introduce potential problems. The Intellectual Property Institute plans to study the pluses and minuses of grace periods - I will stand corrected if the results contradict my views.

Intellectual property rights may have spurred some difficulties between industry and academe, but the situation is getting steadily better. In my experience, research departments in the United Kingdom are more informed and sophisticated in their industrial interactions than their European counterparts.

Ten years ago, when I first became involved with these issues, I believed that problems between universities and industry were regularly caused by a lack of understanding in universities of what businesses were all about. So much has changed so quickly that I am tempted now to feel the reverse.

Paul Leonard, a former research scientist, is director of the Intellectual Property Institute, an independent research organisation. He writes in a personal capacity.

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