Click on image to enlarge.

More engineering-related issues are cited in a recent R&D Magazine survey due to its involvement in product development areas.

Click on image to enlarge.

More than 20% of all R&D is dedicated to technology transfer according to our industrial, government, and academic readers.

Click on image to enlarge.

Collaborative development was the most common type of tech transfer project cited in a recent R&D Magazine reader survey.

Click on image to enlarge.

Readers involved in tech transfer generally are more likely to become involved with multiple organizations than with just one.

Click on image to enlarge.

Nearly 90% of those involved in technology transfer arrangements say that their efforts are successful.

Click on image to enlarge.

No one reason for doing technology transfer stands out, organizations do it as a general way to grow their businesses.

Tech transfer is growing in industry to accelerate product development, in academia to support research efforts, and in government to commercialize developed technologies. In all of these areas, the technology purchaser often needs to heed to the warning--"buyer beware."

The one overriding rule of technology transfer appears to be that tech transfer is a different thing to different people. To members of the Association of University Technology Managers, it's "a term that describes a formal transfer of new discoveries and innovations resulting from scientific research conducted at universities to the commercial sector. To the Federal Laboratory Consortium, it's "a process by which existing knowledge, facilities, or capabilities developed under federal R&D funding are utilized to fulfill public and private needs." In industry, it's a mechanism that enables companies to solve their own technology needs by purchasing or licensing other companies' technology and expertise.

Tech transfer is obviously non-limiting in nature and encompasses all of these attributes. It basically involves the transfer of use of intellectual property (IP) from one organization to another, generally for the payment of a use or licensing fee. But include the payment of a fee in any arrangement and you immediately create issues involving an organization's profit or loss situation.

A few precautionary rules for enhancing profits and minimizing losses in a technology transfer arrangement is the purpose of this article. The rules listed here are in no way intended to be all-inclusive for the evaluation of a technology transfer event. They are intended to highlight some of the complexities of successfully pursuing this increasingly useful avenue of meeting your organization's strategic goals.

1 Don't over-value the value of a technology. Too often, participants in a tech transfer agreement will undervalue the cost of scaling a product from its prototype demonstration stage to full commercial production, according to Craig MacDonald, Battelle's VP Strategic Alliances, Columbus, Ohio. Too often the buyers will become enamored with the technology and underestimate such implementation costs, as tooling, materials, packaging, processing, and testing/quality assurance. One of the largest causes of a failed tech transfer deal is a run-up in manufacturing costs The technology buyer is advised to have qualified manufacturing experts fully evaluate these costs during the evaluation stage. Users are recommended to add a 15% contingency fee to the final estimated manufacturing costs to offset unanticipated costs.

2 Fully understand your target market. Strange as it may seem, some tech transfer participants will purchase a technology without a good understanding of the potential commercial market for the technology, according to Robert Bass, VP of the mechanical and materials division at Southwest Research Institute, San Antonio, Texas.

Bass recommends that technology purchasers define their market needs early in a tech transfer negotiation and make sure that there is a clear commercial advantage of the final product compared to its potential competition.

He also advises technology purchasers to get the end users of the product involved early on and see what the overall market will bear for the new technology. Time is also not always on your side in these negotiations, since markets may change during the product's manufacturing scale-up phase.

3 Hire good people to make your deals. People managing the negotiations of a technology transfer deal should have a strong technological background, along with a good business understanding and some legal background, says Annemarie Meike, a business development executive in the Industrial Partnerships and Commercialization division at Lawrence Livermore National Laboratory, Livermore, Calif. "Without these traits it is difficult for your business team to achieve their goals," she says. All of their expertise will come into play during these negotiations.

4 Look for win-win solutions. "Technology transfer is about getting the technology into the market," says Meike. A win-win solution is often one where the technology provider and the purchaser have complementary capabilities that together result in a strong technology being efficiently manufactured and effectively marketed to a marketplace that needs and wants the technology. Often companies with similar capabilities while understanding each other's requirements may appear to be compatible, but in reality neither may bring anything to the table that isn't already there.

5 There is still plenty of room at the bottom.The strategic National Nanotechnology Initiative serves as an excellent example of how federally funded research can lead to the development of new industries and provide ongoing basic research sustenance to strengthen corporate development efforts," says Joseph Allen, president of the National Technology Transfer Center, Wheeling, W.V. Allen is also author of the just-published "Technology Transfer for EntrepreneursA Guide to Commercializing Federal Laboratory Innovations."

Allen sees a plethora of nanotechnologies being supported by federal R&D funding and developed in federal labs where an industrial technology transfer partner could help commercialize them. Federal agencies involved in these research efforts include the Departments of Defense, Energy, and Justice, the EPA, NASA, NIST, National Institutes of Health, and the National Science Foundation.

6 Test the market. "The best way to assess a technology is to ask market participants about the value that benefits of a technology can bring them," says Peter Liao, head of the Center for Technology Applications at Research Triangle Institute, Research Triangle Park, N.C. "If there is value then you can try to sell them on the opportunity." Most industrial organizations would never think twice about doing market research on a new product that was developed internally. But, too often, that same tactic is ignored when purchasing a technology from outside the company. The purchaser can mistakenly believe that market research has already been performed by the technology supplier or just outright overlook it. Either way, market research is still invaluable for any new products and in a tech transfer deal, it should be performed prior to signing the final documents or at least as an essential make/break component of the deal.

Liao also advises tech transfer partners to not get discouraged. Historically, only 1% to 5% of patented technology gets commercialized.

7 When you commit, commit. The technology resource allocation process in a technology organization is typically a complex arrangement of priorities, daily operations, and essential operations. In a tech transfer scenario, when the deal is finally signed and the technology transferred, resources need to be available to support it in the time frame that will provide for its successful implementation. If ongoing operations take away resources from the transferred technology, then disparities can develop between the organization's planned strategy and its actual implemented strategy. Resources need to be actively monitored, understood, and controlled on a day-to-day allocation if need be.

8 Don't trivialize the legal aspects. Technology can be transferred, but if you don't own the rights, you may be at risk in terms of what business you can really create out of the technology. Be protective of your rights and make sure you receive all aspects of the technology that you need. "There have been several instances lately where the actual "inventorship" of a technology was disputed and claims were made on parts of a technology that was developed by someone else," says Stephen Maebius, a partner at Foley & Lardner Intellectual Property, Washington, D.C. "Especially in the booming area of nanotechnology, a client has to watch out for broad claims of others in their negotiations and consider the claims of other patents."

9 Understand the system. There have been a number of laws passed over the past 20 years supporting tech transfer. Some may affect your particular situation. It would be worth the time to understand the basics of what each of these provide, it could save money and time in the long run. The Bayh-Dole Act passed in 1980, for example, allowed non-profit organizations (universities, etc.) to retain title to innovations developed under federally-funded research programs. The Stevenson-Wydler Act of 1980 established cooperative research and development agreements (CRADAs).

Other laws passed that supported the growth of tech transfer include the Small Business Innovation Development Act (1982), the National Cooperative Research Act (1984), the Federal Technology Transfer Act (1986), the National Competitiveness Technology Act (1989), the Small Business Research and Development Enhancement Act (1992), and the Technology Transfer Improvements and Advancement Act (1996).

10 Use every resource. Technology transfer is strong and growing. The government supports it and there is a host of technologies available. As a result there is an enormous amount of information available for potential technology purchasers, much of it online. The following resources are just a sampling of all that is available:

• Association of University Technology Managers (AUTM) , Northbrook, Ill., 847-559-0846, www.autm.net
• Federal Laboratory Consortium for Technology Transfer (FLC) , Cherry Hill, N.J., 856-667-8009, www.federallabs.org
• National Agricultural Library Technology Transfer Information Center (host site for all federal tech transfer information),> www.nal.usda.gov/ttic
• National Technology Transfer Center (NTTC) , Wheeling, W.V., 304-243-2130, www.nttc.edu
• The Technology Transfer Society , Chicago, Ill., 312-644-0828,
www.millkern.com
• Yet2.com , Cambridge, Mass., 617-557-3800, www.yet2.com

Tim Studt