Academic Research, IP Creation
and Commercialization of Research
Output in Malaysia: Challenges and
Prospects
Ida Madieha bt. Abdul Ghani
Azmi
Civil Law Department
Outline
• IP as a tool for wealth creation
• Universities’ IP and their role in
wealth creation
• Policy instruments on IP
• Internal IP Policies
• Strategic use of IP
IP AS A TOOL FOR WEALTH
CREATION
What is intellectual property?
• “Intellectual Property can be
defined as information that has
economic value when put into use
in the market place”
Innovation cycle
Profit/
Reward
Human
Intellect
Innovation/
creativity
IP as developmental tool?
• Strong link between innovation and economic performance
• Competitive edge shifts from production-based to knowledge based
• Value of physical assets (decreasing) vs. intangible of assets (increasing)
• Increasing importance of knowledge-intensive businesses as technology and the product life cycles are shorter
Innovation as the key driver in
the new economy
Strategic integration of IP with
development policy issues
Trends in Global R & D expenditure
• High income countries
– 70 % of R & D high-income countries
– 2.5 % percent of their GDP on R&D
• Low- and middle-income
economies
– ↑ 13 % share of global R&D
expenditure by 13 percent (1993 and
2009)
– China → >10 %
– China = 2nd second largest R&D (2009)
Government R & D spending as % of GDP (2008-
2011)
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
1.1
1.2
% 2008 2011 Highest level of GBAORD intensity between 2009 and 2010
OECD Science and Industry
Outlook 2012
Statistics of PCT application
Country of origin 2009 2010
US 45,617 44,890
Japan 29,802 32,180
Germany 16,797 17,558
China 7,900 12,295
Korea 8,035 9,668
France 7,327 7,288
United Kingdom 5,044 4,908
Netherlands 4,462 4,078
Switzerland 3,671 3,728
Sweden 3,567 3,314
The number of PCT
applications filed by
applicants from
China (+55.6%),
India (+36.6%) and
the Republic of
Korea (+20.3%)
sharply increased
in 2010. The
number of PCT
applications filed by
applicants from
Spain, Austria and
Japan also showed
positive annual
growth with 12%,
11.3% and 8%
increases,
respectively,
compared to 2009.
UNIVERSITY’S IP AND
NATION’S WEALTH CREATION
The building blocks of the new economy
Basic research
Intellectual asset
Technology transfer
Policy shift in IP, technology transfer
and commercialisation
1960s
Israel – univ IP policies
1980
Bayh-Dole Act
1990s
Europe
Professor’s privilege - university
1999
Japan
2000
Korea
The multiple vectors of knowledge transfer from
universities and PROS to industry
Research and publications
Dissemination of knowledge via
conferences, seminars, meetings
with industry and others
Education and training of
students/researchers recruited by
the private sector
Consultancies, contract research.
University-industry joint research
projects, joint research centers and
PhD projects
Creation of IP available for
licensing to established firms
and new start-up companies
Creation of spin-offs and other forms
of academic entrepreneurship of
faculty or students (with our without
IP)
Public
research
and
educatio
n
Industry
and
innovati
on
World Intellectual Property
Report: The Changing Face of
Innovation, 2011
Table A.4.1 technology transfer frameworks
Law/policy/decree entitling
ownership & inventor rights
Innovation and related policies Inventor
compensation
Mandatory
TTO creation
Brazil Ownership: 1996 Patent Law (Law
9279)
Inventors: 1998 Law on Industrial
Property (Art. 93):
maximum of one-third of the value
of the invention
2004: Innovation Law (Law No.
10.973)
Incentives for R&D, collaboration
and technology transfer
YES
5% to 33%
of royalties or
licensing income
YES
At each institution
or shared among
institutions
Russian
Federation
Ownership: 1998 Decree and
2003 Revision of the Patent Law
2007-2012: R&D in priority fields of
science and technology
development in the Russian
Federation for 2007–2012
2002: Technology Transfer
Network
NO NO
Not mandatory but
encouraged
India Ownership: 2000 Governmental
Ruling
Inventors and clarification of
ownership rules: Utilization of
Public Funded Intellectual
Property Bill 2008 (under approval)
YES
At least 30% of
licensing income
NO
Not mandatory but
encouraged
China Ownership: 2002 Measures for
Intellectual Property Made
under Government Funding
(entitling patenting)
Inventors: S&T Findings
Conversion Law
1998: the S&T Advancement Law
and the S&T Findings
Conversion Law 2002: Opinion on
Exerting the Role of
Universities in S&T Innovation
YES
Varies according
to type of
transfer
NO
Not mandatory but
encouraged
South Africa Ownership: Patent Law
Ownership and inventors: 2010 IP
from Publicly Financed
R&D Act
National Research and
Development Strategy (R&D
Strategy)
YES
At least 20% of
licensing income
YES
Mandatory
Table A.4.1 technology transfer frameworks
Law/policy/decree entitling
ownership & inventor rights
Innovation and related policies Inventor
compensation
Mandatory
TTO creation
Argentina Ownership: 1995 Law of Patents
of Invention and Utility Models
(Joint ownership by the university
and the centralized agency
CONICET)
1995: Law on National Higher
Education
2002: National Program for the
support and fortification of
university linking with industry
YES
Up to 50%
(patent law)
NOChile
Chile Ownership: 1991 Industrial
Property Law
National Innovation Plan NO
(statuary
rules left to
institutions)
NO
National TTO
Malaysia Ownership and inventors:
2009 Intellectual Property
Commercialization Policy for
Research & Development
Projects Funded by the
Government
of Malaysia
Second National Plan for Science
and Technology Policy
2002-2020
YES
Varying shares
according to
value of revenue
YES
For public sector
R&D institutions
Mexico Ownership: 1991 Industrial
Property Law
Inventors: Federal Law of Labor
and Innovation Law of 2010
2002 Science and Technology
Law
2010 Innovation Law: inventor
compensation and TTOs
YES
Up to 70% of
income
YES
Not mandatory but
encouraged
Nigeria Ownership: 2004 Scheme of
Service for Nigeria’s Federal
Research Institutes, Colleges of
Agriculture and Allied
Institutions
Guidelines on Development of
Intellectual Property Policy for
Universities and R&D Institutions
NO
(recommended;
left to
institutions)
YES
Philippines Ownership and inventors:
2009 Technology Transfer Bill
1997: Magna Carta for Scientists,
Engineers, Researchers,
and other S&T Personnel in the
Government (for researchers at
PROs) and 2002: National
Science and Technology Plan
Only available
for governmental
institutions
60% (PRO)-40%
(inventor)
NO
National TTO (1997)
Table 4.6 Systematic impacts of IP-based
technology transfer policies Potential Benefits Potential costs
Broader impacts
on science
1) Increased impact of more focused
research
with potential for application
2) Improved innovation system linkages
• Efficient division of labor in the generation
and
commercialization of new inventions
• Private sector contribution to funding
basic and applied research
3) Increase in the quality of research and
education
1) Reorientation of the direction of research
• Overemphasis on applied, short-term,
more lucrative research
• Less diversity in scientific disciplines as
focus
on patentable outcomes increases
• Other university missions are neglected,
such as teaching and training
2) Negative impacts on open science
• Crowds out/displaces the use of other
knowledge
transfer channels to industry
• Publication delays, increased secrecy,
less
sharing, including the withholding of data
• Decrease in international scientific
exchanges
3) The promise of university income can
reduce
government commitment to funding
Innovation and
growth
1) Commercialization of inventions with
economic and social impacts
• Increase in consumer welfare and
business productivity
via access to innovative products and
processes
2) (Localized) positive impacts on R&D,
technology
spillovers, entrepreneurship, employment
and growth
3) Higher competitive position of country in
global market
1) Long-run negative effect of diverting
attention
away from academic knowledge production
2) Long-run negative effects of IP on open
science and follow-on innovation
• Patenting of broad upstream inventions,
platform technologies and
research tools increases the cost of follow-
on research and innovation
• Reduction in the diversity of research
3) Focus on IP might inhibit rather than
promote
commercialization of inventions
Table 4.5 Impacts of IP-based technology transfer
policies on Universities/PROs and firms
Potential benefits Potential costs (or investment)
Universities and PRO s 1) Increased IP ownership facilitating
entrepreneurship and vertical
specialization
• Reinforcing other policies aimed at
academic
entrepreneurship (e.g., enhancing
access to finance)
• Licensing and other revenues (e.g.,
consulting)
can be invested in research
2) Cross-fertilization between faculty and
industry
• Intangible benefits to university
reputation and the quality of research
• Helping to identify research projects
with a dual
scientific and commercial purpose
3) Increased student intake and ability to
place students in firms
1) Diversion of time away from academic
research
• Distorting incentives for scientists and
potentially also
for the nature of public-oriented
institutions
• Reorganizing university processes and
culture
with a view to commercialization
2) IP-related establishment and
maintenance costs
• Establishing and maintaining a TTO
and related IP management,
including investment in expertise and
human resources
• Spending time on IP filings and
technology
transfer (even if contracted out to a TTO)
• Additional financial and reputational
costs
associated with defense of IP rights
Table 4.5 Impacts of IP-based technology transfer
policies on Universities/PROs and firms
Potential benefits Potential costs (or investment)
Firms 1) Facilitates the revelation of useful
university
inventions to the business sector
• Enabling firms to have access to top
scientists and to
collaborate with the scientific
community in developing
innovation within a clear contractual
setting
2) Enables the creation of a market for
ideas
and contracting with universities
• Framework diminishes transaction
costs and increases
legal certainty, facilitating investment
by private sector
• Securing an exclusive license
increases
incentives for further investment
• Ability to specialize is competitive
advantage (vertical specialization)
3) Commercialization of new products
generating profits and growth
1) Barriers to access of university
inventions
• Precludes free access to university
inventions – including
the more basic research fields and
research tools, except
where research is the result of a
sponsored contract
• Lack of access if another firm has
secured an exclusive license
2) IP-based transaction costs and
tensions in
industry-university relationships
• University scientists lack an
understanding of development
costs and market needs (cognitive
dissonance) leading
to higher probability of bargaining
breakdown
• IP negotiations can interfere with
establishment of joint
R&D and university-industry relations,
where universities
act as revenue maximizer with strong
stance on IP
Patent or perish?
R & D conducted by universities and public research office accounts for a substantial share of total R&D
In high income countries – 20 -45% of annual R & D expenditure
In low and middle income countries – PROs and universities are the main R D actors
↑ of patents from universities esp. in China
Global trends in university and PRO
filings
University PRO
Singapore 13% 19%
Malaysia 13%
27%
Spain 12%
Ireland 11%
Israel 10%
PCT filings (1980-2010)
Global trends in university and PRO
filings (1980-2010)
University PRO
US 52,303 12,698
France 9,068
27%
Japan 6,850
China 1,304
India 1,165
IPTA 2005 2006 2007 2008 2009 2010 Grand
total
International Islamic University Malaysia 3 9 9 2 0 0 23
Universiti Kebangsaan Malaysia 12 10 23 23 40 43 151
Universiti Malaya 30 13 17 18 41 44 163
Universiti Malaysia Pahang 0 0 0 4 49 41 94
Universiti Malaysia Perlis 0 0 0 0 7 4 11
Universiti Malaysia Sabah 1 0 0 2 1 9 13
Universiti Malaysia Sarawak 0 1 1 5 2 2 11
Universiti Malaysia Terengganu 0 0 0 3 0 1 4
Sultan Idris Education University 0 0 1 0 0 0 1
National Defence University 0 0 0 0 1 2 3
Universiti Putra Malaysia 19 22 25 55 71 90 282
Universiti Sains Malaysia 2 6 3 4 29 35 79
Universiti Teknikal Malaysia Melaka 0 0 1 0 10 7 18
Universiti Teknologi Malaysia 7 9 58 132 250 192 648
Universiti Teknologi MARA 6 21 16 12 27 37 119
Total 80 91 154 260 528 507 1620
R & D Institutes 2005 2006 2007 2008 2009 2010 Grand total
Agensi Nuklear Malaysia 0 2 2 1 1 1 7
Construction Research Institute of Malaysia 0 0 0 2 1 0 3
Forest Research Institute Malaysia (FRIM) 1 1 0 2 3 16 23
Institut Kemahiran MARA 0 0 0 1 0 0 1
Institut Penyelidikan dan Kemajuan Pertahanan Malaysia (MARDI)
2 8 4 7 4 7 32
Institut Penyelidikan Sains dan Teknologi Pertahanan 0 1 0 0 0 0 1
Institute for Medical Research 0 2 1 2 2 1 8
International Islamic University Malaysia 0 0 0 10 21 37 68
Lembaga Getah Malaysia 1 0 1 0 2 2 6
Lembaga Koko Malaysia 1 1 2 0 1 1 6
Lembaga Pembangunan Industri Pembinaan Malaysia (CIDB)
1 1 0 0 0 0 2
Malaysian palm Oil Board (MPOB) 19 10 21 10 19 19 98
Malaysian Insitute for Nuclear Technology Research 1 1 0 0 0 0 2
MIMOS Berhad 2 1 76 110 131 144 464
National Hydraulic Research Institute of Malaysia (NAHRIM)
0 0 1 0 0 0 1
SIRIM Berhad 8 5 1 6 9 4 33
Total 38 40 109 151 204 222 764
Conflicting concerns
Accountability for R&D expenditure
Intense pressure for commercialization
compete to be an important player in IP landscape
Reduce knowledge sharing
Reduce the diversity of follow-on research and access to essential
tools
Need to leverage on alternatives as
well…
Open innovation platforms,
selected examples
Tools or platforms to capture ideas
from consumers or other contributors
Apple’s adoption of ideation software
like Sprigit to capture audience ideas
Prizes and competition Tata Group Innovista competition to
spour innovation among subsidiaries
Co-creation platforms Lego Minstroms allowing customers
to create Lego designs and robots
Platforms connecting problems and
solvers/ exchange of IP
Various platforms for companies to
post challenges: InnoCentive,
Grainger, Yet2, Tynax, UTEK,
NineSigma, Spark IP
POLICY INSTRUMENTS ON IP
Policy instruments
Public Sercive Department Circular (Pekeliling Perkhidmatan Bilangan 5 Tahun 1999
National IP Policy
2007
IP Commercial-isation Policy for Research and Development
(June 2009)
Public Service Department (Pekeliling Perkhidmatan 30 tahun 2009)
Important stakeholders
MYIPO
UNIK
AIM
(National Technology Transfer
Officer)
MOSTE
Others
MDEC BioTech
Corp
NRE
Min of Health
MITI
MTDC
IP Commercialisation Policy
Scenario 1
• IP belongs to recipient
• Where funding comes from Govt, & recipient creates IP
Scenario 2
• IP belongs to relevant body
• Where relevant body commissions research through consultancy or commission agreement
Scenario 3
• IP belongs to recipient or third party
• Govt →govt agency →to recipient
IP Commercialisation Policy
Scenario 4
• Joint ownership 3rd party + RI
• Govt → govt agency →3rd party + RI
Scenario 5
• Joint ownership by sev recipients
• Govt →sev recipient
Scenario 6
• Joint ownership RI = 3rd party
• Govt →RI + 3rd party
Scenario 7
• Joint ownership govt + 3rd party
• joint funding Govt + 3rd party
Employee inventions?
• makes, in the field of activities of his employer, an invention,
In the field of
activities
• using data or means placed at his disposal by his employer Use
facilties
Copyright?
Scholarly books, articles, audiovisual,
or other scholarly works
Belong to the employee/ scholar
Except under commission
Research collaboration with
external parties
Default position →a 1st right to negotiate either a non exclusive or exclusive licence
The third party →a first right to negotiate either a non-exclusive or exclusive Licence
If 3rd party made substantial contributions →may jointly owned
If only product development belonging to 3rd party →3rd party
Special condition
no Recipient shall grant to any
person the exclusive right to use
or sell any Invention in Malaysia
unless such person agrees that
any products embodying the
Invention or produced through the
use of the Invention will be
manufactured substantially in
Malaysia
IP Commercialisation Policy for Research and
Development (MOSTE 2009)
Nett Proceeds Inventors Recipients
1 First RM250,000.00 100% 0%
2. RM250,001.00 to
RM1,000,000.oo
80% 20%
3 RM1,000,001.00 to
RM2,5000,000.00
60% 40%
4. RM2,500,001.00 and
5,000,000.00
50% 50%
5 RM5,000,001.00 and above 40% 60%
Distribution Guidelines
Incentives for invention
a) Upon Disclosure of Invention : RM500.00
b) Upon Filing of Patent : RM5,000.00
c) Upon Grant of Patent : RM10,000.00
Government rights (march in rights)
The Government shall have the
right to require the Recipient, an
assignee or exclusive licensee of
the said Invention to grant a
royalty free, a non-exclusive,
sole or exclusive licence to a
responsible third party
Unik earmarks 113 R&D findings for commercialisation
(Tuesday April 19,2011 Bernama)
• CYBERJAYA: The Special Innovation Unit (Unik) under the Prime Minister's Office has
earmarked 113 research and development (R&D) findings with high potential for
commercialisation.
• Unik executive vice-president Rizatuddin Ramly said the R&D findings were identified within the
first four months this year.
• He said the R&Ds were conducted by five public universities and two research institutions,
namely Universiti Sains Malaysia (USM), Universiti Malaya (UM), Universiti Kebangsaan Malaysia
(UKM), Universiti Putra Malaysia (UPM), Universiti Teknologi Malaysia (UTM), Sirim and Institute
for Medical Research (IMR).
• "A total of 1,100 R&D findings were submitted by the universities, but after much analysis and
shortlisting processes, only 113 were identified to have high potential to be commercialised," he
said Tuesday.
• The setting up of Unik, with the aim of commercialising the findings of R&Ds conducted by local
universities and research institutions, was announced by Prime Minister Datuk Seri Najib Tun
Razak last year.
• Unik is a one-stop centre to formulate policies and strategies aimed at creating a conducive
ecosystem to propel development and innovation in Malaysia.
• Rizatuddin said among the criteria for the findings to be earmarked for commercialisation were
their market size and patent protection, both locally and internationally.
• He said most of the R&D findings were in the field of material science, life science and
biotechnology.
• UM and USM, for example, had conducted a research on medical diagnostics for tropical
diseases like dengue, cholera and typhoid, he said.
• Rizatuddin said the R&D findings were developed over a period of five to eight years and were
expected to enter the local market next year. - Bernama
Food for thought… 08/18/2010
No Copyright Law The Real Reason for Germany's Industrial Expansion?
By Frank Thadeusz
Did Germany experience rapid industrial expansion in
the 19th century due to an absence of copyright law? A
German historian argues that the massive proliferation
of books, and thus knowledge, laid the foundation for
the country's industrial might.
The entire country seemed to be obsessed with reading.
The sudden passion for books struck even booksellers as
strange and in 1836 led literary critic Wolfgang Menzel to
declare Germans "a people of poets and thinkers.
THE LEGAL CHALLENGE
Universities’ IP Policies
Evolution of Internal IP Policies
• Evolution of IP Policies
• IPTAs + GRIs
• 1999 Govt Circular
1990-
• Q: in the course of employment
• Recurring disputes in universities
• + NDA, Research Agreement, NDA, Disclosure
2000 - • IP Manual
• R & D Roadmap
• MOSTI Commercialisation & IP Policy (2009)
2005-
Legal basis for the transfer of rights to
employer-university
• Use of government R & D funds
• Assignment of rights, NDA, disclosure forms
• In the course of employment & use of facilities and resources
• Fiduciary duty
• Misappropriation of employer’s property/ conversion
Equity and common
law
Internal IP Policies
MOSTI IP Policy
Other contractual
means
Roche (2011) Supreme Court
Initial
ownership
• Q: whether the Bayh Dole Act = automatic divestiture of ownership rights to federal contractors?
• ‘right to elect’ = automatic entitlement of ownership
history
• Since 1790 –invention belongs to the inventor
Transfer of rights
• Mere employment is not sufficient to vest ownership to employer
• Must be followed with effective assignment of rights
Uni of Central Florida (2011)
Transfer of rights
• Fed Cts have consistently upheld the validity of patent assignment obligations imposed on univ. students, faculty and staff
Equity
• Staff owe fiduciary duty to the univ – not to conceal and misappropriate inventions to his own benefit
contract
• Validity of internal IP policies?
• Held = breach of contractual duty
AIA (2011)
Initial ownership
• Florida Regulations
• University Patent Policies
• Distance itself from Roche
Transfer of rights
• Distinguish between initial vesting and transfer of rights
• Effective transfer of rights
Gray (2008)
IP policy
• Not validly passed
• invalid
Common law
• Q: in the course of employment
• Duty to invent = duty of academic staff?
• Duty to research ≠ duty to invent
• Academic staff ≠ research employee in private firms
Rising IP disputes in university
compounds…
June 17, 2009; a former Stanford Univ. Graduate sued school and faculty advisor
Jan 26, 2012; Misouri Univ sued former post doctoral student and professor
Jan 24, 2012; Kens State Univ sued former post doctoral researcher
April 17, 2012; Columbia Univ. sues Illumina over DNA sequencing patents
STRATEGIC USE OF IP
Universities’ IP
OPTION 1: PUT ALL
IN THE FREEZER
OPTION 2: PACK
FRUITS OF
DIFFERENT SHELF
LIFE
OPTION 3: PICK AND
CHOSE OR CONSUME
THE WHOLE BASKET
IP life cycle
creation protection exploitation
All depends on level of IP
literacy! • Protecting High School Students IP
> I am a high school teacher in Queens. This year I've been asked to pilot a new
Android App Development course. I ran into an interesting problem, that I had
never considered before. My students want their app in the marketplace and they
wanted to make some money off them.
> This raised several questions:
>
> 1. Who 'owns' the games?
> 2. What would the students/school do with the money from this?
> 3. If they are created by a group of graduating students, how would I
> manage money?
> 4. How do I protect the students' ideas from other people profiting
> from them?
> 5. How do I maintain control of what is attached to the school?
> My solution was to release everything under the Creative Commons
> Attribution-NonCommercial-ShareAlike 3.0 Unported License through a
> school controlled account. That way the students' ideas are
> protected, and no one can make money off them, and I can keep an eye
> on what is being released.
>
The road to the market…
prototype Proof of concept
Non linear
Amount of IP
spending more than
royalties earned
Big universities
doing better than
the small ones
Sample
production
Table 4.3 Ratio of Income from IP licences, options
and assignments to total research expenditure, 2000
to 2009
2000 2001 2002 200
3
2004 2005 2006 2007 2008 2009
Australia 2.8 2.0 1.9 1.6 1.3 1.3 2.1 3.6 1.5 4.1
Canada 1.8 2.3 1.6 1.6 1.4 1.2 1.4 1.2 1.0 -
Europe - - - - 3.2 3.2 0.4 1.0 1.3 -
UK 0.6 1.1 1.1 1.1 1.5 1.3 1.3 1.4 2.1 -
US 4.8 3.4 3.5 3.4 3.4 5.3 5.3 5.5 6.6 6.5
Conclusion
• Basic research is mainly
conducted by the public sector
• Universities and government led
research institutes are a
fundamental source of knowledge
for the business sector
• The synergy between the
academic and entrepreneurial
activity in the univ must be
maintained.
Conclusion
• Importance of following other
country’s learning curve
– innovation policy
– Court disputes on Bayh dole &
internal IP policies
• IP ≠ money
• BUT IP = knowledge generation
• Need to strategise IP creation and
commercialisation