Univalor & LRD: A brief comparative study of technology transfer units

What factors facilitate technology transfer?

By Cliff Pavlovic, M.Sc, Ph.D

November 2010 Leuven (Flemish Brabant), Belgium, & Montral (Qubec), Canada

Table of Contents
Summary ....................................................................................................................................................... 3 Introduction .................................................................................................................................................. 4 Background ............................................................................................................................................... 5 Technology transfer .............................................................................................................................. 5 Overview of organizations being studied ................................................................................................. 5 Univalor ................................................................................................................................................. 5 LRD ........................................................................................................................................................ 6 Roots of success: Key differentiators regarding LRD .................................................................................... 7 Technology transfer: Low barrier of entry ................................................................................................ 7 Technology transfer: Setting up the Return on Investment ..................................................................... 8 Easy access and proper tools: A mix for success .................................................................................... 10 New outcomes to measure ..................................................................................................................... 10 Conclusions: Technology transfer, a holistic approach .............................................................................. 12 Recommendations .................................................................................................................................. 12 1-Lower the barrier of entry for faculty to benefit from technology transfer ................................... 12 2-Tools to facilitate IP valorisation for the actors involved in technology transfer ........................... 12 3-New outcomes indicating economic development ......................................................................... 12 Acknowledgements..................................................................................................................................... 13 Works Cited ................................................................................................................................................. 14

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Summary
The purpose of this study is to compare two different technology transfer units, Univalor from Montral (Canada) and Leuven Research & Development (LRD) from Leuven (Belgium), with the goal of determining what can be recommended to improve the efficacy of technology transfer in Canada. The rationale behind this approach is to learn from LRD, which has a long and successful history in the field of valorization. Although there are a few differences between both units (structurally, environmentally or functionally), the focus turned to the main points which facilitate and improve the efficiency and experience of technology transfer. The points being having an internal VC fund to facilitate spin-off creation, a patent fund to allow timely IP protection, a low barrier of entry into technology transfer for researchers, and measuring new outcomes for technology transfer efficiency. Following discovery of the main points of difference which permit an improved technology transfer ability, three recommendations are put forward: 1) to lower the barrier of entry, for researchers, to technology transfer, 2) to put in place tools, for the technology transfer professionals, to facilitate IP valorisation, and 3) to use outcomes which are a better indicator of (or effect on) economic development.

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Introduction
The purpose of this study is to do a comparison between two technology transfer entities, Univalor in Montral (Qubec, Canada) and K.U.Leuven Research & Development (LRD) in Leuven (Flemish Brabant, Belgium). The goal is to determine what can be recommended to improve the efficacy of technology transfer in Canada by learning from LRD, which has a long and successful history in the field of valorization. The data and information collected to make this report are from the various actors and documentation within LRD and Univalor, as well as within K.U.Leuven and Universit de Montral, as well as from my own in-the-field experience, working as a technology transfer professional at both units (at the time of the writing of this report: 6 months at LRD and 12 months at Univalor). Some work has been done in regards to comparing different technology transfer systems, albeit at a conceptual level. The masters thesis of David Melviez (1), published in 2008, was a case study regarding technology transfer in Canada and Belgium. The thesis provides very good background information on both Univalor and LRD, as well as the context in which they operate. Although the thesis does provide to be an interesting case study at an academic level, it does not delve into the application and consequences of the various processes found in technology transfer. This report will focus on more practical observations and applications in regards to technology transfer in Canada and Belgium, from the perspective of a technology transfer professional who has worked in both systems.

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Background
Technology transfer A general description can be found in Wikipedia(2), which states: Technology transfer is the process of sharing of skills, knowledge, technologies, methods of manufacturing, samples of manufacturing and facilities among governments and other institutions to ensure that scientific and technological developments are accessible to a wider range of users who can then further develop and exploit the technology into new products, processes, applications, materials or services. Within the context of this report, technology transfer is the sharing of technological developments from academia with industry or through the creation of spin-offs, for the purpose of commercialization.

Overview of organizations being studied

Univalor Univalor is a limited partnership founded in 2001 whose mission is to accelerate the transfer to industry of the results of research undertaken by researchers from the Universit de Montral, its affiliated schools and most of its affiliated hospitals (3). In this context and in pursuit of its mission, Univalor benefits from financial support from the Ministre du dveloppement conomique, de l'Innovation et de l'Exportation (MDEIE), the Economic Development Agency of Canada (CED), and from the financial and logistical contribution of each of the institutions it serves (4). Univalor itself is a separate private entity where a multidisciplinary team of experts guides researchers and interact with the industry (1). Univalor has numerous interactions with the financial community and the industry, and recently put in place a patent fund to facilitate IP protection. Organizational structure Univalor has a subject-based structure (i.e. health sciences, engineering) where roles and responsibilities are clearly defined (Figure 1).

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Figure 1: Univalors organizational structure

IP Ownership and Policy The IP initially belongs to the researcher or the university, but in any case the researcher has to assign the IP to the university and at the same time, the IP must be assigned to its limited partnership which is managed by the technology transfer firm (in this case, Univalor) for valorization and commercialization to proceed. (1). LRD K.U.Leuven Research & Development (LRD) is the technology transfer office (TTO) of K.U.Leuven. Since 1972 a multidisciplinary team of experts guides researchers in their interaction with industry and society, and the valorisation of their research results (5). LRD is a separate unit within the university that aims to promote and support the transfer of knowledge and technology, between on one hand the university and on the other industry and society. In order to do this, LRD offers professional advice about legal, technical as well as business-related issues. In addition, LRD is financial independent and self-sufficient (5). LRD is also the recipient of the 2008 IPTEC Tech Transfer Award, in recognition of an outstanding record in technology transfer(5). Organizational structure LRD has a flat management structure (Figure 2). Within this structure, close interaction & collaboration between the different units is promoted and all the units involved in scouting for new projects.

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Figure 2: LRDs organizational structure

IP Ownership and Policy IP belongs to the university and LRD is part of the university structure; therefore there is a simplified legal procedure due to being part of the university. In addition, the commercialization is not dependent of a process of assigning the IP from the researcher to the university.

Roots of success: Key differentiators regarding LRD

After observing the structural and procedural differences between the two units, it is only when a more in-depth (and long term) study is conducted that the key differentiators are observed and their importance determined. The focus here will not be on all aspects or differences found, but on the key ones having an important impact on the efficacy of technology transfer.

Technology transfer: Low barrier of entry

A structure of divisions within the university was created to allow researchers across departments to collaborate and even generate income, either through new IP or contract work. Looking at the divisional structure put into place at K.U.Leuven, this system allows reinvestment of proceeds from commercialized IP into further research. The labs that do so reinvest not just in applied research but in fundamental research as well, since fundamental research today could be translated into applied work years down the road. This allows labs to complement public funding with income from inventions. Page | 7 Dr. Cliff Pavlovic

It is important to note that researchers are free to conduct their research as they see fit, and researchers can always rely on governmental grants (either completely or in part) to pursue their work. Another benefit of this type of arrangement is having a de facto internal technology transfer public relations system: success that researchers have when valorizing their discoveries are more easily communicated to the rest of the faculty, which has the beneficial effect of promoting technology transfer without requiring any additional effort from LRD itself. This increases the awareness, within the university, of the technology transfer office and what they do.

Technology transfer: Setting up the Return on Investment

A perception of tech transfer, which is not necessarily true, is that it is a loss-making proposition. That is, except for a periodic blockbuster, losses are inevitable. This is not necessarily due to policy or structure, but a perception within the public, which can affect how policy is determined. In Leuven, the view is the opposite: profit (even for a non-profit entity) is possible. This is not just by looking at the current financial situation, but by examining how technology transfer was implanted initially. To get a return on investment, you need to have the right foundation: An internal VC was put into place to help with the creation of spin-offs and a patent fund was created to facilitate IP protection. The internal VC fund, called the Gemma Frisius Fund, was set up in the late 90s in conjunction with two financial partners (BNP Paribas and KBC). With the fund there is no need to initially solicit outside venture funding, especially important when external funding dries up periodically, due to the cyclical nature of the economy. An example of the effect can be seen in figure 3, where there is a marked increase of spin-offs created after inception of the fund (which was in 1997).

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Figure 3: Number of spin-offs created by LRD (cumulative number)

There are two other benefits in having an internal VC fund: 1) the development of expertise and 2) the development of a financial network. The internal VC fund allowed LRD to begin a closer relationship with the finance sector, which in turn brought a better understanding in what was needed, in preparation and information, when requesting funding for a start-up. On the other end, the financial partners were able to observe how committed the university was in ensuring technologies succeeded when spun-off. Furthermore, having the relationship with the financial partners of the fund allowed more doors to be opened to more external funding, due to the credibility conferred by having a pre-existing relationship with the financial sector. In regards to the patent fund, the goal was to facilitate IP protection by negating the need to go outside the university. All of this was done in addition to any programs or grants offered by the various governmental levels. The biggest advantages conferred by the patent fund were 1) the ability not to rely solely on external funding deadlines (e.g. government grants) and 2) not be limited by a researchers financial situation (e.g. lack of funds) in regards to IP protection. Therefore this fund gives the technology transfer professionals of LRD the flexibility and speed needed when it comes to IP protection. The combination of these steps facilitates the protection and commercialisation of IP at LRD, whether via licensing or via spin-offs. Combined with the Flemish decree (that made any IP, created within the university, belong to it) and by having a clear view of the incentives of IP exploitation, this provides a low barrier of entry for the researchers to get their technology from the bench to the market. Page | 9 Dr. Cliff Pavlovic

Easy access and proper tools: A mix for success

The combination of a VC fund, a divisional structure and a patent fund allows LRD to have more flexibility and freedom when it comes to valorizing university IP. In Univalor steps have actually been taken to allow this type of flexibility, with an internal discretionary fund to help in technology valorization. One of the objectives of this fund is to cover for patent protection when other funds cannot be obtained in a reasonable amount of time. This is an excellent initiative benefiting technology transfer in Quebec. Furthermore, the availability of numerous internal funding sources (e.g. funds for research and development from the divisions, the internal patent funds) allows for the incubation of innovations, allowing them to attain a stronger position for either licensing or spinning off.

New outcomes to measure

Currently, whether in Belgium (i.e. Flanders) or Canada (i.e. Quebec), as well as in the rest of the world, the question regularly asked is: what outcomes need to be measured when trying to determine the effectiveness of technology transfer? The most popular outcomes currently being measured are: the amount of royalties collected, number of patents (either applied for or granted), and number of spinoffs produced. Although easy to measure, they are by no means perfect, since the number of patents or spin-offs do not necessarily equate to a positive economic outcome, either for the university or the region in which the university is located. In this regard, LRD is trying to bring in new outcomes that reflect more the economic impact technology transfer can have. Now this is not exactly a direct comparison with Univalor, but more of an observation to be pointed out in regards to LRD. It is a forward looking approach, where the focus is on economic development, not simply on the metrics themselves. One new outcome is measuring the 3rd party funding that comes into a region due to internal funding of spin-offs (Figure 4). It shows that, over time, an injection of funds into start-ups can have a substantial effect on regional economic development.

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Figure 4: Investments in spin-offs 2005 2009 (in Euros, 2009)

350,000,000 300,000,000 250,000,000 200,000,000 150,000,000 100,000,000 50,000,000 0 K.U.Leuven Third Parties 4,356,000 325,000,000

Of course this is not the sole outcome to measure, but it is a better indicator of how tech transfer from universities can be an economic engine, to be used in conjunction with currently used outcomes. This is very important, especially to increase general awareness of what technology transfer can accomplish, whether it be at a municipal, provincial or national level. Moreover, this also helps increase general awareness with the public, which is important since a great number are not aware of what technology transfer is and what it can accomplish. Another outcome that can be measured is the indirect job creation due to technology transfer. Especially with spin-offs, you have creation of high level (i.e. high education) jobs, but simply focusing on this is only part of the story. The creation of jobs mean that there are now more people with disposable income and needs in a given area, which means other facets of society can benefit such as, for example, the service sector (e.g. banking, insurance), the support sector (e.g. plumbing, car repair, cleaning) as well as the restaurant sector (e.g. pubs, bistros, coffee shop). This in turn can lead to the creation and sustainability of secondary employment, which is very beneficial to any economic region, to support these new high level jobs and the companies that created them. It is important to note that there are many other outcomes that could be used and some may already be used internally at the different technology transfer units, in Belgium or Canada. The goal is to use them more openly, to showcase to the public (and stakeholders) the beneficial effects of technology transfer.

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Conclusions: Technology transfer, a holistic approach

The success of LRD is due to a multi-directional approach, where the sources of innovation and well as the professionals who assist them are given the necessary tools and environment to bring about a successful tech transfer outcome, either via spin-offs or licensing. In regards to the system in Qubec, steps that can be taken to improve further how technology transfer is done, to the benefit of all involved. This is by no means a declaration that the system in Qubec does not work; it is simply an observation on how to improve the output of technology transfer already being done, using proven approaches from elsewhere, which was the purpose and scope of this study. Moreover, the quality of the technology transfer professionals at both locations is very high; the personnel could easily work in each others environment with ease and efficiency. In the end, this study is simply a snapshot of part of the story which makes up the technology transfer ecosystem in Leuven, in which LRD plays a major role.

Recommendations
Following the analysis and discovery of points of difference which can provide an improved technology transfer ability, three main recommendations are put forward: 1- Lower the barrier of entry for faculty to benefit from technology transfer 2- Put in place tools to facilitate IP valorisation for the actors involved in technology transfer 3- Using outcomes which show economic development 1-Lower the barrier of entry for faculty to benefit from technology transfer Having a lower the barrier of entry for faculty, allows them to benefit from technology transfer and allows easier collaboration between them and the TTO/firm. To do so, a structure needs to be created which allows the accumulation of funds for the purpose of IP protection and valorisation, the reinvestment for further research, and provides a link to the TTO and the technology transfer professional. 2-Tools to facilitate IP valorisation for the actors involved in technology transfer A patent fund to protect IP and an internal VC to fund spin-off projects allow the technology transfer professional to be flexible in valorizing academic IP by being independent of temporal (e.g. govt. funding schedules) and financial factors (such as the researchers lack of funds for the purpose of IP protection). 3-New outcomes indicating economic development Use outcomes that show economic development, such as the amount invested in spin-offs in comparison to amount invested by 3rd parties in spin-offs, over the same period of time. Another could Page | 12 Dr. Cliff Pavlovic

be the effect of high skill jobs in creating secondary employment. These types of outcomes would serve to highlight the importance and the impact that tech transfer has on the economy, as well to increase the awareness within the general public. Now if outcomes indicating tangible economic effects have been used internally (within tech transfer offices), then they should be given more importance publicly.

Acknowledgements
This report was possible with the assistance of Univalor and LRD, in providing the time and the information required. Thank you to all the staff in both organizations for making this report possible. Financial help was provided by Univalor, LRD and the MDEIE.

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Works Cited
1. Melviez, David. La valorisation, Une etude de cas internationale. Montreal : Universite de Montreal, 2008. 2. Technolgy Transfer. Wikipedia. [Online] [Cited: October 23, 2010.] http://en.wikipedia.org/wiki/Technology_transfer. 3. Gestion Univalor. Presentation. Univalor. [Online] [Cited: 10 10, 2010.] http://www.univalor.ca. 4. . Univalor by numbers. Univalor. [Online] [Cited: 10 10, 2010.] http://www.univalor.ca. 5. Leuven Research and Development. LRD Homepage. [En ligne] [Citation : 10 10 2010.] http://lrd.kuleuven.be.

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