Select Committee on Science and Technology Minutes of Evidence



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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