University IP activity increases while commercialization income declines

Research contracts enjoy strong growth

New data from Statistics Canada show that income derived from the commercialization of university intellectual property (IP) experienced a year-over-year decrease of 8% from $55.5 million to $51.2 million between 2003 and 2004. The lackluster results call into question the ability of Canadian post-secondary institutions to triple commercialization outcomes by 2010, as specified in a 2002 Framework Agreement between the federal government and the Association of Universities and Colleges of Canada (AUCC) (R$, December 2/02).

Even under the AUCC's formula, commercialization-related income rose a marginal 3% from $58.5 million to $60.2 million between 2003 and 2004 — a pace that will need to dramatically accelerate if the AUCC's Framework Agreement's key target is to be achieved.

The data are contained in the Survey of Intellectual Property Commercialization in the Higher Education Sector, 2004 — the fifth time StatsCan has conducted the survey since 1998. The voluntary survey was responded to by 83% of Canada's universities and 63% of research hospitals.

The report shows that universities fared better with other indicators. Reported and disclosed inventions jumped 26% to 1,432 while patents issued increased 14% to 397. In addition, new licences were up 17% to 494, active licences improved by 15% to 2,022 and 50% of patents obtained in Canada had been commercialized, compared to 35% at the end of 2003.

The StatsCan data are of limited help in illustrating the source of IP income. Of the $38.6 million attributed to running royalties in 2004, $18.6 million or 48% are unallocated by country. Identified foreign sources account for $16.5 million, while Canadian sources trail at $3.6 million. Reimbursement of patent, legal and related costs account for $5.0 million of IP income, while sale of IP generated $1.9 million (including $1.6 million to foreign sources).

The data show that the cost of managing university IP rose by 1% to $36.9 million. Salaries and benefits account for half of expenditures, followed by patenting and other legal expenses ($10.6 million) and unspecified operational costs ($5.9 million). How effective those expenditures are in generating income through the commercialization of IP varies considerably from institution to institution and region to region.

British Columbia received 10% of the $5 billion in research funding for 2004 (a 16.3% increase over 2003), but punched above its weight with 17% of inventions disclosed, 20% of inventions protected, 17% of new licences and options, 17% of total licences and options and 23% of spin-off companies created to date. The powerhouse Univ of British Columbia likely accounts for the vast majority of this activity, although institutional breakdowns are not included in the report. Curiously, IP income for BC is not reported.

At the other end of the scale, Quebec institutions have not performed as well when measured against sponsored research funding. Although they command a 31% share, and account for 31% of patents filed, all other indicators are lower: inventions disclosed (17%), inventions protected (29%), patents issued (27%), new licences and options (18%), total active licences and options (24%) and spin-off companies created to date (17%).

The results for the Prairies, Ontario and Atlantic Canada were mixed. Ontario was strong in new licences and options and percentage of inventions disclosed, and weaker in IP income (22% of total) and patents issued (22%).

Atlantic Canada more than held its own with spin-off firms created and inventions disclosed, but lagged in IP income and total licences and options. Prairie institutions were strong in inventions disclosed, patents issued and total active licences and options, but weak in inventions protected and patent applications filed.

Ontario also came in with lower results than sponsored research income

RESEARCH CONTRACT INCOME UP

While IP income showed a decline in 2004, the value of research contracts rose 16% to $941 million with the largest single portion ($237.6 million) accounted for by Canadian businesses (see chart). A significant number of contracts (7.8%) are with foreign businesses, although their definition is unclear, which may explain why there is a high proportion (10.2%) of unallocated business contracts.

The main types of contracts were clinical trials ($263.6 million) and service contracts ($202.6 million), the latter involving service provision in which the resulting IP is generally owned by the sponsor. The largest single amount ($306.1 million) is classified as unallocated, meaning the institutions involved were unable to provide the requested breakdown of the activities.

NOT THE WHOLE PICTURE

As wide ranging as the StatsCan metrics are, many contend that they fail to capture the real impact of university technology transfer and commercialization activity. To that end, the recently formed Alliance for Commercialization of Canadian Technology (ACCT) has been working to develop new indicators to better measure output (R$, June 6/06). It will be holding a conference in Ottawa, November 12-14, to further develop its mission. FMI: www.acctcanada.ca

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