Technology transfer :sx the BTG model .sx by Peter Tanner .sx Although there may be some who still think of technology transfer in terms of assistance to Third World countries , most now understand it to mean the process in a developed economy by which a business can benefit from technology transferred to it .sx Even so the significance of intellectual property is still not fully appreciated and often undervalued , particularly in the engineering field .sx This article draws attention to the opportunities which exist , the changes of attitude necessary to take advantage of them and some of the ways in which technology transfer can be achieved .sx It is suggested that , as the world's principal exponent of technology transfer , the British Technology Group ( BTG ) is a good model for all similar activities in this field .sx The paradigm shift .sx With a few notable exceptions , for too long technology transfer has had too low a profile in the UK and been an undervalued resource here .sx This is not generally so elsewhere .sx Increasingly , in all other industrial countries the awareness is growing of the importance and value of intellectual property as a real asset ( just like real estate ) and awareness is also growing of the significance to be attached to the transfer of it if it is to be used to the maximum commercial advantage .sx We must ensure that we redress this in the UK rather than allowing ourselves to fall further behind .sx To do so , however , will require a radical revision of attitudes , a paradigm shift in the current jargon , away from the deeply ingrained 'not invented here' culture which many companies still find it uncomfortable to make .sx In the power engineering field this is particularly so .sx Without doubt , however , technology transfer is worth taking seriously .sx The value of trade in IPR ( intellectual property rights ) is considerable , amounting annually to around pounds10 billion worldwide , corresponding ( at a notional 5% royalty ) to products valued at pounds200 billion per annum and growing rapidly .sx The whole topic of the exploitation of technology was aired and given fresh impetus in the leading article in IEE News ( December 1990 ) entitled 'Not invented here or implemented here' .sx As that article notes , " While the British see themselves as inventors par excellence , our track record of exploitation is far less encouraging " .sx Again , it points out , " Although a reputation for inventiveness is exciting , a competence in profitable exploitation is more important for maintaining our standard of living " .sx We must take heed of this and in doing so abandon not only the NIH syndrome but also any vestiges of a nationalistic attitude in technology transfer .sx We need not only to exploit our own ideas abroad but also to look abroad for ideas which we can manufacture here , always planning for a substantial financial benefit from the flow in either direction .sx Clearly we can ill afford to be parochial about technology transfer .sx In the UK we carry out only 5% of the world's research and have only around 5% of the world's industry .sx It is unlikely , therefore , that we will find a close match between our own R&D and our own industry .sx We must be prepared to license our ideas to companies overseas ( we have , after all , provided over 40% of the basic research ideas over the last 30 years ) and correspondingly look in those countries for ideas which our industry may find valuable .sx This is the true formula for the manufacturing prosperity which we must urgently restore , rather than standing by to witness its further rapid decline .sx As Lord Caldecote pointed out in the fifth Lord Nelson of Stafford Lecture to the IEE in 1988 , the only way the UK will achieve its primary objective of providing satisfying lives for all will be by the creation of wealth as measured by profitability .sx This , he reminds us , requires the nurturing of a prosperous manufacturing industry , the key to which must be greater investment in innovation and an increasing commitment to it .sx He might have gone on to add that a highly important and significant element of this is the professional handling of intellectual property resulting from innovation in the UK and elsewhere .sx The substantive model .sx The IEE News article referred to earlier points out in relation to technology transfer " the need to add a missionary zeal to convert the internal sceptics " .sx BTG has just such a zeal .sx Its mission is " The profitable exploitation of technology " and consequently as a contribution to the debate it might be instructive to spend a little time looking at how it operates and how it has firmly established itself as a leading technology transfer organisation .sx BTG is currently still a public corporation but well on the way to being privatised , which should be achieved before the end of the year .sx To all intents and purposes it has operated as a private company for many years .sx Although when set up as a public corporation it borrowed money from the Treasury , the loans were repaid long ago and it has been self - financing and profitable since the early 1970s .sx The success achieved by BTG is evidence of the benefits to be obtained from the efficient and professional handling of technology transfer .sx During the last financial year BTG increased its total revenue from licensing by 30% to well over pounds25 million and profit before tax by over 25% to close on pounds10 million .sx BTG's sources of innovation benefited substantially from this success ; over the year a total of pounds13 .sx 1 million was returned to the academic sector in revenue sharing , project investment and investment in patents for university inventions .sx The professionalism and success of BTG in the handling of technology is widely recognised , both in the UK and internationally .sx As a result the number of inventions continues to rise rapidly ; last year the number offered to BTG increased 50% and accepted for further exploitation by 35% .sx .sx Once an invention is accepted for exploitation BTG , if appropriate , takes responsibility for patenting it at its own expense , funds further development if this is considered necessary to improve the prospects of successful international licensing , negotiates licence agreements , shares the licence income with the owner of the invention ( so that the institution and the inventor receive 50% of the proceeds between them ) and enforces the patent protection if necessary .sx The acceptance of an invention offered to BTG is the result of a favourable assessment of its commercial potential by an executive in one of the Operations Divisions which are the core of the business .sx All these executives have not only a first class academic background at research and development level but also a managerial commercial experience in the particular sector of technology for which they are responsible .sx If an invention is one for which it is thought that useful patent protection might be obtained , then through BTG's Patents Department and at BTG's expense the patent cover necessary to protect it will be provided .sx The Patents Department is amongst the largest in the country , and highly regarded internationally .sx It is certainly a considerable advantage to have a resource of this calibre in-house , working closely with executives and inventors to produce intellectual property of maximum value .sx It is of crucial importance not only to have the skills to get a proper , well written patent application ( leaving the researcher thereafter free to publish if he wishes to do so ) but also to be able to build a stockade of patents round the key idea to achieve the maximum protection .sx These skills have ensured that in many of the areas in which the organisation operates BTG has secured such a strong patent position for it to be able to take successful patent action when necessary against even the most powerful multinationals or even governments .sx Thus major cases have been won involving Magnetic Resonance Imaging patents against Johnson and Johnson and against the Pentagon in infringement of patents on Hovercraft , to name but two .sx It is not only executives and patent agents working together but these collaborating in one team with legal , financial , commercial , marketing and other skills which give the organisation its unique strength .sx This extends also to licensing software and knowhow which , although generally not protectable by patents , still constitute valuable intellectual property .sx Of course as already mentioned , it is not always the case that intellectual property acquired by BTG is in a condition to be immediately licensable ; it may need further development before it is likely to be of commercial interest .sx BTG has the money to invest in such projects and last year this increased by 32% to a total project expenditure of nearly pounds10 million .sx In developing inventions BTG now has pounds33 million committed to 480 projects as well as investments also in a number of projects with companies .sx In these projects at universities , polytechnics and elsewhere the costs supported include materials , components , apparatus and the salaries of staff engaged on the project , plus a reasonable allocation of overheads .sx It can also include the cost of market research work under subcontract and other activities that enhance the commercial value of the product .sx A feature of a number of these projects is to appoint , when appropriate and with the agreement of their institutions , selected post-doctoral research staff engaged on the project as BTG Fellows .sx This brings us to the important stage of licensing the technology that has been acquired and developed .sx Clearly this requires a detailed knowledge of the industry involved on a worldwide basis .sx Some of this information can be gathered from the various databases increasingly becoming available .sx These are useful but no substitute for personal contacts with the principal players in the field .sx Contacts , levels of confidence and trust need to be built up over many years so that a direct personal approach can be made .sx All this demands well developed marketing skills , including product development , the placing in the marketplace , pricing and promotion .sx These four tenets of marketing are all critical and the executive responsible for the licensing must be experienced in them all .sx With the marketing resolved , selling will then be the important activity and all will then centre on negotiating an appropriate licence agreement .sx The Licence Agreement , like the Patent Specification , is a key document since once the intellectual property has been made available to the licensee the continuing payment of royalties and a satisfactory ongoing relationship may be dependent on it .sx In such a licence it is usual to have a down payment which has the merit of identifying those seriously interested and likely to pursue the activity with vigour .sx In certain circumstances this down payment , or at least some part of it , might be treated as an advance on royalties .sx The royalty level itself needs careful negotiation .sx In many areas this works out to be around 5% for patented work although this is dependent on the technology , and for software , where margins are high , a level of 50% is not uncommon .sx As well as fixing a royalty level it is standard practice also to establish a guaranteed annual royalty level and to write this into the agreement .sx This is particularly so where a degree of exclusivity is concerned .sx Exclusivity either to manufacture or sell in certain territories is not an uncommon feature , normally only over a limited period but long enough to give the licensee a chance to become established in the market .sx .sx As well as having a guaranteed royalty during the exclusive period it is also sensible to establish break minima for each year so that if this level has not been reached the licensor can terminate the agreement .sx This ensures that licensees do not cocoon the work and prevent more serious operators taking a licence .sx However , it is not intended here to go into all the ramifications of the licence deal which could well be the subject of a subsequent article , but only to emphasise , by touching on the detail involved , the complexity of concluding a suitable arrangement and the need for involving expert advice in doing so .sx The success of power .sx Although mention was made at the beginning of this article that power engineering is one of the areas where there might be a reluctance to become involved with technology transfer , this was the engineering area in which BTG achieved an early notable success , due to the vision of the late Prof .sx Gordon Rawcliffe .sx