World Intellectual Property Organization

Technology Transfer at Garching Innovation

(By Bernhard Hertel1)

Introduction

Technology Transfer (TT) has become a major issue for research institutions. It is used not only for generating money by licensing out inventions made by the scientists but also to demonstrate the relevance of the research projects for the general society. New and better products create new jobs, spin-off companies contribute to the modernizing of the industry and are a source for cooperation projects in new and innovative fields of technology.

What is Garching Innovation?

According to the main goal of the scientific activities of the Max Planck Society (MPG) - top-class research in the service of the general public - the results have to be published in international journals. But since inventions, know-how or software created in the performance of the research activities belong to MPG, it is also interested in marketing its intellectual property (IP). To organize the transfer from the institutes to the interested industry, MPG has built a commercial company responsible for its TT: Garching Innovation GmbH (GI), founded in 1970 as "Garching Instrumente".

At the time when the company was created it was not possible to learn from others how to best manage this process. One of the early ideas was to construct instruments based on laboratory type developments and either to license them to third parties or to sell them directly to interested customers. Only little attention was given to promote the awareness for inventions that could be patented and licensed as such. As a producing company it became a competitor to the established industry and therefore was not accepted as licensor. On the whole, it was not a success-story and could not make profits.

Therefore, in 1979, the MPG decided to change the structure of the company. A new management was installed with the clear goal to concentrate on licensing. The management was taken over by H. L. Kuhn who was the former leader of the legal department of MPG, which also included the patent department. He hired a chemist and a physicist as well as three administrative personnel. It was the task of the staff with scientific background to raise awareness among the scientists at the institutes of the value of IP, to understand the inventions offered, to manage the process of patenting and to find interested businesses for licensing.

What is the Max-Planck-Society?

To understand the function of Garching Innovation GmbH it is necessary to know the structure of the Max-Planck-Society. Its full name is "Max-Planck-Gesellschaft zur Foerderung der Wissenschaften e. V." (MPG). It is an independent nonprofit research organization and was established in 1948 as successor of the Kaiser Wilhelm Society. Scientific research is carried out in 80 institutes, which are distributed all over Germany. They are primarily devoted to basic research in the natural sciences, medicine and humanities. The research is dedicated to the acquisition of new knowledge, but at the same time open to application, too. The fields of interest are research in new and innovative lines which universities are still unable to take over adequately, e. g. because of costs or its interdisciplinary character.

With its great variety of subjects, the MPG thus complements the work of other scientific institutions. The MPG is mainly backed by public funds granted by the Federal Government (50 %) and the federal states (50 %). The current budget is approximately 1,2 billion EUR. The knowledge created is public property and can be of benefit to individual and public welfare. It is based on long-term perspectives, on continuity and steady support.

How do we organize the internal work?

GI has grown over the past few years and currently has 15 employees whereof 5 have a scientific and 4 others have a legal or an economic background. The company has a flat internal organization. For each project one of the scientists is responsible. He is the first person in contact with the inventors, he has to advise the institute about the process of patenting, he selects the right patent attorney and organizes the meetings between the inventors and them. Furthermore, he advises where to file patent applications for international protection. He has to develop a strategy for licensing and especially to contact the industry for information about new business opportunities.

In case a company needs more detailed information, he organizes meetings with the inventors at the institute and finally it is in his responsibility to negotiate the option - or licensing - conditions. In most cases the negotiations are also accompanied by the legal staff who finally has to structure the agreement.

After signing the contracts with the industry, the licensing manager is responsible for the follow-up of the contract by keeping contact with the licensee as well as with the inventor. In cases where the conditions under which the agreement has been negotiated change over the years, it has to be adapted to the new circumstances. In these cases it is very helpful to have access to the same person who has negotiated the original agreement.

How do we organize our contacts with the institutes?

Each of the scientists has to regularly contact the different institutes and, from time to time, to give a talk on TT to inform, especially the young scientists, on patent matters and licensing. Most of the first contacts are now by phone. Informal information on new ideas can be discussed and interesting projects can be identified. Later on, a formal invention disclosure has to be produced, finally the proper patent attorney has to be selected and an interview with the inventors is organized when appropriate. Close contacts with the inventors is a basic instrument for successful TT also in later stages of the negotiations with companies.

How do we organize our contacts with industry?

The major point in licensing is to install good contacts with industry. It is a generally accepted rule that TT works best and fastest through personal contacts. Therefore it is necessary that a licensing office establishes and cultivates its personal relations to relevant persons in the companies. Visiting trade-fairs, international conferences and specialized workshops are a good source for finding the right persons through which you can bring information into a company. Inventors are a good source for contacts too. They often know colleagues in the industry which might be interested in their technology. Few contacts could be established by publishing a new technology in databases. Perhaps the world of Internet will improve this in the future.

Spin-off coaching

Besides the scientists and the legal staff, two business economists are responsible for one of the most effective forms of TT: the creation of start-ups based on technologies from the MPG. In the last few years, an increasing number of scientists planned to start their own business. The two business economists specializing in this matter have collected the know-how necessary and the contacts to the outside world in this field in order to help the scientists structure their business and financial plans, to implement the technology owned by the MPG and to negotiate with experienced venture capitalists. They work closely with the scientific and legal staff of GI depending on the daily needs.

Licensing

The licensing policy at GI does not differ to any other TT office. We do not have any strict rules. The only guideline is to reach the best possible result. There is no national policy.  If we cannot find a German company interested in our technology we screen the world. It is much better to have a licensee anywhere in the world than to loose a technology because of no interest in your home country.

Whether you can get a down-payment or not and the level of the percentage for the royalties you can get depends only on the project and the partner you have and of course on your skills in negotiating. By selecting a licensee do not look only on the figures you can reach but also on the production and sales capabilities of the company of choice. Selling is at least as eminent as production.

Figures

GI could increase the number of projects to be handled over the years. The following Fig. 1 shows the development since 1990.

In the same period of time the number of agreements has also grown which can be seen in Fig. 2

The main increase however could be created in income as shown in Fig. 3. This however depends on a few very successful projects. We have to work hard to keep these figures over the years.

About 50 start-ups have been born in the last 10 years. The MPG holds shares in some of them bringing an additional value created through TT and licensing.

Success factors

As mentioned earlier, TT is a long-term process. A TT office should have a basis to survive at least for ten years. It is difficult to predict when you will get your big project. But when it comes you must have the skills to manage it and the resources to defend it if necessary. Therefore, your staff too should have a long-term aspect for the employment and the chances in the company. The industry is keen to hire well-educated people in this field. The right mixture of scientists, lawyers and businessmen and a well-organized back-office is the basis for success in TT.

For more information on Garching innovation, see: http://www.garching-innovation.de/

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1 Bernhard Hertel is the Managing Director of Garching Innovation. The document was presented at the Patinnova '01 Conference in Cardifff (UK) on 16 October, 2001.

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