From IP to NP, Day One: Part 2

After the refreshment break the conference broke out into three parallel sessions

1 (for senior management and stakeholders) Commercialization of Know-How and IP Rights: The Role of the Government, Academia and Industry  

2 (for entrepreneurs) The Role of IP in Seeking and Securing Investments from Angels, Capital Ventures and Private Equities  

3 (for IP professionals) Copyright and the Future of Open Source [it is hoped to receive a note on this session, which will be posted on the 1709 Blog]

This Kat opted for session 1, chaired and moderated by Einat Zisman (CEO, Hadasit, Hadassah's Technology Transfer Company).

First to speak was Sean O’Connor (University of Washington School of Law) on "Managing know-how in global value chains and international technology transfer".  Professor O'Connor gave a run-down on the differences between "know-how" and "show-how" (things you can't learn immediately by reading a document, but have to be practised a bit: psychologists call this 'procedural knowledge' in contrast with 'declarative knowledge": a good example is riding a bicycle).  How do you assess what show-how you have, how to protect it and so on? The answer is the use of non-disclosure agreements (NDAs). Effectively you behave as though you have a trade secret which you're disclosing, even though it isn't.  Properly the agreement should be for non-disclosure and non-use (NDNUA).

Recipients are often unhappy to accept NDNUAs, since they may already have some idea of the disclosed subject matter and/or may spark off some fresh ideas of their own that are caught by their terms.  Marking of disclosed documents goes some way towards protecting both parties, as is the sequential disclosure of elements of the show-how, after each element of which the engineers involved are debriefed.  Non-compete agreements, where enforceable, may circumvent the problem rather than resolve it.

What would be useful would be for disclosures of this nature to be analysed in different fields of technical application, giving shared labels to their features and enabling these practices to be more easily understood, compared and standardised. This would make international technology transfer more effective too, since developing countries could be more effectively shown how to use technologies that are theoretically available on paper.

Professor O'Connor's new book, Methodology and the Means of Innovation, will be published by Oxford University Press next year.

Moving from the legal/theoretical to the practical, Yaacov Michlin (President & CEO of Yissum, the Technology Transfer company of the Hebrew University of Jerusalem) then spoke on "How to optimize collaboration between Academia and Industry - the IP perspective".  Yaacov surprised us all by opening by responding to Daniel Zaifman's earllier comments, explaining that it was actually the Hebrew University that was the biggest, best and brightest institution in the locality when it came to research, development and plenty of other things besides, cautioning the Weizmann Institute that "you can't just sit back and let other people take your patents".  Yissum's current productivity and pipeline, as well as its track record in setting up start-up companies, is certainly impressive.

Yissum: where researchers and industry are encouraged to meet

In contrast with the Weizmann Institute, Yaacov emphasised the need for academia and industry to feed and cross-fertilise one another on a positive, proactive basis. It was effectively part of the educative process of both, and made each more amenable to the needs and interests of the other.  However, Yissum believes that it's important to file for at least provisional patent protection or signing an NDA before its researchers speak with industry.  The dangers of "not invented here" syndrome were also adverted to.

"Money is not everything", Yaacov warned, "and it is best put to use in building the university's infrastructure". Without the necessary facilities, it is difficult to expand applied research activities at university level.  Publications aren't everything either, he added, though academics are often unaware of most recent achievements in industry which may affect their applied research.

Regarding patents, cost was always a critical element: without industrial support, a sufficiently broad base of international filings would not be achieved and there was always the concern that an industrial partner might withdraw its financial support.  Perhaps an extension of Patent Cooperation Treaty filing times could go some way towards ameliorating this position.

Eli Baran (Head of Communication & Electronics Sector, Office of the Chief Scientist, Ministry of Economy) then addressed "Regulations and policies regarding the transfer of industrial and academic know-how", explaining that he was complementing Yaacov Michlin's talk, speaking on project funding in the context of academe/industry cooperation.  The Office of the Chief Scientist (OCS) allows transfers of knowledge within Israel on a more or less unrestricted basis but, where global collaboration and knowledge transfer is involved with respect to OCS-supported knowledge, where it is permitted there will always be a cost. The basis rule of ownership, where an OCS grant is received, is that the IP is owned by the recipient while the OCS will take a royalty on product sales following commercialisation.

"We need to open a hole in the wall of regulations", said Eli, when asking how a new and better approach to the outward transfer of technology is concerned.  He then explained in outline the new scheme for facilitating the transfer of technology on an easier and more open basis, particularly where there was a project inward flow of technology of equivalent value (however that might be achieved).  In 2012 the payment back of royalties in respect of exported technology was capped at six times the amount of the grant funding plus interest, to establish an element of commercial certainty.  Where a business acquiring Israeli R&D know-how is still going to be trading in Israel, the cap is fixed at a more generous three times the funding sum.  An exemption from payment may be established where the acquiring party grants an exclusive licence to use the technology back to the Israeli party.

The OCS, Eli summarised, started with a rigid policy of preserving know-how domestically, but has now moved to a far more flexible position, seeking to balance the needs of government, academe, early starter companies and technology transfer recipients.

Last to speak before lunch was Aharon Schwartz (Consultant, former Head of Teva Innovative Ventures), on the topic: "From IP to NP a call for a new paradigm". Conscious of the conflicting needs to reduce our craving for calories but to provoke us into some sort of response, Aharon launched instantly into the issues of innovation drought, shorter protection terms, high risk and uncertainty.  In 2012 the number of new drug approvals jumped to 40, suggesting that the drought was over, but only 15 of them actually targeted new modes of action; the others are only "more of the same" and in reality only 2 of them have the potential to treat more than a few thousand patients.  This happens at a time when evergreening of pharma patents persists, with the result that IP is being misused. Even if a patent carries on, there is still no guarantee of market exclusivity, especially when in the US some 75% of pharma patent actions fail.

What can be done about this? The answer is a new paradigm, disconnecting totally the notions of patent protection and marketing exclusivity (MA), which should be conferred on the first developer to get a product approved in a territory, leaving the patent owner with royalties.  The exclusivity should be for 12 years for drugs conferring significant improvements on a scale going down to three years for those conferring a minimal incremental improvement.  Compulsory licence mechanisms with ensure that the IP is most efficiently and economically commercialised in the market; competition will be enhanced and many of the problems identified above would be resolved.

Sean O'Connor was then invited to conclude this session. He observed that, in the US, "know-how" tends to refer to something that exists outside patents while, in Israel, it tends to include that which exists within them as well.  He also wondered whether, once you divide the patent system up by having different rules for pharma products, would the system then be subdivided into different regimes for different species of pharma innovations?