RIRDC COMMERCIALISATION OF INTELLECTUAL PROPERTY
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This document sets outs out RIRDC’s policy in relation to the commercialisation of intellectual property in RIRDC sponsored research. Within the range of uptake mechanisms, it specifically looks at when and how research outputs funded by RIRDC should be commercialised. There are many ways in which RIRDC sponsored research can be adopted. This policy recognises that commercialisation is only one means by which research outputs may be managed, and that uptake and adoption may be maximised through means other than commercialisation. |
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[1] TEN PRINCIPLES
1. In all cases, RIRDC will manage research outputs in such a way as to maximise the benefit to its stakeholders. In some cases this will be achieved through commercialisation of research results.
2. RIRDC will proceed on the basis that if research results are commercialised it will own a share of the IP. This share of IP ownership will be agreed by all parties when projects are contracted.
3. Commercialisation will be implemented when it provides faster, more sustainable or more practical avenue for making new products, processes and services available to RIRDC’s primary stakeholders.
4. The primary objective of commercialisation is not to raise funds for RIRDC. Rather RIRDC’s goal is to maximise the uptake and benefits flowing from its investments in rural research. The aim is to make new technologies available to stakeholders as quickly and as cost-effectively as possible.
5. Research must be managed on the basis that it may generate valuable intellectual property. That is, appropriate arrangements need to be made to ensure that the research is placed in a format so that it is capable of being protected
6. RIRDC recognises that other organisations are often better placed to commercialise intellectual property than RIRDC. RIRDC will therefore not be directly involved in the process of commercialisation, other than in exceptional circumstances
7. Decisions about the terms under which the commercialisation will proceed will be made on a case by case basis, drawing on the principles set out here.
8. When commercialisation is identified as the appropriate adoption mechanism prior to the execution of a Research Agreement, a process to define a strategy, a lead agent and a timetable for commercialisation will be included in the Research Agreement.
9. RIRDC undertakes to ensure that all staff who may be involved in the creation, identification, protection or management of intellectual property are properly trained.
10. RIRDC will ensure that its research partners have adequate intellectual
property policies in place and that their staff have been properly trained.
This document sets out RIRDC’s policy in relation to the commercialisation of intellectual property. It looks at when and how research outputs funded by RIRDC should be commercialised. It aims to ensure that RIRDC’s position on this important topic is clear and transparent. The policy formulated here takes into account a number of important factors, in particular:
- RIRDC will commercialise research outputs where commercialisation provides the greatest benefits to its stakeholders. RIRDC acknowledges that the interests of stakeholders will vary from project to project. It is therefore not advisable to dictate in advance factors such as the percentage of projects that ought to be commercialised. Nor is it advisable to dictate the terms under which the commercialisation will proceed. Rather, such decisions should be made on a case by case basis, drawing on the principles set out in this document.
- RIRDC acknowledges that decisions about if, when and how research outputs should be commercialised need to be considered within a broader research management framework.
- RIRDC recognises that intellectual property management is an essential adjunct to the core business of the Corporation and that it must be aligned with RIRDC’s other core activities.
- RIRDC recognises that the involvement of partners in research projects is often highly desirable as it helps to share risk and can bring together parties with different skills and expertise. RIRDC therefore recognises that in many situations it will invest in a research project alongside other research funding bodies.
- Because of this, RIRDC accepts that it will need to take account of the interests of other researcher providers. In particular, RIRDC recognises that co-investors in research projects may require appropriate returns in proportion to the risk involved. The principles set out in this document are designed to be flexible enough to satisfy and to balance the interests of all members of the research project. At all times, RIRDC’s overriding concern will be the interests of its stakeholders.
In thinking about when and, if so, how research results funded by
RIRDC ought to be commercialised, two apparently divergent considerations
were taken into account. On the one hand, private sector investors
will normally want to focus on investments where there is some degree of
exclusivity about the output. However, as the levy revenue that partially
funds the research comes from all industry participants, there is a legitimate
expectation that industry participants have some access rights to the research
outputs that they fund, and that exclusivity to a particular private sector
investor which unnecessarily restricts access to the research outputs calls
into question why they put funds in the first place. In order to manage
these conflicting demands, RIRDC will ensure that the needs of levy providers
are considered when research results are commercialised.
[3] COMMERCIALISATION
To determine when and how research outputs funded by RIRDC should be commercialised, this document addresses three questions:
- Under what terms will the research be commercialised?
To optimise the benefits to its stakeholders, RIRDC will manage research outcomes with a view to making them as widely available as possible. The outputs from some research projects funded by RIRDC will be made freely available to stakeholders (and the general public). RIRDC will only agree to commercialise research outputs from projects in which it invests where commercialisation will provide the greatest benefits to its stakeholders. That is, commercialisation will be implemented when it provides the fastest and most practical avenue for making new products, processes and services available to RIRDC’s primary stakeholders. To the extent that commercialisation increases the availability of products and services to stakeholders, this will also help to ensure that stakeholders recognise the value and benefit of RIRDC sponsored research. It will also contribute to social and economic prosperity. While it is envisaged that the commercialising partner will usually be a private sector organisation, there may be some situations where this will not be the case.
The primary objective of commercialisation is not to raise funds for RIRDC. That is, the focus is not on income generation for RIRDC. Rather RIRDC’s goal is to maximise the uptake and benefits flowing from its investments in rural research. The aim is to make new technologies available to stakeholders as quickly and as cost-effectively as possible.
Ensuring that commercialisation is possible
It is impossible to predict in advance whether a particular research project may give rise to valuable intellectual property rights. To ensure that such rights are not lost, research must be managed on the basis that it may generate valuable intellectual property. That is, appropriate arrangements needs to be made to ensure that the research is placed in a format so that it is capable of being protected, if this is the route that is eventually adopted. RIRDC acknowledges that this may have a negative impact on the research culture that RIRDC depends on. RIRDC will therefore undertake to review and monitor the impact of this policy (see section [4] below).
In order to prevent potentially valuable intellectual property rights from being lost (for example through prior publication), it is important that research for which a commercialisation route is appropriate is identified as early as possible. To this end, RIRDC will establish procedures that identify research that may be suitable for commercialisation. This will include intellectual property from planned research (which should be identified at pre-project stage). Invariably, unexpected research results will arise after a project has started. As such, RIRDC will establish mechanisms to monitor the progress of research and the communication of results throughout the duration of a project.
Deciding whether research should be commercialised
Once research that
is potentially suitable for commercialisation has been identified, RIRDC
must decide whether it wishes to commercialise the research. Decisions
about whether research outputs should be commercialised will take account
of the following principles:
- RIRDC will only commercialise research outputs where this provides the greatest benefit to its stakeholders. For example, research will be commercialised when it provides a quicker, more sustainable, or more practical avenue for making new products, processes and services available to RIRDC’s primary stakeholders.
- Where research is also funded by organisations other than RIRDC, RIRDC will take account of the interests of other researcher providers. Such interests, however, will not be allowed to adversely affect the interests of RIRDC’s primary stakeholders.
- Where it is decided that it is not suitable for a particular research output to be commercialised, the research will be managed in a way that maximises uptake and adoption rates. In some cases, this may mean that the research will be placed in the public domain as quickly as possible. When possible the research will be published in a way that fully discloses the research outcomes so that third parties will be unable to procure a monopoly over any substantially identical outcome. In this way public access to research outputs will be maintained.
Once it has been decided to commercialise RIRDC sponsored research, it is necessary to determine the extent to which RIRDC wishes to be directly involved in the commercialisation process.
RIRDC will only be directly involved in the process of commercialising research results in exceptional circumstances, where it provides the greatest benefits to stakeholders. RIRDC will operate on the principle that other organisations are often better placed to commercialise intellectual property than RIRDC. This is because they are more likely to have the necessary skills in relation to marketing, production, and finance. This will also help to ensure that resources and time are not diverted away from RIRDC’s core activities.
A key factor in the successful commercialisation of research will be the identification of suitable commercial partners. RIRDC recognises that it will need to set in place mechanisms to alert and attract potential partners. This will done in such a way that protects intellectual property in the project.
[3.3] Mode of Commercialisation
In considering the way research is to be commercialised, RIRDC acknowledges that:
- The benefits to stakeholders will vary from project to project. As such, it is not advisable to dictate in advance the mode of commercialisation nor the terms under which the commercialisation will proceed. Rather, such decisions should be made on a case by case basis, bearing in mind the overriding interest of the stakeholders and the principles elaborated here.
- The mode of commercialisation will vary from project to project.
- The more control that the Corporation retains over the commercialisation process, the greater the obligations and potential cost that it will have to bear.
- RIRDC’s involvement in the commercialisation process and the mode of commercialisation will be determined by reference to the relative benefit to stakeholders.
When negotiating terms with commercialising partners, RIRDC will be
guided by the following considerations:
- Freedom to operate: One of the potential problems in transferring intellectual property rights to third parties is that it may mean that RIRDC (as well as RIRDC funded researchers) may find themselves in the unfortunate position whereby they have to pay a licence fee to use products or services that were initially funded by RIRDC. To ensure that this does not eventuate, when transferring intellectual property rights for the purposes of commercialisation, RIRDC should retain the relevant rights to use the technology for research purposes. That is, it should ensure that it retains the freedom to operate.
- Non-Performance: Another potential problem that needs to be planned for is the situation where the commercialising partner either fails to perform or performs inadequately. There may a number of reasons for this, including mismanagement or financial difficulties. A company may seek a licence from RIRDC as a way of protecting pre-existing intellectual property or technology that they control. Given this, in negotiating transfer of research outputs RIRDC will establish minimum performance indicators. RIRDC will also seek to retain the ability to reallocate or renegotiate the licence if the performance by the commercialising partner is deemed to be unsatisfactory.
The mode of commercialisation will be decided on a case-by-case basis in light of the principles outlined in this document. They will also be guided by the following considerations:
Assignment: An outright assignment of rights to a commercial partner will only be considered in exceptional cases. This is because an assignment would result in RIRDC losing the ability to control how the research is used and developed. Where this occurs, RIRDC could not prevent the intellectual property from being exploited in a way that prejudices the interests of its stakeholders. Nor would RIRDC have any right to seek a new partner should the assignee fail to exploit the research. RIRDC will therefore only assign rights in research where it can be confident that the interests of its stakeholders will not be adversely affected and where the financial risk is such that a commercial partner could not reasonably be expected to agree to anything less than an outright assignment. If such a situation should ever arise RIRDC may still impose conditions as to reassignment.
Exclusive licence: In many cases, it will be appropriate for RIRDC to enter into an exclusive licence with the commercialising partner. It is expected that exclusive licences will be attractive to commercial partners. Exclusive licences will also be attractive to RIRDC because they will make the process of monitoring exploitation much less complicated. Where an exclusive licence is granted, it would be expected that the commercialising partner would pay a royalty or dividend for the use of the intellectual property. In addition the commercialising partner will have to market, distribute and service this technology on terms that will safeguard the interests of stakeholders. RIRDC will also normally reserve the right to bring the licence to an end if the partner fails to perform or performs inadequately.
Non-exclusive licence: In other cases RIRDC will consider entering into a non-exclusive licence arrangement with the partner responsible for commercialisation. In general the commercialising partner will pay a royalty fee or a dividend in return for the right to use the invention or other research outcome. A non-exclusive licence will often be less attractive to the commercial partner, but there may be cases where the partner would be happy to accept this type of arrangement. From RIRDC's perspective a non-exclusive licence will be attractive where it increases the rate of uptake of a new technology. RIRDC will take into account the increased difficulty in monitoring arrangements where there are a number of different partners simultaneously exploiting the same technology.
Equity partnership: Instead of assigning or licensing the intellectual property rights for an initial licence fee and a royalty payment, RIRDC may consider taking an equity share in a licensee company or a start-up firm. The primary advantage of this is that it offers RIRDC the possibility of maximising its revenue stream. It runs up against the problem, however, that it exposes RIRDC to greater risk. It may also give rise to the problem (actual or perceived) that RIRDC is in competition with organisations very closely connected with its stakeholders. For these reasons, it is envisaged that RIRDC will only pursue this mode of commercialisation in exceptional circumstances. Before adopting this approach RIRDC will undertake a comprehensive risk assessment and will closely monitor the commercialisation process. Decisions on equity participation will require Board approval.
[4] IMPLEMENTATION: TRAINING AND REVIEW
RIRDC will review existing processes, documentation and procedures to ensure that they comply with and compliment the principles outlined in this document. RIRDC will undertake regular reviews of the impact and effectiveness of these policies. RIRDC will also undertake regular reviews of the impact and effectiveness of its commercialisation policy. The review will place RIRDC's commercialisation strategy in the context of its effect on RIRDC's overall aims and objectives. In order to be able to assess whether these policies are effective, RIRDC will develop criteria against which the effectiveness of the policy can be evaluated.
The success of this commercialisation policy will depend on the skills and expertise within RIRDC in relation to intellectual property. The level of expertise needed will differ depending on the role played by the individual in question. For example, in making strategic decisions about Research Priority Areas, the RIRDC Board will need to be aware of current and future trends in intellectual property. To identify and evaluate potentially valuable intellectual property, Project Managers will need to have a solid and up-to date understanding of the basics of intellectual property. They will also need to be able to identify research that may be commercialised. To the extent that Project Managers act as a point of contact between RIRDC and researchers, they will also need to be able to ensure that valuable intellectual property is not lost, for example, through early publication. RIRDC acknowledges that intellectual property training is an essential component of intellectual property management. RIRDC undertakes to ensure that all staff who may be involved in the creation, identification, protection or management of intellectual property are properly trained. Given the speed with which intellectual property law changes, RIRDC will ensure that staff are regularly updated on relevant changes.
RIRDC will develop detailed guidelines that expand on the principles set out in this document. These guidelines will spell out how the principles outlined in this document are to be implemented. They will also provide guidance as to key aspects of intellectual property law and practice relevant to RIRDC and be included in the Quality Assurance Manual of the Corporation.
