Issue Date: April 18, 2011
Rules Of Engagement
Cooperation between European companies and universities has been strengthening in recent years as both sides move to catch up to the U.S. model of profit sharing between the sectors. Changes in intellectual property law made in several countries more than a decade ago brought about well-defined processes at major European universities to guide both parties through the partnership process.
As the number of partnerships increases, issues that have been long debated in the U.S. are emerging in Europe regarding possible dilution of basic research efforts when the commercial imperative becomes too strong. But the financial challenges for both groups in recent years—government budget cuts that have reduced funding for universities and a recession that slimmed company R&D budgets—mean that these activities are too valuable to abandon.
“Academia and industry are growing together much better,” says Wolfgang A. Herrmann, president of the Technical University of Munich since 1995 and a former catalyst research group leader. “There has been a change in mind-set for society and with scientists so that it is acceptable to participate in the innovation process and make money from your inventions,” he says.
To encourage innovation in the region, many European countries have modified their intellectual property laws over the past 15 years. According to European economists, policymakers were targeting the U.S. model as reflected in the 1980 Bayh-Dole Act, which permitted universities to retain intellectual property rights for government-funded research. Combined with subsequent legislation, the act led to a boost in U.S. academic patenting.
Most of the European policy changes were about ownership rights and were not tied to federally funded research, which is the case for the U.S. law, explains Aldo Geuna, an economics professor at the University of Turin, in Italy. Additionally, the policy changes varied significantly by country, depending on each country’s existing university structure and the historic position of intellectual property, so no single European process or metric for progress has emerged.
Patent applications and licensing revenue have increased at most universities across the continent, according to Geuna’s research, but intellectual property rights are only one of the reasons. Other important changes at universities include the establishment of technology transfer offices to facilitate collaboration and an increased comfort level in engaging in commercially oriented transactions, he says.
At the same time, the focus on technology transfer at universities has created challenges for companies as the negotiation of technology rights becomes more complex for both sides. “Universities now understand the value of monetizing intellectual property,” says David S. Bloch, a partner at the international intellectual property firm Winston & Strawn. “But that also means there will be more disputes about who has the rights and who will make the money,” he says.
Certainly, prospective partners prefer to avoid conflict in their relationships. Most spend a lot of time selecting partners, reviewing both research topics and cultural rapport to find the best fit. At a recent company event, for example, BASF Executive Research Director Andreas Kreimeyer likened the selection process to choosing a life partner.
“Partnerships can be very valuable, so we spend a lot of time making the right choice,” he said. “It is not easy as we try to manage to row in the same direction.” BASF has more than 1,000 academic partners worldwide, and projects typically have a minimum term of five years.
Jürgen Janek, a professor at Germany’s Giessen University, is a research partner with BASF. He says the third-party funding he receives from BASF and other companies is an important resource for his research efforts but adds that the value of such interactions is deeper than financial.
“Partnership with a company includes a flow of knowledge in both directions,” Janek notes. “Not only do I help the company achieve its aims, but I usually learn a lot about a certain field and its economic boundary conditions.” He contrasts this with government funding, which offers valuable monetary support but no market feedback.
Janek participates in the lithium battery research network led by BASF (C&EN, Feb. 21, page 25) and is also the scientific director of a joint project between BASF and Germany’s Karlsruhe Institute of Technology that is focused on fundamental research on new battery systems. “We have smaller contracts with other regional companies,” he adds, “but only BASF can be considered a true partner.”
At Munich-based Süd-Chemie, academic partners provide a boost to the firm’s own technology development, says Hans-Joachim Müller, head of Süd-Chemie’s catalyst business. “The risk/reward matrix is completely different, so we allow ourselves to try avenues where the likelihood of success is reduced. And they often have a skill set that we do not have.”
Süd-Chemie recently announced a partnership with the Technical University of Munich in catalyst research (C&EN, Dec. 6, 2010, page 22). Under the agreement, the partners will target new catalysts for energy and basic chemical applications, with a focus on using carbon dioxide as a raw material.
The project is a 10-year, $28 million commitment for Süd-Chemie, which will get first option on any intellectual property discovered in the scope of the cooperation. The academic research activities will soon move to an $80 million building under construction at the school’s Garching, Germany, campus that will house the catalysis efforts of the chemistry, physics, and life sciences departments.
The Technical University’s Herrmann calls the company a “strategic partner” because “Süd-Chemie fits us so well. They are internationally active, they develop projects well, and they have the resources to support such efforts.” He adds that professors in the catalyst center can collaborate with other companies, but the projects are smaller and do not intrude on the scope of the Süd-Chemie activities.
Müller points out that the collaboration process is more challenging in the U.S., where Süd-Chemie has R&D efforts based in Louisville. “The large universities in the U.S. have tremendous negotiation power with companies,” he says, which is facilitated by national rankings that give the higher-ranked universities more leverage in bargaining.
Such rankings are less prevalent in Europe and typically do not cross national boundaries, but that is gradually changing.
“In the past, the federal system in Germany meant that there was not a lot of difference between the universities,” Müller explains, “but that changed recently when the elite universities were named.” In 2006, the German Federal Ministry of Research & Education announced a top tier of universities, which includes the Technical University of Munich, in an effort to encourage competition and improve quality at German universities.
Müller adds that these schools now get additional government funding, which is increasing the quality gap between them and other German universities. “The system seems to be moving to something much more similar to that in the U.S.,” he says.
This similarity extends to the complexity of writing contracts that define the relationships, a process that industrial and academic researchers find tedious. The preparation of research agreements can take several months to complete and requires multiple lawyers to define the scope of topics to be covered and the future allocation of intellectual property rights. And when research activities begin, each discovery must be reviewed to determine its value to the project participants.
For many academic researchers, it is the time spent, or seemingly lost, in this process that is the most frustrating. This fragile balance between reporting scientific breakthroughs to academic peers and capturing the commercial value of an invention creates tension on both sides of the Atlantic.
“It is always a concern that we do not get to publish our results fast enough,” Janek of Giessen University says. “The process of intellectual property checking often takes too much time,” although he adds that this has not been a problem with BASF.
The complaints in Europe are similar to those in the U.S. regarding the impact of the Bayh-Dole Act, says Guido Bünstorf, professor of economics at Germany’s University of Kassel. “Intellectual property rights management has become more difficult for firms working with university researchers.”
Despite the complexities and hassles, companies will continue these efforts because of their value. For DSM, external partnerships have been an important tool in its transformation into a life and materials sciences company, says Rob van Leen, the firm’s chief innovation officer. “The real breakthrough in technology is often done outside the company,” he notes, adding that DSM currently has hundreds of collaborations with universities and other partners.
The situation is similar at Clariant, where Chief Technology Officer Martin Vollmer has established the new position of innovation manager to oversee external relationships. He says the company “has an agenda to expand our academic network.”
Vollmer also points to “research clusters” as a useful means to boost innovation. The term can have many meanings, but Vollmer defines them as precompetitive R&D networks where companies have broad discussions on new research that is performed by a research institute. Partners can then choose to share in the intellectual property. “Such interactions clearly stimulate both the academic and industrial environment,” he says.
This type of network partnership is common in France, where interactions typically occur through research clusters instead of directly between a single company and a single university. Rhodia and Arkema, for example, collaborate closely with the Centre National de la Recherche Scientifique and Axelera on a variety of projects. These government-funded centers often act as intermediaries between companies and universities, providing the structure and contract support to facilitate the relationships.
The level of government involvement in university R&D is what makes the intellectual property rights environment in Europe different from that in the U.S., Bloch, the lawyer, says. “With government support being such a large portion of university funding, Europe does not have the same level of interuniversity competition for talented academics and private research dollars,” he explains. “But that is changing.”
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