Technology transfer may be all the talk on campuses these days as universities decide how best to spin off their intellectual property (IP) assets to fuel the knowledge businesses of tomorrow but Jim Cuddy (pictured) is already well versed in the practice. As head of Enterprise Ireland’s Technology Transfer Department, his team has negotiated some 400 technology agreements since the unit was established in 1991.
While the deals can take a variety of forms, from joint ventures and manufacturing pacts to technology collaborations and strategic alliances, the main focus of the department’s work is technology licensing. The licensing can work both ways — in as well as out — something that can easily be overlooked by companies that only see it as a way to make money rather than something that can strengthen their own technology base. Too many companies, he feels, do their own research and development (R&D) when sometimes it would make more sense to license another firm’s technology.
“Because the first thing most companies think of is R&D they’re missing a huge opportunity to either license it in or do both,” says Cuddy. “A lot of companies are doing both — they would develop part of it themselves and they would license part.
“[Nanotechnology firm] Ntera is a good example. Ntera had a basic technology itself but it bought in other technologies to attack different markets. It’s usually a cheaper and faster way of doing it; if someone’s already done it, you might as well take advantage of it,” he adds.
Unfortunately, Ntera is the exception to the rule. Of the €1bn spent on R&D by Irish firms in 2003, just 5pc — a paltry €50m — was spent licensing in technology.
Cuddy acknowledges there is a perception problem about licensing that needs to be addressed. “One of the problems is that licensing is seldom on a company’s agenda. It’s seen as a fairly specialist area. One of our jobs is to put licensing on more companies’ agendas,” he says.
Cuddy and his team are doing this by raising the profile of the services they offer. One in particular, TechSearch, is designed to create a technology match between what the client needs and what’s on offer from other technology firms. This is done in a number of ways, for example by trawling through online databases such as the EU-funded Innovation Relay Network in Europe (a leading technology transfer network in Europe with 3,000 technologies on it at any one time), putting out requests through the 30 EI overseas offices and consulting international private technology-transfer information services such as CorpTech and Dialog.
The process that EI goes through to locate that elusive piece of technology is methodical and exhaustive. It begins with understanding the client firm’s business strategy and how technology can support that. Then, a more detailed spec is drawn up of the technology required, which helps ensure the search team knows exactly what it is looking for.
“You’re looking at the physical and technical properties of the technology, you’re looking at the interfacing requirements, cost parameters, the regulatory qualifications and also what type of licensor we should be looking for — large or small. Companies tend to license from companies not too different from their own because they are scared of getting screwed by larger firms,” explains Cuddy.
How long does a search take? “You might be lucky and find the right technology in the first trawl through the database but the chances are it will take a bit longer than that. Two to three months wouldn’t be unusual.”
When the search is complete, EI prepares a shortlist of names and discusses them with the client. The client is then put in touch with a licensor and the licensing negotiation can begin in earnest. Sometimes the client will seek EI’s help in preparing the ‘heads of agreement’, which sets out such negotiation parameters as payment terms, geographical coverage and degree of exclusivity. “Part of our job is to ensure they don’t get screwed,” says Cuddy matter-of-factly.
On the licensing out side, Cuddy sees it as an underexploited model that firms could use to fuel export growth. He cites the example of Longford-based Butler Manufacturing, which develops small-scale sewage treatment systems. Instead of exporting large pieces of equipment it now licenses its manufacture to firms in overseas markets and generates export revenue that way.
“It’s an easier way to penetrate an export market rather than make the thing yourself and ship it over,” he points out. “The same applies to food. You could license your recipes or process technologies to companies in other countries.”
Although business-to-business (B2B) licensing is still the most popular type, two other types are starting to gain some momentum, as Cuddy explains: “B2B is currently the most buoyant but as the universities get better at commercialising technology that will be a good source in the future, as will multinationals. Companies such as Microsoft, Nokia and IBM are starting to establish IP ventures groups with a view to selling off their non-core IP. They’d have a raft of technology and the feeling is there’s no point in sitting on all of it. They can spin it off either through licensing or start-ups in which they would take an equity stake.”
According to Cuddy, the market sectors that have been most active in terms of licensing include engineering, food, medical devices and ICT. Still, Ireland and Europe as a whole are hardly trailblazers in this regard. “The US is much better at doing this than we are,” Cuddy concedes. “It tends to regard its IP as an asset and it is much more ready to sell it as a piece of IP rather than just a product. There’s certainly great scope among countries in Europe including Ireland to exploit that particular opportunity.”
Cuddy is convinced licensing is innovation’s best-kept secret – a chronically under-used resource that more companies would embrace if only they knew about it. “It’s just a matter of getting it on companies’ agendas.”
By Brian Skelly