Memorandum submitted by
BTG plc
INTRODUCTION
1. BTG plc is a world leader in the management
of intellectual property rights. Its business is the profitable
commercialisation of technology. With nearly 50 years of patenting
and licensing to Industry worldwide, BTG has extensive expertise
in the protection, development and marketing of intellectual property.
BTG holds 8,500 patents and patent applications covering around
250 technologies and has approximately 400 licence agreements.
It operates internationally with offices in UK, USA and Japan.
Throughout the last 50 years, BTG has operated at the interface
between academic research and commercial exploitation. Whilst
not itself a manufacturer, BTG is aware of the issues in front
of industrial companies when they consider whether or not to pursue
new technologies. BTG (and its predecessor National Research Development
Corporation) was a crown corporation until 1992 when it was privatised.
BTG floated on the London Stock Exchange in 1995.
SUMMARY
2. It is BTG's view that companies in the
fields of engineering and physical sciences tend to decide on
developing new products and processes in an economically rational
manner. The main drivers, in descending order of importance, are
cost reduction, increased market share (by product innovation
and development) and increased turnover from new products addressing
new markets. This means that the highest risk projects, those
involving new technology addressing new markets, are generally
the lowest priority and where the arguments for pursuing a project
are most difficult to sustain in the face of challenge by accountants.
If any shift in the way in which government provided funds to
encourage the adoption of new technology were contemplated, then
a marginal refocusing on this area might yield results.
THE INDUSTRIAL
APPLICATION OF
GOVERNMENT-FUNDED
RESEARCH
3. It is generally our view that most industrially
relevant government-funded research is applied by and absorbed
into industry. However, one important factor that needs to be
considered is the international dimension. Firstly, the UK probably
conducts less than 10 per cent of international research which
is relevant in the fields of engineering and physical sciences
so that companies must be aware of, and try to gain access to,
complementary research in other territories. The EC programmes
generally encourage this within Europe. Secondly, the UK market
is certainly less than 10 per cent of the addressable world market
for relevant products. In some instances, the UK market is sufficient
to sustain a profitable business. In others, either broad geographical
markets needs to be addressed or, sometimes, there is no suitable
candidate or company in the UK adequately to exploit results of
research. A further point is that government-funded research is
unlikely to be targeted at cost reduction. Happily, some of it
will result in products and processes which will yield cost reduction
but such cost reduction will only be quantifiable by industry
which therefore needs to receive details of the technology in
a manner to enable them to make this calculation. There is thus
a premium on efficient means of communication of relevant data.
THE RESPECTIVE
ROLES OF
GOVERNMENT LABORATORIES
AND INDEPENDENT
RESEARCH AND
TECHNOLOGY ORGANISATIONS
4. Generally, we would expect to see Government
laboratories providing underpinning research of general applicability
but with customisation, and detailed development, the responsibility
either of independent research and technology organisations or
of industrial companies themselves.
THE OPERATION
OF GOVERNMENT
SCHEMES DESIGNED
TO PROMOTE
COLLABORATION IN
AN INDUSTRIAL
APPLICATION TO
RESEARCH
5. BTG itself has little direct experience
of Government schemes of this sort. However, our contacts in industry
and academia leads us to believe that Government schemes achieve
sensible objectives in promoting the collaboration between the
sources and users of technology of industrial application.
INTELLECTUAL PROPERTY
RIGHTS AND
PATENTING
6. This is BTG's specialist area of expertise.
We have found repeatedly that the presence of patents protecting
new products or processes can galvanise companies into spending
significant sums of money in the further development of technologies
which they would be unwilling to do in the absence of patent protection.
There are other forms of intellectual property rights, but patents
are the strongest and best recognised internationally. Generally,
we understand that industrial partners in Government-funded projects
are expected to be the owners of intellectual property developed
during the projects. For the reasons given in paragraph 3 above,
it is possible that the industrial partner may not be capable
of adequately exploiting the technology developed in the project.
So, if one looks at the greatest benefit for the UK, there may
be further revenues to be generated by the licensing of patents
in different geographical or technical markets. The industrial
partners in development projects may not be willing or able to
do this. So, reversionary rights to the academic source in the
event of under-exploitation of patent rights may be considered.
THE PROVISION
OF FINANCE
TO SUPPORT
ENTERPRISES INVOLVED
IN THE
APPLICATION OF
RESEARCH & INNOVATION
7. Companies will generally be able to determine
reasonably accurately the returns available to them from cost
reduction or from developing new products for markets that they
already understand well. It is in the development of new products
and processes addressing new markets that the costs will be well
understood but the benefits will be much more difficult to quantify.
Also, the level of risk of total failure will generally be much
higher. Therefore, if one is looking at how finance might be provided
to companies to increase the application of government-funded
research, then it is to this category that attention should be
paid.
THE ROLE
OF THE
FORESIGHT PROGRAMME
8. The Foresignt Programme may be seen as
having achieved two major objectives. Firstly, it enabled participants
in the programme and readers of the results of the programme to
raise their sights above the immediate pressing priorities to
the longer term without being constrained by having to see the
future as a continuation of the present. Secondly, for those who
participated, it has developed an extremely good network. Our
experience of the networks is that the larger companies are better
able to commit the resources necessary to maintain these networks
and so the challenge will be to see if the SMEs can be encouraged
to maintain the contacts.
THE ROLE
OF THE
ENGINEERING AND
PHYSICAL SCIENCES
RESEARCH COUNCIL
IN FOSTERING
TECHNOLOGY TRANSFER
9. EPSRC generally, we understand, encourages
the academic sources to engage in technology transfer. This we
believe is fairly effective though it will depend upon the capability
of the individual university or research institute.
13 March 1998
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