Principles and Practices Adopted by Canadian Science-Based Government Departments and Agencies to Facilitate Technology Transfer to the Private Sector

[Pilot Study]

Prepared by Thomas E. Clarke, M.Sc. M.B.A.

Prepared for the

Intellectual Property Policy Directorate

Industry Canada

November 1996

EXECUTIVE SUMMARY

Canadian government research laboratories are under increasing pressure to demonstrate that they are contributing to the wealth and physical well-being of Canadians. In the recent publication "Science and Technology for the New Century", the Government of Canada states that technology transfer from government research laboratories to industry is an explicit objective of departmental science and technology programs. The government plan recognizes, however, that better management and commercial exploitation of government intellectual property is needed if the objective is to be achieved.

This pilot study was commissioned by the Intellectual Property Policy Directorate of Industry Canada to identify principles and best practices used by science-based government departments and agencies to transfer technology or scientific knowhow to the private sector.

An extensive review of the literature on technology transfer from government to industry identified the encouragement of person-to-person contact between the inventor(s) in government and the adopters in industry as the most important "best practice" for successful transfer. Contact can occur in a number of ways, including moving the inventor(s) with the invention to the adopting company on either a short- or long-term basis, allowing the inventor(s) to set up a "spin-off' company to develop the technology or knowhow, collaborative or co-operative research projects, mutual laboratory visits, open houses, conference attendance, and contract research that involves the government inventor(s) with the downstream commercialization phase of the technology or knowhow.

Proactive, targeted, marketing methods, including visits to potential industrial "clients" to learn about their R&D requirements and problems, and how business in their areas is conducted, were considered good practices.

Passive marketing methods, such as published papers, newsletters, articles in trade journals, Internet web-sites, etc., were considered to be of less significance in the technology transfer process. These methods are still, however, an important means by which outsiders learn about what is going on in a government laboratory.

The literature also pointed out that numbers of licenses and patents, and their resulting revenues, are a poor indicator of a government laboratory's commercial interaction with the private sector.

In this study, thirteen cases of technology transfer that involved some form of contractual arrangement (licensing agreement) with the recipient companies, were examined. Cases were identified with the assistance of departmental personnel involved in technology transfer. Personnel in the government departments and in the companies involved with the cases, were interviewed, either in person or by telephone.

Canadian government departments are doing many of the things that studies of technology transfer recommend to improve the probability of successful transfer of government developed technology or knowhow. The key practice of allowing and encouraging government scientists/engineers to be involved in the downstream further development and application of the technology or know-how appears to be followed by all of the departments examined. Focussing on collaboration and partnerships that involve the industrial adopter in the technological development at an early stage is an important practice being followed by most departments.

Also noted was the change in culture that has taken place in many government laboratories towards working with industry.

The extent to which the individual departments follow many of the other "best practices" that have been identified in the literature and this pilot study varies considerably. The following practices were mentioned by respondents, but it should not be assumed that every department and agency employs these practices.


Management of Intellectual Property

Both government and industrial respondents said that the issues of ownership of intellectual property, assignment of sole licenses, the valuation of technology and determination of royalty and licensing rates are areas that affect the technology transfer process.

Government interviewees agreed that revenues from intellectual property are not currently a significant source of money for the laboratories.

The literature review found that the assignment of ownership of intellectual property to a contractor capable and interested in commercializing a government developed technology is a practice associated with successful technology transfer.

Intellectual property management practices mentioned by interviewees that facilitated the transfer process were:

The management of intellectual property, including issues such as licensing and ownership of IP, is a major bone of contention with some segments of the private sector and must be addressed to the satisfaction of both parties.

The major problems identified by respondents were:

To assist in overcoming the difficulties with the management of intellectual property, it would be advantageous to bring representatives of government and industry together so that these problems can be addressed to the satisfaction of both parties.


Recommendation


Encouraging the Involvement of Government Personnel

Technology transfer is more likely to be successful when the government inventor(s) work with the technical staff in the adopting company to commercialize the technology or scientific knowhow. The following practices were mentioned by interviewees as encouraging such interactions:

It was noted that there is no consistency across government departments and agencies in providing assistance, rewards or recognition to their scientific staff for technology transfer activities. It was also noted that many government scientists and research engineers are not familiar with the technology transfer process.


Recommendations


Marketing Government Technology/Knowhow

Government departments and agencies are using many methods to market their expertise and technology.

Among the practices mentioned by the respondents are:

The main weakness identified by both government and industrial interviewees was the inadequate level of face-to-face interaction between government technology/business development officers and their prospective industrial clients. Budgetary and policy constraints seem to be at the heart of this problem.

Another weakness noted was the lack of prior training in technology transfer, and new product development of many of business development officers.


Recommendations

Internet Web-sites

Government departments and agencies should make better use of their Internet web-sites to advertise their willingness to work with industry and their technologies available for license.


Recommendation


Corporate Commitment

Industrial and government interviewees pointed out that company commitment to the transfer and future exploitation of the technology is essential. When the technology or knowhow is viewed by the company as a key part of their technological strategy, and their own financial resources are used, there is a higher probability that the transfer and commercialization will succeed.

The active support of senior and middle management, along with their bench scientists and engineers, and adequate financial resources, are important elements supporting the transfer process.


CONCLUSIONS

Technology transfer/business development officers in some of the government departments and agencies have made and are making considerable efforts to overcome barriers through education and training, novel marketing approaches, red-tape reduction, incubation centres and flexibility in licensing.

The culture in the departmental laboratories has changed with many government scientists and engineers showing considerable enthusiasm about seeing their work applied and/or commercialized.

The future good relationship between government laboratories and industry is threatened, however, by three issues: lack of funds for government scientists and business development officers to meet with their industrial counterparts face-to-face to learn about their needs and their strategic directions (also Treasury Board restrictions in the case of conference attendance); disagreements over the government's handling of intellectual property; and the lack of knowledge of government personnel, including some business development officers, about the technology transfer and new product development processes.

The science-based departments, in cooperation with Industry Canada and Treasury Board, must work with Canadian industry to eliminate the barriers that inhibit the efficient and effective transfer of technology, know-how and advice to Canadian industry. This will be a major step in meeting the "Commitments to Action" that are outlined in the government's strategy document, "Science and Technology for the New Century".



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