Inventions (Exploitation) (Hansard, 14 May 1985)

§ Sir Keith Joseph

The Government want to encourage the fullest possible industrial and commercial application of United Kingdom scientific and technological discoveries for the maximum benefit of the United Kingdom economy. In 1985–86 we shall spend, through the grant-in-aid to the five research councils, some £560 million on civil scientific research; and, in recognition of the long-term importance of research for the country, the Government's expenditure plans for the years 1985–86 to 1987–88 make additional provision, compared with earlier plans, of some £18 million in all over the three years for the enhancement of equipment in carefully selected university centres of high quality research and some £27 million for the science budget to assist the research councils in restructuring and redeployment and to fund more research grants of highest quality.

Following my right hon. Friend the Prime Minister's announcement of the ending of the right of first refusal held by the British Technology Group for the exploitation of Government-funded research, with the aim of enlarging opportunities for exploitation especially for scientists who want to exploit their own work, the Department has had extensive discussions with the councils and others concerned. I am now able to announce the main features of the new arrangements.

The Government's overall aims in the new arrangements are to increase the exploitation of research funded by the councils, for the maximum benefit of the United Kingdom economy; to strengthen and improve exploitation, through freer competition between exploiting agencies in the public and private sectors and in other ways; therefore, to place responsibility and initiative for exploitation as fully as possible on researchers, their institutions and the councils, consistent with their legal responsibilities; and to increase the incentive for researchers and their establishments by enabling them and the work that they do to benefit from increased exploitation. We want researchers to be alert to the possibilities for exploitation of their work; to see and share 98W in the benefits of exploitation both for their own establishments and more widely in the national interest:; to have access to arrangements for exploitation as simple and effective as practicable; and, where it is appropriate and they wish to do so, to have the opportunity to pursue exploitation themselves.

This statement mainly concerns universities. I envisage that the same principles should apply for local authority institutions of higher education, and appropriate parallel arrangements should be developed in due course.

For the research they support in universities the councils — which between them are currently funding some 6,900 university research projects of total value of £360 million—would, I understand, wish the rights and responsibilities for exploitation to rest with the institution in receipt of grant, where the university wishes to hold them, and where the councils are satisfied that adequate arrangements and procedures exist for identifying and pursuing potentially exploitable results. On behalf of all of the councils and with their agreement, the chairman of the Science and Engineering Research Council will shortly be writing to vice-chancellors to propose this transfer and to invite them to state their university's wishes.

It will be open to universities to propose what arrangements best suit their circumstances. In considering these I hope that universities will seek to give the fullest opportunity and scope for researchers themselves, where they wish to do so, to assume responsibility for exploiting their own findings and ideas, with commensurate share in the benefits. I envisage that the opportunity to exploit would thus in the first place rest with the researcher, on the understanding that he or she would take active steps to exploit the ideas, in ways consistent with the Government's policy aims and within the framework of the university's agreed arrangements. These arrangements will need to have regard to the university's terms and conditions of service; and, because public funds are involved, the university should share in royalties and provision should be made for periodic reporting. I hope that universities will encourage researchers to exploit discoveries themselves and will provide guidance and help for those who wish to do so. Where a researcher nevertheless chooses not to take on the rights and responsibilities for the exploitation of his or her discoveries, these would revert to the university.

Whether the discovery is exploited by the university or by the researcher it would be open to them to retain the rights themselves, to set up a limited company for the purpose, or to negotiate terms for transfer of the rights and responsibilities for exploitation to intermediaries such as private sector organisations or to the British Technology Group. Or they may choose to enter into direct agreements with industrial and commercial companies for the exploitation of individual discoveries, seeking such professional or other services as they need; or conclude agreements with the private sector intermediaries to undertake this on their behalf.

The Government do not wish to prescribe the means of exploitation; but they will want to be satisfied that there are considered arrangements governing exploitation by the university or by individual researchers to safeguard the public interest in the moneys involved while maximising the possibility that good inventions will be identified, assessed, protected and exploited.

Universities will be invited to submit an account of their proposed arrangements for the exploitation of inventions 99W to the Science and Engineering Research Council which will arrange for them to be considered in consultation with the other councils, the Committee of Vice-Chancellors and Principals, the University Grants Committee and with the Department of Education and Science, the Department of Trade and Industry, and Her Majesty's Treasury when arrangements are agreed and in place, councils would thereafter regard the university as fully responsible; and would wish to receive a brief annual report from each institution on the working of the arrangements in respect of their grants and contracts, including information on income earned. Any proposed major changes in the agreed arrangements will be subject to the same process of consideration and approval. I. shall also be asking the councils, in conjunction with other interested bodies, generally to review the overall arrangements when sufficient experience has been gained of their operation, perhaps after three years.

It would be for the university or the researcher to negotiate exploitation terms. Universities will be able to retain their share of royalties and receipts in full without loss of general or specific grants. I hope that they will see fit to use them to strengthen and improve their research capability, its further exploitation, and related infrastructure. Where a university chooses to establish such necessary infrastructure, the Government would regard related expenditure as a proper use of an institution's resources, in recognition of the role of universities and other institutions of higher education in collaborating with industry and promoting exploitation.

I am asking each council to amend its conditions of grant to accommodate the new arrangements; and am inviting them to consider the scope for developing their own policies for exploitation of inventions originating in their own units and institutes on similar lines, so as to provide the maximum involvement of researchers and their establishments where appropriate, having regard to councils' financial and legal responsibilities and to the efficient use of a council's experience and expertise. The present delegated authority controls governing councils' involvement in commercial enterprises will be phased out as soon as each council is ready to take on its responsibilities fully. They will be able to retain earnings from exploitation of their in-home inventions without loss of grant-in-aid. When sufficient experience has been gained, the Department will wish to review the workings of the new arrangements with the councils.

The intention of these changes is to benefit the United Kingdom; and it is important that the exploitation of our scientific and technological discoveries should, whenever possible, be done by United Kingdom companies. This aim will be borne in mind when considering proposals from universities for the new arrangements. There may be circumstances where a foreign company or a subsidiary of such a company is the best choice, whether as an intermediary or for the negotiated transfer of rights. Where a university or researcher is considering using such a company or subsidiary for all of their discoveries, or all discoveries in a particular discipline or field, the university's arrangements should provide for the Department of Trade and Industry to be consulted at an early stage. The Department of Trade and Industry will also be ready to advise in particular cases and I hope that universities and researchers will consult them freely. The annual reports which universities make on the working of 100W their arrangements should record any agreement for exploitation made with an overseas company or a subsidiary.

There is a nice balance to be struck between the free flow of information on which the health of science so critically depends and the need to protect new inventions if they are to be fully exploited to the benefit of the United Kingdom. A balance is also required between the freedom and motivation of the researcher to pursue exploitation, the efficient use of negotiating and other commercial skills to secure the best terms, and the legal responsibilities of councils, universities and their employees. In seeking to give individual researchers greater scope and opportunity to exploit their inventions, there is a possibility that in particular instances exploitation will be less than optimal. But the Government believe that it is right to incur this risk to secure the gains that will come from giving researchers and their institutions more responsibility and more incentive. They are confident that the scientific community, through consultation between the councils and the universities, will be able to work out satisfactory arrangements that will meet the Government's aims.

The new arrangements will take effect from today and will apply to all discoveries made hereafter whether funded by councils' current or future grants and contracts. There will necessarily be a transitional period, which I hope will last no more than six months, while universities are considering their arrangements and agreeing them with the councils as described above. The research councils have agreed that, during this time, a university with a proposal for exploitation should in the first instance consult the council responsible for the grant; councils will be informing their grant holders accordingly.