The expectation among South African universities about how much money their technology transfer units are going to bring in is dangerously overblown, says Anita Nel, the chief executive of Innovus, a company tasked to commercialise intellectual property developed by the University of Stellenbosch.
The new Intellectual Property Rights Act compels each university to set up a ‘technology transfer” function to ensure that intellectual property developed with government money at the university does not lie dormant, but is put to use for the benefit of South Africa, especially through patenting and commercialisation by entrepreneurs.
Nel warns that only 16% of techtransfer offices at universities in the United States, where they were established through a similar law in the 1980s, are truly profitable.
The Massachusetts Institute of Technology, for example, recouped a mere 3c in licence fees for every dollar spent by the university on research.
‘An awareness about the realities of this kind of thing has developed in America. But in South Africa that paradigm shift hasn’t been made yet. The universities still think: ‘This thing is going to make a lot of money,”’ says Nel.
She says it takes a few years for a tech-transfer office to become sustainable because it has to issue quite a few licences to entrepreneurs before it can build up a substantial royalty stream.
And what really makes such a unit profitable is ‘the kind of transaction that comes by only once every 10 years” — a patent that takes the market by storm.
This is a rather similar model to the venture capital industry in which one in 10 investments delivers such great returns that it pays for the other failures or break-evens.
Nel says academics would benefit substantially from such a successful commercialisation, but their motivation and outlook differ radically from the entrepreneurs with whom she worked at HBD, Mark Shuttleworth’s venture capital fund, before she joined Innovus.
‘They want recognition, students and money for research. They tell you straight that if they wanted to be rich, they would have been in industry.”
This attitude is what makes most academics suspicious of the new Intellectual Property Rights Act, even though it incentivises individual inventors at state-funded institutions by prescribing a reward of 20% of income generated by a commercialised invention up the first R1-million and 30% of net income after that.
The Act, which will require all academic work to be logged at the new National Intellectual Property Management Office (Nipmo), is expected to come into force before the end of the year.
Academics tend to see it — wrongly — as infringements of their academic freedom or as unnecessary red tape, says Nel.
But the advantage of the act is that for the first time there is an onus on academics to account for money that pays for their research by declaring its results and an onus on the tech transfer office of each university to protect the intellectual property and to make sure it is used, says Nel.
She says the attitude with which the regulations are implemented will determine their success.
‘In 2004 to 2006 we dealt with eight projects per year (commercialised eight patents). Then in 2007 we starting seeing it as a contact sport. We started reaching out to the researchers, talking to them in he corridors, started building up one-on-one relationships with them. We handled 43 projects (in 2007). In 2008 we worked on 36 and this year we are already standing at 60.”
Nel says the regulations, issued by the minister of science and technology, have been softened and clarified following comments on the draft regulations released earlier this year.
Some concessions have been made, agrees Piet Barnard, director of the Research Contracts and Intellectual Property Services at the University of Cape Town, but concern remains that the process will be a bureaucratic burden to universities and academics.
‘We felt that there were a lot of administrative functions that could have been delegated to us [the technology transfer units of the universities]. Now we have to constantly go to Nipmo to get certain things signed off.”
Barnard says pleas for the practical handling of open-source licensing have not been addressed.
The regulations do not make provision for once-off permission to place a piece of software in the public domain.
Instead, it seems that every time someone wants to make use of software developed at a university on an open-source basis, permission has to be sought from Nipmo.
Barnard said he hoped the practicality of the regulations will become clearer as they are implemented.
He said an advantage of the new law is that academics will be required to think about the intellectual property potential of their work and should help to stop the practice of academics not charging for their time while working on industry-commissioned research.
Research paid in full by industry does not have to go through the Nipmo process.