This post was first published on 25th July, 2013.
Public Funded Research Institutions and educational institutions in India have begun to realise the importance of commercialising their Intellectual Property, a phenomenon that was long overdue. While a large number of these institutions are yet to be woken up to the trend, those that have tasted success are willing to explore further in order to push their returns northwards.
Commercialising intellectual properties of research institutions has obvious benefits:
- when returns grow up in proportion to the research investments, institutes will feel little need to look elsewhere for funds;
- commercialisation is the most convenient way to reach the inventions to the public and also doubles up as a way to keep the inventions working;
- commercialisation also helps an institution to showcase itself as an IP savvy organisation, rising up to the reputation of their western counterparts; and
- working the intellectual properties created will open up opportunities for further development of the technology.
There are multiple proven means of commercialising intellectual property of a research institution. Most widely practiced among them are IP Licensing and assignments, Private Partnerships and nurturing technology entrepreneurship through incubations. Licensing is well-known among the above means, since, it allows the comfort of holding on to the ownership of IP and the flexibility to revisit the commercial terms periodically, based on performance of the IP.
Licensing has provided extraordinary return on investment for Research Institutions in developed countries like USA. A not so recent (2008) article on Forbes revealed some really interesting statistics. Research related income of $1.5 billion was generated among 189 institutions in US in the year 2006 alone with New York University being the major contributor ($157 million) to the number.
A few institutions in India have greatly benefited from IP licensing. Organisations like Center for Scientific and Industrial Research (CSIR), Indian Institute of Technology Bombay (IITB), Central Food Technology Research Institute (CFTRI) Mysore are among the top grosser among the public funded research institutions. There are multiple reasons why only a handful among over 2500 publicly funded research institutions in India have been able to establish a workable system for IP commercialisation:
- More often than not the sluggish Indian bureaucracy in case of public institutions and profit minded managements of private institutions show little willingness to survive the struggle period that comes with any new venture. Licensing normally takes about two or three years to show returns and in some cases may exceed the office tenure of the bureaucrat who initiates it;
- Generally poor quality of patent specifications/claims (most research institutions do not realise the importance of investment in a quality service provider and believe in drafting patents themselves) pose a major setback in terms of their valuation thereby mitigating the returns;
- Departments in most research institutions are not in sync when it comes to research and therefore create independent IP with no nexus with each other. Investors are more interested in a portfolio of inventions relating to a particular subject matter, given the incremental nature of the present day inventions.
There are numerous aspects that a research institution has to attend to in order to establish a profitable licensing program. Some of them are listed below:
- Set up an IP policy and process to streamline the IP generation within the organisation and have an in-house expert team to implement the same;
- Never compromise with quality of application drafting and seek professional help to ensure turning an invention into a sellable property;
- Having instrumentalities such as Technology Transfer Offices (TTOs) are crucial for the success of any licensing programme given the fact that a good inventor is generally bad businessman;
- An audit exercise by an external IP auditor and a valuation exercise for crucial Intellectual Properties normally yield better results asset identification and mitigation of underselling respectively;
- Build a portfolio of IP and offer them as a bundle vis-à-vis a single IP; and
- Be patient and most importantly do not expect every single IP in the portfolio to be licensed out for it simply does not work that way. One IP with good potential can make up for the investments made in ten others.
Author: Sandeep Hegde M.