Tech Monitor ( July-August 2000 )

Introduction

¡¡¡¡Technology transfer (TT) is generally defined as the process through which technical information and products development by a public or private laboratory are provided to potential users in a manner that encourages and accelerates their evaluation and or use and permits the commercial production of a marketable product.
¡¡¡¡While this process can be either very simple or quite complex, it basically involves a technical resource, which is the R&D laboratory developing the technology, a user e. g., small, medium or large business and some interface connecting the two.
¡¡¡¡Any TT requires clear planning and precise action relating to the many steps in the process. This is best done through a close interaction of the technology provider with industry, which in most instances is the technology seeker.
¡¡¡¡Some of the mechanisms that make TT possible are joint research, cooperative research and development agreements, licensing, technical meetings, trade shows and exhibitions, and information dissemination through fact sheets, publications, seminars and workshops.

Planning

¡¡¡¡An R&D laboratory embarking on TT must have a strategic plan. This, in most in stances, is more important than any of the remaining R&D activities.
¡¡¡¡In a TT strategic plan, due consideration must be given to the three major steps in the process as given below:
Product recruitment where appropriate market surveys and sales fore casts have to be carried out for the technology that is to be developed.
¡¡¡¡£ªProduct evaluation where probable users have to be identified, taking into consideration the natural and human resources of the country.
¡¡¡¡£ªProduct availability where the manufacture of marketable products in the local market and possibly international markets has to be ensured taking into consideration the quality as well as the price of the product.
In addition to all these, the publication and public relations angle, which also play a vital role in the process, have to be given due consideration.
¡¡¡¡A strategic plan for TT must usually lead to interdisciplinary brainstorming sessions that could produce interesting and productive collaborative projects, thus broadening both the technology ideas and the TT efforts. These endeavours require the support and cooperation of staff at all levels of the R&D laboratory.
¡¡¡¡In planning for TT, it is also very important to determine if research or production of new knowledge by the R&D laboratory is entirely necessary. Exploitation of resources and setting up of industries may advance faster and perhaps more economically through applications of purchased turnkey projects or even borrowed technology. Therefore it must be seriously considered if the limited resources of R&D laboratories of developing countries need to be wasted on R&D programs for rediscovery or for some imagined "national prestige".

Putting together a team

¡¡¡¡After seriously considering the necessity for R&D in the first place, it is important to put together a team for the development of the technology and its transfer. While TT is a very important function, hardly any R&D group in a developing country can afford to make it the sole responsibility of one person or group of people. Invariably this task has to be one of the additional responsibilities of one of the investigtors, or even of the Director, but even with this limitation it can be fulfilled successfully.
¡¡¡¡It is clearly advantageous to have people in the team who have some experience in at least some aspects of TT, and sufficient technical knowledge to speak intelligently about the devices or technologies to be transferred. On the other hand, it is unlikely that and one individual will have full acquaintance with the inventor or developer, something that will be needed at some point before transfer can be successfully accomplished. For this reason, a TT group must avoid pursuing opportunities for a product whose developer or principal investigator is no longer working in the laboratory. If the person is now at a different institution, it is more useful for the interested company to contact that person directly. It is unrealistic to expect TT team members to be experts on every product being developed.
¡¡¡¡Within the TT group it is always advantageous to have a member who has had personal experience in running a business, developing and licensing a product, taking out a patent, or actually developing and transferring a product of his or her own design. Further, some or most members of the team must be experienced at making technical presentations, a definite plus for successful TT.
¡¡¡¡Some of the more subtle, and yet very important, qualities desirable in members of a TT team are the ability to communicate in layman's terms with people unfamiliar with the field, and the willingness and ability to strike up conversations with likely collaborators or licensees who may be total strangers.
¡¡¡¡The most desirable size of a TT team will depend on the size and nature o the technical side of the organization, and upon its productivity. However it is essential that a TT team must have members with strong backgrounds in engineering, research and design, and each member must preferably have had per sonal experience in at least one aspect of TT. One important member of a TT team is an Information specialist who is essential for the preparation of professional material for distribution.

Finances

¡¡¡¡In developing the technology package, finances are required at various stages. The first requirement is at the R&D stage, which would include the laboratory 'bench scale' process; the next requirement is for stepping up to a pilot scale; and finally for the development of the final 'commercial scale' package.
¡¡¡¡Unlike in developed countries, very few industrial firms in developing countries can afford to gamble on, and pay for, pure research. Even if the gamble pays, there are still fewer who can utilize the fruits of invention and follow it up with successful commercialization. Research and Technology development in developing countries is therefore typically an activity of large industries that enjoy backing from multinational partners.
¡¡¡¡R&D institutes in developing countries cannot therefore hope for much financial support from industry. This means that they have to obtain support from either the Government or from donor funding which may be available through international financing or through development banks. The R&D costs in many countries even in the developed world are borne mainly by the state.

Bringing in expertise

¡¡¡¡Consultants, private firms, and others claiming expertise in TT offer various TT services. These must of course, be viewed with caution. This is because TT by definition includes so many different fields of expertise, including business, law, patents, negotiation, agreements of various types, government regulations, manufacturing, management, engineering, product design, field testing, evaluation, marketing, distribution, sales, maintenance and user training. Furthermore, many of these fields themselves include various specialities.
¡¡¡¡Thus there seems to be no such ting as an expert in TT. One way to bring in necessary expertise is to establish an Advisory Board that includes experts in the fields most needed for the operation. It is useful to have non-government experts for this purpose, since they are not subject to the restrictions of government employees in what they say or do. Further, they are more likely to have experience in the "real" world of business, where the most important aspects of TT occur. The most helpful and useful person on the Board will be a legal member who is preferable a patent attorney.
A second way to bring in expertise is through the use of different consultants. This mechanism meets with varying success. But through careful screening, and a willingness to switch consultants when appropriate, one can get satisfactory results. It is important, of course, of have a clear idea of why the consultants are being hired, what they should produce, how soon and at what cost.
¡¡¡¡Perhaps the best way for an R&D worker to earn the realities of business and marketing is through discussions with parties who come to the laboratory to discuss possibilities of collaboration or commercialization of specific products. It is largely through their questions and answers that one can gain an under standing of what is needed or wanted by a potential partner before entering into any arrangement or agreement.

Documentation

¡¡¡¡Documentation is extremely important in any TT activity. Sine the entire process depends upon contacts, discussions, agreements, the timing of events (especially stages of technology development), and the actions relating to them, it is of utmost importance that those involved in the process keep accurate, complete and reliable records. Since these activities often relate to money, it is essential that regular logs and or records be kept, and preferably in a form that cannot be tampered with, altered or misrepresented. Bear in mind, however, that this log (if kept on a computer) may be of limited legal value, since it can easily be altered.
¡¡¡¡Certain documents are actually required in connection with patentable inventions. In most countries a patent is awarded to the "first to file". Documentation is a factor in establishing status as a legal inventor. The time of filing such a document is ambiguous. Presumably, it should be filed a soon as practical, after the inventor realizes that he she may have invented something patentable.
It is important to note that no possible conflict of interest should arise if the invention is made under a cooperative R&D Agreement. The agreement should specify to which party the invention belongs, to the laboratory or to the company, and what portion of the royalty will go to either party.

Looking for opportunities

¡¡¡¡R&D laboratories usually look for opportunities through booklets, brochures, media releases, etc, providing detailed listings of their capabilities and technologies, with the presumption that industry will actively seek technologies. However this method does not necessarily work. Instead, attending technical meetings, trade shows, exhibitions and conferences remains among the best methods of establishing and maintaining personal contacts for TT, but this is difficult in a climate of shrinking budgets.
¡¡¡¡There are two approaches therefore that may overcome this problem and it is best that both are taken. The first is to design and publish a regular newsletter announcing recent developments and potential new products in the laboratory. The second is to bring in a consultant who understands the problem and has a clear approach to it. Of course, successful newsletter distribution requires an appropriate database. This is where the consultant can be helpful, especially if he has experience in raising private and venture capital.

Negotiating

¡¡¡¡The biggest myth about negotiations is that they are some sort of contest, with a winner and a loser. Actually, a success, full negotiation is one in which each party succeeds in getting most of what they wanted. In other words, it is a win-win situation. The reason is simple: A negotiation is generally the beginning of a working relationship. If one of the parties feels cheated, it is not a good relationship, and there will invariably be trouble in carrying out the negotiated agreement.
¡¡¡¡There is a strong tendency on the part of inventors to think that their invention is worth much more money than anyone is willing to pay. It is always better to settle on a sliding scale going from an initial 8 per cent to an additional 2 per cent as the volume of sales increases, rather than ask for a straight royalty of 10 per cent on a consumer product with a very large market potential. The inventor must also bear in mind that very few transferred technologies ever make big money.
¡¡¡¡Therefore, the goal of negotiations with industry is not to make the laboratory rich from the proceeds, but rather to ensure that the product is, in fact, commercialized successfully. In negotiations, therefore, it is much more important to link up with a responsible company that will carry through on its promises, and to write an agreement that will produce a friendly, effective team for accomplishing that goal, rather than to maximize the royalty received.
Nevertheless, royalties are considered important as:
¡¡¡¡£ªThey appear to place a real value on the product;
¡¡¡¡£ªThey produce an incentive for performance if minimum royalties are specified; and
¡¡¡¡£ªThey furnish much needed financial resources to augment the TT effort in ways that are difficult by other means.

Patenting

¡¡¡¡A patent is a document issued by a Government office which describes a particular invention and creates a legal situation in which that invention can normally only be exploited made, used, sold, imported by or with the authorization of, of the patentee. The protection of inventions is limited in time (generally 20 years from the filing date of the application).

How far should you go?

¡¡¡¡It is important to recognize that a patent does not do anything for you or for the product, except perhaps to add some sort of value to the product and process. The primary function of a patent is that it prevents anyone else from making, using. Offering for sale, selling or importing your invention. Most often, a patent attorney specializing in the scientific or engineering area of the particular patent, with considerable input from the inventor, files a valuable and valid patent. Also they must be filed in each country in which protection is desired. For these reasons, good patents are expensive.
¡¡¡¡Certainly, not all ideas or inventions are worth patenting. The decision as to whether to file for a patent or not depends primarily on how much chance there is of someone trying to copy and sell the particular product or process. And this in turn depends upon a number of factors, such as cost of production, size of market, and likely financial returns. Naturally, large companies are more likely to attempt to patent, particularly if the market is large and there is considerable profit to be made.

What is patentable?

¡¡¡¡There are essentially four specific requirements for patentability:
¡¡¡¡£ªThe invention must be novel, which permits in practice the solution of a specific problem in the field of technology;
¡¡¡¡£ªThe idea must be 'new', in the sense that it has not already been published or publicly used;
¡¡¡¡£ªIt must be non-obvious (involve an inventive step), in the sense that it would not have occurred to any specialist in the particular industrial field, had such a specialist been asked to find a solution to the particular problem; and
¡¡¡¡£ªIt must be capable of industrial application, in the sense that it can be industrially manufactured or used.
¡¡¡¡£ªThe determination of whether an invention is novel is important in two respects;
¡¡¡¡£ªIt may, in fact, already have been patented, in which case the product can not be transferred in the first place (depending on the date of the patent), since the manufacturer might then be infringing on an existing patent.
¡¡¡¡Such a situation could be embarrassing and possibly very expensive, and is definitely to be avoided. To avoid it, a patent search using a computerized service can be quite valuable.

Patent search

¡¡¡¡A good resource for checking existing patents is the local Patent Office. However, if the stakes are high, as in an important consumer product, an exhaustive search performed by a competent patent attorney is recommended.
¡¡¡¡The WIPO Patent Information Services for Developing Countries, which has been in operation since 1975, offers services free of charge on the basis of contributions made by some 15 Intellectual Property Offices in industrialized countries and the International Bureau of WIPO itself. These services include the provision of:
¡¡¡¡£ªState-of-the-art search reports carried out in patent document collections and on line databases;
¡¡¡¡£ªInformation on equivalent patent documents and on patent literature cited in earlier examination procedures or identified in documentary searches;
¡¡¡¡£ªInformation on the legal status of published patent applications and granted patents;
¡¡¡¡£ªCopies of individual patent documents;
¡¡¡¡£ªSearch and examination reports of application for patents; and
¡¡¡¡£ªSearch and examination of patent applications submitted by the African Regional Industrial property Organization (ARIPO) which have no priority or for which no search reports have been established.

Who is an inventor?

¡¡¡¡By definition, an inventor is a person who has contributed substantially to the invention, in the sense that it would not work or would not as valuable with out that contribution. A more specific criterion is that one is an inventor if, and only if, at least one of the claims listed in the patent is attributable to that person.
¡¡¡¡The definition of an inventor on a patent is a legal matter, an the inappropriate naming of an inventor (or failure to name a legitimate inventor) can be grounds for a court ruling that the patent is invalid. It is therefore a matter to be taken seriously.
¡¡¡¡There is a clear distinction, there fore, between an inventor and a person who provides laboratory assistance. That is, if a person's contribution could have been made by any other assistant, then that person is not an inventor. For example, a machinist who makes a prototype is not ordinarily an inventor, unless he has introduced a new idea that actually made the invention feasible.

The Sri Lankan experience

¡¡¡¡Sri Lanka is located 880 km north of the equator, adjacent to the southern tip of India. With an area of 65610 sq km or 6.5 million hectares, the country is inhabited by 18.8 million people (1998). The country, through relatively small, boasts of a large number of national R&D institutes that are geared to provide technology development and transfer to the industrial sector in the country.
¡¡¡¡Large industries in the country are either generators of technology internally in collaboration with their foreign counterparts or R&D laboratories abroad, whilst SMEs are entirely dependent on technology available elsewhere. Sri Lanka's SMEs are not generators of technology internally. For them, maintaining a healthy cash flow and ensuring a satisfactory return on investment do not leave scope for expenditure on R&D. All records indicate that SMEs in Sri Lanka prefer to acquire foreign technology on a turnkey basis, sometimes in spite of their inability to access, absorb, adapt and exploit new and appropriate know-how and business techniques. However there are instances of TT from government R&D laboratories to this sector.

Industrial Technology Institute

¡¡¡¡The Industrial Technology Institute is a government research institute with the largest number of disciplines in the country. The Institute came into existence as the successor to the Ceylon Institute of Scientific and Industrial Research established in 1955. The Institute is dedicated to the promotion of industrial development through R&D, constancy, technology transfer and the provision of analytical services.

Finances for technology development

¡¡¡¡From time to time the institute has received finances from international organizations for its R&D efforts as well as for development of technology. Some of the technologies that have been developed through these programs have been transferred to industry. The Institute also carries out R&D with funding provided by the government as well as through joint cooperative programs with industry. The latter have not all been successful in the commercialization of products even though Institute-developed technologies have been used by industry, particularly by MESs, to varying extents, in commencing new operations and in improving existing technologies.
¡¡¡¡Some of the technologies developed with government finances, successfully transferred to industry and since commercialized in both domestic and export markets are the following:
¡¡¡¡£ªCanned coconut milk TT to Vichy Foods Company;
¡¡¡¡£ªCanned coconut milk and creamed coconut TT to Silver Milis Foods (Pvt) Ltd.; and
¡¡¡¡£ªCanned coconut milk TT to Mawath-gama Mills.
¡¡¡¡£ªCoconut is traditionally used as a component in the Sri Lankan diet. Coconut 'milk' is the best-known coconut kernel product, obtained by squeezing the shredded coconut kernel with added water, and used in the traditional "curry". The Institute worked on an R&D program on coconut-based products for over 20 years and thus acquired the necessary expertise for this TT.

Basis of TT

¡¡¡¡The Institute's TT process has in most instances been on a non-exclusive basis on a contractual agreement, with the Institute retaining the right to transfer the technology to more than one industrial enterprise. However the Institute has always maintained this in such a way that the SME to which the technology has been transferred initially is given time to establish the industry successfully and obtain a market lead before a competitor comes into the scene. In some instances the Institute has secured minority holdings in the SME in lieu of the transfer of technology and technology related services. In these instances, since the share value depends on the success of the enterprise, both the Institute and the enterprise have to be strongly committed to promote the venture. Further, even though there is no licensing or royalty involved, the Institute's own interest in the venture ensures high confidentiality.

Two TT cases

¡¡¡¡Two brief accounts of such technology transfers are detailed here.
¡¡¡¡The first instance relates to 1994, when the Institute signed an agreement with Delmege Industries Moscoils (Pvt) Ltd. The Institute was allocated a 10 per cent holding in the Company in lieu of R&D and machinery for manufacture of mosquito coils. The Institute was to provide. Exclusive rights to the formulation and production of mosquito coils and. Constancy on an exclusive basis for mosquito coil manufacturing technology. However the Institute developed and the industry never got off the ground.
The second instance was in 1996, when the Institute signed an agreement with Tab Lanka Deco Products (Pvt) Ltd. And secured a 10 per cent holding in the company in lieu of TT, with exclusive reghts for manufacture of eight products from jackfruit. Initial TT was effected for dehydrated jack, waraka (ripe jack) candy, dehydrated waraka and jack seed snack. Two of these products were successfully commercialized, with funding obtained from development banks, and the products were even exported to foreign markets on a small scale. However the industry cold not sustain itself due to various problems it encountered and is not in operation any more.

International financing

¡¡¡¡Two major projects that received international financing for technology development are discussed here.

Cereal based products

¡¡¡¡In the early 1980s the Government of Sri Lanka identified the need for development of products based on tranditional Sri Lankan staple food, which meant rice and leguminous seeds. This was mainly to enhance the country's capability of carrying out product and process development work in the area of agroindustrial processing, notably to serve the SMEs in the country. International financing was secured through UNDP/UNIDO in 1989 and a project titled "Technologies for Food and Agora-based industries" was carried out through the Ceylon Institute of Scientific and Industrial Research (CISIR), predecessor to the Industrial Technology Institute. Through this project the Institute was able to acquire expertise. Pilot scale facilities and technology for the manufacture of several cereal based products.
¡¡¡¡The know-how acquired included those for the production of:
¡¡¡¡£ªRice flours with different properties as required for application in bread baking, biscuit banking and pasta manufacture;
¡¡¡¡£ªExtruded convenience foods with composite flours from rice and leguminous seeds, for consumption as infant foods and convenience foods (snack products, breakfast cereals. Taking into account local tastes and nutritional value; and
¡¡¡¡£ªRice flour mixes and composite flours for instant mixes for traditional food products, dessert mixes, etc.
¡¡¡¡£ªThis expertise helped in successful TTs in the following instances:
Instant hoppermix, instant thosaimix, instant kola kenda mix (all traditional foods that need long preparation time) TT to Harischandra Milis Ltd;
¡¡¡¡£ªInstant string hopper flour (another traditional food that needs long preparation time) TT to Harischandra Mills Ltd. And Hirusandu Ltd.
¡¡¡¡£ªInstant noodles and instant rice in 03 types TT to Festiva (Pvt) Ltd,; and
¡¡¡¡£ªBaby rusk TT to Chummy Confectioneries (Pvt) Ltd.
In these instances, the TT had been successful, mainly because of the availability of pilot scale equipment for cereal processing, because of which, in turn, the project team had been in a position to demonstrate the technology to potential entrepreneurs.

Fruit and vegetable preservation

¡¡¡¡In the late 1980s the Ceylon Institute of Scientific & Industrial Research received funding from the International Development Research Center in Canada for "Developing technologies for preservation of fruits and vegetables to ensure their maximum utilization". A large number of varieties of tropical fruits and vegetables grow abundantly in Sri Lanka. They are used either for direct consumption or for processing into secondary products. However it has been estimated that 20-30 per cent of the country's production goes waste for a host of reasons. One of the major objectives of this study therefore had been the development and assessment of semi-processing systems to reduce losses of seasonal fruits and vegetables, thus creating a basis for small rural agora-industries in Sri Lanka.
¡¡¡¡Tomato, mango and lime were chosen for the study. The products that were developed included the following:
Steeped mango slices and manufacture of commercial products;
Semi-processed tomato and mango pulp and manufacture of commercial products; and
Steeped, preserved lime.
¡¡¡¡The commercial viability of the processes developed indicated that the basic problems of raw material shortages faced by processing industries during the off-season could be minimized. The viability study also indicated high socio-economic benefits aimed at promoting employment in rural areas and providing growers opportunities for the processing and marketing of produce.
But even though the processes were given much publicity and promoted to both fruit and vegetable growers and the processing industries, TT could not be achieved for any of the processes or products. The reasons were that major fruit processing industries had no faith in the quality of any sub-contracted products and resented the high commissions they had to pay for them.

Conclusions

¡¡¡¡TT does not just happen; somebody has to make it happen; and it takes a significant amount of time and know-how, Indeed, it takes substantial time just to build the ongoing relationships needed for successful TT. Therefore, in every laboratory than carries out a substantial amount of research and or development, it is always better if there is one person whose sole responsibility is TT.
The most difficult part of TT is finding the right manufacture at the right time, with both the means and the inclination to complete the task. It is much harder to find a partner once a products is fully developed than it would have been earlier in the process.
Obtaining international financing of TT seems to be a somewhat useful method of successful TT as sufficient funding and expertise are made available. However even this method does not completely ensure successful TT even when tech nologies for useful and relevant products have been developed.
¡¡¡¡Perhaps the biggest frustration in TT is that the method seems to be different in every case. There does not seem to be any one method that will lead to successful TT. All in all, the transfer of products is somewhat of a gamble, and the time required for transfer varies greatly depending on the route. But the odds for success seem to be much higher it TT is an integral part of a project at the outset.
¡¡¡¡Finally, it is important that we under stand the long time constraints involved in transferring technology to the private sector and actually realizing any income from it. It can sometimes take up to ten years before the income from royalty becomes significant. So TT is difficult, costly, and takes a long time. But it is essential if a product is to reach the intended user.

References

1. Annual Report, Ceylon Institute of Scientific & Industrial Research, 1997
2. Annual Report, Ceylon Institute of Scientific & Industrial Research, 1997
3. Annual Report, Industrial Technology Institute, 1998.
4. Report on "Developing Technologies for preservation of Fruits and Vegetables to ensure their maximum utilisation" Part B (1991), Malini Malla-waratchie and TV Gamage.
5. Report on "Technologies for Food and Agora-based Industry", UNIDO project DP/SRL/88/016D, 1986.
6. World Intellectual Property Organization (WIPO) Patent Information Services for Developing Countries, 1996.

WIPO Expo on electronic commerce and intellectual property September 20-22, 2001

¡¡¡¡WIPO Expo on electronic commerce and intellectual property will be held in Geneva on September 20-22, 2001. The Expo will address the latest developments in e-commerce and intellectual property legal, technical and policy-oriented, and will be webcast live.
¡¡¡¡The three day program is planned to consist of three sections: An E-Commerce Forum (presentation by international experts in the field) An Innovation Expo (demonstrations of the latest technologies and digital uses of intellectual property) A Festival of Creativity (live and web-based performances of artists).
¡¡¡¡Senior policy makers in government and business and legal and technical professionals concerned with the Internet, e-commerce and intellectual property rights, as well as others wishing to familiarize themselves with the issues in these areas are invited to attend.
¡¡¡¡For more information, contact: Electronic Commerce Section, Office of Legal and Organization Affairs World Intellectual Property Organization, 34, chemin des Colombettes, 1211 Geneva 20, Switzerland.
Tel: (+41-22)3389164; Fax: (+41-22)7403700; E-mail: ecommerce@wipo.int