Technology Commercialization: Combining Public and Private (original) (raw)

1989, Policy Studies Journal

International economic competitiveness has recently become the wellspring of legislation and initiatives in the United States. This is due primarily to the increasingly unfavorable U.S. balance of trade arid the outflow of technobgy at the expense of the U.S. technobgy and industrial base. Basb to many of the assumptions about how to increase competitiveness is that product/process innovation in the commercial sector springs in part from government-sponsored research and devebpment (R&D). The annual federal investment in R&D in the U.S. is about $63 billion. The translatbn of this R&D into commercial products and processes usually requires cooperatbn between the federally-funded researchers and the commercial sector. As stated by the Secretary of Commerce (1989), "Research reports can never hope to convey all that the researchers have learned and absorbed. This is especially so in the case of federally-supported R&D where the resulting technobgies tend to be far from commerciaiizatbn." One of the natbnal solutbns to increase competitiveness has been the passage of the Federal Technobgy Transfer Act of 1986. One effect of this act is to increase the likelihood of a greater number of both direct and indirect reiatbnships between public and private organizations to commercialize technobgies. According to 1989 reports by both the U.S. General Accounting Office (GAO) and the U.S. Department of Commerce, federal agencies have taken numerous actbns to implement the 1986 act, but it is too early to determine its impact since it takes several years for inventbns to reach the marketplace. Additbnal laws which facilitate public-private reiatbnships for commerciaiizatbn are the Bayh-Dole University and Small Business Patent Procedures Act of 1980 and NASA's Space Act of 1958. A 1987 GAO report noted that, since passage of the 1980 Bayh-Doie iegislatbn, university-industry cooperatbn had increased 74 percent. Furthermore, the Natbnal Cooperative Research Act of 1984 promotes industrial research consortia (R&D Limited Partnerships) by alleviating antitrust penalties. These consortia are often public-private arrangements. Finally, certain federal agencies, such as the National Science Foundation (NSF), have initiated research programs in the 1980s to promote university-industry cooperation. Technology and American Competitiveness 189 This increase in publb-private interactbns opens up tx>th some exciting possibilities and preliminary cautbns. Thus, the purpose of this paper is to: 1) draw selectively upon pertinent literature to categorize some of the possible public-private arrangements to commercialize technologies, and 2) discuss some of the issues inherent to these an-angements. PUBLiOPRiVATE ARRANGEMENTS FOR COMMERCIALIZING TECHNOLOGIES Organizatbns partbipating in the technobgy commercialization process include private firms, non-profits, public-private mixes, and publb organizatbns. In the commerciaiizatbn process, technologies are patented (or copyrighted or trademarked) and marketed to private developers who Ibense the inventbns for ultimate manufacture and sale. Public-private arrangements in technobgy commercialization are examined here according to three categories: 1) direct multi-organizational partnerships; 2) indirect third party intermediaries; and 3) contractual reiatbnships. Direct Multi-Organizationai Partnerships For the purpose of commercializing technobgies, multi-organizational partnerships can be described as direct relationships between public institutbns (e.g., federal laboratories or state universities), private enterprises, and/or non-prpfits in order to conduct joint R&D. The 1986 Technobgy Transfer legislation allows laboratory directors to enter directly into cooperative R&D agreements (CRDAs) with private corporations without competitive bidding. According to GAO, as of February 1989, 172 CRDAs are in place as a result of the act. The Bbtechnobgy Research and Devebpment Corporation in Peoria, Illinois is an example of such a partnership. It includes the U.S.