Research collaboration and commercialisation
6.1
Not all collaboration between industry or SMEs and the universities or VET should or will lead to commercialisation. However, the way university-industry collaborative successes are most acknowledged is through commercialisation. Commercialisation is one major way in which technology transfer – being the transfer of technology form its place of origination to wider distribution among people and places – occurs. Again, though, the Committee heard evidence of barriers to technology transfer.
6.2
The University of Sydney, whilst acknowledging their successful collaborations with private and not-for-profit industry partners, have:
…identified the following key internal factors that currently work against closer partnerships with industry, and in relation to the commercialisation of our research:
Sometimes weak researcher skills in industry engagement, commercialisation and entrepreneurship;
limited internal and external incentives for researchers to prioritise engagement alongside other research and teaching obligations;
an insufficiently clear, long term and well-coordinated university-wide strategy in relation to industry engagement and technology transfer, with current interactions being decentralised and not always interconnected;
limited dedicated resources for industry engagement and commercialisation, including spaces and funds; and,
limited visibility in relation to our successes in industry engagement and knowledge transfer.
To support fast technology transfer and rapid commercialisation, organisations require mature innovation practices. ON and the CSIRO Innovation Fund are two current CSIRO initiatives, supported by NISA, which illustrate how public sector organisations can take an active role in fostering entrepreneurship within the research sector. CSIRO developed the ON program to lift its own innovation performance and as a contribution to national innovation capability and capacity. With funding from NISA, CSIRO has delivered ON nationally to Australian universities and publically funded research agencies.
6.4
QUT points out that they are actively working with their:
…technology transfer company, qutbluebox, to build the portfolio of industry engagement, manage relationships, identify early potentially valuable intellectual property (IP), and undertake proactive business development activities.
6.5
In addition TAFE Queensland, in discussing technology transfer and intellectual property (IP):
…acknowledges the crucial role of the CSIRO and universities and works in partnership with them on innovative projects, for example a partnership with Griffith University to undertake a program of critical participatory action research.
6.6
The New South Wales Business Chamber submitted that broad adoption of Easy Access Intellectual Property (Easy Access IP) would increase the visibility of university research and make it easier for businesses to licence IP with a view to commercialising research. Universities who prescribe to Easy Access IP make a selection of their intellectual property available to companies to develop for free, using a simplified one page agreement.
6.7
The Chamber of Commerce and Industry of WA state that:
Intellectual property (IP) issues also continue to be an impediment, despite the fact that many universities have simplified their IP policies. Generally, there is no consistent approach to IP among Australian universities. One of the consequences of this disunity is that additional time and fiscal resources are required for industry to successfully engage. However, there are some excellent examples of well-regarded IP policies that could be identified as best practice, and these could be applied on a consistent and national basis. Such an option actually would be a simple reform possibility that could be implemented relatively quickly, with limited costs, and would achieve significant benefit.
6.8
Textor Technologies stated that:
… one of the key things is connecting the really good businesses with good universities and good students. The press for industry and for research has been bad, in a way, over the last few years. If we could create a critical mass of really exceptional stories, case studies, to demonstrate where things are going, then I think that would be very helpful…
6.9
The Australian Academy of Technology and Engineering (AATE) submitted that the Australian Government’s National Innovation and Science Agenda includes a commitment to introduce a new national metric to rank universities according to the impact of their research and the quality of their engagement with industry.
6.10
Having identified barriers to collaboration between universities and corporations and with a particular focus on technology transfer and commercialisation, the Committee considered how these barriers could be overcome.
6.11
Dr Matt Wenham of the AATE noted that it was important that academics involved with industry are recognised and not penalised for doing so:
…we and others have picked up, in the innovation agenda around metrics—and how academics, in particular, are measured—and moving away from simply measuring on traditional academic outputs, in terms of publications and citations—not to do away with that but also adding in metrics that look at engagement with industry or government or non-profit. This is so that there is an incentive for the academics who are inclined to do that sort of work to get recognition for doing that work and for those who want to move in and out of industry, as another example, to make sure that, at the very least, they are not disadvantaged for wanting to do that sort of work within the funding system and the promotion system.
6.12
The Engineering Institute of Technology’s submission remarked that, in engineering, lecturers ‘have often been hired for their research capabilities and academic aptitude’ rather than their industry experience.
6.13
The NSW Business Chamber noted:
In the publish or perish world, industry trained professionals can be discouraged from entering academia. Professional experience is not generally taken into consideration for promotions and many can be restricted from certain grant funding schemes because they do not have a previous track record in publications. This is a lost opportunity as experienced professionals can help to reduce the translation gap between industry and research.
6.14
Referring to the Australian Research Council’s (ARC) Linkage funding scheme the Australian Catholic University’s submission states that:
The Linkage funding scheme plays a vital role in facilitating collaborative research projects between higher education researchers and other parts of Australia’s innovation system, particularly industry. Linkage funding supports national and international partnerships between researchers and business, industry, community organisations, and other publicly funded research agencies.
6.15
Commenting on grants funding after the Watt Review the National Tertiary Education Union’s submission point out that:
The data show that there will be significant winners and losers as result of government agreeing to adopt the Watt Review recommendations. However, losses are limited by guaranteeing that each university will keep at least 95% of the grants it received in the previous year. The NTEU estimates that cost of the 95% rule (the difference between nominal loss and the actual loss) would be in the order of $16m in respect of support grants and $18m in respect of training grants. Our estimates is that this will be covered by the extra $127m of research block grant funding (over four years) and therefore is not discounted from the extra funding those institutions are paid.
6.16
Professor Arun Sharma from QUT told the Committee that QUT believes ‘that the policy settings, from the perspective of universities, now are right to engage with business, because there are the right incentives’ and that:
The Watt review basically gave us the incentive to now go out and work with business rather than just publishing papers in top journals.
6.17
The Australian Nuclear Science and Technology Organisation’s (ANSTO) submission explained that, as a Publicly Funded Research Agency (PFRA), they are:
…not eligible to directly apply for linkage grants from the ARC (or the National Health and Medical Research Council). If the eligibility rules were amended to allow PFRAs to apply for linkage grants, ANSTO could better support industry, and take on the role of an administering organisation.
6.18
ANSTO go on to state that:
The Scheme, as currently constructed, requires an industry participant to partner with a university for a project in order to be eligible for a grant. In cases where the industry participant then uses its partnership with a university to access landmark research infrastructure operated by a PFRA like ANSTO, the university partner often acts as a superfluous broker. The rationale for excluding the PFRAs from Linkage Grants has been that PFRAs already receive government funding. However, given that the bulk of university research activities are also already funded by government through block grants, it is clear that this principle is not consistently applied.
6.19
ANSTO suggests that:
…a review of the eligibility rules for the Linkage Grant Scheme could result in increased opportunities for PFRAs to engage with industry. This is especially the case in instances where PFRAs are the custodians and operators of landmark research infrastructure, which can deliver great benefits to industry.
6.20
Pfizer, a manufacturer and provider of prescription medicines, consumer health products and vaccines, submitted that:
[C]ompetitive grants are often awarded to research projects that do not necessarily align with market needs. This can ultimately lead to research outcomes that create solutions for problems that may not exist for the end-user. In short Australia needs a greater focus on industry-guided research to create an environment based on market pull and pull-through.
6.21
Two suggestions that Pfizer make are as follows:
Requiring that grant review panels include industry representation: If the intent is for commercial translation to occur, then the ultimate end-users should be advising on or assessing applications to ensure that the proposed research plans will lead to outcomes that align with market needs and expectations.
Tying funding for specific research grants to industry/consumer collaboration: For example, Singapore's Agency for Science, Technology and Research requires that recipients of research grants secure an industry partnership before receiving the full amount of funding awarded in their grant.
6.22
In discussing Singapore’s approach mentioned above, Pfizer state that it could be:
…modified domestically for Australian Research Council (ARC) or National Health and Medical Research Council (NHMRC) grants by, for example, (a) withholding the last 20 per cent of an awarded grant until the researchers can demonstrate that they have end-user engagement; or (b) offering a 20 per cent premium on top of the awarded grant for researchers who pursue genuine end-user engagement/ collaboration.
6.23
When asked if there should be industry representatives deciding where grant money goes Ms Catherine Eibner, General Manager of Start-ups, Blue Chilli was reticent explaining that:
I have to say, when I have worked with PhD students, the conversation with them on thinking about how to monetise an idea versus how to apply for more grants is very, very difficult. Some of them have fantastic ideas that could make a lot of money, but they are in that ecosystem and quite safe in their PhD grant world. To break them out of that and have them thinking about how they are going to sell this, how they are going to make money, is a big paradigm shift for them, and that is a challenge.
6.24
However the focus here is on grants for research that can be commercialised and, as Mr Steve Fanale, Chief Executive Officer of Drive Yello put it, ‘not everything is about making a business out of it.’
6.25
Indeed, commenting that the average pay back time for ‘deep research’ is 17 years, Mr Patrick Woods, Deputy Vice-Chancellor and Vice President, Resources, University of Technology Sydney said that most of the time deep research is ‘not commercialisable (sic) because it is leveraged for other discoveries.’
6.26
Whilst there is some evidence of problems, such as those mentioned by ANSTO, and suggested recommendations, such as those by Pfizer, the bulk of evidence to the Committee suggests that the Australian Government policies and programs around research grants are working towards the university-corporate collaboration and technology transfer that Australia needs for the future.
Intellectual property
6.27
Securing intellectual property (IP) is vital to capturing the value of innovation. Without appropriate recognition and legal protection of IP an innovative idea can be copied without monetary gain flowing through to the original innovator.
6.28
The Australian Government IP website states that:
Applying for an IP right to protect your idea can be critical if you want to build a business and establish your presence in a market.
As stated by Craig Venter, a geneticist and one of the first scientists to sequence the human genome, 'intellectual property is a key aspect for economic development.'
6.29
One particular example of the importance of IP is the ‘Flow Hive’. Australian inventors created a honey bee hive where honey could be accessed by a tap at the front of the hive allowing honey to be collected in jars. This invention took a decade to develop and represents the first modernisation in the way beekeepers collect honey. The company recently discovered an alleged copycat brand and will have to defend its market position via IP law.
6.30
The Committee heard that capturing and protecting IP can often be a challenge, particularly when industry and universities collaborate.
6.31
Professor Richard Strugnell, Pro Vice-Chancellor Regional, La Trobe University, explained that there is no consistent national approach to IP across the tertiary sector:
IP arrangements across the higher-ed. landscape vary considerably. At our university, PhD students usually do not own their intellectual property because the university when it subscribes to a Category 1 grant—an NH&MRC or ARC grant—has to assure the government that it can control the IP, and so the IP is necessarily taken from the student by default to the institution. Students not working on Category 1 grants are often in this grey zone. I think there is an opportunity to regularise things across the country, if it is possible, in the area of intellectual property generated by students. If we had students here, they would have a different understanding perhaps to us of what those arrangements are.
6.32
In their submission Ai Group observed that:
Often businesses seeking relationships with Australian universities find themselves immediately drawn into long and complex IP negotiations, with universities insisting on ownership and licensing arrangements that make business participation unattractive.
6.33
The Chamber of Commerce and Industry WA said the inconsistency in IP arrangements across the tertiary sector means industry must dedicate significant time and resources to successfully engage in collaborations.
6.34
La Trobe University noted that researchers who do not retain the IP they generate may still commercialise their research by reaching agreement with their university to pursue a spin-off company independently.
6.35
However, the Committee also heard that even without the complexities associated with collaboration with universities, the high cost of securing IP can be prohibitive for small businesses and start-ups.
6.36
For example, Ms Hynes reported that the cost of maintaining IP can be difficult, particularly with the prevalence of patent troll litigation in international jurisdictions, such as Texas in the US.
6.37
Ms Hynes explained that patents exist to protect the rights of inventors and allow time for them to refine their products. Patent trolls are companies which buy patents with a view to extorting money (via litigation) from businesses who use the patents to manufacture things.
6.38
University of Melbourne Commercial said that industry likes to own the IP generated through collaboration with universities and uncertainty is not tolerated:
…it is a black and white issue: you either own the IP or you don't do the work. …it needs to be clear and simple in terms of ownership of the IP, and any confusion or muddying of the waters in terms of students or researchers owning a proportion of the IP is a red flag.
6.39
Pfizer said that it is critical that IP is negotiated at the beginning of collaboration, so that ownership is clear.
6.40
Universities Australia suggested that that Easy Access Intellectual Property (Easy Access IP), developed by the University of New South Wales which has been adopted by six other universities could be adopted more broadly to improve IP arrangements.
6.41
Easy Access IP enables universities to make IP available to industry quickly and for free using a one page agreement. Universities Australia said that universities are using Easy Access IP to disseminate IP which is difficult for them to commercialise because it is at an early stage of development.
6.42
There are four fundamental, aligning principles of Easy Access IP institutions:
1
Easy Access IP believes that Universities exist to create and disseminate knowledge. We aim to maximise the rate of dissemination through knowledge exchange.
2
Easy Access IP’s purpose is to create impact from university research outcomes as opposed to monetary aims.
3
Easy Access IP wants simple transactions and agreements which make it easier for industry to work with us.
4
The Easy Access IP agreement is the beginning of a collaborative relationship, not the end of a knowledge exchange process.
6.43
In return for free access to real world, excellent relevant research and IP, Easy Access IP ask their licensees to;
demonstrate how they will create value for society and the economy;
acknowledge the licensing institution as the originator of the intellectual property;
report annually on the progress on the development of the Easy Access IP;
agree that if the IP is not exploited within three years, the licence will be revoked; and,
agree that there will be no limitations on the licensees use of the IP for the university’s own research.
6.44
Professor Attila Brungs, of the University of Technology Sydney (UTS), noted that participating universities are making 70 to 80 per cent of their IP available through Easy Access IP.
6.45
The Australian Mathematical Sciences Institute (AMSI) has also developed simplified IP arrangements. AMSI uses a single contract for IP based on Canadian best practice. The contract enables universities to retain the background IP for educational and research purposes and allows companies to secure project IP and licence the background IP for commercialisation purposes. Professor Prince of AMSI noted that this contract has been successfully used over 100 times to date.
6.46
The Department of Industry, Innovation and Science has partnered with IP Australia to produce an IP Toolkit for Collaboration, to simplify and improve IP negotiations between researchers and universities. The Department of Education and Training noted that they are:
…working with relevant agencies to develop a response to the recommendations regarding providing access to publically funded research in the Productivity Commission (PC) Inquiry into IP arrangements released publicly on 20 December 2016.
6.47
The report of the Productivity Commission’s Inquiry into IP Arrangements, as mentioned above, was released publicly on 20 December 2016. The Overview of the report stated:
The goal of IP policy should be to achieve a balance between the incentive to create and the risk of damaging the productive use of new ideas through over-protection, while also recognising that Australia’s IP arrangements form part of a global system. With the overarching objective of maximising community wellbeing, the Commission has identified four guiding principles that the IP system should embody — it should be effective, efficient, adaptable and accountable…
6.48
Professor Attila Brungs, of UTS, warned that Australian Government reform of IP must be consistent with its National Innovation and Science Agenda (NISA). He claimed that if the Government incentivises universities to undertake commercialisation through targeted grants, or by other means, it may discourage them from making IP available via Easy Access IP or discourage other universities from adopting Easy Access IP:
I am giving away IP, yet a new thing has come out where measures give me money as a university depending on how much I commercialise. If I give the IP to Pfizer and they make $1 billion and employ 10 million Australians, that is fantastic. But, if I made $1 million, I would actually get $500,000 from the government. If that were my only driver—there are all these other drivers—I should do the second; I should not do easy access IP; I should not have my standard IP approach, which is that industry owns the IP. I take that approach because universities are public institutions and that is the right thing to do for public institutions. The taxpayer has already paid for it once. I believe it should be out in industry. But there are still inconsistencies in even government policy, where I get measured on how much money I make from commercialisation of my IP and I get rewarded for that, and then I reward my academics for that.
6.49
The Committee heard that any reform of research grants and funding to promote commercialisation outcomes must be done in a manner consistent with intellectual property (IP) reform.
6.50
Mr Jonathan Brinson, Executive Director, The Warren Centre for Advanced Engineering stated:
…that a national intellectual property strategy needs to be written into NISA 2.0 about what the nation of Australia wants and how the nation of Australia will commercialise more IP, create a higher patent productivity and look at the variety of innovation activities.
6.51
Speaking about issues in terms of obstacles regarding IP arrangements with collaboration between universities and the business sector, Mr Tony Wheeler, Director of the Imagine Consulting Group, stated that:
There is a difference in mentality. I will give you a very quick example of this. I think you talked about health before. When Life Sciences Queensland was originally set up, I was the facilitator who set up that ecosystem. We worked with the likes of the universities, the pharma groups and everything else. It was interesting. We did this exercise right on day one. It was about mapping out an ecosystem, mapping out the stakeholders and getting everyone to talk about their perspectives, where they were coming from and what was going on.
In terms of the IP conversation, we then had a very explicit cultural divide created in the room. One group got together saying they could do this in the space of five minutes and another group said they really did not know how to do this. The group that got together and sorted out their IP issues in literally five minutes and said, 'We can actually do this. This is our common IP. This is unique. We could combine these manufacturing resources and save $10 million in the first 12 months' was the three CEOs of the largest pharma and nutri companies.
The ones that struggled the most were QUT, Griffith and UQ standing next to each other, because at that stage—and this is what you keep saying is changing now, which I think is fabulous; it needs to—the competitive nature of their culture and their competition for research funding through ARC and other grants created a scarcity mentality.
For them it is not this, 'Let's go and create more business,' and there is an abundance. In the research world, if you are relying on government funding, we are all largely competing for the same dollars, so any dollar that goes to QUT, does not go to UQ, does not go to Griffith et cetera. Eventually they ended up doing the first combined health submission to government and got a significant grant, but just watching that cultural divide was really quite significant.
6.52
IP and research commercialisation processes go hand in hand. It is important that reforms to grant processes, including those through NISA, and reforms of the IP system must be done in a way that is consistent with the need for commercial success and with an acknowledgement of universities as public institutions.
Committee comment
6.53
The Committee notes the evidence it received from ANSTO explaining the challenges it faced as Publicly Funded Research Agency (PFRA) who is not eligible to directly apply for linkage grants from the ARC (or the National Health and Medical Research Council).
6.54
In addition, the Committee considered the two suggestions mentioned by Pfizer. That of including industry representatives on all panels which award funding for scientific research and the suggestion that grant recipients are provided with additional funding of 20 per cent of their original grant if they can demonstrate they are collaborating with industry to commercialise their research.
6.55
The Committee is conscious that not all research can lead to commercialisation and feels that placing an undue emphasis on commercialisation could create a situation where important ‘deep research,’ as mentioned above, could be overlooked or lost. This would be most undesirable.
6.56
The level of funding for start-ups in Australia is concerning. In the absence of a vibrant venture capital market such as in the United States the government must step in. The Committee is heartened by government funding for venture capital via initiatives such as the CSIRO Innovation Fund and the tax benefits for investing in start-ups via Venture Capital Limited Partnerships (VCLPs).
Mr Andrew Laming MP
Chair