Legal lift for French patents

May 7, 1999

Celia Hampton looks at Jospin's liberal reform of public sector innovation

Many academics feel uneasy about commercialising their research. In France their reservations are backed up by the law. But imminent legal changes could make it far easier for French universities to act commercially.

The 1984 education law allows public research bodies to commercialise results but it creates no practical legal means by which they can do so.

Universities need a decision signed by several ministers to set up their own commercial businesses. This cumbersome process, not surprisingly, yields no more than two a year. Worse, there is a legal prohibition on those working for universities or public research bodies from having any interest in a private-sector company.

The Jospin government put forward a draft law on innovation and research in January. It is due for its first reading in the National Assembly this month.

Institutions and individual researchers will be allowed to make a profit. The intention is to benefit French society, industry and employment by encouraging research bodies to take their results to market.

Public institutions will enter a long-term agreement with the state setting out their targets. A system of tacit approval for commercial projects that comply with guidelines will replace interministerial decisions. Institutions will be able to create a corporate subsidiary or form a "public interest grouping" with private partners.

Another option will be to create commercial service centres within a public institution to manage contracts with outside companies. This would include managing intellectual property rights, selling specialist services and doing any associated publishing.

Budgetary rules will be more flexible than for public services and the centres will be allowed to hire workers on contract.

Anyone engaged in research at a university or other public institution will be allowed to work for private enterprise on secondment without losing public servant status.

The firm and the researcher's institution of origin will be free to have commercial dealings with each other, including technology transfer. The researcher will also be allowed to own up to 15 per cent of the company.

Preserving public service status for the researchers protects the company from redundancy costs, especially where it is a risky small startup.

The contract of secondment will be for two years, renewable twice. During that time, the researcher will be subject to quite strict conditions to avoid conflicts of interest, for instance by not taking part in negotiations between the company and the "home" institution.

At the end of six years, he or she will have to choose whether to return or stay with the company.

Public funds to encourage start-ups and venture capital were announced separately on March 24. Education minister Claude All gre, said that there will be a E30 million (Pounds 20 million) fund for start-up "incubators".

These will bring academics, investors and venture capitalists together, possibly with local government participation, at universities that are interested in forming venture capital funds to promote new businesses.

Their capacity to raise finance on the private market will be an important selection criterion as the goal is for private money eventually to replace state funding.

A working group was appointed last year to look at patent law. Its report will decide on a "grace period" to protect inventors. At present, when an invention is disclosed before a patent has been applied for, the inventor loses the possibility of a patent because, once published, the invention is no longer "novel". A grace period would protect the claim.

To complement the liberal legal framework, the government's bill will accord small innovation-driven companies a more generous tax treatment for research costs, capital gains and the stakeholdings of the companies' founders. The bill is significant. As recently as 1983 France's highest administrative court, the Conseil d'Etat, ruled that a public servant who acts as director of a private company violates the principles of exclusivity and impartiality.

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