Bill to increase the commercial exploitation of inventions
relating to the Act relating to amendments to Act No. 21 of 17 April 1970 relating to the right to inventions made by employees
Recommendation from the Ministry of Education and Research, dated 19 April 2002, approved by the Council of State on the same date.
In response to Report to the Storting No. 39 (1998–99) Research at the beginning of a new era, the Government appointed in January 2000 a publicly appointed committee chaired by Professor Jan Fridthjof Bernt. The terms of reference of the committee were to investigate necessary amendments to statutes and regulations in order to achieve an enhanced commercialization of research results at universities and colleges. The committee was to give an account of the current system for commercialization of research results at universities and colleges, assess whether amendments should be made to statutes and regulations and indicate the possible consequences of the proposals. The committee submitted its report From insight to industry (NOU 2001:11) in March 2001, and the report was subsequently circulated for comment by the appropriate bodies. This Proposition is a follow-up of NOU 2001:11, and contains proposals for statutory amendments to promote increased use of inventions made at universities and colleges.
The Bernt Committee considered that universities and colleges in future should focus more on commercialization of research results and that the institutions should receive a share of any income from patented inventions. However, the committee was divided into a majority (3) and a minority (2) as regards the question of who should hold the right to commercial exploitation of inventions made at universities and colleges. In the view of the majority, this right should continue to be held by the researcher, while the minority held the opinion that the institution should be able to take possession of the right to exploitation if it so wished. The whole committee considered that the community should receive something in return for its investments in these institutions. The Government supports this view, and has placed emphasis on amendments that may help to bring this about.
The Government’s Bill entails the following:
- The Act relating to the right to inventions made by employees shall be amended so that universities and colleges, if they so wish, may take possession of the right to commercial exploitation of patentable inventions made by employees of the institution. This is implemented by repealing the “exception for teachers”.
- In order to secure researchers’ possibility for open dissemination of knowledge, it is proposed that a new exception be made to the general provisions of the Act. The new exception entails that teachers and scientific personnel in full or part-time posts at universities and colleges shall have a statutory right to freely publish their research results even when this may prevent the institution from exploiting an invention commercially. If the publication right is not taken advantage of within a year after the institution is notified of the invention, the institution may take possession of the right to the invention.
- Researchers must notify the institution without undue delay of any research result or invention that may be assumed to be patentable.
- Any income from inventions shall be distributed between the researcher and the institution. It is proposed that no further specification be made of the proportional distribution of income between researcher and institution or of how the institution shall use its share of any income.
- In connection with external funding of research projects, the question of rights must be clarified by means of separate agreements between the institution, the source of funding and the researcher prior to the start of the project.
The proposal provides a reasonable balance of rights and responsibilities for researchers and institutions, and facilitates the organization of work on commercial exploitation of inventions at universities and colleges. The proposal will result in researchers receiving the help of the institutions in work on exploitation of an invention, thereby enabling them to concentrate more on research and teaching. The institution must, for its part, organize an apparatus to safeguard the rights of both the researchers and the institution and to ensure that inventions are patented and made available to commerce and industry.
The Proposal complies with the view of the majority of the Bernt Committee that the researcher should have the freedom to decide whether a patent for an invention should be applied for and whether or not it should be exploited commercially. The Proposal also complies with the view of the minority that only a transfer of the exploitation right to the institution could ensure sufficient involvement by institutions in work on commercial exploitation of inventions.
The Government submits at the same time as the present Proposition a proposal to amend the Act relating to universities and colleges so that institutions subject to the Act are assigned greater responsibility for ensuring the use of research results by the Norwegian community and by commerce and industry, cf. Proposition No. 40 to the Odelsting (2001–2002) relating to the Act relating to amendments to Act No. 22 of 12 May 1955 relating to universities and colleges and Act No. 64 of 2 July 1999 relating to health personnel. The proposals in Proposition No. 40 to the Odelsting (2001–2002) contain premises for the present Bill.
Fundamental issues concerning research and innovation
The Government hereby submits a proposal for amendment of the Act relating to the right to inventions made by employees so that researchers at universities and colleges are to a greater extent given the same legal status as that of employees in other establishments. The purpose of the Bill is to increase the commercial exploitation of the inventions arising out of research at universities and colleges without threatening the principal traditional tasks of these institutions: free research and higher education. An overall objective is to strengthen the transfer of knowledge between the institutions and commerce and industry and to establish systems that give society at large greater benefit from the activities at universities and colleges.
In the years to come, Norwegian society will face new challenges requiring innovation and restructuring both in commerce and industry and in the public administration. There is uncertainty attached to the income from the petroleum sector. The proportion of elderly people in the population will increase, and environmental challenges will probably become both more complex and more serious. Technological developments and globalization expose our commerce and industry to increasingly strong international competition, which strengthens the need for restructuring. It has previously been estimated that Norway must double its income from onshore industry during the next twenty years if the welfare state is to be secured. It will be important to further develop the traditional Norwegian industries so that they can remain competitive in a globalized economy, and new, untraditional, knowledge-based industries must also be developed.
A common key factor for Norway’s success in meeting the challenges facing both commerce and industry and the public administration will be the capacity to develop and utilize new knowledge.
It is thus reasonable to expect that universities and colleges in a future knowledge society will contribute to the creation of value to a greater extent than they do today. Report No. 39 to the Storting (1998–99) Research at the beginning of a new era pointed out that research results at universities and colleges hold unexploited potential for application by commerce and industry. Better exploitation of this potential requires that the institutions involve themselves more in commercialization, i.e. work to secure the economic exploitation of inventions. This also requires that the institutions are provided with the opportunity to secure society’s investments in research and education by receiving any economic gains from inventions.
The development of a growth-oriented commerce and industry that can reduce the dependence on petroleum and gas activities is a particular challenge for Norway. The Government will therefore establish conditions to make Norway an attractive country for investments and for development of new ideas and activities. The Government will improve the conditions for a knowledge and research-based commerce and industry and, as a stage in this, will strengthen the transfer of knowledge between the universities and commerce and industry. This is an element of the political platform of the coalition government. Other initiatives to promote a more knowledge-intensive commerce and industry in Norway will be considered in connection with the Government’s general review of the range of industrial instruments.
The importance of research and development for innovation
Basic research plays a decisive role in the expansion of our general knowledge base, but basic research can also give rise to more specific and useful radical innovations. Basic research has no practical consequences until the results are coordinated with other technological, cultural and scientific advances. This requires close contact between research institutions and society at large. It also requires that innovators in society at large and in commerce and industry are able to find and understand what is developed in research institutions and that research institutions are willing to use their knowledge to solve various theoretical and technological problems that prevent further development of a specific product or service.
Creativity and innovation result from a productive interaction between inspiration, hard work, broad knowledge and – often – considerable time. The capacity for innovation is closely associated with the capacity for learning and the capacity to identify relevant knowledge. The development of a more knowledge-based commerce and industry is dependent on efficient exchange of knowledge, competence and personnel throughout the knowledge system and a close cooperation between commerce and industry and research environments at universities and colleges. Such a development is also dependent on the existence of capital that can help to ensure that good ideas and inventions developed at universities and colleges succeed in making the transition from the idea stage to product development and sale.
Our universities, colleges and research institutes are far from being the foremost R&D partners of Norwegian commerce and industry. In 1999 Norwegian companies purchased R&D services for NOK 4.4 billion. Forty-two per cent of R&D services were purchased from abroad. Approximately one-quarter were purchased from enterprises in Norway. Only one-fifth
were purchased from Norwegian universities, colleges and research institutes. Recent research shows that production industries make more use of research institutions and academic institutions as information sources for their innovative activities than service enterprises do (Braadland, Nås, Pedersen, Sandven, Ørstavik (2001): Innovation in Norwegian commerce and industry: A new overview. STEP report R-01). Research institutions and academic institutions are nevertheless generally regarded as the least important sources of information for the companies investigated. Improvement of the interaction between institutions and Norwegian commerce and industry therefore involves a considerable challenge.
Knowledge production and knowledge dissemination
The flow of knowledge in the community is very varied and complex, which makes it difficult to calculate the total yield from R&D investments. The number of national patents gives an idea of the extent of the commercial exploitation of ideas and research results in Norway compared with other countries. During the period 1993–2000, Norway was given an approximately average ranking in the OECD statistics for national patent applications per head of population, and the number of national patent applications increased by 16 per cent from the period 1993–1996 to the period 1997–2000. However, the total number of patent applications in Norway (including foreign patent applications) increased by 22 per cent during the same period. In 2000, 6,700 patent applications were registered in Norway, of which 5,325 (79 per cent) were foreign. From 1990 up to and including 1999, a total of 11,200 national patent applications were submitted. There is a fair degree of certainty that between 2 and 5 per cent of these came from employees of universities, colleges or institutes during the last 10 years (Research Council of Norway (2002): The Norwegian research and innovation system - statistics and indicators 2001). At the same time, patenting from this group appears to be increasing in relative terms.
The benefits of knowledge increase in proportion to the number of people who use it. During recent years, there has been anxiety in a number of OECD countries that protection of knowledge through secrecy, patents and exclusive licensing agreements may bring about undesirable restrictions on open distribution and use of knowledge and results from research institutions. According to a report from the OECD (OECD (2001): The new economy beyond the hype. The OECD Growth Project. Economics.), too strong regulation of the use of knowledge and information may weaken knowledge sharing, scientific progress, the pace of innovation and economic growth in general. The OECD recommends that national legislation relating to the rights to research results and inventions should seek to achieve a balance between the needs for open knowledge sharing between research institutions and protection of the use of inventions in the private sector.
Exploitation of inventions and freedom of research
It is important that the increased focus on commercial exploitation of inventions is not allowed to weaken the long-term, basic research at universities and colleges. Both in the production of patentable research results and in other ways, basic research is at least as important as applied research. The social utility function of research is made up of the sum of basic and applied research. If, for example, allocations to basic research are reduced owing to expectations of
increased profits from commercial exploitation of inventions, this will seriously affect the independence of the institutions and may be instrumental in bringing about a disposition for more short-term applied/commercially-oriented research. This would not be socially beneficial in the long term, either for the institution or for society at large.
At the same time it is important to ensure that the institution is able to take part in harvesting the fruits of the investments made in order to bring about a commercially successful project. This yield may in the next round function as “venture capital” for investment in similar projects. However, an ambition, through commercialization, to generate added value that can be used to partially finance other aspects of the institution’s activities would be fundamentally dubious. This would entail institutions becoming commercial establishments in a way that violates their role in society and that may have an undesirable effect on the profile and orientation of their activities.
Freedom of research
The Government regards as fundamental the principle that it is the researchers and the institutions that shall decide the object of research, the methods that shall be employed and how the results shall be presented. This is indicated by due regard for intellectual freedom, disinterested truth-seeking and historical experience regarding how best one can create favourable conditions for new scientific awareness. Another basic principle is the free right to publish research results. The researcher’s right to publish his research results is a precondition for discussion, criticism and quality assurance of research results by the scientific community. Publication of one’s own results is also a major means by which researchers build up their competence and status, while commercialization often requires time-limited secrecy and the exclusive right to exploitation of inventions.
Publication and patenting
Observance of secrecy in connection with commercialization seems nevertheless to be a problem associated with principles rather than practice. A patent application need not in practice entail a significant level of secrecy for the researcher or research institution. Unlike unpatented knowledge (secret know-how and trade secrets), which can be kept secret for a long time, the patent system is thus not necessarily an obstacle to the publication of research results. A report from the European Commission (Commission of European Communities (2002): An assessment of the implications for basic genetic engineering research of failure to publish, or late publication of, papers on subjects which could be patentable. SEC (2002) 50) concerning the relations between patenting and publication within the biotechnology field, shows that although it is true that delays in publication occur as a result of patent applications, there are few cases where publication is delayed for a long period for this reason. Such postponement occurs more often as a result of the applicant’s lack of knowledge of the patent system. The report emphasizes the need both for changes of attitude in research institutions and for a support facility to assist researchers in becoming familiar with the patent system.
Researchers’ freedom to exploit their own research results economically by means of patents, etc. cannot be said to have the same significance as the researchers’ publication right for bringing about a critical and well functioning research system or community.
The Government has viewed it as important that the statutory framework more clearly than at present shall present researchers with a concrete choice as to whether an invention shall be patented or published in such a way or at such a time that it cannot be exploited commercially.
Cooperation between researcher and institution
The present Bill provides institutions with greater potential to take part in the process of exploiting inventions commercially. Researchers and institutions should have fairly coinciding views as regards finding a reasonable balance between the requirements regarding secrecy entailed by commercial exploitation of inventions and the scientific community’s requirements regarding openness. A close and trusting cooperation and good dialogue between the two parties will increase the potential for achieving both the academic and the commercial gains from a research project.
Rights to inventions at universities and colleges
During recent decades, there has been a broad national and international debate on how research results and inventions from universities and research-based educational institutions can best be exploited in serving the interests of society. One of the core issues of this debate is the question of who shall have the right to commercially exploit research results and inventions from universities and colleges; the originator, i.e. the researcher, or the institution the researcher is attached to, the infrastructure of which enabled the invention. An increasing number of countries have amended the statutory framework so that universities and other research and educational institutions, if they so wish, may take possession of the right to commercial exploitation of inventions made by researchers at the institutions.
Universities’ and colleges’ rights to inventions have both idealistic and economic aspects. The idealistic aspect relates to who shall have the honour for making an invention, while the economic aspect relates to who shall have the right to exploit the invention commercially. Through the so-called “exception for teachers” in the Act relating to the right to inventions made by employees, teachers and scientific staff at universities and colleges, unlike other employees, have so far enjoyed a prior claim to commercial exploitation and income from inventions made during employment. The exception was originally made on grounds of due consideration for the freedom of research, although it has primarily concerned a special right to commercial exploitation of results.
The Government attaches great importance to achieving a more efficient exploitation of the competence resources administered by our universities and colleges. This also includes enhanced exploitation of inventions made at the institutions. It is of major importance for the success of this that the institutions be involved in the commercialization process and that legal and organizational framework conditions are established for such involvement. The institutions’ potential to receive a share of any economic gains of a patent is regarded as being of major importance in this connection.