Technology Transfer as a Means of Commercialising Technologies from Research Institutions - Please RSVP with Martha Robinson at MRobinson@csir.co.za.

On 17 April 2018, the CSIR will showcase its technologies to potential licensees or partners to commercialise these technologies. The CSIR is a world-class research institution that has accumulated a wealth of potentially valuable technologies and intellectual property rights through years of high-tech research. However, the fact that the CSIR is a research-minded and not a commercially-minded institution raises the question of how the technologies and intellectual property can be commercialised.

One of the most successful means of commercialising is technology transfer. This is the act or process of transferring technology or intellectual property from one organisation, transferor, to another, the transferee. The purpose of the transfer is for the receiving organisation to develop and commercialise the technology further. The transferor or licensor then receives payment or a share in commercial success.

There are a number of ways to transfer technology. They range from a simple license agreement to a cooperation arrangement, depending on the involvement or support provided by the transferor. If the holder of the technology wishes to have minimum involvement, a license agreement is appropriate; whereas if the holder wishes to be more involved, a joint venture, spin-off company, merger or joint development can be considered.

Although all models will be considered, institutions that focus purely on research, such as the CSIR, often favour the more hands-off approach of a license agreement. Although technical support can be provided by the licensor, the licensee is free to conduct its business as it sees fit.

The attraction of a license agreement for a research institution is the freedom to continue to invest and focus on its core function, research, while deriving an income as a return on its investment in research. Over the last three decades, research institutions have been increasingly expected to show a return on investment in monetary terms and not just academic prestige and research outcomes. This model has been implemented successfully by numerous research institutions and many are now financially self-sufficient. Knowledge and intellectual property are the biggest commodities of current times. 

Attractive technology is normally covered by patents. Patents are a good indication that the technology has novel and inventive aspects, giving it a potential commercial edge. In addition, the patents provide a monopoly of the novel and inventive aspects in the market to the licensee. License agreements provide easy, fast and low risk access to the market without the need to invest time and money into research. The licensor, as it is a research institution, can provide further technical support and continued research.

Each potential license situation is unique and license agreements can be negotiated and tailored to reflect the requirements of the licensee and licensor and take into account the value of the technology. The important point to keep in mind is that a license agreement is a long-term relationship, which needs to benefit both parties for the relationship to work.

A license agreement can be non-exclusive and the licensor can grant further licenses. If the license agreement is a sole license agreement, the licensor can use its own technology, but not grant any further licenses.  If the license agreement is an exclusive license agreement then no one, including the licensor itself, may use the technology. Since the latter is a bet on one horse, such an agreement will normally have performance targets attached to it.

An important term of a license agreement is the royalty rate, which depends mostly on the value of the technology to the licensee. It is important that the amounts payable can be determined easily to avoid disputes.

Other important terms that can be negotiated are the territory in which the technology can be commercialised, limitations on the field and types of use, as well as the time period of the license agreement.

License agreements and other ways of commercialising technologies emanating from research institutions can benefit both the research institutions and licensees greatly; the main challenge is finding a match. It is important for research institutions to market their available technologies and for technology driven companies to be aware of the available technologies that may fit in with their corporate strategy. The MSM Tech Day intends to contribute towards this goal.

Disclaimer: This article is contributed by the Author - Pieter Venter of Hahn & Hahn in his personal capacity. The views, thoughts, and opinions expressed in the text belong solely to the author, and not necessarily to the CSIR or Hahn & Hahn.