The Public Sector and Entrepreneurship

Abstract: This chapter is about university spinouts: why they are created, who founds them, and how they are developed. It also considers many of the issues that a university and its faculty have to address to successfully launch and develop new for-profit ventures. Spinouts carry risks, but they may also be the best vehicle for developing early-stage university technologies and providing a host of other benefits. The chapter offers examples from the past five years at Yale University, as well as from the private sector, that suggest ways to minimize the risks and maximize benefits.

Abstract: This chapter provides a practical guide for organizations seeking to transfer their intellectual property (IP) rights to a spinout company (normally through a licensing agreement) so that the company can convert the IP into products or services that benefit the public. Based on experiences at Stanford University over the past three decades, key issues have been identified for negotiating transfer to a spinout, and guidance on best practices for reaching a successful agreement is provided. The chapter briefly reviews potential conflict-of-interest and conflict-of-commitment issues that inevitability arise when employees of public research organizations become involved in spinout companies.

Abstract: Ready access to venture capital investments is vital to the success of start-up companies in the capital intensive high-technology sectors such as biotechnology. But there is a common misconception that an abundance of venture capital will spawn the formation of new companies. In fact, the opposite is true: new companies actually attract venture capital. This chapter provides an overview of the venture capital system, explains its importance, and identifies what qualities of a company make it attractive to venture capital investors. Some of the factors can be influenced by government action, so the chapter offers several ways that governments can encourage venture capital investment.

Abstract: Intellectual Property (IP) can be commercialized via free distribution or licensing, or through new companies that develop and exploit it. These new companies are called spinouts, or start-ups. Establishing successful spinouts and start-ups requires a solid business plan, coordinated teams of professionals who share a common vision, a respected managing director, and technology transfer intermediaries. Intermediaries help bridge the cultural divide that often exists between the generators of intellectual property and the new companies.

Abstract: Universities are eagerly seeking ways to commercialize their innovations. The recent success of spinout companies has made that commercialization option more popular, but commercialization may not be the most efficient approach for research institutions. The risks must be weighed, as well as the benefits, and this chapter offers an overview of the hidden costs of setting up a spinout. Exploring the necessary supporting conditions that can improve the potential for success, the chapter also considers start-ups and incubation centers as potentially better options.

Abstract: Business incubators, as economic tools, have become increasingly common in the last decade and a half for stimulating local development. Incubators provide facilities and services (for example, business planning and legal, accounting, and marketing support) to catalyze small-business growth. In fact, incubated companies have a dramatically higher rate of survival than an average spinout does. This chapter explains what steps to take to set up an incubator, including the basic structure and the kinds of services generally offered. Successful incubator programs are discussed, and a helpful bibliography focused on case studies is provided.

Abstract: This chapter describes the structure, policies, and operations of the Technology Licensing Office at the Massachusetts Institute of Technology (M.I.T.). The chapter emphasizes the licensing office’s role in generating spinout companies and considers the importance of the biotechnology cluster within the state of Massachusetts and it’s surrounding regions. Also discussed is M.I.T.’s approach to ensuring that licensing procedures maximize access to medicines and vaccines arising from M.I.T.’s research.

Abstract: Given the expertise of large agricultural companies with respect to product development from cutting-edge research, these companies often choose to in-license technologies from small biotechnology companies and universities rather than relying solely on in-house efforts. This chapter provides an overview of the interest of large industry players in sourcing early-stage technologies from companies, how best to communicate those opportunities to companies, and what to expect in terms of valuing the technology and structuring a licensing deal. Large companies are generally interested in creating new products or new technologies that are commercially viable and that help establish sustainable agricultural economies. But, in addition, they generally support providing products and technologies that bolster subsistence farming and humanitarian efforts, while recognizing the need to protect the company’s intellectual property against unauthorized uses for commercial or other unintended purposes.

Abstract: The potential for personal interests to influence institutional decisions in universities and public sector research institutions continues to grow. This is because of the increasing activity in intellectual property (IP) management and technology transfer undertaken by these institutions. The activities have the potential to generate both personal and institutional financial gain, making conflict of interest and conflict of commitment issues unavoidable. This chapter explains the nature of these conflicts and discusses the policies, regarding conflict of interest, of several universities, offering them as potential models for crafting these indispensable policies.

Abstract: This brief case study describes how the International Centre of Insect Physiology and Ecology (ICIPE) helped African growers maintain access to foreign markets and improve livelihoods by being able to achieve standards certification for agricultural export commodities. The process involved a characterization of the problem and a conceptualization and execution of a solution. The solution included creating a regional certification body in East Africa capable of providing globally recognized certification at costs that were locally affordable. The level of technical know-how needed by the certification body in order to be effective was significant, so the expertise of ICIPE was instrumental in creating the local certification body. Ongoing certification services provided by the certification body are highly market oriented, and because of this orientation the group was spun off as a private company, as Africert Limited.

Abstract: The benefits of technology transfer are everywhere apparent, and perhaps the best news—as this Handbook’s compilation of case studies demonstrates—is that these benefits are already reaching developing countries. Building on the success of the U.S. Bayh-Dole Act, countries everywhere are seeking to better utilize the research capacities of their universities and public research institutions. The growth of such technology transfer initiatives is inspiring, as are the innovative varieties of partnerships that have developed to ensure that the world’s poor benefit from the global intellectual property system.

Abstract: The Cohen-Boyer licensing program, by any variety of metrics, was widely successful. Recombinant DNA (rDNA) products provided a new technology platform for a range of industries, resulting in over US$35 billion in sales for an estimated 2,442 new products. Over the duration of the life of the patents (they expired in December 1997), the technology was licensed to 468 companies, many of them fledgling biotech companies who used the licenses to establish their legitimacy. Over the 25 years of the licensing program, Stanford and the University of California system accrued US$255 million in licensing revenues (to the end of 2001), much of which was subsequently invested in research and research infrastructure. In many ways, Stanford’s management of the Cohen-Boyer patents has become the gold standard for university technology licensing. Stanford made pragmatic decisions and was flexible, adapting its licensing strategies as circumstances changed.

Abstract: The history of technology transfer at Stanford goes back to an initial pilot program launched by Niels Reimers in 1970, a program that put the university in an excellent position to take advantage of the Bayh-Dole Act. Enacted in 1980, the act gave U.S. universities ownership of any patents developed using federal funds. Today, Stanford University and successful technology transfer are almost synonymous. But success is more than just a matter of timing. Stanford’s Office of Technology Licensing (OTL) takes a flexible, broad outlook on the development of its intellectual property that has made Stanford a favorite business partner. This chapter reveals the secrets behind the success of Stanford’s OTL.

Abstract: This chapter provides a conceptual overview of Arizona State University’s mission, and explains how the university’s “technology translation” efforts support that mission. The chapter offers a rationale for why effective technology translation and commercialization are economically and socially relevant. A case study illustrates how a program established by Arizona State University’s technology commercialization group has led to significant returns for the university and the local community. The authors conclude that public and private institutions in both developed and developing countries can implement the concepts and strategies for technology commercialization described in the chapter.

Abstract: A small agricultural biotechnology (agri-biotech) company needs to establish a strong IP portfolio. Such a portfolio provides a foundation for R&D, encourages outside investment and funding, and supports product commercialization. An important step in establishing an IP portfolio is in-licensing patent rights from third-party patent holders. Nonexclusive licenses typically give a company freedom to operate and open up the possibility of creating commercializable products. Exclusive licenses give a company an exclusive position for commercialization under the patents in question.

This chapter discusses in-licensing as it applies to small agri-biotech companies. It describes the types of technologies that may be subject to in-licensing, the procedures attendant upon in-licensing, and the terms that may be delineated by in-licenses.

Abstract: Generating data to secure regulatory approval in sectors, such as pharmaceuticals and agricultural chemicals in which product safety and efficacy is paramount, has become ever more extensive and expensive. There is thus a need to provide an incentive to undertake such data-generation efforts by protecting the investment in them against free riding. Article 39.3 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) recognizes as an intellectual property right the need for such protection in those sectors. This chapter discusses how certain jurisdictions, and in particular the European Community, have implemented the TRIPS requirement involving regulatory data protection regimes. Such protection is not provided by the patent system, which instead protects invention.

Abstract: The promise of biotechnology relies on new science that is increasingly complex and specialized and depends on sophisticated, global intellectual property rights systems. This complexity requires a more open system of knowledge sharing than previous research and development programs. Studies suggest that successful innovation requires developing clusters of institutions, businesses, and personnel. “Location, location, location,” the battle cry for property realtors everywhere, is increasingly becoming the key phrase in studies of innovation dynamics and knowledge-based growth. Offering an overview of recent research on clusters in Canada, this chapter suggests that governments have an important role to play in the process of cluster formation and that ensuring a mix of “local buzz” and “global reach” is part of the recipe for success.

Abstract: This chapter examines the outcomes of technology transfer policies adopted in the past 20 years by five middle-income countries: Brazil, India, Ireland, Israel, and Jordan. The outcomes in those countries suggest that nations whose governments enable the assimilation of new technologies grow faster, create more jobs, and reduce poverty levels. The outcomes suggest also that a mixture of government and market strengths are needed to efficiently use technology transfer. Without this balance, technology transfer will have limited effects.