News & Views item - September 2006

 

 

Another Who Can See Beyond the Fringe of the Carpet. (September 27, 2006)

    In March last year Max Whitten former Chief of CSIRO's Division of Entomology wrote an open letter to the then Minister of Education, Science and Training, Brendan Nelson, which said in part:

May I suggest that you, and those advisers you draw upon for inspiration, read a paper delivered by Australian, Richard Newton, who is Dean of the College of Engineering at the University of California, Berkeley, to the Australian Academy of Technological Sciences and Engineering in November 2002: Intellectual property creation, protection and dissemination in University - Industry - Government research collaboration http://www.atse.org.au/uploads/Newton.pdf). The College of Engineering has created economic benefits worth trillions of dollars for the state of California, the United States and the world without depending on licence revenue as an indicator of good performance. How much better Australia would be if you could attract back to this country someone like Richard Newton to run an ailing institution like CSIRO, or to be Australia's Chief Scientist.

Some eighteen months later Gavin Moodie, higher education policy analyst at Griffith University in an opinion piece for The Australian's Higher Education Section has joined the plea for the Australian Government and our public universities to exercise some sense and allow universities' intellectual property to be made freely available with the exception of biotechnology.

 

For openers Dr. Moodie calls attention to the facts that "in 2004, Australian universities earned just 0.3 per cent of their revenue from royalties, trademarks and licences. The biggest Australian university earners of licensing revenue earned less than 2 per cent of their revenue from licences: Edith Cowan (1.6 per cent), Curtin (1.4 per cent), Deakin (1.3 per cent) and Flinders (1.2 per cent)." And by comparison US universities didn't do all that much better. "Licensing income amounts to only 4.2 per cent of research spending by US universities, according to the US Association of University Technology Managers."

 

Dr Moodie also points out what should be obvious but is usually overlooked by those urging the universities to go forth and profit from their intellectual property. "[O]f course licensing revenue isn't necessarily surplus or "profit". Commercialisation units are very expensive with their business development managers, intellectual-property lawyers and accountants.

 

"They also impose heavy indirect costs on researchers in explaining their research and its implications to intermediaries. This month The Chronicle of Higher Education reported that more than half of US universities consistently lose money on technology transfer. The enthusiasm of universities for commercialising their research was characterised as 'irrational exuberance'".

 

Dr Moodie invokes policy and management consultant John Howard's conclusion that, "researchers and research organisations will, except in very rare situations, earn more from being paid for their work (through contracts and consultancy) than from licences and royalties flowing from intellectual property or from income earned in spin-off companies," which of course gets into that other area of just what proportion of academics and researchers efforts should be directed to teaching and research for the public good and just what are the costs to a nation for having its universities preoccupied with pursuing applied commercial research.

 

Whether Gavin Moodie's view that the "structure of the biotechnology industry and its relationship with research make university patents for drugs and medical devices both sensible and profitable" is really in the best interests of the nation may be a moot point; he gives no data to back up the claim.

 

In any case he concludes with this practical policy: "I therefore suggest that with the exception of biotechnology, universities simply give away most intellectual property as a contribution to the general good. This could be subject to universities including in their intellectual property licensing agreements a standard "blockbuster" or "jackpot" clause. Should their intellectual property contribute to "blockbuster" revenues of, say, $50million over 10 years, there would be a sharing of revenue determined by a nominated commercial arbitrator."

 

What odds that he will be any more influential than Dr Whitten?