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AT last
Friday’s General Membership Meeting and Forum of the
Licensing Executives Society (LES) Philippines, Sen.
Edgardo Angara, chairman of the Senate Committee on
Science and Technology, gave an update on the
much-awaited Technology Transfer Act, which is expected
to finally provide a clear framework for the
commercialization of research and development (R&D)
undertaken by government-funded institutions.
The role
of R&D in our country’s growth cannot be underestimated.
Studies have shown that developed countries, on the
average, spend 2.5 percent of their gross domestic
product on R&D, while developing countries spend much
less. South Korea, Japan and the US, for example,
allocate 2.82 percent, 2.80 percent and 2.61 percent,
respectively.
Rapidly
developing India and Brazil allocate at least 1.2
percent and 0.91 percent, respectively. On the other
hand, the Philippines allocates only 0.14 percent of its
GDP (based on 2003 Department of Science and Technology,
or DOST, figures), which already constitutes the
combined spending of the government and the private
sector. Clearly, we have a lot of catching up to do.
The
Technology Transfer Act is embodied in Senate Bill 1721,
authored by Senator Angara, while its counterpart, House
Bill 3270, was authored by Cavite Rep. Joseph Emilio
Abaya.
The
passage of this Act is critical as it would provide the
policies for, among others, the ownership of
intellectual property (IP) developed from publicly
funded R&D, the transfer of technology between the
public and private sectors, the creation of academic
spinoffs or start-ups and establishment of technology
licensing offices.
Among
the salient provisions of the Act are:
1. IP
ownership. Ownership of IP generated from research
funded by a government funding agency (GFA) shall, in
general, be vested in the research and development
institute (RDI) that actually performed the research,
unless there are valid and compelling reasons to the
contrary. This is in recognition of the fact that RDIs
are in a better position to identify the potential for
economic utilization of intellectual property, subject
to their having the right skills and management
capability.
The Act
also recognizes that the GFAs need not own the IP
generated in the research they fund to be able to use it
for government purposes. The RDI owning the IP can
license it for the use of the GFA. In case of joint
funding, the RDIs shall own the IP, but R&D funding
agreements should consider the policies of contracting
parties, whether local private or international parties.
2.
Revenue sharing. All revenues from the commercialization
of IP from R&D funded by a GFA shall accrue to the RDI,
unless there is a revenue-sharing provision in the R&D
funding agreement. In all cases, the GFA and RDI shall
negotiate whether a revenue-sharing scheme will be
included as entitlement clauses in the R&D funding
agreement. Sharing of revenues between the RDI and
researcher shall be governed by an employer-employee
contract.
3.
Establishment of spinoff firms/commercialization by
researchers/technology generators. In meritorious cases,
an RDI shall allow its researcher-employee to
commercialize the IP generated from R&D funded by a GFA
through the creation of a spinoff firm, provided that
its researcher-employee takes a leave of absence for a
period not exceeding two years.
4. Use
of income. Public RDIs undertaking technology transfer
shall be vested with the authority to use the income
derived from commercialization of IP generated from R&D
funded by GFAs. Income from commercialization shall be
used to compensate the researcher-employee; and to fund
R&D, science-and-technology capability building and
technology-transfer activities, including the
establishment and management of technology licensing
offices.
5.
Development of internal IP policies and establishment of
technology licensing offices (TLOs) and/or technology
business development offices. All public RDIs with
substantial R&D capacity involved in technology-transfer
activities are encouraged to establish their own TLOs in
whatever form they may deem appropriate and develop
their own IP policies in accordance/in support of the
policies of the IPO.
6.
Establishment of technology information access facility.
The DOST shall establish a common access facility for
all technologies generated from R&D funded by GFAs and
those generated by RDIs through their own budget. All
RDIs shall contribute to this technology information
access facility.
The Act
is said to be the local version of the Bayh-Dole Act of
the United States, which was passed on May 12, 1980, and
which established a uniform patent policy among the
federal funding agencies and enabled small businesses,
nonprofit organizations and universities to retain title
to federally funded inventions.
Prior to
enactment of the Bayh-Dole Act, the US was losing its
technological advantage. At that time, it had lost its
No. 1 competitive position in steel and auto production;
it was not even second in a number of industries; the
total number of US patents being issued had been
declining since 1971; investment in US R&D over the
previous 10 years had been dormant; and the number of
patentable inventions made under federally supported
research had been in a steady decline.
Twenty-two years later, in 2002, The Economist lauded
the Bayh-Dole Act as “[p]ossibly the most inspired piece
of legislation to be enacted in America over the past
half century.”
According to the respected publication, “[M]ore than
anything, this single policy helped to reverse America’s
precipitous slide into industrial irrelevance.”
The Bayh-Dole
Act accomplished two significant things: (1) it
transferred ownership of an invention or discovery from
the government agency that had helped pay for it to the
academic institution that had carried out the actual
research; and (2) it ensured that the researchers got a
piece of the action. As a result, US universities became
hotbeds of innovation, as entrepreneurial professors
took their inventions off campus to established start-up
companies to commercialize these.
Based on
a recent survey of the Association of University
Technology Managers, an association of the technology
licensing officers of different universities in the US,
the provisions of the Bayh-Dole Act made the following
possible: 137 nonprofit institutions introduced 567 new
commercial products through their licensing agreements
in 2004; 185 institutions introduced 3,114 new products
through licensing since 1998; 16,871 invention
disclosures were reported, up 8.8 percent over the
previous year (as against 250 university inventions
disclosed in 1980, the year before the Bayh-Dole Act);
in 2004, 462 new companies were formed, based on
academic research (an increase of 23.5 percent over the
previous year); and 67.8 percent of university licenses
went to small businesses.
While
the Bayh-Dole Act is far from perfect, and is itself
being reevaluated in the US, it is credited with the
creation of thousands of jobs from technologies created
from university and government-funded licensing, as well
as the number of new companies formed from licensing by
RDIs.
Similar
models have enjoyed success in other jurisdictions. The
local counterpart is certainly a step in the right
direction, and should be given a chance to work. With
the country’s medium-term growth anchored on, among
others, technology-based entrepreneurship, efforts to
speed up the Technology Transfer Act’s enactment
certainly deserve broad support.
Patricia A. O. Bunye is a senior partner at Villaraza
Cruz Marcelo & Angangco (CVC Law) and the president of
the Licensing Executives Society Philippines. She heads
CVC Law’s IP Commercialization practice, as well as its
mining and natural resources practice, and may be
reached at po.bunye@cvclaw.com. |
