The process of technology transfer explained by diagram
In its broadest sense, technology transfer (TT) is the process of translating promising ideas into products, processes and services in the economy. More specifically, in a South African institutional context, and framed by the IPR Act, TT involves the identification, protection and putting into use (or commercialisation) of promising technology concepts that emanate from research activities, for the benefit of society.
This definition resonates with South Africa’s stated policy intent to improve the regulatory environment for the identification and utilisation of intellectual property (IP), to improve the translation of research results for economic gain, and to improve the living standards of citizens — in line with the 1996 White Paper on Science and Technology, 2002 National Research and Development Strategy and 2007 Ten Year Innovation Plan.
The TT process is made up of many activities, which can be depicted in many ways, and, in reality, TT is a fluid and dynamic process that rarely follows a linear course. The infographic is explained in the following sequence of steps:
Knowledge creation
Research is undertaken, and in some instances research result(s) with potential commercial application may be identified, such as an invention.
Disclosure
Submitting a disclosure to the technology transfer function (TTF) is the important first step in the process of documenting a new IP creation such as an invention and facilitating further activities in the development of the technology, its protection and commercialisation. Some or all of the following three steps (IP protection, fundraising and technology development and marketing) can occur after disclosure and initial evaluation.
IP protection
In support of the likely commercialisation strategy, the TTF may pursue patent or other IP protection of the new disclosure. The TTF will work with IP creator(s) and IP attorneys to draft and file a patent, registered design, or plant breeders’ rights application. Another protection approach is to maintain confidentiality and treat the technology as a trade secret. It should be appreciated that registered protection is not an end goal; instead, it should be viewed as a means to facilitate commercialisation, whether for social and/or commercial benefit.
Fundraising and technology development
The TTF in partnership with the IP creator(s) will raise funds to support further development and testing of the technology, conduct market and techno-economic studies, and other activities that may make the technology more attractive to partners to commercialise the technology.
Marketing
The TTF in partnership with the IP creator(s) will identify opportunities and market technologies to potential commercial partners. These partners have the expertise to translate discoveries into new products, processes and services, or are entrepreneurs with the right experience and credentials to create a company for the purposes of undertaking such translation.
IP transaction
This is an agreement entered into in order to grant a third party the right to develop and/or commercialise the technology (licence) and/or to transfer ownership to such party (assignment). In some instances an option is granted that gives this party the first right to negotiate a suitable assignment or licence arrangement at a later stage. Licences can be exclusive (only one party can exercise the rights granted) or non-exclusive (more than one party can exercise similar rights). An IP transaction is entered into with the chosen party which can be an existing company or a start-up company. With an existing company, a due diligence may be conducted prior to negotiating and executing the IP transaction. With a start-up company, the TTF facilitates the formation and registration of the start-up company, may take equity in the company, and enters into a suitable IP transaction with the newly formed company. The start-up company may require incubation and capital-raising support, which the TTF can facilitate or support directly, depending on its capabilities and available support mechanisms.
Product development
After an IP transaction is concluded, companies typically invest significant resources to translate the IP creation/invention/technology into a useful product, process or service, which can generate revenue for the company. As part of this process the IP creator(s) may be tasked to assist the company by transferring their knowledge of the technology, and/or acting as technical experts to guide product development, and/or they may even elect to become directly involved as employees of the start-up company.
Impact
Impact may be created through the use of the technology in a new or improved product, process or service, inter alia, through: jobs, exports and increased tax revenue created in the economy; social impact in terms of improved quality of life, health and safety; revenue to the institution, through royalties paid, dividends earned or equity sold (a portion of this income is shared with the IP creators as per an institution’s IP policy); and/or indirect impact to the institution, for example, through securing additional research opportunities with industry partners due to successful TT.
Assessment/Evaluation
Ongoing assessment and evaluation is conducted, especially during disclosure, marketing, fundraising and protection activities. The technology and its commercial prospects are evaluated in terms of many factors, including IP protection (such as patentability), market prospects in relation to competing technology solutions, commercial potential and possible partners with whom to work. IP creator(s) and the TTF work closely together to ensure all parties are up to date with all developments. Go/no go decisions are made and technologies can be abandoned at any stage if the prospects are not favourable.
South Africa’s first national intellectual property and tech transfer survey
Innovation is crucial for South Africa’s economic growth and competitiveness. To enhance technological innovation, scientific research and development (R&D) is necessary. As the enabler of this endeavour, government playing the role of an “entrepreneurial state”, is required to invest significantly in R&D and in the institutional platforms that drive innovation.
To reap the full benefits of government R&D investment and grow the knowledge economy, South Africa must accelerate the transfer and commercialisation of results from publicly funded research in ways that benefit the country.
It is on this basis that, among other measures, the Intellectual Property Rights from Publicly Financed Research and Development Act (IPR act) of 2008 was introduced to incentivise actors in the research-to-innovation value chain to improve their approaches in identifying and managing intellectual property (IP) for eventual commercial and social use, as well as their interface with the private sector and international partners in these aspects.
Effective policymaking requires evidence, and the inaugural South African National Survey of Intellectual Property and Technology Transfer at Publicly Funded Research Institutions is one instrument to gather this evidence. The survey was embarked upon to establish what a number of the baseline indicators are that are required to track overall activity in IP management and technology transfer (TT).
Key findings
The survey was sent to all institutions — as the term is defined in the IPR act — which are the 23 higher education institutions and the 10 Schedule 1 institutions or science councils. Valid responses were obtained from 24 institutions. Of these, 23 indicated that they have either established a dedicated office of technology transfer, have individuals dedicated to TT or are members of a regional office.
Management of technologies, patent families, trademark families, registered design families and new patent applications increased more rapidly than the increase in research expenditure, which indicates acceleration of these activities relative to research expenditure. On average, 100 new technologies were added annually between 2011 and 2014 to the portfolio managed by respondent institutions.
There has been a quadrupling in the actual number of licences executed per year in the period. Of significance is that more than 88% of this revenue accrued consistently each year to the same four institutions that have well-established technology transfer functions. The majority of IP transactions yielded less than R100 000 per year.
In total, 45 start-up companies were formed over the period to commercialise the institutions’ technology, 73% of which were based on publicly funded IP.
As at 2014 the majority (53.5%) of all staff in the offices of technology transfer had four years or less TT experience; females comprised 62.5% of the TT staff in higher education institutions and 61.9% in science councils; black, coloured and Indian/Asian groups together represented 56.4% of technology tranfer function’s staff in higher educational institutions, and 65.2% in science councils.
Viewed in the context of overall trends in the racial and skills composition of the labour force in the country, these statistics show that there is clear room for improvement.
Most institutions are performing a range of activities within the categories of IP management, commercialisation and administration. Noticeably, enforcement is less active.
In the survey, institutions have indicated that they required 19% additional funding in 2014 for TT operations and 50% more for IP expenditure.