Commercialisation Considerations
"There is no single, obvious way to measure the success of tech transfer that everyone has somehow been missing. Metrics themselves should be seen as experimental, and their impact needs to be monitored. At the same time, metrics should not be altered lightly because stability is needed to make comparisons over time.”
RFI Response, Massachusetts Institute of Technology
CMNS Energy technology transfer and IP policy study is of interest. This recent publication provides insight. - gbgoble
Iman Hemmatian ,Todd A. Ponzio,Amol M. Joshi
Published: May 24, 2022
Exploring the role of R&D collaborations and non-patent IP policies in government technology transfer performance: Evidence from U.S. federal agencies (1999–2016)
Abstract
Around the world, governments make substantial investments in public sector research and development (R&D) entities and activities to generate major scientific and technical advances that may catalyze long-term economic growth. Institutions ranging from the Chinese Academy of Sciences to the French National Centre for Scientific Research to the Helmholtz Association of German Research Centers conduct basic and applied R&D to create commercially valuable knowledge that supports the innovation goals of their respective government sponsors. Globally, the single largest public sector R&D sponsor is the U.S. federal government. In 2019 alone, the U.S. government allocated over $14.9 billion to federally funded research and development centers (FFRDCs), also known as national labs. However, little is known about how federal agencies’ utilization of FFRDCs, their modes of R&D collaboration, and their adoption of non-patent intellectual property (IP) policies (copyright protection and materials transfer agreements) affect agency-level performance in technology transfer. In particular, the lack of standardized metrics for quantitatively evaluating government entities’ effectiveness in managing innovation is a critical unresolved issue. We address this issue by conducting exploratory empirical analyses of federal agencies’ innovation management activities using both supply-side (filing ratio, transfer rate, and licensing success rate) and demand-side (licensing income and portfolio exclusivity) outcome metrics. We find economically significant effects of external R&D collaborations and non-patent IP policies on the technology transfer performance of 10 major federal executive branch agencies (fiscal years 1999–2016). We discuss the scholarly, managerial, and policy implications for ongoing and future evaluations of technology transfer at federal labs. We offer new insights and guidance on how critical differences in federal agencies’ interpretation and implementation of their R&D management practices in pursuit of their respective missions affect their technology transfer performance outcomes. We generalize key findings to address the broader innovation processes of public sector R&D entities worldwide.
R&D collaborations and non-patent IP policies in government technology transfer performance: Evidence from U.S. federal agencies (1999–2016). PLoS ONE 17(5): e0268828. https://doi.org/10.1371/journal.pone.0268828
Editor: Antonio Rodriguez Andres, German University in Cairo, CZECH REPUBLIC
Received: October 1, 2021; Accepted: May 10, 2022; Published: May 24, 2022
Copyright: © 2022 Hemmatian et al. This is an open access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.
Data Availability: All data underlying the findings in our manuscript are available at Harvard Dataverse: https://doi.org/10.7910/DVN/DNUFWR.
Funding: A.J. This research was supported by the Ewing Marion Kauffman Foundation under a Kauffman Junior Faculty Fellowship grant. The funders had no role in study design, data collection and analysis, decision to publish, or preparation of the manuscript.
Competing interests: The authors have declared that no competing interests exist.
Introduction
As highlighted in a recent study by the World Intellectual Property Organization (WIPO), governments in many countries significantly expanded and accelerated their investments in research and development (R&D) activities as part of their policy responses to the 2009 financial crisis and the 2020 coronavirus outbreak [1]. For example, China is focused on building critical nationwide infrastructure via the construction of advanced data centers, 5G wireless networks, and new energy vehicles [1, 2]. These initiatives are driven primarily by greater public sector investment in the Chinese Academy of Sciences, which in 2018 announced plans to rapidly grow its number of national labs from 200 to 700 by 2020, with a fully operational key lab system expected to be completed by 2025. In another example, specifically for combating the coronavirus, France pledged 5 billion euros in R&D spending, which represents a 25% increase over its original R&D budget for 2020. This effort is led by the 10 research institutes that make up the French National Centre for Scientific Research (CNRS) and receive 80% of all public R&D funds allocated by the French government [3, 4]. In a similar effort within Europe, Germany’s second stimulus package, which targets COVID-19 recovery, features 50 billion euros of R&D investments in a wide array of future-focused technologies. These funds are directed towards R&D projects conducted by three distinct networks of federal- and state-sponsored labs, which include the Helmholtz Association of German Research Centers, the Max Planck Institutes, and the Fraunhofer Institutes [5, 6]. In other countries such as Turkey [7], India [8], and Israel [9], governments initiated similar programs to promote technology commercialization and spark growth. Despite the considerable differences in political systems and economic priorities across China, France, Germany, Israel, Turkey, and India, what their respective public sector R&D entities all have in common are clearly defined government mandates to pursue scientific and technical breakthroughs that may fuel long-term growth, prosperity, and security.
In line with its counterparts in the aforementioned countries, but on an even broader scale, the single largest public sector R&D sponsor in the world is the U.S. federal government, which has a similar pro-growth mandate to drive scientific discovery, develop new knowledge, promote technical standards, and generate useful innovations. For instance, in 2019 alone, the U.S. government funded an estimated total of $141.5 billion in R&D expenditures [10], which “plays an irreplaceable role in directing technology toward more general and active domains” [11, 12]. Approximately 27% or $39.6 billion of this total is intramural R&D conducted internally by federal agencies, while the bulk of this funding, 73% or $101.9 billion, is allocated to R&D conducted externally by for-profit corporations and nonprofit organizations. Within the extramural R&D allocation, industry represents $43.6 billion, universities receive $33.4 billion, and contractor-operated federally funded research and development centers (FFRDCs, many of which are called ‘national labs’ or ‘federal labs’) account for $14.9 billion. Although there is an established stream of prior research on university-industry technology transfer [13–20], far less is known about technology transfer at national/federal labs and non-university research institutes. Despite governments’ consistently large and increasing budget allocations to public sector R&D entities and activities within their respective countries, there appears to be inconsistent and limited use of quantitative metrics for measuring performance outcomes related to creating and commercializing new technologies.
The dearth of research in this area is surprising because national labs are an essential component of the core systems of innovation in the U.S. and around the world [21, 22]. We aim to extend prior research in a new direction by exploring how government-industry technology transfer at national/federal facilities may differ from university-industry technology transfer along critical dimensions, especially in terms of the identification, adoption, and usage of appropriate performance metrics.
Indeed, an evaluation of institutional policies and practices at these R&D facilities may yield new managerial and theoretical insights for improving the effectiveness of existing government-supported technology transfer processes.
Our study investigates the following research question: How do differences in R&D policy implementation across federal agencies affect their technology transfer activities and performance?
We believe that obtaining empirical evidence to answer this question is timely, relevant, and strategically important as governments around the world continue to expand the scale and scope of their funding for public sector R&D. The central premise of our study is that two main elements of federal agencies’ varying approaches to innovation management directly influence technology transfer performance:
(1) their engagement in external R&D collaborations, through formal or informal partnership agreements; and
(2) their adoption of policies for sharing non-patented intellectual property (IP).
Although the importance of participating in external R&D collaborations and adopting policies for handling IP are routinely incorporated into existing research on university-industry transfer [23, 24], these factors are not yet systematically integrated into the emerging stream of research on government-industry technology transfer [25]. Our study aims to contribute to the nascent literature on federal technology transfer by providing a conceptual framework, expanded metrics to measure successful technology transfer, and fresh empirical evidence to guide scholars, managers, and policymakers in their evaluation of R&D commercialization processes.
Our study differs from previous studies in two critical ways. First, unlike prior research on government and academic technology transfer that focuses primarily on protecting proprietary technologies through patenting activities [26, 27], we examine the importance of external R&D collaborations and sharing proprietary technologies through non-patent IP policies such as copyrights and materials transfer agreements (MTAs). Second, in contrast to the emerging set of studies on federal technology transfer that use only agency-driven supply-side metrics to evaluate agency performance [28], we introduce customer-driven demand-side metrics and integrate both types of measures into our empirical analyses.
For example, beyond the traditional supply-side metrics of filing ratio, transfer rate, and licensing success rate [29, 30] that capture a producer’s ability to push technologies into the commercial marketplace, we use the demand-side metrics of licensing income and portfolio exclusivity that capture a customer’s willingness to pull technologies out of government labs [31].
By incorporating external R&D collaborations and non-patent IP policies as predictors and demand-side metrics as outcomes in our models, we seek to provide a more holistic picture of federal technology transfer performance at the agency level.
We organize our study by first explaining the historical context of key legislative acts and proposing a conceptual framework. We then conduct a set of exploratory analyses that offer initial empirical evidence for the effects of external R&D collaborations and non-patent IP policies on the technology transfer performance of 10 major federal executive branch agencies (fiscal years 1999–2016). Overall, when we specifically examine agencies’ use of formal agreements for partnerships, we find a positive and significant relationship between this type of external R&D collaboration and all of our supply-side metrics (filing ratio, transfer rate, and licensing success rate), as well as portfolio exclusivity on the demand-side. In contrast, agencies’ use of other types of customized and informal external R&D collaborations appears to be associated with two main effects on the demand-side: (1) a significant decrease in licensing income; and (2) a simultaneous and somewhat surprising corresponding increase in portfolio exclusivity. We find evidence that agencies with a greater utilization of FFRDCs have lower agency-driven technology transfer performance in terms of supply-side metrics. On the demand-side, we find that greater FFRDC utilization is associated with greater licensing income and lower portfolio exclusivity.
We also find the adoption of non-patent IP policies to be associated with substantial and economically significant shifts in the supply-side and demand-side metrics. While the supply-side effects are similar for copyright agreements and MTAs, the demand-side effects are different. External R&D collaborations appear to further amplify these observed effects. In sum, our findings indicate that federal technology managers must carefully consider the combined effects of external R&D collaboration and non-patent IP policies when formulating their respective agencies’ technology transfer plans and programs. Based on these findings, we discuss the scholarly, managerial, and policy implications for ongoing and future evaluations of federal agencies’ technology transfer performance. Beyond U.S. federal agencies, we also consider how our key findings may inform possible innovation process improvements and policy reforms for public sector R&D entities and activities in other countries and contexts.
Historical context and conceptual framework
Historical context
The Bayh-Dole Act of 1980 (Bayh-Dole), the Stevenson-Wydler Technology Innovation Act of 1980 (Stevenson-Wydler), and the Federal Technology Transfer Act of 1986 (FTTA of 1986) are the cornerstones of the legal foundations for federal agencies’ interpretation and implementation of their R&D management practices and technology transfer activities in pursuit of their respective missions [32]. Bayh-Dole allows non-profits and small businesses to keep title to inventions made using federal government funding. Enacted in December of 1980, Bayh-Dole—which made changes to U.S. Code (USC) title 35, i.e., the “Patents” chapter—also explicitly authorized federal agencies to “grant exclusive or partially-exclusive licenses to patents, patent applications, or other forms of protection obtained” (Codified as amended at 35 USC 200 et seq.). The importance of Bayh-Dole (PL 96–517) on innovation policy is well-documented in the existing literature and is prominently featured in numerous studies of federal technology transfer, academic entrepreneurship, and the commercialization of university-owned patents [33–36].
Prior to Bayh-Dole, the granting of an exclusive license was a lengthy and cumbersome endeavor, with specific requirements differing by the agency. In practice, exclusive licenses were almost never granted [37]. The elaborate process for the U.S. Navy, considered among the more forward-thinking agencies at the time [38], involved advertising the patent in three different publications (the U.S. Patent Office, the Federal Register, and at least one other publication of choice) for a period of at least six months, followed by another 60 day public notice of a prospective exclusive license [39]. Given the lengthy processes and bureaucratic hurdles, agencies would typically grant only non-exclusive licenses, which made a prospective licensee’s business decision of investing in federally-owned patented technologies far riskier. As a result, the government appeared to be hoarding around 30,000 unlicensed patents, and potentially useful and valuable new technologies were not being commercialized. Hence, prior to the enactment of Bayh-Dole, if one looked at patent licensing activity, federal technology transfer appeared to be at a complete standstill. For example, in 1976 alone, only about 150 patents were licensed by all federal agencies from over 2,000 issued patents [39]. With such a small fraction of patents actually being licensed for commercial use, proposed reforms recommended offering a degree of exclusivity in licensing through a unified and more streamlined process to accelerate the commercialization of unlicensed inventions [40, 41]. By explicitly authorizing federal agencies to exclusively license inventions, Bayh-Dole aimed to address this issue.
Although it is less well-known than Bayh-Dole, an equally important piece of legislation is Stevenson-Wydler (PL 96–480), which was enacted fifty-two days earlier and signed into law, also by President Carter. This law made changes to title 15, the “Commerce and Trade” chapter, and was focused on using the federal labs’ R&D capabilities and resulting technologies to more directly benefit citizens of the U.S. by moving those technologies to the private sector (Codified as amended at 15 USC 3701 et seq.). Of the two laws, Stevenson-Wydler is the only one to explicitly mention “technology transfer” and make technology transfer a codified mission of the federal labs by requiring each agency “strive where appropriate to transfer federally owned or originated technology to State and local governments and to the private sector [42].”
Agencies were legally bound to establish an Office of Research and Technology Applications (ORTA) at each lab, staff the office with at least one full-time professional, and devote not less than 0.5% of the agency’s R&D budget to support the technology transfer function. A waiver for the 0.5% budgetary requirement was built into the law, and essentially all of the agencies requested waivers; the requirement was dropped when the law was amended in 1986 [43–45]. From the beginning, the implementation of technology transfer legislation at federal agencies and national labs had its supporters [46, 47] and skeptics [48]. Part of the ongoing debate about the effectiveness of these policies and laws arose from the lack of a uniform, standardized set of metrics for consistently monitoring and measuring technology transfer performance across agencies, labs, and teams:
Quote
“There is no single,
obvious way to measure the success of tech transfer that everyone has somehow been missing.
Metrics themselves should be seen as experimental,
and their impact needs to be monitored.
At the same time,
metrics should not be altered lightly because stability is needed to make comparisons over time.
” RFI Response, Massachusetts Institute of Technology [
49]
The enactment of Stevenson-Wydler required federal agencies to incorporate technology transfer activities directly into their respective missions and to allocate dedicated resources but did not adequately define appropriate metrics for measuring these activities across agencies. In the 1980s, several academic studies indicating that the U.S. faced a risky competitive decline in innovation, along with the growing recognition that many national labs had specialized facilities and equipment that could be leveraged to support innovation more broadly, prompted renewed attention on federal technology transfer [50–52]. In response, Congress passed the FTTA of 1986. Signed into law by President Reagan, the legislation amended Stevenson-Wydler in a number of noteworthy ways, including moving licensing from being handled centrally by agency managers to being handled by the inventing lab, establishing a Federal Laboratory Consortium, and most importantly, authorizing the use of Cooperative Research and Development Agreements (CRADAs) by the labs.
A CRADA is a contractual agreement between one or more federal laboratories and one or more non-federal entities “under which the Government, through its laboratories, provides personnel, services, facilities, equipment, intellectual property, or other resources with or without reimbursement (but not funds to non-Federal parties) and the non-Federal parties provide funds, personnel, services, facilities, equipment, intellectual property, or other resources toward the conduct of specified research or development efforts which are consistent with the missions of the laboratory” (15 USC 3710a). Shortly after the law came into effect, CRADAs experienced explosive growth and rapidly came to dominate the formal channels of federal technology transfer [22, 53–55].
In sum, the enactment of Bayh-Dole, Stevenson-Wydler, and the FTTA of 1986 established some of the guiding principles that remain influential today in shaping how federal agencies’ employees manage R&D activities. All three pieces of legislation address key issues regarding the ownership, transfer, and sharing of knowledge generated by federal labs. Bayh-Dole emphasized the importance of licensing out government-owned inventions. Stevenson-Wydler established the requirement that federal agencies explicitly incorporate technology transfer into their missions. The FTTA of 1986 broadly authorized resource-leveraging agreements in the form of CRADAs to facilitate collaboration with private sector partners. These laws collectively provide broad authorization and guidance to agencies conducting R&D on how to execute their mission with a focus on technology transfer.
