Consultations on Government Investments in University Research

Ottawa, August 30, 1999 -- The federal government intends to consult widely about the recommendations in a recent report, Public Investments in University Research: Reaping the Benefits.

The report was prepared for the Advisory Council on Science and Technology (ACST) by an Expert Panel, chaired by Pierre Fortier, Senior Advisor to the Chairman of Innovitech Inc. It calls for coherent university intellectual property policies, adequately resourced university commercialization offices, skills development measures, a competitive business environment and increased investments in university research.

"Taken together, these recommendations have the potential to generate significant social and economic benefits for years to come. Canadian university researchers who perform leading-edge, innovative research and who wish to commercialize their inventions deserve access to the best commercialization support possible. We also must ensure that the jobs and economic growth resulting from these innovations are realized by Canadian taxpayers who fund the research," said Gilles Cloutier, Deputy Chair of the ACST.

The federal government will consult with representatives from academic institutions, provincial governments and the private sector before developing a response to the work of the ACST's Expert Panel. Dr. Thomas A. Brzustowski, President of NSERC (the Natural Sciences and Engineering Research Council of Canada), will lead these consultations in September and October. "What we want to find out is whether the Panel's recommendations will achieve the government's objectives," said Dr. Brzustowski.

Leo Derikx, who has extensive experience in the area of research links between universities and the private sector, will assist Dr. Brzustowski. Those interested can also make their views known via the ACST web site. All input will be carefully considered and will form part of the official consultation record.

The ACST was established to provide the Prime Minister with expert, non-partisan advice on national science and technology issues. The ACST Expert Panel on the Commercialization of University Research was formed in October 1998 to investigate this issue, which is of increasing importance as more and more products and services are derived from advances in scientific research.

Public Investments in University Research: Reaping the Benefits can be found on the ACST web site at: http://acst-ccst.gc.ca/acst/comm/home_e.html. This site also contains information on the public consultation plan, and can be used to transmit feedback on the Panel's recommendations.

Hard copies of the report may be obtained by calling (613) 954-2720 or faxing (613) 990-2007.

For more information, please contact:

Tim Nau Director, Communications NSERC 350 Albert Street Ottawa, Ontario K1A 1H5 Telephone: (613) 995-5993 Fax: (613) 943-0742 tim.nau@nserc.ca

Karen Corkery Senior Policy Analyst Innovation Policy Branch Room 838E Industry Canada Ottawa, Ontario K1A 0H5 Telephone: (613) 946-1076 Fax: (613) 990-2007 corkery.karen@ic.gc.ca

Backgrounder

Summary of the Expert Panel's Report

The Panel's report deals only with university research that is supported in any part by federal funds. The objective of the recommendations is to provide the greatest possible economic return to Canadian taxpayers on the investments they make in university research. This return takes the form of new economic activity when research results produce new high value-added goods and services. Commercialization of university research creates good jobs and social benefits, for example, through improvements in health care made possible by the application of medical research discoveries.

The approach to the commercialization of university research in the report hinges on the choice made by university researchers who make discoveries, create inventions or develop new ideas. The report endorses researchers' rights to publish their results, or make them public in some other way. The report's recommendations only affect researchers who decide to protect their discoveries for potential commercial development. The recommendations were designed to increase the odds of successful commercialization with win/win outcomes for researchers, universities and Canadians.

The report proposes a flexible approach to the ownership of intellectual property (IP). In cases where researchers own IP that they want to see commercialized, the report recommends disclosure and assignment to the university. Universities would be held accountable by governments for maximizing returns to Canada. Universities would also be given the flexibility to assign IP to affiliated research institutions, firms or researchers under certain specified conditions, including when the other party is better placed to maximize returns to Canada without undue conflict of interest.

Universities must be able to provide the best possible service to researchers who engage in research-based innovation. The report recommends that new targeted money be provided to universities in an amount equivalent to 5% of their total federal research funding to help them provide that service and invest in the improvement and protection of IP. Universities could choose to provide that service themselves or buy it. Small universities may see advantages in pooling their resources.

To be eligible for the 5% grant, the report recommends that universities be required to develop an innovation policy based on principles that include encouraging research-based innovation by providing rewards to researchers who engage in these types of activities. Innovative researchers should be entitled to share in the net financial benefits from commercialization undertakings and they should be recognized in tenure and promotion policies for their investment of time and effort in the innovation process.

Indeed, the Panel heard that there was such a strong cultural bias against innovation in some university departments that potential innovators were afraid of putting their academic careers in jeopardy. It was for that reason that the Panel recommended that innovation be identified as the fourth mission of the university, or at least explicitly included in the traditional three missions of teaching, research and service, wherever it fits. The earlier stronger form of this recommendation was the subject of some controversy in the consultation on the draft report. The Panel listened to these concerns, but concluded that the importance of research-based innovation needs to be recognized in universities' mandates. The report recommends that universities be given two years to put such innovation policies in place, but the new money should flow in the interim. Universities should also be required to report annually on their performance.

People with the right skills are needed to provide the level and quality of service required for success in research-based innovation. There is a need in this area for people who understand science, markets and the legal complexities inherent in the commercialization of research. Such people are rare, and the universities themselves need to take a hand in educating them.

Another recommendation deals with creating a business climate in which start-ups and established firms dependent on universities as a source of innovation can prosper and grow. The report proposes changes to taxation measures, including personal rates of tax, capital gains and employee stock options.

The Panel was aware that the limited faculty time for research in Canadian universities limits their potential to contribute to the development of the Canadian economy. This potential can be raised by increasing university funding in Canada and by ensuring that universities can support the indirect costs of the research that they are expected to carry out.

The report endorses a researcher's right to perform basic research and publish. Indeed the report recognizes these as legitimate activities that contribute to Canadians' economic and social well being. That is why the Panel recommended increased funding for basic research, and allowed for IP ownership by researchers to empower them to decide whether to publish or commercialize the results of their research. For researchers who pursue the commercialization option, the report's recommendations are intended to provide them with a more supportive environment.

If the government endorses these recommendations, the Panel believes that university commercialization undertakings will be more consistent, visible and meaningful in terms of generating jobs and improved social conditions for Canadians. This should be viewed as a successful outcome by all university researchers, including those not affected by this report. Success on this front will not threaten basic research or researchers who publish. On the contrary, the report notes that commercial successes will reinforce the need for more basic research to fuel long-term innovation, build greater public support for publicly funded university research and attract greater private funding for basic and applied research. The ACST sees an opportunity to generate far greater returns on the public investment in university research than is presently the case in a way that would benefit all parties.

Report of the Expert Panel on the Commercialization of University Research: Setting the Context for Public Consultations

I) Federal Government's Objectives

There is ample evidence that the world economy and society are undergoing a fundamental change -- the shift to knowledge-based growth. In the knowledge-based economy, the effective management of knowledge is becoming the decisive determinant of economic success. In the long run, knowledge and a work force with the skills to apply this knowledge are the main sources of productivity and income growth, and improvement in the quality of life.

Canadians must innovate. We must expand our knowledge and ability to do new things, and to do old things in better ways. Innovation and knowledge are the raw materials of the 21st century economy, providing new tools and techniques, changing the way we do things, helping us make better use of resources, and making the economy more prosperous. Studies by the Organisation for Economic Co-operation and Development (OECD) suggest that an "innovation gap" separates Canada from our competitors. Although it has been reduced over time, a sizable gap still remains.

"The Government is determined to do more to support innovation and risk-taking in Canada and to attract more foreign investment in knowledge-based industries to Canada. We will build creative partnerships between the private and public sectors to accelerate the adoption of innovative technologies in all sectors of the economy." Speech from the Throne

Over the past several years, the government has put in place a new framework for innovation. That strategy has three parts -- the creation of knowledge; the dissemination and sharing of knowledge; and the application or commercialization of knowledge.

To support the creation of knowledge, the federal government has increased its investment in the Canada Foundation for Innovation and increased the budgets of the Granting Councils to support research and development.

To support the dissemination of knowledge, the government is pursuing its vision and plan to make the information and knowledge infrastructure accessible to all Canadians by the year 2000, thereby making Canada the most connected country in the world.

The foregoing initiatives focus on supplying and transferring knowledge. For innovation to remain the driving force behind improving productivity and living standards, knowledge must be applied to creating new products, production processes and markets. The federal government supports the commercialization of knowledge through such initiatives as the Networks of Centres of Excellence, Technology Partnerships Canada, the Business Development Bank of Canada and the Industrial Research Assistance Program.

"A Liberal government will further strengthen R&D;, especially in small and medium-sized business, by encouraging technology partnerships between Canadian universities, research institutions, and the private sector that emphasize the commercial applications of research and development." Creating Opportunitym The Liberal Plan for Canada

In this context, facilitating the commercialization of university research has been a government priority for a number of years. It has driven the creation of university-industry programs under the granting councils, and is a key objective of the Networks of Centres of Excellence. It also propelled the creation, in 1998, of an Expert Panel by the Advisory Council on Science and Technology to provide the government with an external perspective on how to maximize the returns on the public investment in university research.

To improve Canada's innovation performance and transition to the knowledge-based economy, Industry Canada will seek to accelerate the "commercialization and adoption of innovative processes and products by Canadian organizations." Industry Canada: Making a Difference, Our Priorities for 1999-2000

II) Background

The nine member Expert Panel on the Commercialization of University Research commissioned background reports and consulted with over 100 stakeholders prior to finalizing its report entitled Public Investments in University Research: Reaping the Benefits.

The ACST has recommended to the federal government that it implement the recommendations of the Expert Panel. This would involve establishing a coherent university intellectual property policy framework, providing incremental support for the commercialization function within universities, developing the skills required to increase the number of successful innovations created from university research, ensuring that tax policies are conducive to the growth of firms that form strategic alliances with universities, and investing in university research to fuel the commercialization pipeline.

III) Objective of Public Consultations

Dr. Thomas A. Brzustowski, President of the Natural Sciences and Engineering Research Council of Canada, will lead the government's consultation effort with the support of Mr. Leo Derikx. Dr. Brzustowski and Mr. Derikx will meet with a wide range of affected stakeholders throughout September and October, 1999. In addition individuals are invited to provide their views via the ACST web site.

All input will be carefully considered and will contribute to improved public policy making by the federal government.

IV) Outcome of Consultations

The timing of the government's response will depend on the outcome of the public consultations. A broad base of support for the Panel's findings could lead to decisions in the fall of 1999. On the other hand, the federal government may need to take more time in framing its response in the event that the consultations point to the need for further work.

For Additional Information

• the report of the Expert Panel Public Investments in University Research: Reaping the Benefits;
• background reports commissioned by the Expert Panel;
• additional information on the public consultation strategy;
• an opportunity to provide your views as part of the official consultation record.

Paper copies of the Panel's report can also be obtained by calling Industry Canada's Information Distribution Centre at 613-947-7466.

Contacts:

Tim Nau Director, Communications NSERC 350 Albert Street Ottawa, Ontario K1A 1H5 Telephone: (613) 995-5993 Fax: (613) 943-0742 tim.nau@nserc.ca

Karen Corkery Senior Policy Analyst Innovation Policy Branch Room 838E Industry Canada Ottawa, Ontario K1A 0H5 Telephone: (613) 946-1076 Fax: (613) 990-2007 corkery.karen@ic.gc.ca