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About
Editor-in-Chief, Anatole Krattiger
Editorial Board
Concept Foundation
PIPRA
Fiocruz, Brazil
bioDevelopments- Institute
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Why This Topic Is Important
This section addresses the crucial step of determining what, if anything, the commercial use and value of
a piece of IP-protected technology or genetics might be. The primary lessons of this section are that such
value is highly uncertain and difficult to assess. Yet, an understanding of the issues and methods involved
provides central insight into the nature of the problem of transferring technology from a scientific
laboratory to the market.
Key Implications and Best Practices: Section 9
Given that IP management is heavily context specific, these Key Implications and Best Practices are intended as starting points to be adapted to specific needs and circumstances.
- Determining how to translate an invention into an innovation that makes a difference in people’s lives (economically or socially or both) is one of the principal reasons technology transfer offices exist.
- Government policies ought to be flexible and enable research institutions to customize technology transfer strategies that align with the institutions’ missions. Different approaches will serve different types of research and academic organizations working within various disciplines and cultures.
- It can be challenging to negotiate licensing agreements that are fair to everyone and conducive to making inventions become innovations. it is often better to make an imperfect deal than no deal at all. People do not benefit until technology is developed and distributed.
- Public sector institutions should therefore be supported in their overall deal making efforts rather than using individual deals as particularly good or bad examples.
- A government can make technology transfer less risky and more attractive for licensees by applying such policies as government R&D grants, subsidies, encouragement of clusters, financing of business incubators, and offering complementary R&D inputs or regulatory requirements that are conducive to the emergence of new technologies.
- Bioprospecting and related activities raise important issues with respect to pricing. Importantly for developing countries, when fees are “shifted forward” by increasing the collection fee and reducing royalty payments, more risk is transferred to the collecting company, which is developing the product, since the company will have to pay the same amount of money regardless of whether successful commercial products are developed from the collected material. Shifting fees forward may have particularly interesting possibilities, as doing so allows countries to invest resources early on to capture additional value in bioprospecting activities.
- It is important to adopt national policies that facilitate access to biological resources under fair and equitable terms with prior informed consent. Access mechanisms should be transparent, predictable, and managed by experts.
- There is a strong interaction between bioprospecting activity and national scientific capabilities. In countries with strong scientific capability, bioprospecting is robust. Moreover, such capacity increases the negotiating strengths and benefit sharing stipulated in contract agreements.
 Abstract
Evaluating Inventions from Research Institutions
by Lita Nelsen
Abstract:
The patenting strategies of research institutions are based on three key decisions. The first involves whether or not to file a patent. This decision must be based on sound information about the market, the uniqueness and usefulness of the invention and/or technology, the likelihood of being able to obtain patent protection, factors related to the inventor, and the potentially paradoxical impact of patenting on the institution’s social and humanitarian responsibilities. The second decision involves whether to market the invention to established companies or to develop a spinout business. The third involves how much to charge for a license. Related to all of these decisions is the key question of whether patenting is the most effective route to global access. Negotiating licensing agreements that are fair to the research institution, the private company, and developing countries can be challenging because research institutions may have difficulty determining fair market values. In addition to outlining a process for obtaining these values, this chapter offers some rough numbers for guidance. In general, the author concludes that it is far better to conclude a deal than to wait for the best agreement while fighting interminably for perfect financial terms.
Abstract
Valuation of Bioprospecting Samples: Approaches, Calculations, and Implications for Policy-Makers
by William H. Lesser, Anatole Krattiger
Abstract:
In this chapter, the revenue consequences of varying collection fees and royalties with regard to germplasm prospecting contracts are demonstrated. Principal factors are the uncertainty of finding marketable products and the value of these products. Negotiation factors are finding a good balance between collection (initial) fees as opposed to royalty (delayed) payments. Emphasizing collection fees reduces total payments except when national interest rates are very high. Reducing the risk of failure through in-country screening, including the use of indigenous knowledge, is a potentially valuable activity. Issues for contract negotiators are outlined and the implications for biodiversity conservation discussed. Conceptually, the highest valuation approach, royalties, will most encourage conservation, but as the future is typically heavily discounted, collection payments may get more attention and be most effective. Policy considerations for national governments, nongovernmental organization (NGOs), and development agencies are reviewed and it is concluded that grants/loans and training/equipment for in-country screening should be given a high priority as a potentially viable activity in the long term.
It should be noted that the figures and calculations in this chapter are merely for illustration. The valuation of samples, and by extension a country’s biodiversity, is a negotiation and will depend on many factors, including alternative investment options by a company, alternative technologies that could be used for lead compounds, interest rates, and a range of risk factors, such as the political situation in a given country surrounding the national debate on bioprospecting. The latter point is a key factor: valuation is always a calculation that has important political consequences. Another complicating factor is the need for confidentiality with which a country and company will hold its overall business estimates. Neither a company nor a country will be likely to share their valuation basis purely for negotiation purposes and because neither want to tip off other entities about the opportunity. It is therefore concluded that, from a practical perspective, the proper valuation is the one that (1) provides the country with compensation and other benefits such that it does not feel taken advantage of and can withstand criticism from its constituents and (2) provides the licensee (typically a company) with a reasonable cost of obtaining the crucial raw or semifinished goods it requires as an input to its business.
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