Property rights for research institutions

Zain Adnan Jakarta

Global sales of pharmaceutical products in 2004 reached US$550 billion, of which the share of developing countries was just $4 billion.

This is not surprising since major pharmaceutical companies from developed countries spend large sums of money in research and development. They also protect their investment by patenting their inventions.

One of the reasons these companies are so successful is that they collaborate extensively with research institutions in universities and with smaller biotech companies.

The pioneer of such cooperation at university level is Stanford University. In 1970, the university founded the Office of Technology Licensing (OTL) similarly known within other Universities as a Technology Transfer and Licensing Office (TTLO).

TTLO's which are common nowadays were a rarity back then. It started with the gene splicing research of Cohen (from Stanford University) and Boyer (University of California). Niels Reimers of the OTL persuaded the two to let Stanford secure the patent.

By the time the Cohen/Boyer DNA patent expired, it had earned a license fee of $250 million. As a result, the concept of taking intellectual property from the laboratory to the market is now institutionalized to the point that the Association of University Technology Managers (AUTM) in the U.S. can regularly attract world leading companies, venture capitalists and lawyers to its annual conference.

Participants include Stanford, Columbia, MIT and the University of Wisconsin. Stanford's successes include Cisco, Yahoo! and Sun Microsystems.

Furthermore, the U.S. government enacted the Bayh Dole Act on Dec. 12, 1980. This act helped spur research in state funded organizations. It created a uniform policy in patents among the federal agencies that provides funding research.

The main incentive is that non-profit organizations (universities) and small businesses were able to keep hold of titles to inventions made utilizing federally financed research programs.

The impetus was the realization that thousands of valuable patents were not used and collecting dust. The U.S. government, which had financed the research, lacked the resources and contacts with the relevant industries required to market and develop the invention. Universities are pushed to take part in technology transfer activities.

This is also the reason the Indonesian government enacted Law No. 18/2002 on National Research, Assessment and Application of Science and Technology.

However, speaking to a member of one of the TLO's on campus at the University of Indonesia (UI); many university researchers still do not trust the system to allow the UI to patent their innovation. They would rather finance the patent application themselves by hiring out university patent agents.

Before doing any research, a researcher should first map out what types of technologies have already been patented. They can use software such as Matheo software to help them navigate the United State Patent and Trademark Office or the European Patent Office. After the research is finished, they should use their university TLO's to patent their invention. An agreement on the profit sharing scheme on commercialization of the patent is needed at this stage.

It is important not to publish their findings in a journal or newspaper. According to the World Intellectual Property Organization, for a patent to be valid, it must meet the following criteria: The invention must have a practical use and it must show an element of novelty.

This means a patented invention must possess some new characteristic that is not known in the body of existing knowledge in its technical field; it must show an inventive step that could not be deduced by an individual knowledgeable in the field.

Publication of research would fall into the "prior art" -- the processes, devices and modes of achieving the end of an alleged invention that were known or were knowable by due diligence before and at the date of the invention.

Another example is Texas Instruments' (TI) turnaround which was on the verge of bankruptcy in the mid 1980s. It found in its patent portfolio many technologies that were the basis for the products being used by its competitors in its own industry as well as other fields the TI was not in direct competition with.

In a drive to save the company it went into an all out patent licensing and litigation effort. As a result by 1992 it has earned $391 million from patent licenses, which was 43 percent more that it's $274 million in operating income in the same year.

In Indonesia, Pertamina, the state oil company paid Rp 5 billion for a license to use a patent.

The simple patent was for an innovative oil can opener which is now used in the market. This proves that research and development can be beneficial for both the end user and researcher.

University and research institutions need to work more closely with venture capitalists and businesses to patent their inventions.

The writer is Deputy Head of External Affairs of the Indonesian Intellectual Property Society. He also works at Suryomurcito & Co, an IP consultancy. The views expressed are his own and are based on publicly accessible material. He can be reached at zain_adnan@yahoo.com.