Prof. Mario Rivera
A HISTORIC PERSPECTIVE OF TECHNOLOGY TRANSFER & THE GOVERNMENT’S ROLE IN TECHNOLOGY COMMERCIALIZATION
United States science and technology policy evolved after significant historical events such as World War II, the Cold War, and the decline of United States dominance in the economic and technological environment. These events not only threatened the state of our nation , but also had long-term effects on the TH AND 19TH CENTURIES. United States history inspired science and technology policies ??and the evolution of technology transfer are described in the following literature review.
THE BIRTH OF SCIENCE & TECHNOLOGY POLICIES AND TECHNOLOGY TRANSFER
During the post World War II era, President Franklin Roosevelt and his administration made a historic decision to establish a comprehensive federal policy for supporting science and innovation. The movement towards new science policies was an acknowledgement by President Roosevelt that many of the successes of World War II could be credited to the scientific advances and new technologies what were developed and utilized by the United States military. The resulting federal policy developed by President Roosevelt’s science advisor, Vannevar Bush, was exemplified in Bush’s 1945 report Science, The Endless Frontier. The intentions of the policy were aimed at providing industry and United States military with an endless pool of scientific knowledge to ensure economic growth and superior defense capabilities. This new federal policy redefined the different roles of government, industry, and universities in regards to how they participated in the science and technology sector (Atkinson & Pelfrey, 2010). In summary, the national policy described in Science, The Endless Frontier provided that the federal government would support basic research through funding research universities who would produce the pool of fundamental technologies that industry and the military could pull from. As a result, the National Science Foundation (NSF) was established and devoted to supporting basic research and education in all scientific and engineering disciplines. Prior to establishing this science and technology policy and prior World War II, the federal government provided almost no support for research in universities. Atkinson and Pelfrey (2010) claim that Bush’s Science, The Endless Frontier “remains to this day the single most important document on U.S. science policy ever written” (p. 40).
The post World War II era resulted in preliminary outcomes of loosely coordinated policy to further the missions of individual federal agencies toward adoption of science and technology policy. Ham and Mowery (1995) report that during the 1950s, defense-related spending accounted for 80% of federal research and development funds allocated to basic research. Along with defense related procurement, this spending assisted with the growth of high-technology industries such as semiconductors, computers, and commercial aircrafts, and it supported the enormous growth of university-based scientific research (Ham & Mowery 1995, p.91). This led to the creation of technology transfer, which is a mechanism for turning basic research into an actual goods and services that generates income and are beneficial to the public in general. The new importance of technology transfer inspired by Bush’s executive document caused university-based research funded by the federal government to flourish. Industry sponsored partnerships with universities declined as a result of the large amount of federal research funding that was being provided by the government (Atkinson & Pelfrey, 2010). Nevertheless, the federal government had successfully generated a mechanism for research universities to create a considerable pool of basic research for industry to select from. However, there were limitations on the ability of industry to dictate the types of innovations that were being generated, so although there was a large pool of technologies, the majority of these technologies were defense related and did not fit as viable opportunities for commercialization.
In the 1970s and throughout the Cold War, the United States government sought to further develop technology and science policy to encourage technology transfer and enhance the nation’s competitiveness. To address some of the difficulties in technology transfer,
By the early 1980s, government funded research and development contributed less and less to commercial or non-defense related applications, and the focus of technological development transitioned from civilian to military applications. The change in direction of technology applications from civilian to military and the declining demand for defense-related technologies triggered the economic viability of United States defense suppliers of high-technology components and systems to rely more heavily on the more competitive markets within the private sector. In summary, the technologies developed with military applications had satisfied the demand requirements established by the United States military, so United States defense contractors were forced to seek new business ventures in the civilian or non-defense related markets for their businesses to be competitive. In response to the shift in commercial interest, the federal government looked for other ways to emphasize support for technology adoption of non-defense related innovations through ‘dual-use’ technology development programs suggested by the President William Jefferson Clinton Administration (Ham & Mowery, 1995).
Since the 1980s and towards the end of the Cold War, the administrations of Presidents’ Reagan, Bush, and Clinton worked to reorient science and technology policy with bipartisan support to address the fluctuating United States economy. This reorientation was in response to the many changes in the international economic and technological environment that resulted in the reduction of United States technological dominance and forced the United States to become interdependent on foreign economies and markets. In particular, the Clinton Administration sought to address the dependency of trade policy on technology policy and redirect federal research and development spending towards non-defense related applications (Ham & Mowery, 1995). Although there was not much success at unifying technology and trade policies due to the complexities of the global system, the Clinton Administration was successful at redirecting federal support for basic science research from defense applications to non-defense applications to support the growth of the private sector. This initiative supported the philosophy that “government can play a key role in helping private firms develop and profit from innovation” (Clinton & Gore, 1993; Ham & Mowery 1995, p. 89).
MODERN SCIENCE & TECHNOLOGY POLICIES RESULTING FROM EMPHASIS ON COMMERCIALIZATION
The 1980s were a pivotal time in the development of science and technology policy and technology transfer. Block and Keller (2011) stated that the federal government continued to take a proactive approach to encouraging innovation and technology transfer. However, the trade deficit, caused by the competition in rival nations such as Japan and Germany catching up to the American firms, continued to affect the United States economy and technological dominance. Politicians and bureaucrats began to evaluate if science and technology policy could be utilized as a tool to partly address the foreign trade deficit (Bauer, Lang & Schneider, 2012). Two pieces of legislation were introduced to improve technology transfer and both had a strong emphasis on commercialization. The first technology transfer law was called the Stevenson-Wyle Technology Innovation Act of 1980. This Act was the first of a series of acts. The Act was established to promote dissemination of scientific research from the federal government in attempts to foster public welfare, and it required national laboratories to practice technology transfer by identifying and managing intellectual property filed to protect innovations. This Act was later amended to become the Federal Technology Transfer Act of 1986, which encouraged cooperative research and development agreements (CRADAs) between national laboratories, generally in the form of Department of Energy (DOE) contractor operated national labs, and research universities and/or industry (NSF, 2012).
Another very profound piece of legislation that was derived in the 1980s was the Bayh-Dole Patent and Trademark Amendments Act of 1980. This Act was intended to stimulate technology transfer and encourage commercialization of technology from universities and national laboratories to the private sector. The Bayh-Dole Act allows university, small business, and non-profit institutions to retain ownership of inventions and the associated intellectual property developed from federal government-funded research. This Act also allows these institutions to enter into royalty bearing licenses with third parties for rights to the intellectual property. The underlying significance of the Bayh-Dole Act is to ensure that public investment in basic research serves as a catalyst for national economic growth and improves the overall quality of American lives (Atkinson & Pelfrey, 2010).
Prior to the 1980s legislation, the government retained ownership of the rights to any patentable invention that was developed with federal funds. The difficulty of obtaining a license from the federal government for a solely government owned invention made it challenging to commercialize these inventions and prevented the likelihood of technology transfer. For example, the Government Accounting Office (GAO) reported in 1978 that the United States government upheld 28,000 patents, but fewer than 5% of those patents were commercially licensed to the private sector. Proponents of the Bayh-Dole Act believe that university or laboratory ownership of intellectual property is necessary to incentivize industry to work more closely with universities and laboratories to spin technology out of the research labs because industry would now have a more simplistic path to secure rights to the inventions and their associated intellectual property (Lowe & Gonzalez-Brambila, 2007). Prior to the Bayh-Dole Act, industry members were forced to negotiate highly bureaucratic licenses from the federal government to these innovations, which proved to be too complex or costly to attract industry’s attention regardless of the potential value of the technology. Therefore, prior to the Bayh-Dole Act, many university-based innovations simply remained unlicensed and corporate sponsored research agreements with universities were less appealing to industry. Feldman and Desrochers (2004) suggest that the Bayh-Dole Act has resulted in the closer associations between university and industry researchers, which have accelerated scientific advancements and commercialization over the past three decades. Many technology transfer experts report about the successes of the Bayh-Dole Act catalyzing technology transfer out of universities; however, Link et al. (2011) report that neither the Stevenson-Wydler Act nor the Bayh-Dole Act have sufficiently increased technology transfer out of the national laboratories. Many national laboratory researchers are simply not incentivized to participate in technology transfer and commercialization contradicts the research missions that they operate under. Despite the difficulties in technology transfer from national laboratories, it is commonly agreed that university technology transfer has increased and flourished, and as a result, many technology transfer offices have been established.
TECHNOLOGY TRANSFER OFFICES ESTABLISHED FROM MODERN TECHNOLOGY POLICY
An uncommonly known fact
Another important government agency that pays a critical role in technology transfer is the United States Patent and Trademark Office (USPTO). The USPTO is responsible for issuing patents and trademarks for inventions developed by inventors to establish intellectual property identification for the designated owner of the invention. Intellectual property protection inspires competition and generates value for the private sector. In many cases, the inventors of an invention have employment obligations with industry, universities, national laboratories, start-up companies, etc. that require or incentivize the inventors to assign their rights to the invention to the entity employing or funding their research; therefore, the entity that files, prosecutes, and becomes the assignee (or owner of the patent) is most commonly a company, university, national laboratory, or TTO. Using patents as an example, intellectual property protection for inventions provides the assignee the ability to publically limit others for twenty years from making, using, selling, importing, or exporting products that incorporate or infringe on their patent(s). The twenty year protection period is given exchange for disclosing the details of the invention to the public (Lowe & Gonzalez-Brambila, 2007); however, for federally funded inventions, the federal government retains a non-exclusive right to use the technology without reporting to the patent owners. Once a patent has expired, the public then has the right to profit or benefit from the invention freely. TTOs (and sometimes industry) use intellectual property to seek potential licensee from the private sector or through the formation of start-up companies that then license the intellectual property for industry specific licensing fees in order to commercialize the technology.
In order to perfect and establish
Next, the Licensing Executives Society (LES) was founded in 1965 and is an international non-profit organization dedicated to providing updated information about best practices for licensing of high-technology. Members consist of business development managers or technology scouts from industry as well as university and national laboratory technology transfer professionals. Benefits of becoming a member include access to technology transfer publications and surveys, licensing terms broken down by specific industries, and sharing of individual contact information from industry (LES, 2013).
Finally, the Association of University Technology Managers (AUTM) was established around 1974 and evolved during the Bayh-Dole Act era. AUTM is devoted to promoting technology transfer between research universities and private industry and was formed on the objective of getting federally funded research out for public use (AUTM, 2013). AUTM successes and other activities can be found in the Better World Project Report that is released annually by AUTM. Its 3,500 members are made up of technology transfer professionals primarily from United States research universities, and these members participate in evaluative statistics collected in annual reports used to educate technology transfer professionals around the world (Leydesdorff & Meyer, 2010).
PROGRAMS ESTABLISHED FROM MODERN TECHNOLOGY POLICIES & TECHNOLOGY TRANSFER AGENCIES
In addition to TTOs and their associated technology transfer associations, United States science and technology policies also delivered some successful programs during the 1980s, and many were catered to the development of small business and start-up firms looking to commercialize new technologies. Among the most popular are the Small Business Innovation Research Program (SBIR) of 1982 and the Small Business Technology Transfer Program (STTR) of 1992. The United States Small Business Administration Office of Technology (SBA) administers these SBIR and STTR programs to focus on the formation and growth of small or start-up companies focused on research and development. The SBA uses SBIR and STTR programs to promote technology-based entrepreneurship through public-private partnerships that enable financing for the start-up or small company as well as funds for research and development within a university or national laboratory (Gilbert, Audretsch & McDougall, 2004). This program inspires commercialization of new innovations through requiring government funding agencies to grant a portion of their funds to start-up or small companies that are collaborating in research with a university or national laboratory. Bauer et al. (2012) report that federal funding agencies awarded approximately $2 billion in SBIR and STTR programs to start-up or small high-technology companies in 2010 (p. 108). Most technology transfer studies and scholars suggest that the SBIR and STTR programs have successfully stimulated commercialization of innovations within the high-technology sector (Link & Scott 2010; Bauer, Lang & Schneider, 2012).
Other programs that are similar in nature to the SBIR and STTR models are the Advanced Technology Program (ATP) and its successor program, the Technology Innovation Program (TIP). The National Institute of Standards and Technology (NIST) enacted ATP, and then TIP, through the America Creating Opportunities to Meaningfully Promote Excellence in Technology, Education, and Science Act (COMPETES Act). However, it was determined by government sponsored surveys that ATP had only limited success (Bauer, Lang & Schneider, 2012). In 2007, the TIP was enacted to improve the United States international competitiveness by promoting and accelerating innovation in the United States through research universities, national laboratories, and industry by funding high-risk, high-reward research areas to solve critically needed societal challenges. The intentions of TIP are to speed up the development of technology under public-private partnerships that are of critical national need by offering high rewards in the form of research grants, cooperative agreements, or government contracts to competing constituents. Recent areas of requested innovation have been advanced manufacturing materials and sensors for civil infrastructure, such as water pipelines, roads, bridges, and tunnels (NSF, 2013).
CURRENT TECHNOLOGY AND INNOVATION POLICY
Recently, the TIP was modified by the America COMPETES Act that was updated and enacted by President Barack Obama in 2011. The updates included additional funding, integration of additional funding agencies, prizes for successful innovations, improved publication and dissemination efforts, and initiatives to promote education in science, technology, engineering and mathematics (STEM). President Obama’s Administration has also encouraged technology policy and innovation under the Strategy for American Innovation initiative that provided a $780 billion stimulus package to combat the United States economic crisis of 2008. The stimulus package sought to substantially increase the funding for national institutions such as NSF and the National Institution for Health (NIH) who could then fund more universities and national laboratories to conduct considerably more research (Bauer, Lang & Schneider, 2012). The Obama Administration’s objective was to invest in the building blocks of American innovation, promote competitive markets that drive entrepreneurship, and catalyze breakthroughs for national priorities in such areas as alternative energy, heath information technology, and manufacturing of advanced vehicles (OSTP, 2009). The Obama Administration’s strategy is striving to promote economic growth that is sustained by long lasting achievements of Americans through investment in innovation and STEM education. This strategy encourages the United States to catch up to other technologically dominant countries that not only dominate commercial markets, but also lead the world in the amount of graduates going into the workforce in STEM fields.
The Leahy-Smith America Invents Act (AIA) is another historic policy change that was enacted under the Obama Administration in 2011 and will greatly affect technology transfer and commercialization for research universities, start-up companies, and independent inventors. AIA is the most significant change to the United States patent system since 1952 and will require the attention and devotion of many attorneys in order to interpret the new changes to patent law in the coming years. Fundamentally, AIA switches the United States patent system from ‘first to invent’ to ‘first to file’ system- meaning that an inventor can no longer receive a patent for a technology by proving that he or she was the first to conceive the innovation unless the inventor was also the first entity to file the patent. Under prior patent law, an inventor or assignee could invalidate another party’s patent if the inventing entity could prove they were the first to conceive the idea. Although there are many legalistic changes that will not be discussed in this paper, another important change under AIA is the creation of a new filing status called ‘micro-entity’ that allows universities, small businesses, and individual inventors to pay smaller filing fees to the USPTO.
Opponents of AIA state that AIA will be advantageous to large industrial companies because they will have the resources to file patents quickly on intellectual property that was not necessarily invented by their firm, which eliminates the democratic nature of the ‘first to invent’ system. In addition, opponents propose that AIA will drive up the cost of filing intellectual property for universities and small companies because they will have to file patents more quickly and frequently. Proponents have very polar opinions on the impacts of AIA
STATE AND LOCAL GOVERNMENT’S ROLE IN TECHNOLOGY POLICY, TECHNOLOGY TRANSFER & ECONOMIC DEVELOPMENT
Geiger and Sa` (2005) state
Recently, there has been a pattern of states switching their focus of technology transfer from collaborative research from within their associated research universities and national laboratories, to a new focus on technology-based economic development activities. The rudimentary idea of using basic research to foster commercialization has proven to be a difficult task, so states are now devising strategies to achieve similar ends through economic development (Geiger & Sa`, 2005). States are looking for ways to encourage the formation and growth of technology-based start-up companies as a mechanism to generate income and equity from basic research that is developed within their research institutions. In the past, these small firms and companies have been constrained by their inability to invest in basic research due to the high-risk nature, longevity of the research, and the research institution’s requirement to be able to publish (shortening the company’s opportunity for competitive advantage). Many states also became overly competitive about ensuring the economic benefits would be captured within the economy of their state; though, many innovative states are now working to overcome this obstacle by taking a “rainforest” approach (Hwang & Horowitt, 2012). Hwang et al. (2012) have proposed a radical new theory to explain the nature of innovation ecosystems as human networks that generate extraordinary creativity and output. They argue that free market thinking fails to consider the impact of human nature on the innovation process. This concept suggests that the local, state, and national technological communities, defined at
ILLUSTRATIONS OF STATE INVESTMENTS IN TECHNOLOGY BASED OPPORTUNITIES
Many states have invested or do invest in technology-based opportunities to promote economic development through funds appropriated by endowment funds, legislation, or large legal settlements. A popular example is in Pennsylvania where the state allocated 19% of the state’s $11.3 billion tobacco settlement to develop a bioscience corridor that provided funding for research, a small business incubation center, and a venture capital fund to commercialize inventions and fund start-up companies (Lowe & Gonzalez-Brambila, 2007). Another example is the new Utah Science Technology and Research (USTAR) initiative funded by the state of Utah through the passage of a new bill that allocated monies from Utah’s general fund and appropriated $5 million in additional funds in 2013. USTAR will support new research facilities and a new bio-innovation center focused on leveraging innovative technologies to generate more technology-based start-up firms and higher paying jobs (USTAR, 2013). Finally, a most recent example in 2013 from New Mexico shows commitments to invest directly in technology based start-up companies through the assistance and management of a California based venture capitalist firm, called Sierra Ventures. With approval from the Private Equity Investment Advisory, the New Mexico State Investment Council approved a $10 million fund to be managed by Sierra Ventures and invested in early-stage technology companies in mobile communication, social media, video, cloud computing, and energy technologies (Gerew, 2013). This recent announcement is followed by rumors of New Mexico State funding of $5 million for a new innovation center that will be modeled after the successful Gainesville, Florida Innovation Square located near the University of Florida. Only time will tell if these investments will yield significant gains, but the intentions of the state are to invest in the innovations and people behind the innovations to generate economic development within their respective regions.
The history of science and technology policy is based on strategic movements by the federal government to provide state-of-the-art technology for our military and to address difficulties within the American economy. Although it has been difficult to measure direct successes, it is apparent that the federal government should play a role in catalyzing the private sector through basic research and increasing our knowledge base to keep the United States competitive. Today, science and technology policy is used to encourage economic development, and many states are looking for innovative ways to produce environments that support entrepreneurism and start-up company activities to attract job opportunities and larger corporations to their regions. An underlying message that resides in all science and technology policies is the importance of scientific research and mechanisms to move research towards commercialization. Without technology transfer processes, technology may become under utilized and trapped within the bureaucracy under which it was created. There have been many policy attempts that try to rectify or simplify the technology transfer process, and it is very likely that there will be many additional efforts in this regard or new attempts to reinvent the process. The technology transfer process, particularly related to start-up companies and technology inventors, enhances the United States democratic nature by encouraging the entrepreneurs and technologist to pursue the American dream. Moving towards the future, there will be an increase in United States policies that advocate for STEM education and graduates that will be necessary to sustain these high technology firms, research universities, and national laboratories.
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