UK: Do Universities Exploit Their Intellectual Capital?

Last Updated: 20 September 2006
Article by Emyr Lewis and Alison Patten-Hall

UK universities have a long way to go in order to make appropriate commercial gains from the intellectual capital (IC) generated by their academics and researchers, according to a major new survey.

Despite the hype surrounding the commercial exploitation of intellectual capital as a potentially significant source of funding for HE institutions, the survey suggests that in most cases it is pretty modest in English and Welsh universities.

The study, Commercial Exploitation of Intellectual Capital in English and Welsh Universities, undertaken by Wheeler Associates/McCallum Layton on behalf of Morgan Cole Solicitors, found that cash generated by exploiting IC amounted to no more than 0.2% of institutional funding on average across the institutions surveyed, and even in the most successful cases no more than 2.5%.

In the most comprehensive exercise of its kind, researchers spoke to the most senior person responsible for the commercial exploitation of the university’s intellectual capital, for example director/manager of technical transfer and intellectual capital at 17 red brick, 11 plate glass and 22 new universities.

Findings included:

  • While most institutions have a unit responsible for exploitation, there is still a significant number of institutions that have not taken steps such as an IP audit (54%); adopted a formal policy for exploitation (26%); or prepared standard licence agreements (28%);
  • While 48% of institutions have set targets for commercialisation, most institutions focus on quantitative targets only (e.g. number of licences granted, number of patents, number of spin-offs created), and very few set more businesslike targets of the net financial gain to the university;
  • The feeling in most institutions (90%) was that academics are more interested in publishing research in order to improve RAE ratings than in applying for patents.

This all suggests that there is still a long way to go in many HE institutions making the most of their intellectual capital from a commercial perspective.

There still seems to be a significant culture gap between academia and commerce. In many respects that is a good thing. We value our universities and colleges for reasons other than their ability to generate commercial income, and their contribution to society cannot always be measured mechanically.

Nevertheless, they exist in a UK context where there is increased competition for sometimes decreasing resources and in an international context where partnerships between higher education on the one hand and industry on the other seem to be more efficient at creating value. There are also structural problems, such as the tension between protecting patentable inventions on the one hand and the need to publish in order to attract research funding.

All bar two of the institutions surveyed have an office or division responsible for exploiting its intellectual capital. Many report to the vice chancellor or finance director.

A third have up to five people employed in the unit and 21% have more than 20, with an average of around 14 people in each. Just eight of these units (16%) are set up as a separate company; of these eight companies, half have directors from outside the university.

In nearly all cases, universities said they own the intellectual property created by its academic staff. Any proceeds from the exploitation of intellectual capital, however, are generally shared between the university and the inventor, often on a sliding scale whereby the share going to the inventor reduces as the value of the work increases.

Most respondents felt that academic staff take a pragmatic view of the university’s policy on commercial exploitation, although of a given list of statements to describe their attitude, six picked ‘something they are just not interested in’, five ‘a bureaucratic nuisance that gets in the way of completing or publishing their research’ and two ‘a misappropriation of their intellectual capital to benefit others’.

Only 46% said that their university has carried out an IP audit, half of them doing this on a regular (usually annual) basis.

Universities said commercial exploitation of IP over the last 12 months varied widely, raising from less than £10,000 to £3m. On average, each university currently has around a dozen patents.

And 90% of all respondents agreed (68% strongly) with the statement ‘academics at this university are focused on improving the RAE ratings for their departments through the publication of research papers in academic journals, rather than applying for patents’.

Nonetheless, most have created spin-off companies and a fifth of respondents said that the rate at which these are being created is increasing. In addition, the failure rate of those companies that have been set up appears low (failure often being put down to the lack of a market, where this has happened, running out of funds or the technology not living up to expectations).

The university takes a seat on the board of its spin-off companies in two thirds of cases and nearly all provide support in terms of introduction to sources of finance (most often government funding, venture capitalists or business angels), company formation and business planning.

More than 30% of respondents said that they did not feel their university was very effective at exploiting its intellectual capital.

A lack of resources, lack of support from academics and management and a lack of outside investment were cited as the most common barriers to achieving this goal.

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