Good morning.
Thank you to the members of this committee for the invitation to speak today. I wish I could be with you in person.
My name is Steve Susalka, and I'm the chief executive officer of the Association of University Technology Managers, also known as AUTM.
AUTM is a non-profit organization composed of over 3,200 individuals, including some 200 Canadian members who represent more than 300 academic and research institutions worldwide and focus on supporting inventions as they move from the lab to the marketplace.
What exactly is academic technology transfer? That term can be defined in five words: research, invention, evaluation, protection, and commercialization. Using data from AUTM's annual licensing activity surveys, I will compare the technology transfer efforts of Canada and the U.S.
First, on research, academic technology transfer is fully reliant on the money that is spent on research at universities, colleges, and hospitals. According to AUTM's 2015 surveys, the 36 Canadian institutions reported approximately $6.1 billion U.S. in research expenditures. In comparison, the U.S. reported approximately $66.6 billion U.S. Because the U.S. has approximately 11 times the amount of research expenditures that Canada has, I'll divide the U.S. numbers going forward by that multiple—about 11—in order to make a fair comparison.
The next step is invention. Technology transfer activities begin when a scientist, student, or staff person at an academic institution develops an idea for a new invention. Canadian institutions reported 1,813 invention disclosures in 2015. That correlates to approximately $3.4 million U.S. per invention disclosure. For perspective, data from U.S. institutions demonstrate that Canadian institutions spend about 28% more on research expenditures per invention disclosure produced.
The third step is evaluation. Canadian technology transfer offices receive hundreds of these invention disclosures each year; however, not all of them are commercialized. Why? Some inventions might not be protectable enough, and others might not address a substantial market need. Technology transfer offices assess the viability of the various inventions they receive and invest in as many of them as they can afford.
Looking at the number of patent applications filed is a good proxy for the number of invention disclosures actually pursued, recognizing that there are a number of caveats. If you look at the number of new patent applications by research expenditures, you will see that about $5.9 million U.S. in Canada results in one new patent application. Compared to the U.S. rate, Canadian institutions spend about 42% more on research expenditures per new patent application.
The fourth step is protection. The protection of the inventions, generally through patent and/or copyright protection, is a critical piece of the technology transfer process. Without it a company will not take the risk of investing the substantial resources needed to develop an early-stage idea into a product. As this committee no doubt recognizes, a strong and reliable patent system is absolutely crucial for a flourishing technology transfer ecosystem.
The final step is commercialization. Of course, the ultimate goal of academic technology transfer is to create new products and services to help Canadians and serve the public good. Since academic institutions do not sell products, the institution's intellectual property is instead licensed to companies that develop and market the institution's invention.
Canadian institutions reported 700 option and licence agreements in 2015, demonstrating that Canada was just about as efficient in optioning and licensing intellectual property compared to the U.S. when normalizing to research expenditures.
Another result of effective Canadian academic technology transfer practices is the generation of new start-up companies based on academic intellectual property. In 2015, Canadian institutions reported 90 start-up companies formed, again demonstrating that Canada was just about as efficient at forming start-up companies as the U.S., when normalized by research expenditures.
Interestingly, the equivalent option and licence agreement rates do not result in similar licensing revenue when compared to the U.S. In fact, Canadian institutions accounted for only $62 million U.S. in licensing revenue in 2015, which worked out to only about 27% of the normalized U.S. licensing revenue figure. Although licensing revenue numbers are often swamped by a handful of home runs, this difference in licensing revenue is dramatic.
Three points can be made with this data.
First, Canadian technology transfer is about 28% to 42% less efficient in generating invention disclosures in patent applications. Why? One reason could be inventor-owned IP policies are lowering the number of reported inventions and patent applications. They are being created, but just not counted. Also, there might not be as much of an emphasis on intellectual property disclosure and protections as in the U.S. through the Bayh-Dole Act that requires federally funded inventions to be disclosed.
My second point is that Canadian technology transfer is just as efficient in agreements executed and start-up companies formed, even though they start with fewer invention disclosures and patent applications. How? First, this statistic is impressive and reflects well on the quality of the technology transfer professionals in Canada as they are doing more with less. Second, successful Canadian start-up accelerators are likely contributing to the significant number of start-up companies. Third, a focus on IT-based technologies by some institutions are also likely to contribute to more start-ups than expected, due to lower overhead.
My final point is that Canadian technology transfer only produces about 27% of licensing revenue in comparison to the U.S. Why? First, again the inventor-owned intellectual property policy means some inventions, and perhaps some of the higher-value inventions, are not being counted here. Second, downstream funding sources, for example, for institutional prototyping funds or governmental commercialization funds, are perhaps not as prevalent as in the U.S.
I look forward to continuing the discussion as we find ways to further increase the commercialization of the diverse and impressive research being pursued in Canadian institutions.
Thank you.