IP_Module 14

MODULE 14: TECHNOLOGY TRANSFER AND INTELLECTUAL PROPERTY RIGHTS

14.1 INTRODUCTION - WHAT IS TECHNOLOGY?

Technology is the branch of knowledge that deals with the creation and use of technical means
and their interrelation with life, society, and the environment, drawing upon such subjects as
industrial arts, engineering, applied science, and pure science. The word technology comes from
Greek term “technología” meaning "art, skill, craft" and logic1.

Technology is a broad term that refers both to artefacts created by humans, such as machines,
and the methods used to create those artefacts. More broadly, technology can be used to refer
to a way of doing something or a means of organization: for instance, democracy might be
considered a social technology. The word is also used to describe the extent to which a society
can manipulate its environment2.

Technology is generally divided3 into five categories:

• Tangible: blueprints, models, operating manuals, prototypes
• Intangible: consultancy, problem solving, and training methods
• High: entirely or almost entirely automated and 'intelligent' technology which

manipulates ever finer matter and ever powerful forces
• Intermediate: semi-automated 'partially intelligent' technology that manipulates refined

matter and medium level forces
• Low: labour intensive 'dumb' technology that manipulates only coarse or gross matter

and weaker forces.

Technology can further be classified4 as follows:

• An Emerging Technology is an innovative technology that currently is undergoing bench-
scale testing, in which a small version of the technology is tested in a laboratory.

• An Innovative Technology is a technology that has been field-tested and applied to a
hazardous waste problem at a site, but lacks a long history of full-scale use. Information
about its cost and how well it works may be insufficient to support prediction of its
performance under a wide variety of operating conditions.

• An Established Technology is a technology for which cost and performance information
is readily available. Only after a technology has been used at many different sites and
the results fully documented is that technology considered established.

Technology has affected society and its surroundings in a number of ways. In many societies,
technology has helped develop more advanced economies and has allowed the rise of a leisure
class. Various implementations of technology influence the values of a society and new
technology often raises new ethical questions. Examples include the rise of the notion of

1 http://evridikidakoselt.wikispaces.com/file/view/Technology.pdf
2 Confronting the challenges of participatory culture
3 http://www.businessdictionary.com/definition/technology.html
4 Notes on Technology Transfer, The Global Development Research Centre

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efficiency in terms of human productivity, a term originally applied only to machines, and the
challenge of traditional norms.

The prehistoric discovery of the ability to control fire increased the available sources of food and
the invention of the wheel helped humans in travelling in and controlling their environment.
Recent technological developments, including the printing press, the telephone, and the
Internet, have lessened physical barriers to communication and allowed humans to interact
freely on a global scale. However, not all technology has been used for peaceful purposes; the
development of weapons of ever-increasing destructive power has progressed throughout
history, from clubs to nuclear weapons.

When the word “technology” is used today, it is most often used to refer to high technology –
computers, cell phones, rockets – rather than technology in general. But when anthropologists
use the word “technology,” they go all the way back to the controlled use of fire (from about
500,000 – 1 million years ago), the invention of the wheel (c. 4000 BC), and beyond. The first
technological tools were simple hand-axes made by our hominid ancestors millions of years
ago5.

“Technology” can be, generally, characterized6 as follows:

14.1.1 RELATED TO SCIENCE

Although there is certainly a relationship between science and technology, there is, except in
certain high technology industries, very little technology that could be classified as applied
science. Technology is marked by different purposes; different processes a different relationship
to established knowledge and a particular relationship to specific contexts of activity. Change in
the material environment is the explicit purpose of technology, and not, as is the case with
science, the understanding of nature; accordingly its solutions are not right or wrong, verifiable
or falsifiable, but more or less effective from different points of view.

14.1.2 INVOLVES DESIGN

At the centre of technology lies design. That “design is the very core of engineering” is affirmed
by the requirement that all degree engineering courses should embody it. The design process in
technology is a sequential process which begins with the perception of a need, continues with
the formulation of a specification, the generation of ideas and a final solution, and ends with an
evaluation of the solution.

14.1.3 FULFILMENT OF A ‘NEED’

The motivating factor behind all technological activity is the desire to fulfil a need. For this
reason all designs should be made or realised - whether that be through prototype, batch- or
mass- production or some form of three-dimensional or computer model - if the need is to be
truly fulfilled, the design is to be legitimately evaluated, and the design activity is to have been
purposeful and worthwhile.

5 Creative technology - http://www.creative.cz/category-73-creative-technology
6 What counts as technology - http://atschool.eduweb.co.uk/trinity/watistec.html

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14.1.4 MULTI-DIMENSIONAL NATURE

Not only may design and production involve co-operation between designer, production
engineer and materials scientist but may also involve “technologists” in performing a multitude
of functions, such as working with others, operating within budgets, persuading decision
makers, communicating to clients and working to deadlines.

14.1.5 CONCERNED ABOUT ETHICS AND VALUES

Technology is informed by values at every point. Value decisions may be called for not only in
relation to the specific design criteria (i.e. aesthetic, ergonomic and economic judgments,
suitability for purpose and ease of manufacture) but also in relation to the rightness or
wrongness of a particular solution in ethical terms.

14.1.6 SHAPES THE SOCIETY

Technological enterprises are determined, neither by advances in knowledge nor simply by the
identification of needs, but by social interests. Of the potential new technologies available at
any one time only a few are developed and become widely implemented. In this way
technology is shaped by society, by consumer choice. Yet it could also be argued that
technology shapes society - the technology of the motor car, for example, has shaped our
environment and our whole way of life.

Simply put, technology is the extension of our human capability, in order to satisfy our needs or
wants. Technology involves systems, sometimes very simple ones, and at other times very
complex ones, and everything else in between.

14.2 TRANSFER OF TECHNOLOGY

Technology is information that is put to use in order to accomplish some task. Transfer is the
movement of technology via some communication channel from one individual or organization
to another. Technology is the useful application of knowledge and expertise into an operation.
Technology transfer usually involves some source of technology, group which posses specialized
technical skills, which transfers the technology to a target group of receptors who do not
possess those specialized technical skills, and who therefore cannot create the tool themselves.
Globally, the technology transfer experience has pointed to multiple transfer strategies, two of
which are the most significant: the licensing of intellectual property rights and extending
property rights and technical expertise to developing firms.

The major categories of technology transfer and commercialization involve the transfer of:

• technology codified and embodied in tangible artefacts
• processes for implementing technology
• knowledge and skills that provide the basis for technology and process development

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Technology transfer is the process by which basic science research and fundamental discoveries
are developed into practical and commercially relevant applications and products. Technology
Transfer personnel evaluate and manage invention portfolios oversees patent prosecution,
negotiate licensing agreements and periodically review cooperative research agreements
already in place. Part of the technology transfer process involves the prosecution of patents
which is overseen by the national Patent and Trademark Office. Individuals with advanced
degrees in the biomedical sciences are needed to review and process patents in the
biotechnology field7.

‘Technology transfer’ means the use of knowledge and when we talk about transfer of the
technology, we really mean the transfer of knowledge by way of an agreement between the
states or companies. ‘Transfer’ does not mean the movement or delivery; transfer can only
happen if technology is used. So, it is application of technology and considered as process by
which technology developed for one purpose is used either in different applications or by a new
user8.

14.3 OBJECTIVES TO BE ACHIEVED

Coordinating between technology users and developers, between researchers and
manufactures is an important element of technology transfer. Access to relevant internal and
external resources to individual projects and enterprises has to be enabled.

A main ingredient for moving technology from a research laboratory to a new business
enterprise successfully is an environment that is supportive of entrepreneurship. This needs to
be encouraged by providing guidance, counselling and resources.

Cataloguing resources related to business enterprises and connecting would-be
entrepreneurs/researchers and other technology developers to outside groups and
organizations which can help in the process of starting new products, companies etc. Such
linkages provide referrals for individual business counselling, sources of financing or the names
of individuals who can help with a particular facet of business development.

Technology Transfer Activities includes processing and evaluating invention disclosures; filing for
patents; technology marketing; licensing; protecting intellectual property arising from research
activity; and assisting in creating new businesses and promoting the success of existing firms.
The result of these activities will be new products, more high-quality jobs, and an expanded
economy.

Technology [transfer] generally would comprise the following elements:
• Process Know how
• Design Know how
• Engineering know how
• Manufacturing know how
• Application Know how

7 Technology transfer, Encyclopedia of Management, Gale Cengage
8 TECHNOLOGY TRANSFER IN SMEs, United Nations Economic and Social Commission for Asia
and Pacific; Chiranjibi Nepal, Bishwa Raj Karki and Kabya Prasad Niraula

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• Management know how

14.4 TECHNOLOGY TRANSFER PROCESS

Technology transfer is the process of transferring discoveries and innovations resulting from
university research to the commercial sector and typically comprises several steps. The process
starts when a faculty member, graduate student or staff (i.e. inventor) of a university submits an
invention disclosure to the university’s office of technology licensing. The office typically
evaluates the invention’s economic prospects and decides whether to protect the IP by securing
a patent, copyright or trademark or by keeping the invention a trade secret. Patenting is often
done concurrently with the publication of the research results. Since inventions made using
university resources are owned by the university, the inventors in effect assign the rights to their
intellectual property and the university is free to license the technology to interested parties.
The next step occurs when an individual or organization, usually a commercial company, secures
a license to commercialize the technology. A license does not technically grant a company the
right to make, use or sell the invention, but it is an agreement for the university not to sue the
company for patent infringement. The license source can be in the form of a patent, copyright,
trade secret or trademark. A non-confidential document summarizing an invention is sent by
the office to interested companies for a review process, with the office requesting a signed
confidentiality agreement prior to a full disclosure. After a due diligence process and the
execution of a licensing agreement, both parties may start earning income from the transferred
technology. While this may sound fairly simple, the actual process is often complicated in
practice9.

14.5 TECHNOLOGY TRANSFER IN INDIA

Exponential Growth of Technology in India has played a significant role in all round development
and growth of economy in our country. Technology can either be developed through own
research and development or it can be purchased through indigenous or imported sources.
India has opted for a judicious mix of indigenous and imported technology. Purchase of
technology is commonly called “Technology transfer” and it is generally covered by a technology
transfer agreement. India inherited a poorly defined and monopolistic domestic sector from its
colonial past. However, Indian industry has been growing steadily since liberalization from its
normal interactions with probable tech donors. It now has policies like automatic approval to all
industries for foreign collaborations, so long as there is a decent lump sum payment (although
there are regulatory ceilings on royalty payments). The result has been a blossoming of a few
primarily Indian biopharmaceutical groups into multinational enterprises. Also, India has seen
that projects with international collaborations have recorded minimal economic dispersion. This
has enhanced the confidence of India, a nation that already has conspicuous human resources
primed for research and development activity.

Still, India has not reached anywhere close to the biotech global top spots, despite its solid
positioning in the low technology sectors, such as agriculture and dairy. Clearly something has
gone amiss in this whole process. Either Indian corporations do not see a good market for hi-
tech products, or there is no indigenous generation of high technology, or international groups

9 Technology Trends - http://www.angel-investor-news.com/ART_TT.htm

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offer only last-generation technology for collaborations. It must be said, however, that Indian
research laboratories are close to global current trends on conceptual and technical terms.
Obviously a lot of potential remains un-harnessed, demands unmet and dreams unrealized.

14.6 TYPES OF TECHNOLOGY TRANSFER

14.6.1 TECHNOLOGY LICENSING, EXPORTING AND LEASING

Technology transfer between private companies10 is most commonly accomplished through
licensing, although other mechanisms such as joint ventures, research consortia, and research
partnerships are also quite popular. Licensing is a big business by itself. In 2002 U.S. companies
received over $66 billion in payments on technology licenses from other organizations, of which
$58 billion was from domestic sources. Data from the U.S. Department of Commerce compiled
in the mid-1990s indicated that international technology licensing was rising at approximately
18 percent per year, and domestic technology licensing was rising at 10 percent per year.
Another growing mode of private technology transfer is the formation of research joint ventures
(RJVs) between companies in the United States. For years, such joint ventures were rare, mostly
due to fears among companies that joint ventures would provoke antitrust litigation from the
government. Research joint ventures are an advantageous means of acquiring high-risk
technologies, for several reasons. First, joint ventures enable the risks and costs involved in early
research in technology to be shared across multiple firms, reducing the burden on each
individual company. Second, the resources and expertise needed to develop certain
technologies may be distributed across multiple firms, so RJVs are the only way to combine
those resources in one effort. Third, in industries where technology advances quickly, RJVs are
an effective way to keep up with new developments. Finally, RJVs are often used to develop and
set critical technical standards in certain industries, especially telecommunications. These
reasons indicate that RJVs will continue to increase in significance as a tool for technology
transfer.

Once the organization has at least started to establish ownership of the technology, there are
several possible legal and/or contractual mechanisms for transferring technology from one
organization to another11:

Licensing—the exchange of access to a technology and perhaps associated skills from one
company for a regular stream of cash flows from another.
Cross-licensing—an agreement between two firms to allow each other use of or access to
specific technologies owned by the firms.
Strategic supplier agreement—a long-term supply contract, including guarantees of future
purchases and greater integration of activity than a casual market relationship. One prominent
example is the second-source agreements signed between semiconductor chip manufacturers.
Contract R&D—an agreement under which one company or organization, which generally
specializes in research, conducts research in a specific area on behalf of a sponsoring firm.

10 Transfer of technology [UNCTAD Series on Issues in International Investment Agreements], United
Nations Conference on Trade and Development http://www.unctad.org/en/docs/psiteiitd28.en.pdf
11 Technology Transfer - http://www.referenceforbusiness.com/management/Str-Ti/Technology-
Transfer.html

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Joint or cooperative R&D agreement—an agreement under which two or more companies
agree to cooperate in a specific area of R&D or a specific project, coordinating research tasks
across the partner firms and with sharing of research results.
R&D corporation or research joint venture—the establishment of a separate organization,
jointly owned by two or more companies, which conducts research on behalf of its owners.
Research consortium—any organization with multiple members formed to conduct joint
research in a broad area, often in its own facilities and using personnel on loan from member
firms and/or direct hires. The choice of which mechanism to use in a particular technology
transaction depends on many factors, including the stage of development for that technology,
what the company receiving the technology is willing or able to pay, what technology or other
assets it might be able to offer in place of money, the likely benefits of establishing a longer-
lasting partnership between the organizations instead of a onetime transfer; and the exact legal
status of ownership over that technology. For example, if a small firm simply wants to sell its
technology to a large firm in exchange for money, it will probably choose to license the
technology. If the small firm also wants access to the large firm's complementary assets, such as
its production facilities and distribution network, it will try to negotiate a more substantial and
permanent relationship, such as an R&D contract or a cooperative R&D agreement.

14.7 LICENSING AGREEMENT12

This covers the transfer of certain rights from the Developer of a technology, process or know-
how to the Recipient, in return for a fee or share of royalties. An industrial franchise can be
regarded as a type of license agreement. This type of agreement allows the franchise holder
(Recipient) to obtain the franchisee’s (Developer) know-how, or expertise in order to
manufacture or exploit a product or knowledge that will be distributed under the franchisee’s
brand in a given territory.

14.8 TECHNICAL CO-OPERATION13

Technical co-operation requires that both parties - play an active/creative role by providing their
expertise or know-how in order to:

• Adapt a technology, a product or a process for a new application or sector
• Develop a technology, a product or a process to meet new market needs
• A technical cooperation agreement can comprise for instance the following cases:
• Co-development of a new product using the expertise of the Developer and the

production facilities of the Recipient
• Co-development of a new version of an existing product to meet market needs
• Feasibility study including tests -customised for a specific application

A technical cooperation agreement is definitely not:

12 Types of Technology Transfer - http://www.enterprise-europe-network.sk/content.php?id=37
13 Types of Technology Transfer - http://www.enterprise-europe-network.sk/content.php?id=37

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• A research project: A technical cooperation agreement should deliver a process or a
product that is directly operational, which is not necessarily the case within a research
project.

• An exchange of samples
• A simple conformity tests on samples: This is not enough for being considered as a

feasibility study where a specific expertise exchange is needed.
• A Non Disclosure Agreement (NDA)
• A simple training
• A consultancy work

14.9 JOINT VENTURE14

This type- of agreements is the most complete. It is a strategic alliance between two or more
parties to undertake economic activity together. The parties agree to create a new entity
together, by both contributing equally and they then share the revenues, expenses, and control
of the enterprise. The venture can be for one specific project only, or a continuing business
relationship. It implies the creation of a formalized link between companies, with the sharing of
commercially sensitive information to allow the development of new technologies, processes or
products.

14.10 COMMERCIAL AGREEMENT WITH TECHNICAL ASSISTANCE15

This includes any commercial agreements between 2 parties accompanied by a transfer of
know-how or expertise, which should consist of:

• Assistance with starting up an installation
• Advice/training on the use of a new process
• Technical Training accompanying the transfer of the new product/process
• Technical assistance ensures the effective start-up and/or maintenance of the

transferred technology, but also covers the installation of technology (assembly;
engineering work; testing; training).

14.11 MANUFACTURING AGREEMENT (SUBCONTRACTING & CO-CONTRACTING)16

These types of agreements are only valid if they involve some elements of the transfer of
expertise, know-how, technology and/or training. The two valid types of agreements are:

• Subcontracting: the Developer is the client and the recipient its subcontractor. The
developer transfers some of its specific know-how to the subcontractor to enable him to
perform the work required.

• Co-contracting: the Contractor selects the subcontractor on the basis of specific skills,
expertise and know-how it possesses to jointly develop new processes and technologies.

14 Types of Technology Transfer - http://www.enterprise-europe-network.sk/content.php?id=37
15 Types of Technology Transfer - http://www.enterprise-europe-network.sk/content.php?id=37
16 Types of Technology Transfer - http://www.enterprise-europe-network.sk/content.php?id=37

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14.12 INVENTIONS WITH OBLIGATIONS TO THIRD PARTIES17

Many inventions attributable to university researchers are related to research projects carried
out in cooperation with third parties. A contract between the parties is usually drawn up at the
start of such projects, stating how any inventions that may occur will be handled. The
subsequent process of filing a patent and who will derive the rights from it are also
documented. The technology transfer actually takes place in advance of this stage.
Inventions that can used freely-

If a researcher comes up with an invention that carries no obligations to any third parties, which
means can freely use the invention, the business case is an essential step in the process toward
choosing the right business model.

In such a case, technology transfer can occur in one of three ways:

• By selling the invention
• By licensing the invention
• By setting up a spin-off

14.13.1 LICENSING THE INVENTION:

One or more interested parties will have been found as part of the business case that is keen to
apply the invention in their product or process. The license granted can be either exclusive or
non-exclusive, with various forms of exclusive license, such as geographical, in time, in
application and so forth. The license is granted in return for a royalty payment, related to the
turnover generated by the invention. The size of the royalty also depends on the degree of
exclusivity. A lump sum may be involved in order to cover the patent costs incurred.

14.13.2 SETTING UP A SPIN-OFF:

If the business case involves the decision to set up a spin-off, the initiative for this is taken by the
Innovation Lab. A first draft of a business plan is compiled, in which the company, the product
and the market are described in some detail. The financial section of the business plan must
show healthy profitability. The business plan will also be used to secure funding. The Innovation
Lab then sets up a subsidiary company under Holding, together with the inventor(s), and the
search begins for parties needed to make the spin-off a success.

Since we, as a university body, are interested primarily in intensive, long-term cooperation at
the scientific level, we are keen to facilitate spin-offs. In the ideal situation, this results in joint
follow-up research and contract research. Clear agreements will be made with regard to the
spin-off company itself. These concern not only the role of the shareholders (shareholders’

17 Various types of technology transfer - http://www.tue.nl/en/innovation/technology-transfer-by-
tue/various-types-of-technology-transfer/

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agreement), but also the provision of knowledge (licensing agreement) and facilities
(cooperation agreement)18.

14.14 VERTICAL TRANSFER OF TECHNOLOGY

Technology transfer can take a number of different forms, depending on the capacity and
policies of the parties involved the size of the technological gap, the amount and quality of the
technical information available, the degree of supplier intervention and the initiative shown by
the recipient. The various forms of technology transfer can be classified as follows, with
reference to historical events and the conventions of contemporary international technology
transfer19.

14.14.1 TECHNOLOGY TRANSFER – FROM GOVERNMENT TO INDUSTRY20

In an effort to increase the application of government research results to industry technology
problems (and therefore fuel technology-based economic growth), the United States
government has passed a series of laws since 1980 to encourage the transfer of technologies
from government laboratories to industry. Technology licensing was the earliest focus of
activity, based on the notion that government laboratories were like treasure chests of available
technologies that could easily be applied to corporate needs. In fact, government technology
licensing activity is extremely limited. Other agencies face substantial difficulties in licensing
technologies. Often, their technologies require substantial development before
commercialization, reducing their value to firms. Also, most government laboratories do
research in areas where there is no clear, consistent path to commercialization as exists in the
pharmaceutical industry. The uncertainty of commercialization also diminishes the willingness
of firms to purchase technology licenses from laboratories.

Instead, most agencies have focused on signing Cooperative Research and Development
Agreements (CRADAs). CRADAs are contracts to conduct joint R&D projects, where the
government laboratory contributes personnel and equipment, while the partner contributes
these assets and funding as well. The number of CRADAs signed by government agencies has
increase steadily in recent years.

There are several potential benefits and potential difficulties involved in CRADA research
relationships:

• Transfer of product and process technologies can have a significant impact on recipient
firms' business performance.

• Technology transfer may or may not result in commercial products. A survey of 229
technology transfer projects at 29 federal laboratories, conducted by the Georgia
Institute of Technology, found that 22 percent of the projects resulted in new

18 Various types of technology transfer - http://www.tue.nl/en/innovation/technology-transfer-by-
tue/various-types-of-technology-transfer/
19 Technology Transfer - www.grips.ac.jp/teacher/oono/hp/docu02/uchida_techtransfer.doc
20 Government to industry transfer, Encyclopedia of Management;
http://www.encyclopedia.com/topic/Technology_Transfer.aspx

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commercial products, while 38 percent contributed to products under development.
Interestingly, in 13 percent of the projects, new product development or product
improvement was never a goal.

Laboratories' views on technology transfer can affect success. Now that most of the legal
barriers to technology transfer have apparently been eliminated by congressional legislation,
the true barriers are generated by the culture of the laboratories and the attitudes of
researchers and laboratory administrators. For example, in several cases firms have complained
that laboratory researchers were not used to meeting the strict timetables on project
completion that private sector researchers must observe.

Technology transfer, especially in joint research, can aid the government laboratory as well. A
report examining ten CRADA projects found that the laboratories can also benefit from
technology transfer, for example, through enhanced expertise for researchers, development of
technologies that also support the laboratory's mission, acquisition of sophisticated equipment
and infrastructure, and increased laboratory revenues from industrial sources21.

14.14.2 TECHNOLOGY TRANSFER – BY UNIVERSITY AND INDUSTRY COLLABORATIONS22

Speeding up the transfer of technology from the university to industry became a widespread
goal of governments in the 1980s, even though the processes of transfer was not yet well
understood. Key issues of debate included whether existing laws, policies and funding programs
work to maximize transfer of technology to the private sector and whether they jeopardize
universities' training and open- science missions. Negotiating intellectual property rights is
"troublesome" to both researchers involved and university technology managers. It was said
that Technology transfer occurs in airplane seats and at lunch.

One of the original pieces of U.S. technology-transfer legislation23, the Bayh-Dole Act, directed
government agencies to encourage universities and other research organizations to license out
technologies developed with federal funding. Since 1980, this activity has become a small but
growing source of revenue for universities. Technology transfer from academia and other
research institutions to industry continues to grow, according to the annual survey of the
Association of University Technology Managers. The 2003 survey shows that increasing
numbers of research institutions are forging licensing agreements with commercial entities to
bring newly developed technology and products to the market. In 2003, the 165 institutions of
higher education responding to the survey reported receiving close to $1 billion in licensing
revenue in 2003, a 1 percent increase over 2002.

Commercial institutions pay royalties for the right to put inventions and discoveries from
universities to commercial use in products such as computer-imaging technology, medical
diagnostic testing, and treatment of disease. Institutions of higher education, in turn, can use
the revenue to increase investments in research and development. This technology transfer also

21 Transfer of Technology - http://www.referenceforbusiness.com/management/Str-Ti/Technology-
Transfer.html
22 University-Industry Collaboration and Technology Transfer -
http://www.ipfrontline.com/depts/article.aspx?id=7061&deptid=3
23 University - government role analysed in Technology Transfer, Stanford University News Service;
http://news.stanford.edu/pr/94/940329Arc4357.html

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leads to sponsored research agreements between firms and universities, often to undertake
additional research needed to commercialize technologies. Universities now receive
approximately 7 percent of all research funding from industry, compared to about 3 percent in
the 1970s. Institutions of higher education also reported spinning off nearly 350 companies and
receiving 3,450 U.S. patents for new technologies and inventions. Since fiscal year 1998 when
the question was first asked, 178 U.S. survey respondents have reported a total of 2,230 new
products introduced to the market place24.

For industry, universities offer the best way to acquire basic technological research as those
activities are curtailed within firms. Universities also house experts in much focused fields of
study that are likely to have benefits to a small number of firms. Finally, joint industry-university
research is viewed as an important recruiting tool in today's competition for scientific talent,
since industry-funded projects are often carried out by graduate students who later go to work
for their former sponsors25.

Technology transfer is a valuable mechanism by which industry can accelerate its innovation
activities and gain competitive advantage through cooperation. Technology transfer can also
boost overall economic growth and regional economic development. While further study is
needed to estimate the exact benefits gained from technology transfer and ways to achieve
those benefits, it is clear that this is an activity that is becoming a central feature of the U.S.
research and development system.

14.15 HORIZONTAL TRANSFER OF TECHNOLOGY

Vertical technology transfer refers to the transfer of technical knowledge and hardware, from
R&D through to commercialization whereas Horizontal technology transfer refers to the transfer
of technical knowledge and hardware from one geographic location to another. Any technology
transfer model or commercialization model can be portable across countries if technologies in
the case are similar and relevant to particular socioeconomic needs. The latter is critical for the
business sustainability too. Developing countries need production facilities for the essentials not
the dreamy research-driven technologies at this stage so industrialization should really be the
priority.

14.16 HOW CAN DEVELOPING COUNTRIES BEST FACILITATE TECHNOLOGY TRANSFER FROM
RESEARCH INSTITUTIONS26?

As the worst economic crisis in decades continues to take its toll, one thing is now clear - its
effects aren't confined to rich countries. The development and adoption of innovative
technologies can help developing countries better cope with the effects of the crisis27. How can
developing countries best facilitate technology transfer from research institutions?

24 Transfer of Technology [IPU] - www.scribd.com/doc/51102656/DTRANSFER-OF-TECHNOLOGY
25 University industry collaboration - http://www.encyclopedia.com/topic/Technology_Transfer.aspx
26 Technology transfer facility, Ana Carrasco, infoDev [infoDev is a global partnership program within
the World Bank Group which works at the intersection of innovation, technology, and
entrepreneurship to create opportunities for inclusive growth, job creation and poverty reduction.]
27 Facilitating transfer of technology to developing nations, United Nations Conference on Trade and
Development; http://www.unctad.org/en/docs/iteipc20045_en.pdf

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Recognizing the need for further study of technology transfer, IFC has financed a study on
technology transfer and proposed some hypothetical interventions that may prove to
effectively facilitate technology transfer from research institutions. The report raises a number
of questions, including:

• Has the US model been successfully replicated elsewhere? Can it be? More importantly,
should it be?

• What are the strengths and weaknesses of the US technology commercialization model
in the US context? What are the implications for emerging markets?

• What other models exist and what are their strengths, weaknesses, and adaptability and
implement ability?

• Who are the stakeholders in tech transfer generally? Which of these play an active role
in commercialization? Which currently do not but should?

• What are the special technology transfer considerations by industry, e.g., human health,
agriculture and food, information technology, and alternative energy?

• What approaches might improve technology flows between developed countries and
emerging markets?

14.17 HOME-COUNTRY MEASURES

Many developed countries have adopted measures that directly or indirectly facilitate
technology transfer. These measures include financing support, training, matching services,
partnerships and alliances and support for equipment purchase or licensing. UNCTAD has
surveyed 41 agencies and programmes in 23 developed countries that offer home-country
measures (HCMs), in one way or another, facilitating technology transfer. HCMs are often
provided as part of international cooperation programmes and/or strategic trade and
investment initiatives28.

UNCTAD has surveyed 41 agencies and programmes in 23 countries that provide HCMs
facilitating technology transfer. The most common HCMs related to technology transfer include
project financing (including through FDI and venture capital), training, matching services,
partnerships and alliances and support for equipment purchase or licensing. The measures are
intended to help identify possible sources of technology, acquire the required technology, adapt
it to local needs and develop the local technological base. The following illustrates the different
types of HCMs provided by developed countries to facilitate technology transfer.

14.18 FINANCING OF TECHNOLOGY TRANSFER

Some HCMs directly finance technology-transfer-related activities such as the purchasing of
equipment and/or licensing a particular technology by developing country firms and institutions,
and training of operators and maintenance personnel. Financing may also support adaptation of
these technologies to suit the local conditions and standards, and the preparation of feasibility
studies, missions and project planning meetings.

28 A survey of home country measures, United Nations Conference on Trade and Development;
http://www.unctad.org/en/docs/iteipc20045_en.pdf

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14.19 TECHNOLOGY TRANSFER THROUGH FDI 29

Foreign direct investment is one of the channels of technology transfer to developing countries.
Foreign affiliates may bring new opportunities and challenges that may encourage suppliers to
innovate. They may provide direct training to suppliers and retailers of their products and
services. In addition, the movement of manpower between different firms could transfer
management and marketing techniques. These could induce higher efficiency in the utilization
of resources (e.g. human and financial) that will entail further adaptation of competitors to
survive in the new environment.

A number of home countries encourage their firms to invest in developing countries through
provision of incentives. Although many of these incentives aim at promoting internationalization
of their firms, in some cases, home-country governments require their firms to show evidence
of technology transfer to developing country in order to receive the incentives, while in other
cases there is no such requirement. Some of the requirements such as training of local
personnel transfer of machinery and equipment, linkages with the local firms and local supplier
networks are considered important in facilitating technology transfer through FDI30.

While host-country incentives and environment play a vital role in attracting FDI, home-country
initiatives that reduce the risks of investing in developing countries can also facilitate investment
flows. For example, FinnFund, a state-owned finance company, plays an important role in
promoting investment flows to developing countries. Finnfund invests primarily in Finnish
companies or long-term customers, suppliers and subcontractors of Finnish firms and/or
companies that license Finnish technology (see annex 1 for details).

14.20 MATCHMAKING AND PROVISION OF INFORMATION ON TECHNOLOGIES

One of the main challenges faced by developing countries is to identify the most suitable
technology from out of several alternative technologies and multiple sources of technologies.
This is important especially in those areas where the technologies are changing rapidly.
Matching those who possess the necessary technologies with those that need them may be
difficult and costly for developing countries with limited sources of information.

The importance of matchmaking in facilitating the transfer of technology is illustrated by the
activities of United States-Asia Environmental Partnership (US-AEP),12 a public-private
interagency partnership, supported by the United States Agency for International Development
(USAID). Founded in 1992, US-AEP brings together American business enterprises and potential
Asian customers. By 2002, US-AEP had matched over 700 Asian stakeholders, attended to 5000
requests from Asia and accounted for successful transfer of about US$1.4 billion worth of
technologies. In 2002, the US-AEP received the Government Award from the Environmental
Business Journal in recognition of its work.

29 Home country measures and FDI – Monographs on Investment and Competition Policy, #13;
http://www.cuts-international.org/HCM_FDI.pdf
30 Facilitating transfer of technology to developing nations, United Nations Conference on Trade and
Development; UNCTAD Series on Trade and Development;
http://www.unctad.org/en/docs/iteipc20045_en.pdf

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14.21 PROMOTING PUBLIC-PRIVATE PARTNERSHIPS

Public-private partnerships present a unique opportunity for combining the entrepreneurial,
innovative and efficiency of private firms and the flexibility of public institutions to deliver
services especially in neglected areas. These partnerships so far have been in limited areas.

14.22 ACCESS TO VENTURE CAPITAL AND TECHNOLOGY TRANSFER

Venture capital plays a central role in facilitating technology development and transfer through
provision of support for product development and commercialization. Venture capitalists also
provide management support, business and marketing strategies, and match making services,
among others, that improve the success of commercializing technologies and expansion of
businesses.

Home countries could also facilitate the formation of venture capital firms in developing
countries. For example, the South-North Development Initiative has been instrumental in
developing six local venture capital projects in Africa and Latin America. The shareholders are
Americans and local business houses/persons. Developed countries, through their agencies and
development banks, could help create venture firms in developing countries through provision
of seed funds, encouraging their firms to invest in the funds and, through agreements with
developing countries, create an enabling environment for venture capitalists.

14.23 INTERNATIONAL ALLIANCES AND TRANSFER OF TECHNOLOGY

One of the significant features of the global business environment in recent decades has been
the formation of networks involving partners in different countries, each providing
complementary support services and technologies. These networks are designed to reduce the
risks and share the costs associated with the development of new products. Such arrangements
are particularly important in areas with limited access to financing and technology. Some of
these alliances may involve developed and developing country institutions that may share key
technologies31.

14.24 MEASURES TO IMPROVE HOST-COUNTRY ABSORPTIVE AND TECHNOLOGICAL
CAPACITY

Many developed countries support human resource development in developing countries by
providing scholarships for higher education in their home countries. They also provide research
and equipment support to academic, research and professional institutions in developing
countries. Technical assistance is also provided to industrial associations and government
advisory bodies.

31 Facilitating transfer of technology to developing nations, United Nations Conference on Trade and
Development; UNCTAD Series on Trade and Development;
http://www.unctad.org/en/docs/iteipc20045_en.pdf

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14.25 CO-OPERATION IN TRANSFER OF TECHNOLOGY 32

Developing countries have also committed themselves to work together to overcome shared
challenges. The Marrakech Declaration (Morocco, 2003) recognized that “South-South
cooperation is not an option but an imperative to complement North-South cooperation”.
Similarly, the Dubai Declaration for the promotion of science and technology (Dubai, 2002)
called for the “identification, documentation and networking of institutions and individuals who
have made significant progress in the field of biotechnology”, provision of funding through
development banks, collaborative programmes and networking. The Dubai Declaration also
called on “international institutions such as FAO, UNCTAD, UNDP, UNESCO and others” to
increase their support to developing countries and concerted efforts within and between
nations to overcome the digital divide.

A number of the South-South initiatives are likely to occur through regional and bilateral
agreements. Through these initiatives, international resources and expertise could be channels
to overcome common challenges. They also concentrate limited regional resources to achieve a
critical mass that could overcome national weaknesses that may hinder the rate at which
technology is absorbed or utilized. Further, they may facilitate harmonization in policies that
encourage technology development, transfer and use.

For example, the Organization of African Unity (OAU), now African Union (AU), launched the
Pan African Rinderpest Campaign (PARC) in 1986 to completely eradicate the disease
(Rinderpest) on the continent. PARC coordinated national projects in 35 participating countries
and assisted in improving vaccine production and quality control technologies, skills upgrade,
management training, border harmonization dialogue and communication channels. Through
PARC, the EU is estimated to have invested $200 million by 1999. Rinderpest, a viral disease,
could wipe out up to 90 per cent of the cattle in an area and, with it, the livelihood of many
families. A vaccination campaign in 22 African countries was thought to have eradicated the
disease in the 1970s. However, between 1979 and 1983 more than 100 million cattle died from
a resurgence of the disease. Nigeria alone is thought to have lost $2 billion dollar due Rinderpest
in the 1980s.

With different developing countries at different levels of technological development,
cooperation should increase technology transfer especially in areas of common interest. Some
developing countries are quickly becoming technological leaders and should soon be in a
position to assist other developing countries establish a technological base within and between
regions.

14.26 TRANSFER OF CLIMATE FRIENDLY TECHNOLOGY33

Transfer of specifically climate friendly technology to the developing countries, including
emerging economies has become one of the hot topics in recent years. Governments and

32 Facilitating transfer of technology to developing nations, United Nations Conference on Trade and
Development; UNCTAD Series on Trade and Development;
http://www.unctad.org/en/docs/iteipc20045_en.pdf

33 Technology transfer financing to developing countries, Heikki Noro, Parola International Associates,
Finland, November 2006; http://www.ymparisto.fi/download.asp?contentid=67209

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multilateral institutions have taken up a variety of measures in promoting and financing trade
and investments in this field. Incentives have been beefed up with subsidized financing
instruments in order to attract the private sector. The Kyoto Protocol has given a special boost
to the market forces in two ways: a) investments in more environmentally friendly energy
production, and b) investments in clean production technologies and energy efficiency. Energy
producers, polluting industry and providers of new technologies have all started to make use of
the available financing instruments, including CDM and JI, and are participating in various
programmes promoting the use of clean technologies and renewable energy. The developing
countries are among the main beneficiaries, as their energy and industrial sectors are growing
rapidly and offer investment opportunities to this effect.

Climate change and the Kyoto Protocol are closely interrelated to wider issues in the financing
of more environmentally friendly business and investments. Technology transfer to developing
countries can relate in this respect to several different activities, which are targets for financial
transactions: 1) purchase and trade of carbon credits through the CDM and JI processes; 2)
export of technologies, equipment and services on purely commercial basis; 3) transfer of
intellectual property rights through licensing and related commercial means; 4) utilization of
multilateral and bilateral promotional and financing schemes tailored for this purpose; 5)
physical or financial investment in clean energy production and clean technology companies in
the developing countries; 6) provision of advisory services through various technical assistance
programmes.

All these activities are designed and can contribute to positive developments in preventing
climate change. This short paper aims at giving a snapshot of the present financing market in
the areas of promotion and transfer of climate friendly technologies to the developing
countries. The review will concentrate on the transfer process, but not in the wider area of
technology development in the supplying countries. The review will focus on three issues: the
main players, the main financiers and the main financing instruments in use. The description will
not be exhaustive, but will try to illustrate the most essential forms and players today. The
review will also try to look at the demand side, i.e. investors of this technology on one side and
suppliers of it on the other side. In this respect, how the instruments address to some of the
main bottlenecks in the financial markets will be touched upon.

There is abundance of bilateral, multilateral and other financing instruments available to
support technology transfer to developing countries. Specific financing instruments and
promotional activities for climate friendly activities are, however, a more recent phenomenon.
Therefore, limited information on their effectiveness is still available. The paper will try to point
out some of the conclusions made in evaluation of selected financing instruments.

14.27 TECHNOLOGY TRANSFER TO DEVELOPING COUNTRIES IS AN IMPOSSIBLE DREAM

Collaboration between private investors and public sector is the only way to introduce low-
carbon technology to poor countries. One of the most contentious topics for discussion at the
Copenhagen climate talks will be "technology transfer", the proposition that climate
technologies should be handed from rich nations to poor.

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It's a fine idea in theory. It happened in pharmaceuticals with the licensing of HIV/Aids
medications to the developing world. But climate change is a different ball game, where
technology transfer is a complex challenge. For a start, governments don't own intellectual
property, companies do. Getting companies to surrender it is no easy task.

A hybrid car has more than 350 individual patents. How do you manage the licensing of each of
these? If you jump that hurdle, you still need to build, market and install the technology in a
new market that lacks much of the skills, capital and infrastructure the developed world takes
for granted.

The second fatal flaw in this concept of "technology transfer" is the assumption the technology
is there and ready to be transferred. It isn't. Developed nations are still inventing and trialing
much of it. Take bio-fuels: we know algae could be part of the answer to an alternative to oil.
But it is at least 15 or 20 years away from large-scale reality. If we haven't got it now, we can't
transfer it.34

The focus needs to shift from technology transfer to technology collaboration. While the public
sector can stimulate demand and create markets for low-carbon technologies, the large-scale
investment required to deploy these climate friendly technologies will come from the private
sector. Partnership between the two is a critical success factor. Our answer at the Carbon Trust,
developed with the Indian Institute of Technology and Climate Strategies, is to establish a global
network of Climate Innovation Centers in developing countries, funded by the international
community, national governments, local and global businesses. These centres would build local
capacity, encourage enterprise and provide finance to roll out the technologies we have today
and develop the ones we'll use tomorrow. We estimate that an initial investment of £2bn in 20
centres would leverage up to £20bn in private money and they could be up and running within
two years. They will enable the right solutions to be developed in the right places. There is no
silver bullet: every region faces its own climate and energy challenges.

In the developed world, most clean energy technology is developed for use with existing
electricity grids. Yet there is no grid in much of the developing world. In Africa, how do you
replace millions of diesel generators with solar photovoltaic?

In India, how can you drive mass household uptake of solar thermal and cooling for cleaner
water and refrigeration?

These problems are best solved by the academic and business brains of the nations and regions
they affect, with the backing of international finance. Creating local economic opportunity will
encourage the private sector to engage and drive change.

The next decade is crucial in reducing global carbon emissions. If we continue to pursue the
impossible dream of technology transfer instead of collaboration, we will let time slip through
our fingers and progress will be slow and haphazard. Some of the biggest challenges the world
faces simply won't be addressed. We cannot afford to let that happen.

34 Technology transfer to developing countries is an impossible dream, Cath Bremner, The Guardian,
UK; http://www.guardian.co.uk/environment/cif-green/2009/dec/09/technology-transfer

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