Shared management of intellectual property : The design of a Dutch IP management entity. Master Thesis

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1 ARW BDK Shared management of intellectual property : The design of a Dutch IP management entity Master Thesis Eindhoven University of Technology, November, 2007 ]oost van Montfort niet uitleenbaar

2 Shared management of intellectual property : The design of a Dutch IP management entity "Shoot for the moon, even if you miss, you will land among the stars" (Anonymous) Supported by: Eindhoven University of Technology Faculty of Technology Management 5600 MB Eindhoven The Netherlands Philips Research High Tech Campus AE Eindhoven The Netherlands 15t Supervisor TU je : 2nd Supervisor TUE : Supervisor Philips : Prof. Dr. A.G.L. Romme Dean and professor Department of Organisation Science and Marketing Eindhoven University of Technology Dr. M.M.A.H. Cloodt Assistant professor Department of Organisation Science and Marketing Eindhoven University of Technology Dr. R.M. Wolf Senior Business Development Manager Philips Research III

3 Abstract Intellectual Property (IP) generated at Dutch public research organizations is often left unused. This study offers an analysis of the advantages and disadvantages of a shared IP facility, which will manage the Dutch IP collectively. This national IP management entity will strengthen the Dutch patent position and stimulate technology-based economic growth.

4 Preface This report marks the end of my study Industrial Engineering and Management Sciences at the Faculty of Technology Management of Eindhoven University of Technology. It describes the design of a new, national oriented Intellectual Property management entity based on the Open Innovation paradigm. I hope this study will contribute to the discussion about the valorisation activities of Dutch public research organizations, and will provide some guidelines for the design of a shared IP facility. The aim of this study, to design a tool which should stimulate economic growth by strengthening and making effective use of the Dutch knowledge position, seemed an interesting challenge to me. Eleven months after I started my study I can confirm my initial thoughts. The study proved to be both interesting and challenging. Especially the national orientation and strategic focus made the study difficult but rewarding. It forced me to use a general and abstract mindset something I am glad I have been able to learn throughout this project. A project like this is only possible with the support of others. Therefore I want to thank Philips and in particular Ronald Wolf for the initial idea of this study and our positive discussions. Secondly I want to thank my supervisors of the TU/e, Sjoerd Romme and Myriam Cloodt for their objective feedback, insights and network. Furthermore I want to thank all the interviewees for their time and interest in my research, in particular Gerard Verschuren of Eindhoven Innovation Lab and Peter van Dongen of the Dutch patent office. With this report I complete my study period ; a period of new experiences, new friendships and above all personal growth. Judith and loost thanks for all the conversations, laughs and nice memories we share. Last but certainly not least I want to thank my parents, Piet and Florence, for all their trust and unconditional support throughout my whole study and my brother Bas for his humour and ability to relativize. Eindhoven, November 2007 VII

5 Management summary With the current emphasis on the valorisation task of public research organizations technology transfer is a hot topic. This study provides an analysis of the technology transfer activities of Dutch public research organisations. A design is presented for a shared national IP facility, referred to as the IP Netherlands BV. The design of the IP Netherlands BV is based on an extensive literature study of the topics Open Innovation, national innovation systems, IP management and organizational science. Design principles are formulated based on literature study as well as on interviews held at 10 Dutch universities, 2 other Dutch PROs, 2 Belgium PROs and 1 multinational firm. The interviews focussed on the IP management policy and activities of the Dutch PROs. A qualitative cross case analysis is conducted based on the interview findings, which results in the following interesting findings : - Technology transfer is hampered by a fragmented landscape of valorisation activities within the Netherlands and a lack of critical mass at the local level ; - The technology transfer activities of Dutch PROs are not as effective as those of colleague PROs in Europe and America. The Netherlands only outperforms other European and American PROs in the area of new business creation ; - Benefits occurring from strategic management of IP are left unused by the Dutch TTOs ; - Dutch PROs use a closed IP management model where on a national scale an open model would reveal interesting economic advantages. In conclusion, technology transfer at Dutch PROs is still in its infancy. It is in an early developmental stage, organised locally and without coordination or guidance from a national entity. This has resulted in a fragmented landscape of valorisation activities all with a small critical mass and incapable of managing their IP in a strategic way. In order to overcome these disadvantages currently faced by the Dutch PROs, a shared national IP management entity is designed. The mission of this entity is to stimulate technology-based economic growth by effectively exploiting and strengthening the Dutch knowledge position. Its tasks will be focussed on the exploitation of current IP held by the Dutch PROs and on the creation of new IP and businesses in collaboration with the industry. The IP Netherlands BV will be a collaborative initiative of the Dutch PROs supported by the national government. The IP Netherlands BV will use an open business model, which stimulates the mutual sharing of knowledge, ideas and innovations between PROs and other partners. In terms of the open business model, the IP Netherlands BV can also unfold its activities for individuals, SMEs and MNCs. These parties can stimulate the growth of the organisation and could contribute to a stronger position of the Netherlands in the global knowledge and IP landscape, eventually leading to national economic growth. Ix

6 Table of contents Abstract V Preface VII Management summary IX Table of contents XI 1. Introduction Objective of the report Stakeholders Rationale Structure of the report Conceptual framework Definitions Open Innovation National Innovation System IP management literature Organizational science Problem definition and analysis Research objective Research question Methodology Research model and approach Data acquiring and analysing techniques Analysis Literature Open Innovation National Innovation Systems IP Management Organizational Design Sub conclusions literature analysis National benchmark Dutch Innovation System Technology transfer at the Dutch PROs International benchmark Experiences of Belgium PROs Philips Sub conclusions benchmarks Conclusions Design Current situation Stakeholders Critical mass Design IP Netherlands BV Organisational structure Workflow model Financial terms Implications stakeholders Expectations IP Netherlands BV Conclusion and discussion Conclusion Discussion and further research Research Material/ Literature Appendices Interview questions Interview notes X I

7 Delft University of Technology University of Twente University of Groningen Radboud University of Nijmegen University of Tilburg University of Leiden Erasmus University Rotterdam Eindhoven University of Technology TNO Performance calculation Dutch technology transfer activities Performances per 1000 researchers Unit outcome costs in million PPP$ of research expenditure XI I

8 1. Introduction In this chapter the objective of this study is introduced. I will also elaborate on the stakeholders and rationale of the research. This chapter will end with a sketch of the structure of this report Objective of the report Innovation currently is a hot issue in most of the knowledge intensive economies. Open Innovation is a paradigm, often referred to as a new way to innovate, especially effective in an environment with abundant knowledge (Chesbrough, 2003a, p. 15). Although until now Open Innovation is mainly focused on companies, it also has implications on a higher level, e.g. on a national scale. In short, the Open Innovation paradigm is about stimulating ideas and knowledge sharing in order to speed up internal innovation and expand the markets for external innovation. Regarding the sharing of ideas and knowledge several codification and protection issues arise. Related to Open Innovation this leads to an increased awareness of Intellectual Properties (IP). These IP issues are especially important for the major knowledge providers within society. This usually are Public Research Organizations (PROs) like universities, university allied medical centres and other research organizations. Examples of the implications of Open Innovation on a national scale are various. For example the collaboration between industry and PROs, and the importance of valorisation for the national economy are effects of the growing importance of Open Innovation. It is assumed that benefits can be gathered by management of the IP generated at the Dutch public research organizations on a national level. The objective of this report is to provide the Dutch government with a well-founded report on the potential benefits such a national management entity can provide Stakeholders This research study is initiated from the department 'Organisation Science and Marketing' which is part of the faculty 'Industrial Engineering and Management Sciences' of the Eindhoven University of Technology. An important research field within this department is Innovation Management. The Innovation Management-group studies the management of innovation processes and develops theories, tools and techniques to make business more innovative. Another important stakeholder in this study is the Dutch Government. Although not directly involved in the research project, this study will provide some guidelines and advices especially for the Ministry of Economic Affairs (Ministerie van Economische Zaken) and the Ministry of Education, Culture and Science (Ministerie van Onderwijs Cultuur en Wetenschap) Rationale In line with the Open Innovation paradigm more and more companies are also outward oriented regarding their innovation process. They are actively searching for new promising ideas. Since the market for these ideas is expanding, not only on a firm level, but on a national and even international level as well, the value of these ideas is increasing. This trend gives rise to a vast amount of opportunities for Dutch public research organizations, including universities, medical centres and other research institutions. Although their most important tasks are teaching and executing research, they are more and more supposed to commercialize their most promising ideas as well. This process is often referred to as the valorisation process.

9 The topic of valorisation is extensively debated during the past months and a lot of publications appeared on this topic in combination with the questions about the intellectual property of public research organizations. NRC Next (NRC Next, Monday March the 26th) opened with an article about accumulating unused knowledge at universities : "Dutch researchers are ranked highly, based on their scientific publications. However their discoveries aren't commercialised very often. From an economic prospective this indicates unused opportunities, but not only from an economic prospective. It is also the case that discoveries which could serve society -like better medication, faster internet, more blo friendly fuels- accumulate inside labs". Also the AD (AD, Thursday May 24th) published an article about the awareness that is arising at most of the Dutch public research organizations on the subject of valorisation : "They [Technological University Twente] and the Technological University of Delft stress the fact that universities have to think more commercially nowadays". "It is believed that control on the possible abuse of government money slows the innovation power of an institute. As co-owner of the patents assigned by their professors, Delft University of Technology has to defend its own stake. At least the government money invested in the vast amount of patents can be repaid, but most favourable the university makes a lot of money with the patents. 'We think after deduction of costs we can earn approximately ten to twelve million euro a year with our patents', says dean Marco Waas. Those millions will be earned by a handful of successful patents - most of the patents only cost money" (Intermediair, Nr. 21, ). These articles show the current awareness and emphasis on the valorisation of knowledge generated at the Dutch PROs. These PROs execute a lot of governmentally funded research. Therefore they serve a role for society as well. On the one hand side they have to serve society by introducing and translating valuable knowledge into useful products for humanity and on the other hand they have to increase the effectiveness of their valorisation process in order to acquire more economic benefits from their knowledge and ideas and eventually become more self sufficient. This places them in a rather difficult situation where commercial and social stakes need to be balanced. In light of the position of the Dutch PROs mentioned above IP, as a way to protect valuable knowledge and ideas, is becoming more and more important. The valorisation process is the main driver behind this growing awareness on (IP) at public research organizations. Therefore this study will focus on the IP management activities of Dutch public research organizations. These IP management activities should stimulate industrial growth and strengthen the Dutch IP position based on new combinations and clustering of IP Structure of the report After this introduction the report will continue with the conceptual framework. In chapter two the different definitions, which will be used throughout the report, are introduced as well as the problem definition and problem analysis. Here also the research objective will be presented. In chapter three the methodology will be explained. Her the research model, approach, research questions and the data acquiring and analysing techniques, which are used during the study will be introduced. In chapter four the analysis is provided, after which the design is presented in chapter five. This report will end with a discussion and conclusion.

10 2. Conceptual framework In this chapter the framework will be sketched on which this report is based. Therefore the problem definition and analysis will be presented as well as the research objective. However, first of all the most often used terms will be defined Definitions In this section those concepts, which will be used most often throughout this report, are briefly introduced and defined. Although most concepts will look rather familiar a good understanding and definition of the concepts will prevent any obscurity in the remainder of this report Open Innovation This research is executed based on the Open Innovation paradigm. A definition of Open Innovation is provided by Chesbrough : "Open Innovation is the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively" (Chesbrough et al., 2006a, p. 1). The Open Innovation paradigm is built on the systemic approach to study technology development as opposed to the linear model which is used in the past. In the linear model of innovation, knowledge flows are modelled quite simply : the initiator of innovation is science, and an increase in scientific inputs into the pipeline will directly increase the number of new innovations and technologies flowing out of the downstream end. However usually innovation is the result of a complex interaction between various actors and institutions. As economic activities become more knowledge-intensive, a large and growing number of institutions with specialised expertise of very different kinds will be involved in the production and diffusion of knowledge. The determinants of success of enterprises, and of national economies as a whole, are ever more dependent on their effectiveness in gathering and utilising knowledge from these institutions - whether they be in the private sector, public sector or academia (OECD, 1997). About the systemic approach of innovation will be elaborated in the following part where I will elaborate on the term National Innovation Systems. Here I want to conclude with the remark that Open Innovation can only deliver significant benefits if it is seen and implemented in a broad way and amongst different institutions like firms, government, universities and research organizations National Innovation System The literature on National Innovation Systems (NIS) is extensive. Freeman was the first to use the term NIS, however he mentioned NIS only casually as he wrote his article 'Technological infrastructure and international competitiveness', in August 1982 (Freeman, 1982). A more specific definition is provided by Metcalfe (Metcalfe, 1995) : "National innovation systems are defined as the set of distinct institutions which jointly and individually contribute to the development and diffusion of new technologies and which provide the framework within which governments form and implement policies to influence the innovation

11 process. As such, it is a system of interconnected institutions to create, store, and transfer the knowledge, skills, and artefacts which define new technologies" ( Metcalfe, 1995 in OECD, 1999, p.24). One of the key characteristics of the NIS approach is its focus on the interactive nature of innovation. Lundvall, (1999) one of the major contributors to the NIS literature, emphasises this: "Through the 1970s and 1980s, the linear model, where new technology is assumed to develop directly on the basis of scientific efforts, was discredited by empirical work. Empirical studies demonstrated that most innovations reflect a process where feedbacks from the market, such as knowledge inputs from users, interact with knowledge creation and entrepreneurial initiatives on the supply side. Other national differences such as the interaction between universities and industry, the education and training system, and the kind of interaction it fostered among specialists, the financial markets, and so on, that had been described separately in the literature were gradually taken into account and entered into the system's perspective" (Lundvall, 1999, p. 62). This point of view matches the principles underlying the Open Innovation paradigm, where collaboration and sharing of knowledge and ideas is favoured above an inward focus on innovation IP management literature In an Open Innovation setting the transfer of knowledge, technology and ideas is extensive. These flows are referred to as technology transfer. Technology transfer is defined as : "the transfer of the results of research from universities to the commercial sector" (Bremer, 1999, p. 2) or : "the process whereby inventions or intellectual property from academic research is licensed or conveyed through use rights to industry" (AUTM, 1998, p.3). Within an Open Innovation environment in which knowledge and ideas are transferred extensively, it is important to protect these valuable assets in a proper way. Therefore Intellectual Property Rights (IPRs) can be used. Intellectual Property Rights are defined as : "exclusive rights granted to authors and inventors to exploit their works and invention for a limited period. From the perspective of economics, intellectual property is a temporary monopoly on the use or exploitation of that good, supported by legal enforcement mechanisms. The basic public policy rationale for intellectual property laws is that they facilitate and encourage the pursuit of innovation and the disclosure of knowledge into the public domain for the common good" (Wikipedia, 2007). Different forms of IPRs are known : patents, copyrights, trademarks, industrial design rights and trade secrets. Each form of knowledge is captured using special IPRs. Most technical knowledge is captured in the form of patents. Since most Dutch PROs offer some technical oriented studies (three technical universities) or are active in technical research fields (life sciences, pharmacy, biotechnology, etcetera ; represented in eights university hospitals) patents are important in the Dutch knowledge landscape. This study will therefore focus on patents and the management of this IP form. Especially in a world in which knowledge and ideas are becoming more and more important, effective management of your intellectual property is important. IP management is thereby defined as : "The whole of tasks and issues related to the creation and exploitation of Intellectual Property Rights" (Van Reekum, p.7). Important to know, especially within an Open Innovation climate in which the interaction between different institutions is important, is the fact that IP

12 management within multinational companies (MNCs) is different from IP management at PROs. These differences also cause the `Valley of Death' to exist. The 'Valley of Death', also known as `Innovation Paradox' (]elinek, 2006) is defined as : "the gap between the technical invention or market recognition of an idea and the efforts to commercialize it" (Markham, 2002, p. 31). A visualization of the Valley of Death is presented in figure 1. r 1 Existing commercialization Existing research \ / resources resources (technical and market) Valley of Death Idea Research Fuzzy front end Product development commercialization Level of development Figure 1 The Valley of Death ( Source : Markham, 2002) Figure 1 shows the difference in resources necessary and used for technology development and commercialization. At the left hand side of the figure the scientific research world is shown with its resources, which are focussed on technology development. The right hand side represents the industries and their focus on commercialization activities. The 'Valley of Death' represents a lack of resources, structure and expertise to develop a product from discovery till commercial success. Some MNCs have their own research resources, which feed their commercialization resources. In such a situation the `Valley of death' is less likely to occur, since research and commercialization resources are managed by the same company. However for those ideas originated from PROs the 'Valley of Death' is a serious obstacle to overcome in order to become a commercial success. IP Management is supposed to play a role in crossing the 'Valley of Death'. Therefore I will present a closer look on the differences of IP management at PROs and MNCs. It is plausible to expect more economic value to be generated out of IP, when its transfer between PROs and MNCs is made easier. The focus of this study will therefore be on strengthening the patent positions of Dutch PROs by better management of its intellectual property Organizational science For the design of an IP Management entity an organizational structure has to be developed. This will be done based on an idealized design : "An idealized design is a conception of the system that its designers would like to have right now, not at some future date" (Ackoff, 1981, p. 105). "An idealized design is not an ideal design, because it is capable of being improved and improving itself. It is that system with which its designers would currently replace the system planned for if they were free to replace it with any system they wanted" (Ackoff, 1981, p. 107). Two different idealized designs are 5

13 possible, namely the bounded idealized design and the unbounded idealized design. The difference lies in the permission of the designers to change the containing systems in the unbounded idealized design. However they may only change those systems that will improve the performance of the organization being designed. A bounded idealized design of an organisation begins with the assumption that the organisation involved was destroyed last night. It no longer exists, but its environment is assumed to remain as it was, untouched (Ackoff, 1999, p. 88). Since it is outside the scope of this study to chance the Dutch innovation system, or in other words change the system in which the new IP management entity has to act, the bounded idealized design will be used to design the organisation. In the remainder of this document I will refer to the new IP management entity as the IP Netherlands BV. The idealized design process consists according to Ackoff (1999, p. 82) of the following phases : - Formulating the mess ; in this step the current state of the organisation and its environment is analysed as well as the 'projected future'. In the projected future a sketch is made where the organisation would be if it were to continue to do what it is doing now and if its environment changed, but only in ways the organization expects ; - Ends planning ; in this step the organisation exactly defines what is wanted. A mission statement of the organisation should be prepared, as well as the desired properties and its design. This step ends with formulating the closest approximation to the design that is believed to be attainable, and an identification of the gaps between the design and the current stage ; The remaining planning aspects - means, resource, and implementation and control- are referred to as the realization phases of the planning (Ackoff, 1999, p. 82) and defined as : - Means planning ; in this step the identified gaps between what the organisation is and is now doing and where it wants to be and to be doing are to be closed or reduced ; - Resource planning ; in this step planning for the necessary resources (money, capital goods, people, consumables and data, information, knowledge, understanding, and wisdom) will be made. - Implementation and control ; in this step instructions are specified about who is to do what, where, and when. Furthermore all planning decisions, including implementation decisions have to be monitored. This control mechanism enables organisational learning as rapidly and effectively as possible. As mentioned before the focus of this study will be on an idealized design of the IP Netherlands BV. Therefore the following constraints have to be taken into account : - The organization designed must be technologically feasible ; it must not incorporate any technology that is not currently available ; - Although the design need not be capable of being implemented, it must be operationally viable, that is, capable of surviving in what would be its environment if it came into existence now ; - The organization designed must be capable of being improved continuously from within and without. The last constraint requires the organisation to be capable of rapid and effective learning and adaptation, and to be subject to change by its stakeholders (Ackoff, 1999, p. 89).

14 Since the IP Netherlands BV will consist of a great number of participants, rapid and effective learning and adaptation are important requirements for the organisation in order to effectively respond to changes by its stakeholders. These characteristics are, besides others, imbedded in the circular organisation. In chapter 4, I will elaborate on the choice to use a circular design for the IP Netherlands BV. Here I will continue with the problem definition and analysis in order to finish with the research objective and research question of this study Problem definition and analysis Besides technology transfer the valorisation tasks of PROs are manifested in a variety of ways. The far most important valorisation task is the education and dissemination of students and researchers for society. Also the publication of research results by students and researchers is an important valorisation task of PROs. The focus of this study however will be on the transfer of IP and the preceding management of IP at Dutch public research organizations. Dutch PROs can roughly be divided into universities and other public research organizations like TNO, GTI's and STW. The task of these other PROs used to be focussed on bridging the gap between fundamental research and the application of this knowledge (Wijffels et al., 2004, p. 7). However this task is gradually shifting towards a more market driven approach in which these PROs are acting as market driven, international oriented and independent organizations. It is plausible that these shifting tasks are a reaction on the Open Innovation climate. The Open Innovation climate also has its effect on the role of universities. Their main task is still focussed on education and research, but firms more easily contact universities for valuable knowledge and ideas. Although the transfer of patents only represents a small part of the valorisation activities, patents become more important. In other words, universities are becoming a stronger commercial partner within the National Innovation System as provider of valuable knowledge. This role implies more awareness within Dutch universities on their valorisation tasks. Although currently most Dutch PROs are aware of their valorisation tasks, The Netherlands still has a gap to close with other countries, especially the United States. Interviews held at different knowledge institutions in the Netherlands indicate the Dutch early stage development. The following quotes indicate that most universities are still developing technology transfer initiatives and have not yet found a straightforward and well-suited way to organise these activities. Eindhoven : "I think IP management in the Netherlands is just in its infancy. Many organisations will have individually cases in which the IP management went well, but a well structured and successful organisation wide approach is scarce. We are just started with such a organisation wide approach" (Interview Mr. Verschuren, TU/e Innovation Lab, Eindhoven). Delft : "With the start of the Valorisation Centre (end of 2005), the patent management is transformed from a passive form into an active form" (Interview Mr. Boersma, Valorisation Centre Delft, Delft). "Mid 2006 a start is made to intensify the contract and patent support and the information supplies about patents and facultative patent portfolios. On management level the basis is provided to professionalize. These developments will be continued in 2007" (Annual report TU Delft 2006, p. 37).

15 Groningen : "The Business Generator, which will start the first of September 2007, should first obtain a foothold, because eventually it will only become a success if it has an additional value for the knowledge base (researchers)" (Interview Mr. Van der Bilt, Transfer & Liaison Groep Groningen, Groningen). Leiden : "Making connections between universities, industry and society is the task of a new department of the university namely, the in 2005 developed Leiden University Research and Innovation Services (LURIS), which is active at the moment. An intensive collaboration around knowledge valorisation is built with the LUMC (Leiden University Medical Centre)" (Annual report Leiden University 2006, p.12) These quotes from Technology Transfer managers at the different universities and passages from the annual reports, indicate technology transfer in The Netherlands is still in its infancy. This conclusion is supported by the following observations : - Late establishment dates of really centralized Technology Transfer Offices at the universities ; - Lack of sufficient knowledge and guidelines regarding technology transfer activities at the universities ; - Lack of coordination and financial support from government regarding technology transfer activities at PROs ; - Insufficient insight in the current state and results of IP management activities at the Dutch PROs ; - The premature stage of IP management as part of the tasks of Technology Transfer Offices; - The presence of still unused knowledge at PROs ; actively and systematically searching for valuable and potential knowledge isn't being done or is just started at the PROs. These obeservations can be explained by the nature of IP and the difficulties related to the transfer and management of IP. The most common difficulties are : "High costs of patent management ; Severe uncertainty over the infrequent and unpredictable 'arrival rate' of the 'home run' patents that account for the majority of licensing revenues ; The need for close interaction with (faculty) inventors ; The balancing of licensing revenues with other objectives" (Mowery and Sampat, 2001). The problem analysis as mentioned above leads to the following research objective Research objective This research study is meant to advise the Dutch government on incentives that can stimulate technology transfer and the dissemination of research results. Effective technology transfer is supposed to benefit the academic institutions as well as society. The benefits of well-structured technology transfer programs for the academic institutions are most obvious, since they present : - "A mechanism for important research results to be transferred to the public ; - Service to faculty and inventors in dealing with industry arrangements and technology transfer issues ;

16 A method to facilitate and encourage additional industrial research support ; A source of `unrestricted' funds for additional research ; A source of expertise in licensing and industrial contract negotiations ; A method by which the institutions can comply with the valorisation requirements of national governments ; Also it may be used as : - A marketing tool to attract students, faculty, and external research funding ; - A source of income" (Adepted from Carlsson and Fridh, 2002, p.201). The benefits for society can be summarised by : - The creation of wealth ; - The creation of jobs ; - The dissemination of new products and solutions to problems in society. Technology transfer is still in its infancy in The Netherlands as indicated in the previous section. Especially at universities, technology transfer activities are only just evolved and managed institutional wide. Benefits can be gained by sharing knowledge regarding the technology transfer activities at PROs. Since these benefits will not only favour the public research organizations themselves, also the effect on society will be investigated. This report focusses on the IP management activities and presents an overview of these activities in The Netherlands. It also elaborates on the theoretical idea that by combining and clustering IP aroused from Dutch PROs, benefits for the individual institution and society can grow more significantly than by using an individualistic approach. The research objective can be summarised as : To design a Dutch IP management entity serving technology-based economic growth based on : Literature on Open Innovation, National Innovation Systems, IP management and organizational design ; International benchmarks and an evaluation of the current IP utilisation practices at the various Dutch PROs Research question In order to fulfil the research objective mentioned in the previous section different research questions need to be answered. These research questions relate to different (literature) fields, which will be discussed individually, throughout this report. The research questions are categorized based on the research model as visualised in figure 5 : Open Innovation - Why is this study originated from an Open Innovation setting and what is its relevance within such a setting? - What are the success factors and pitfalls of strong appropriability regimes in an Open Innovation setting? National Innovation System - What is the impact for society of technology transfer and particularly the transfer of IP rights? - How is this impact measured and what can we learn from it?

17 IP management - What are the advantages and disadvantages of an IP-management entity on a national level above one on an institutional level (PRO)? - Why is IP-management important on a national level? Is IP management on a national level profitable or in other ways valuable? Organizational design - What different organizational design types are possible for the new entity? And which one is favoured? Benchmark national level - How does the relevant context for technology transfer looks like in The Netherlands? - What is the current state of IP-management at Dutch public research organizations and what especially are the difficulties they face? - To what extent would a national IP management entity be helpful for The Netherlands? - To what extent and in which forms are there Dutch IP management entities already? What are their current activities and performances? Benchmark international level - To what extent is a national IP management entity new to the world? And what can we learn from other countries about IP management on a national level? - What can we learn from firms about IP management applicable on a national level? Common questions - Is the Dutch (business) society ready for a national IP management institution? - What is the relevance of this study for Philips Research? The specific research questions mentioned above lead to one general key question. With this general research question will be dealt during the remainder of this report. The general research question is defined as : How to strengthen the Dutch IP position by better management and combination o Dutch Intellectual Property Rights created at Public Research Organizations? 10

18 3. Methodology In this chapter the research model and approach will be discussed as well as the data acquiring techniques Research model and approach During this research study I will use the Science Based Design approach (Romme, Endenburg, 2006) to structure my research. The focus of the Science Based Design Approach is on : "developing construction principles and design rules grounded in organization science as well as on organizational solutions implemented and tried out in real-life settings" (Romme and Endenburg, 2006). For reasons of convenience in the remainder of this report, I will refer to 'design principles', to include both construction principles and design rules. The original Science Based Design approach is visualized in figure 2. Organization Science T HI Design Principles t F-N Organization Design F1 Implementation and experimentation Figure 2 Science Based Design approach ( Edited from source : Romme, Endenburg, 2006) The main difference between the Science Based Design approach and other research approaches is its focus on construction principles and design rules. Other approaches, like the regulative cycle of Van Strien (1997) which is visualized in figure 3, focus only on the organization design and implementation of the (re)design. Problem mess Evaluation Problem definition Intervention I I Analysis and diagnose Change or Action plan Figure 3 Regulative cycle ( Source : Van Strien, 1997) Although the regulative cycle is a more elaborate approach for organizational redesign, it has similarities with the two last steps of the Science Based Design approach. In the regulative cycle a problem definition has to be found within a problem mess. Based on this problem definition an analysis is executed, resulting 11

19 in a change plan and an intervention. The changes will be evaluated after which the regulative cycle can start all over again. The regulative cycle is also present within the Science Based Design approach and is visualized in blue in figure 2. A problem definition will arise from practice or in other words is extracted within the implementation and experimentation phase. Based on this problem definition recommendations for a new organization design will be presented. The main difference between both approaches is also visualised in figure 2. The Science Based Design approach not only uses a theoretical background, which is translated into design principles. It also updates these aspects by feedback from the implementation and experimentation phase. Although the national IP management entity I will design is new, there are experiences with IP management on a firm level. Also the research fields of Open Innovation, National Innovation Systems, IP management and organizational science are not new to the world. Literature in these four research areas is available and will therefore be used in this report. Figure 4 shows a custom made version of the Science Based Design approach, which will be used throughout my research. Organization Design Science Principles t Organization Design I Implementation and experimentation Literature Open Innovation : Literature National Innovation Systems Literature IP Management Literature Organizational Science : f Design Principles tj Organization Design NL Setting Implementation and experimentation ~ i r O oriented implementation and experimentation research (benchmarks) Theoretical feedback : : -~ Practical feedback --~ Practical feedback (outside the research scope, since time horizon is too long) Figure 4 Custom made Science Based Design approach for the design of a Dutch IP management entity l2

20 As mentioned above literature about Open Innovation, National Innovation Systems, IP management and Organizational Science is used for the theoretical background. Design principles will be inferred from the literature review. They represent any coherent set of imperative propositions, grounded in the state-ofthe-art of organization science, for producing new organizational designs and forms and redeveloping existing ones (Romme and Endenburg, 2006, p. 288). Practical feedback in the implementation and experimentation phase will be gained from IP management entities on an institutional and firm level. Therefore a benchmark study will be executed at different Dutch universities, TNO, STW, Philips, Leuven R&D and IMEC. Findings and experimental feedback from these benchmarks will be used to come up with useful design principles. This input will be used to design the new Dutch IP management organization. This approach is visualised in the research model underneath. A research model is a schematic representation of the research objective and the steps, which have to be taken to accomplish its goal (Verschuren and Doorewaard, 1995, p. 18). The research model used throughout this report is visualized in figure 5. Literature Open Innovation Literature National Innovation Systems Literature IP Management Design principles regarding IP management entity Literature Organizational Science Design IP Netherlands BV National benchmark (universities and other Dutch PROs) Theory Organization Design International benchmark (Philips, IMEC, Leuven R&D) Figure 5 Research model The research model above leads to a design of the IP Netherlands BV, which will be made in terms of organization design theory and based on design principles abstracted from theory and practice. Each building block of my research model will be discussed more in-depth in the next chapter, but first of all the data acquiring and analysing techniques, will be presented Data acquiring and analysing techniques The first step in the Science Based Design approach is a literature study. Literature on each topic is found using databases like Abi/Inform, JSTOR and Emerald. However, since this study has a very explorative nature literature about national IP management entities was hard to find. On an institutional level literature about IP management is more readily available, but not so in The Netherlands. Although the marginal availability of literature hampered this study, 1 3

21 it also provided opportunities to contribute to the available knowledge in this area. This is done by analysing individual case studies at the institutional level. Table 1 gives an overview of different research strategies suitable in different situations. As indicated in this table the characteristics of this study justify the use of case studies as research strategy. Case studies were used since this study is characterised by a "How" research question, no requirement for the investigator over the behavioural events and a focus on contemporary rather than historical events. Case studies furthermore provide the opportunity to deal with a full variety of evidence - documents, artefacts, interviews, and observations (Yin, 1989, p. 20) and therefore delivered more input for this study. Strategy Form of research Requires control Focuses on question over behavioural contemporary events? events? Experiment how, wwhy yes Yes Survey who, what*, where, no Yes how many, how much Archival analysis (e.g., who, what*, where, no yes/no economic stud how many, how much Histo how, why no No Case study how, yes * "What" questions, when asked as part of an exploratory study, pertain to all five strategies Table 1 Overview of research strategies useful in relevant situations (Source : Yin, 1989, p. 17) The case studies formed the base for the'outward oriented implementation and experimentation research (benchmarks)' as visualised on the right hand side of the Science Based Design approach model in figure 4. The case studies consist of interviews held at different Dutch PROs. Table 2 gives an overview of the people who were interviewed : Name Department / Organization Institution Dutch universities 1 Mr. Boersma Valorisation Centre Delft Delft University of Technology 2 Mr. De Groot and Twente Kennispark University of Twente Mr. Eijkel 3 Mr. Jongen Wageningen Business Generator Wageningen University 4 Mr. Van de Bilt Transfer & Liason Groep University of Groningen 5 Mr. Vink 'Marktverkenning, strategie en Radboud University I ontwikkeling' Nijmegen 6 Mr. Smailes Leiden University Research and Innovation Leiden University Services 7 Mr. Van der Avoird Centrum voor Kennistransfer Tilburg University 8 Mr. Sambeek Kennisbescherming en Exploitatie UMC St. Radboud 9 Mrs. Lichtenbeld BioMedbooster Maastricht University 10 Mr. Posthumus Erasmus MC Holding BV Erasmus University Rotterdam Other Dutch PROs 11 Mr. Hoo erwen` Patents and Licensing TNO 12 Mrs. Konings Juridische zaken (Intellectual Properties STW and license MNCs 13 Mr. De Visser Philips Intellectual Property & Standards Phili s International PROs 14 Mr. Debackere Leuven R&D Katholieke Universiteit Leuven 15 Mr. Clerix and Mr. Octrooidienst IMEC R ckaert Table 2 Overview of interviewees All interviewees are manager within the valorisation organisations of the PRO. Ten interviews were held at Dutch universities, two were held at other Dutch 14