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Universities and patent monetization

Updated: Jan 8, 2023

Patents have become an important IP asset in today’s world. In fact these are the major sources of revenue for many tech based companies and start ups. The concept of patent monetization has evolved over the years and in developing countries like India, it has seen a significant rise in recent past. However, unlike corporate, quite surprisingly universities have not been able to satisfactorily monetize IP assets for their benefit. The trend is prevalent not only in India but across the world. Let’s understand the status of patent monetization in universities and ways to boost it.

Research and Innovation Regime in Universities:

Universities are knowledge houses for young and innovative brains. These academic institutions offer both infrastructural and intellectual facilities to aid in research and development. As the idea of protecting intellectual property gained popularity, various Governments encouraged their universities to file patents for their inventions. In US, Bayh-Dole Act was passed which enabled research organisations to patent and commercialize inventions that had been developed under projects funded by federal government. As a result the number of university patents in the United States increased significantly. Many other countries including India have also tried to empower universities and take the lead in patenting and IP licensing. Universities have also created departments called the Technology Transfer Office (TTO), to facilitate patent commercialization, which also helps to connect to corporate industry, law firms or any other entity interested in fostering partnerships.Oxford University’s technology transfer organisation is considered one of the leading TTO worldwide. Universities in India have also set up their TTO which are involved in successful commercialization of the patents. IIT Delhi’s TTO (called the FITT) has assisted in technology transfers of over 30 technologies out of which over 10% have been successfully commercialized.

Lack of Interest in Patent Monetisation by Universities:

Lack of interest of the universities in patent monetization can be blamed on unsatisfactory ROI. Let’s take an example, Stanford University produces one invention disclosure for approx every $2 million of research funding. On an average, in 15 years a total of about 3200 disclosures are received out of which only 800 inventions get licensed. Going further, about one-third of these licensed inventions produce income out of which only 22 inventions produce at least $100,000 per year. This means that a significant amount of income is received only from a small fraction of inventions. This acts as a deterrent for universities. Also, in most Universities, the TTOs lose money. As per a survey only 11% technology transfer proves to be profitable.

What can the universities do to utilize their patents properly?

· Set goals: The University leaders should make up proper academic routines in accordance with market needs. Universities can also appoint an expert dedicated to handle and explore the business aspects of IPR.

· Professional IP assistance: The valuation of patents requires counsel from attorneys and professional experts, knowledge, like market analysis etc. Hence taking professional assistance may prove to be helpful.

· The right target: When it comes to licensing, many strategies are available for university such as Direct Licensing, Indirect Licensing, Litigation, outright sale of patent without any royalty or commercializing the technology itself. The choice depends upon how large a university is or the method of administration.

· Profitable strategy: The institution must determine which organization to do business with in any transaction. Licensees with credibility and good public image should be pursued in licensing agreements to eliminate problems when there are conflicts relating to business.

Patent Monetisation in India:

India is still an emerging country which is currently suffering from lower levels of increased familiarity with alternative IP monetization, technical capability and less precious IP. Greater steps are required as a measure to fix the existing shortfall in revenue from licensing. Poor investment on R&D is also one reason. India invests approximately 1% of its GDP in the research as compared to developed countries (US spends about 2.7%, Japan spends 3.2%, South Korea spends 4.3%, Israel spends 4.9% of their GDP on research and development activities).

However, scenario has improved over the last few years. Pitching for IPR awareness, the University Grant Commission of India pushes educational institutions for IP protection. It mandates setting up of IPR centres in the institutions. The National Assessment and Accreditation Council or NAAC assesses institutions on the level of facility provided for identifying and promoting IP. MHRD's National Institute Ranking Framework (NIRF) ranks institutions based on the number of patents filed, granted and commercialized. As a result a significant rise has been observed in patent filing and patent commercialization from various institutions. Consequently we have India's top engineering institutes as the leading patent filers. In June, 2020 university patents alone constituted for 2.05% of the total granted patents. In the coming years, awareness and facilitation in patent monetization process will surely help to the universities to take monetary advantage of their research.

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