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  • Ian Ritchie : Scottish Business Insider

Two-year exercise fails to yield research licensing solution

AN ENORMOUS amount of our money, £3bn or so, is spent every year on research at leading universities. Not surprisingly, many think that some of this funding should result in a stronger UK economy by, among other things, the formation of new innovative spin-out companies.

However, although the universities don’t actually provide any of these funds, the exploitation rights of all this research is allocated for their benefit, and the tendency to try to ensure a financial return from such licensing often results in tension between the budding entrepreneur and their university.

It’s usually a pretty unfair competition – the individual is usually on their own, up against the negotiating, accounting and legal machine that their university will have on tap.

There have been horror stories of universities claiming 50 per cent of the equity, demanding punishing royalties, or, in one appalling case, a stake in the company for the individual executive handling the deal. Many universities have disgracefully pre-sold ‘first-look’ rights to investment companies such as the IP Group which, although it earns the university a substantial fee, has a fairly negative effect on potential spin-outs.

As a result, in September 2011 Education Minister Mike Russell asked the Scottish Funding Council (SFC) to investigate the setting up of a ‘single knowledge transfer office’ for the licensing of intellectual property from Scotland’s universities.

Talk about a poisoned chalice! I’ve served as a member of the SFC and I know that they have never been able to tell universities what to do. Their only weapon is to provide fresh funding - also known as ‘bribes’ - to encourage them to do change their behaviour.

The working party set up by the SFC had a torrid time trying to come up with a solution to this problem. Everybody agreed that a new central ‘office’ - in Falkirk maybe? - was a non-starter. The evidence from Edinburgh University, which has been particularly successful at generating spin-outs, is that the closer the ‘business development officers’ (BDOs) work with the individual researchers, the more companies are created. Exactly the opposite of some new central ‘office’.

More than two years have now passed since the original ministerial request and those of us who take an interest in such things have been wondering what happened. Well, unnoticed by almost everybody, SFC issued a very brief press release on October 1st announcing a new initiative - Innovation Scotland - supported by £4m of funding.

The release doesn’t actually say anything, and their press office was no help, but I have learned most of this £4m funding will go to support Interface, an existing initiative based at Edinburgh University which seeks to build links between Scottish researchers and industry. Interface is a good unit, doing a good job, but it is not new, and it doesn’t help much with licensing deals for spin-outs.

The other two bits of Innovation Scotland are a new entrepreneurial support programme from Strathclyde, Aberdeen and Edinburgh Universities, and a new ‘high powered’ advisory committee that will meet three or four times a year and advise ministers on actions that should be be taken to help Scotland’s innovation performance.

So the ‘single knowledge transfer office’ file has now been closed and new spin-out companies are still having their terms dictated to them by their host University. The nearly two-year exercise to develop a solution to licensing research has yielded nothing.

The African elephant has a similar gestation period - but at the end of that process at least you get an elephant.

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