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From R & D to Innovation Scenario in Indian Universities: Exploring opportunities in the context of ‘Protection and Utilization of Public Funded Research Bill 2008’

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Government of India`s first Science and Technology Policy was declared in 2003. This policy includes ‘Strategy and Implementation Plan’ emphasising the need to (i) Create a comprehensive national system of innovation; (ii) Evolve mechanisms to help scientists and technologists to transfer know-how generated to the industry by being a partner in receiving financial returns; (iii) Generate and provide protection of competitive IP from Indian R&D programmes; (iv) Ensure that Indian IP legislation provide incentives to undertake large scale and rapid commercialization of indigenously generated technology; and (v) Promote development of skills and competence to manage IPR and use it as a policy tool to leverage its influence. [1] Kochupillai (2010) argues that in pursuit of these objectives government of India introduced the Bill of “Protection and Utilisation of Public Funded Research”.

Public Funded Research and “Protection and Utilisation of Public Funded Research Bill” was introduced in Rajya Sabha in December 2008. Latest developments about the Bill indicate towards increased consensus for greater review of this Bill.[2] Recent debates about the bill point out towards few questions again and again. Broadly speaking, there are three steps leading to commercialisation of university inventions – disclosure, patenting and licensing. Some of the major objections raised from time to time about the nature and language of drafting are: a) Possible encroachment on the autonomy of scientists to have a degree of freedom and flexibility in deciding research priorities b) Criteria and form of IP in which generated knowledge is to be protected, c) Formula for revenue generation and pricing mechanism of the invention during licensing process, d) Proposal for penalising scientists in case of failure to surrender the newly generated IP, e) Belief of the Bill that it will spur to create catalysts of change in Indian Research and Development environment and f) Form of ownership pattern of invention by scientist, institution and government.

A very pertinent question asked in this respect was that “Will legislation improve the climate for innovation and original research in our institutions and is financial incentive the key driver of creativity?” [3] This question tries to address the fundamental objective of the Bill mentioned in the draft as, “To compete in the global environment; it is necessary for India to innovate and promote culture of creativity and innovation, India needs to protect and utilise the intellectual property created out of public funded research and development.” The creativity can be understood by deciphering what Stokes called ‘Pasteur’s quadrant’ accommodating ‘use-inspired basic research’.[4]

Stokes recasted widely accepted view of the tension between understanding and use, citing as a model case of ‘user inspired research. On this revised view, Stokes builds a case that “by recognising the importance of basic research we can frame a new compact between science and government.”[5] Stokes (1997) argues that the logic of classifying research on the basis of intended goals rather than known achievements rests on the fact that policy has to do with the choice—choices facing individual scientists, to those who match resources to alternative research uses at retail or wholesale level. This is necessary to understand considering the claim against the proposed bill that it will hamper the autonomy of the scientists due to influence of the prospective situation in which private firms eager to license will likely to dominate the research priorities. The aspect of motivation behind particular research interest can be understood better by referring to what Bhaduri & Kumar (2009) said about extrinsic motivation in a self regulated behaviour. They argue that extrinsic motivation is “regulation through identification.” Here an activity is undertaken after completely understanding the worth of it. To put it differently, an individual is able to consciously value a regulation and, thereby, decides to internalise it.

Recent published work throws more insights from the experience of University and Small Business Patent Procedures Act i.e. Bayh Dole Act, 1980. This experience tells us whether policy makers were also thinking of directly incentivising university research itself through the Bayh-Dole enactment. But the rationale for the Bayh-Dole Act, in popular parlance, is often interpreted as a financial incentive to university researchers not only to stimulate quality research, but also to disclose and patent ‘profitable’ discoveries for commercial use and consider it as a new source of income. [6] Ray & Saha (2010) repeatedly underline the fact that there has been no decrease in indicators of fundamental research due to the acceleration of support for commercially viable research as envisaged in the concerned Bill. USA experience shows that most of the successful examples of commercialisation due to inducement of this type of Bill were primarily concentrated to the incumbent bio-medical and biotechnological inventions which were historically experiencing successful receipt of federal funds and evidences of innovations compared to other knowledge disciplines.

There are consistent questions about commercial viability of Public Funded Research in India when industrial applicability of the patents came out of Public Funded Research is under big question. While CSIR, a network of government research institutions generated four crore rupees in licensing revenues, it spends over 10 crore that much on patenting and licensing costs. Empirical data from the USA shows that most universities do not make significant sums of money by licensing their technology. In fact cost of operating a technology transfer (TTO) office exceeds the money from technology licensing.[7] The positive features making this bill more attractive have certain newly realised drawbacks. Leydesdorff & Meyer report that in recent times there has been relative decline in university patenting.[8] This also comes with the fact that cross institutional collaborations and co-authorships are becoming more dominant trend to major the quality of research being carried out rather than incentives to patent the invention.

It is believed that non-exclusive licensing will increase the rate of technological development. Basheer (2010) argues that “Exclusive licensing vests the entire gamut of rights over the invention with one entity and this may lead to relative stultification in technological progress, than had the technology been licensed out to multiple parties.” So pushing for upfront expression in the bill about non-exclusive licensing as the default rule is at most necessary to be desired for promoting the cause of public funded research. It is interesting to note that Bayh Dole Act was originally enacted with the provisions for strong intellectual property protection through exclusive licensing. The public funded research institutes driven by their accountability and social mandate can pave the way for emergence of new techniques and methods by contribution of their research for enhanced manufacturing capabilities. This may reduce the cost of product by many times targeted at millions of poor people, which is otherwise difficult in product patent regime due to profit orientated motives of the firms. This view was however expressed with the belief that patents are necessary ingredient in the chain leading towards innovative activity of the public funded research institutes.

Recently concluded session on ‘Perspectives on Public Funded Research for Technological Development: Insights from India’s Technological Trajectory’ in the Conference "Growth and Development: Future Directions for India" (23-24 April 2010, JNU) debated the link between this current Bill, potential of public funded research in coming out with creative and innovative technologies for industrial application aimed at solving vexing problems of humanity. Prof. Amit Ray (CITD, SIS, JNU) was the chief speaker. He said that “Since 1970s due to the legacy of Ayyangar Committee Report (1957-59) and the Indian Patents Act (1970) Indians enjoyed weak patent regime to foster the capability in understanding the “Know-How” arrangement of particular technology leading towards flexible process or reverse engineering era before Product Patent Regime came in to force in 2005. This was largely the secret behind the Indian story of success in majority of the scientific inventions being innovated and commercialised.

Prof. Ray explained further: “While Indian continued to unlock different processes to imitate the particular technology at lesser cost with better efficacy we were not successful at all in inventing some radically novel technology which will really push India towards self reliance in that particular area of industry or sector.” This realisation, according to him, is very necessary when looked at the capacity of the proposed ‘Bill for Patenting of Public Funded Research’ to discover the true potential of talent hidden in the public funded research institutions. This bill may provide greater opportunities to incentivise the research initiatives being taken in the public funded research institutes across India. Potential indicators of relevance to the commercialisation of research by public science institutions range from citations to the scientific literature in business patents to the economic impacts of public science in terms of employment or value-added. Economic impact indicators are the most useful of all measures, but they are difficult to obtain. So, they are not very useful for assessing the short and medium term effects of policies to encourage commercialisation. [see Arundel & Bordoy (2008) ]

In this context it was worthwhile to note how Prof. Ray touched upon the concept of “Fortune lies at the Bottom of the Pyramid” while explaining the true need to incentivise the new initiatives which may hold probabilities of commercial viability for further industrial application to solve the local problems. Dr. Prahalad[9] argues three distinct aspects of local research. a) Local research must focus on the unique, basic needs of those at the bottom of the pyramid in a particular region or country; b) Local research must seek to adapt solutions from other markets and other applications to local needs; c) Local research must examine local practices to identify useful principles and potential applications. (Dr. Prahalad who was

‘Management Thinker’ passed away recently http://www.bus.umich.edu/NewsRoom/ArticleDisplay.asp?news_id=19158)

In this context, the crucial role and contribution of the universities and their research has been keenly narrated by Sampat (2006). He says that the economically important ‘outputs’ of university research have come in different forms, varying over time and across industries. They include, among others: scientific and technological information (which can increase the efficiency of applied R&D in industry by guiding research towards more fruitful departures), equipment and instrumentation (used by firms in their production processes or their research), skills or human capital (embodied in students and faculty members), networks of scientific and technological capabilities (which facilitate the diffusion of new knowledge) and prototypes for new products and processes.[10]

Kochupillai (2010) points out towards possible intention behind bill to reduce dependence of university and R&D institutions on government funding. Considering the experience from TTOs of US, Kochupillai argues that “The belief behind this bill will make universities self-reliant by funding for R&D by the revenue generated out of licensing is not realistic. Control of funding in public funded research institution is directly related to betterment of societal health and welfare.”[11]

The aspect of ‘Socially Relevant Innovation” discussed by Basheer (2010), grassroots innovation by Bhaduri & Kumar (2009)[12] and ‘social rate of return from academic research’ by Mansfield (1990) cannot be excluded from the formal framework of universities and research institutions. Mansfield[13], by his analysis showed that at least ten percent of the innovations during 1975-85 were not possible without the academic research, even though it is considered that results of academic research are so widely disseminated, fundamental, subtle and widespread so as to find link with industrial innovation. Because if we have to understand the research culture which is required to address the problems of the people at the ‘bottom of the pyramid’ it is necessary to know how ‘socially relevant innovations’ and ‘innovations in grassroots situations’ happen.

By citing established literature, Bhaduri & Kumar (2009) note that not only (a) extrinsic incentives are only useful in the short run, but also (b) they might prove to be counterproductive in the long run by crowding out intrinsic motivation of individuals. Authors refer to historic work of Joseph Schumpeter to say that, “The motive to accumulate private property can only explain part of innovative activities, especially in early capitalist societies. The wheel of economic development in such societies was kept moving by “personality” and “will” of individuals. In his view, “the joy of creating, of getting things done” associated with the behavioural traits that “seek out difficulties and takes delight in ventures” stand out as the most independent factor of behaviour in explaining the process of economic development.

They further explain the intricate threads of motivations behind innovation processes by attributing intrinsically motivated behaviours to those traits whose locus of control lie within the individual. Whereas, locus of control of any extrinsically motivated behaviour lies externally, in the said incentives. Moreover, as authors argue, studies of motivation are significant considering the impact of intrinsic and extrinsic motivation on behaviour being ‘neither complimentary nor linear’. Authors further observe that extrinsic rewards and pressures, in general, undermine intrinsic motivations through ‘over-justification effect’ or through ‘manipulation of behaviour’.

As pointed out by Ray & Saha (2010 ibid) knowledge transfer broadly refers to formal and informal interactions, co-operative education, curriculum development and personnel exchanges, extending to research consortia, co-authoring of research papers by members of a university and industry and employing university graduates. Still Ray & Saha feel that it is unclear whether the outputs of government-funded research projects are more effectively disseminated through publications (available in the public domain) than through patenting.

The survey carried out under the supervision of Prof. Ray with assistance of Sabyasachi Saha concludes that number of research grants to particular Professor affects the quality of research work being supervised by him/her. Scholars who actually work harder from the perspective of publishing more for better career prospects actually publish less. Thus even though publishing is good indicator towards quality and quantity of research work going on in university the actual process of applying for patent is much more simplified than getting a scientific paper published. So, according to the argument in the session, the spirit of patenting inherent in this bill actually has to help the researchers in having greater autonomy in the respect of bargaining that invention with outside private firm irrespective of the fact that which government agency has actually funded it.

Prof. Pranav Desai, Centre for Studies in Science Policy, JNU observed that ‘conflict between publications and patents’ was significant issue while discussing the factors affecting the innovativeness of the research in the public funded research institutions. Sampat (2006) attributes inclination of most industries investing their resources for knowledge diffusion to publications, conferences and informal information exchange. Nelson observes[14] that when universities publish their results and place them in the public domain, as contrasted with patenting them, companies have little incentive to use them. Having said that Nelson questions the viability of the concept of commercial entrepreneurial university posing higher order goal conflicts. He believes that “universities should not forget or neglect that their comparative, or absolute, advantage in national innovation systems, lies in the arenas of open public science and training.”

Prof. Desai also mentioned that need for greater vibrancy of research culture in the public funded research institutions remains the critical issue to be addressed. He believes that the approach of Ministry of Science and Technology, Ministry of Human Resource and Development and other government agencies which are primarily responsible to frame policies for the development of scientific and skilled human resource holds key in addressing the question of ‘research environment’ in public funded research institutions. He pointed out the irony in Indian scenario in the context of debate about this bill. This irony seems to be manifest by more emphasis on ‘Research’ is being given and there is less awareness about ‘Development’ aspect of innovation. This belief comes with an assumption that catalysts which contribute more to the process of innovation are having more engineering skills relatively compared to the stock of fundamental knowledge of the particular research discipline. He also pointed out the lacunae in our law and contract provisions in Indian R&D establishment which date back to 1857.

Nelson (2001) dispels two myths behind ‘success of USA university system’: First myth being “Effective technology transfer almost always requires university patenting, licensing” and second being “Patenting and licensing greatly facilitate technology transfer.” Sampat (2006) suggests that the net effects of Bayh-Dole (and the rise of university patenting and licensing activity more generally) on innovation, technology transfer and economic growth remain unclear and much more research is necessary on this front. Mowery [15] in a study of five universities which successfully completed many technology transfers said that “the knowledge and know-how gap between the university inventor and a would-be industrial commercializer was relatively small, reflecting previous investments by the industrial firm in internal capabilities and external monitoring of scientific developments. Commenting on policy discussion in Europe, Arundel & Bordoy (2008) refer to a ‘European Paradox’ of high public expenditure on research with few visible commercial benefits. This paradox has been attributed to failure of public science institutes in Europe to actively commercialize their discoveries. European governments have responded to the European Paradox by introducing policies to promote commercialization, such as university courses on entrepreneurship for future academics, and a range of other programmes to encourage technology transfer by promoting formal contractual relationships between the business sector and public science.

On another side Kenney & Patton (2009) suggest two alternative invention commercialization models as superior alternatives.[16] The first alternative is to vest ownership with the inventor, who could choose the commercialization path for the invention. Then the inventor would provide the university an ownership stake in any returns to the invention. The inventor would be free to contract with the university TTO or any other entity that might assist in commercialization. The second alternative is to make all inventions immediately publicly available through a public domain strategy or, through a requirement that all inventions be licensed non-exclusively. Both alternatives would address the current dysfunctional arrangements in university technology commercialization. Looking at both the sides it will be difficult to conclude whether; knowledge transfer has far-reaching, long-term impact and technology transfer serves more specific and immediate industry needs or vice versa. Kenney & Patton have also come up with the schematic comparison of university invention ownership regimes. [Please see schematic comparison of Bayh Dole Model, Inventor Ownership Model and Weaker Ownership Model in the article by Kenney & Patton (2009)]

In essence’, message from this seminar was very clear. There should be greater efforts from the government and all other stakeholders to be open for further critical debate on this subject rather than embracing the borrowed version of enthusiasm from the relative interpretation about ‘Research Culture’, ‘Systemic Reforms of IP system in India’, ‘Dynamic and Fundamental Changes in the R&D Establishment’ which shaped the emergence of ‘Protection and Utilisation of Public Funded Research Bill, 2008.’ This debate needs to go forward with lot more deliberate efforts on the part of not only universities, research institutions, autonomous and dependent institutions but also on the part of intellectuals, policy researchers, opinion leaders shaping scientific environment in the country about all the issues in the ambit of this bill. Greater awareness building and cumulative success in reinforcing the belief in the new ideas and initiatives of the responsible scientific human resource will certainly pave the future directions for policymakers; either in legislature or outside legislature.

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[1] Indian Government`s Science and Technology Policy, 2003 Full Text available at http://www.dst.gov.in/stsysindia/stp2003.htm

Parliament-panel-wants-govt-re.html

[3] P.Balaram (2010), Imitating the Bayh-Dole Act: Incremental Innovation, Editorial, Volume 98(2), Current Science

[4] P. Balaram (2008), Science, Invention and Pasteur’s Quadrant, Vol. 94 (8), Editorial Current Science

[5] Michael Armacost in Introduction to Stokes, Donald (1997), Pasteur`s Quadrant: Basic Science and Technological Innovation, Brookings Institution Press

[6] Amit Shovon Ray & Sabyasachi Saha (2010), Patenting Public Funded Research for Technology Transfer: A Conceptual Empirical Synthesis of US Evidence and Lessons for India, ICRIER Working Paper No. 44

(Disaggregated profile of US evidence, focusing specifically on commercialisation of university research, patent quality, research culture and focus, research funding and the role of the TTOs.)

[7] Basheer, Shamnad, Patenting Publicly Funded Research: A Critique of the Indian 'Bayh Dole' Bill (February 2, 2010). Available at SSRN: http://ssrn.com/abstract=1546403

[8] Loet Leydesdorff Æ Martin Meyer, The decline of university patenting and the end of the Bayh–Dole effect, Scientometrics (2010) 83:355–362

[9] Hart SL, Prahalad CK. (1999), Strategies for the bottom of the pyramid: creating sustainable development, unpublished draft paper.

Strategies for the Bottom of the Pyramid: Creating an infrastructure for the bottom must be seen as an investment, like in plants, processes, products and research and development. Further, unlike more conventional investment strategies, no firm can do this alone: Multiple players have to be involved – local governmental authorities, non-governmental organizations (NGOs), local communities, financial institutions, infrastructure builders and other firms. The elements of this infrastructure-- creating buying power, shaping aspirations, improving access, and growing healthy markets—demand innovation– in technology, business models, and management processes. Creating a market out of the world’s poor demands new managerial leadership; one that is willing to experiment, collaborate, empower locals, and create new sources of competitive advantage and wealth.

[10] Bhaven N. Sampat(2006), Patenting and US academic research in the 20th century: The world

before and after Bayh-Dole, Research Policy 35, pp. 772–789

[11] Mrinalini Kochupillai (2010), The Protection and Utilization of Public Funded Intellectual Property Bill, 2008: A Critique in the Light of India’s Innovation Environment, Journal of Intellectual Property Rights Vol 15, pp 19-34

[12] Saradindu Bhaduri, Hemant Kumar (2009), Tracing the Motivation to Innovate: A Study of 'Grassroot' Innovators in India, Papers on Economics and Evolution, Max Planck Institute of Economics #0912

[13] Edwin Mansfield (1991), Academic Research and Industrial Innovation, Research Policy 20, pp. 1-12

[14] Richard R. Nelson (2001), Observations on the Post-Bayh-Dole Rise of Patenting at American Universities, Journal of Technology Transfer, 26, 13-19, Kluwer Academic Publishers.

[15] David C. Mowery (2005), The Bayh Dole Act And High Technology Entrepreneurship in U.S. Universities Chicken, Egg, or Something Else? In ‘University Entrepreneurship and Technology Transfer : Process, Design and Intellectual Property’ Ed. Gary Libecap, Elsevier Publishers

[16] Martin Kenney & Donald Patton (2009), Reconsidering the Bayh-Dole Act and the Current University Invention Ownership Model, Research Policy 38 , 1407–1422

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