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Royalty Sharing: Creating Bayh-Dole models in Developing Countries

The issue of royalty payment has been recently discussed in an article “Public-funded R&D Bill — Creating the ecosystem for innovation” in The Business Line in India by Jyothi Datta. Relevant issue of royalty payment under Bayh Dole type legislation as per the article states:

“The draft Bill seeks to give back to the scientist or inventor, 30 per cent of the revenue from commercialization of his or her research. About 10 per cent is marked to the public-funded institute’s IP Management Cell and the rest of the revenue is ploughed back into the institute. The IPM Cell will help the researcher patent innovative work, besides negotiating with commercial institutions when it is ready to strike.”

Indian Bayh Dole like bill titled “Public Funded R & D Protection of Intellectual Property Bill, 2008” which is before the Indian Parliament provides that inventors receive 30 percent of any royalties stemming from licensing. A similar legislation in South Africa that was recently enacted known as the ‘Intellectual Property Rights from Publicly Financed Research and Development Act’ that intends to enable and encourage recipients of government-funding to protect as Intellectual Property and license the results of their research in order to provide incentives for those recipients to work with industry players to commercialize research. Section 10 of the legislation provides that the creators and the inventors get a portion of the royalty stream generated from the licensing of the invention.

Jyothi Datta points out to the comments by Dr Prabuddha Ganguli, who was on an international expert team to help draft a similar legislation for South Africa:

“Parameters have also been outlined on the royalty that would be paid to the scientist/institute when the patented research gets commercialised, says the Bill’s architect. But IP expert Dr Prabuddha Ganguli, who was recently on an international expert team to help draft a similar legislation for South Africa, is uncomfortable with attempts to outline parameters on issues such as royalty payment. The legislation should be a broad guiding framework and specifics should be left to the rules that are made later taking into account in the changing environment. Though he has not seen the draft of the proposed Indian legislation, he points out that there are several texts and sub-texts to the issue — like whether the research has been fully or partially funded by the government; definition of national interest and if the government exercises its “march-in” rights on a critical product, does it pay for it, and so on.”

WIPO commissioned reports on Tech. Transfer of various Asian Countries in 2003 and they had a set of guidelines for developing models which were divided into 3 levels:

1. National Policy on Intellectual Property and University-Industry Technology Transfer.
2. University Policy on Intellectual Property and Technology Transfer.
3. Institutional Set-up and Practical Aspects for Technology Transfer from Universities to Industry

They include Income distribution (or royalty sharing) as a part of “University Policy on Intellectual Property and Technology Transfer” and not a part of the National Policy/ Law, that is also Dr. Gangully’s  view on this issue as was published in an Indian Daily some time back.

In contrast Prof. Karen Hersey in her recent post “Royalty Sharing: A Matter of Law or a Matter of Policy” on the ITTI blog said that “setting a floor of 30% arguably accomplishes two things. first, it sends a message from government to research institutions receiving grants that the efforts of faculty and students who contribute to the process of innovation and commercialization is valued and second, it prevents grant recipients from, quite frankly, playing politics with rewards that their innovators justly earn.”

Although in an article published on SciDev.net, Shamnad Basheer (Ministry of HRD IP Chair Professor at WBNUJS, Kolkata) said that Indian IP Act would ensure that inventors receive at least 30 percent of any royalties stemming from licensing and the same is a laudable aspect of bill unlike the US Bayh-Dole Act, which leaves royalty-sharing policies to the academic institutions. Their remains to be dispute about the fact that having a mandatory provision for royalty sharing might not be the best of ideas and such specifics should be left to the rules that are made later taking into account in the changing environment or to the judgment of the University bodies, looking to their profits and the best way they can incentivize scientists and researchers to maximize the interest of the institutions.

References:

1. Karen Hersey, Royalty Sharing: A Matter of Law or a Matter of Policy, International Technology Transfer Blog. < http://blogs.piercelaw.edu/itti/2009/03/expert-views-prof-karen-hersey.html>
2. Shamnad Basheer, Indian patent bill: Let’s not be too hasty, SciDev.net. < http://www.scidev.net/en/opinions/indian-patent-bill-let-s-not-be-too-hasty.html>
3. Jyothi Datta, Public-funded R&D Bill — Creating the ecosystem for innovation, The Business Line. < http://www.blonnet.com/2008/04/23/stories/2008042350430800.htm>

 

Categories: Africa, Asia, Intellectual Property, Public-Private Partnerships (PPP), World Intellectual Property Organisation (WIPO)