Patent owner: ICT—a brave attempt to new technology transfer mode

In China, research institutes, universities and colleges have undertaken a large number of national science and technology research and innovation projects and have gained many outstanding technical achievements. A considerable portion of the achievements have successfully received national patents. However, the reality is that most of the patented technologies remain idle and are waiting to be put to use for industrial uses. For the most part only patented technologies which are applicable to key national construction projects have been put to use.

There is an urgent need for state-owned scientific research institutions to find a way to serve enterprises with the results of their scientific research, particularly in the area of patented technology. Enterprises are in particular need of access to these technological achievements, which for them are rare core resources which have the potential to help them get the upper in today’s increasingly fiercely competitive market environment. Not everybody is blind to this problem however and the Institute of Computing Technology (ICT) of the Chinese Academy of Sciences (CAS) is a good example of efforts to resolve this problem.

Founded in 1956, ICT is the first academic institution in China specializing in the comprehensive study of computer science and technology. The Institute developed China’s first general digital electronic computer, built a high-performance computer R&D base and invented China’s first general-purpose CPU chip.

As the cradle of the computer cause in China, ICT has made remarkable scientific and technological achievements in its fifty years’ history. By the end of 2011, ICT had earned a total of 735 scientific and technology (S&T) achievements. It had also won 196 country-level, CAS and ministerial level S&T awards, of which 39 were national S&T awards and 157 were awards from CAS.

During the interview of China IP, Sui Xueqing, Deputy Director of ICT, stated that currently, “on average, ICT applies for approximately 200 patents every year and (if you count applications from previous years) had accumulated a total of 1,258 patent applications by the end of 2011. Since the company’s foundation, 722 patents have been authorized, the majority of which have been patents for inventions.”

When asked about the apparent disconnection between S&T achievements and industrialization in the domestic market, Sui Xueqing explained: “the existence of a technology transfer gap between the two sections is completely normal. As a national research institute, government funding accounts for a large portion in ICT’s research funds. ICT undertakes a great number of national research projects, so that the starting point for our research work is to improve the technological level of the country as a whole, expand the influence in science and technology and step into the international forefront. We lay focus on national policies and people’s livelihood and strive to be a forward-looking and leading institute. In this sense, ICT’s research is different from the R&D of enterprises. ICT also has a small number of horizontal research projects targeted at the needs of enterprises. We have done a lot of work to fill this gap, trying to shorten the distance between the two.”

Looking at this subject from a different perspective, Sui Xueqing also noted: “But at the same time, we must see that in the field of information technology, the life cycle of S&T achievement is quite short. A technology may become obsolete if it is not put into practical application in a short time. In addition, the amount of patent applications should maintain a reasonable proportion to the amount of patents a company maintains. A large number of new patents come from R&D every year, resulting in the increasing patent accumulation, which may not be a good thing either. Many patented technologies that are held by ICT make no contribution to the company’s economic and industrial development and can not produce social and economic benefits. ICT has to pay the maintenance fee for these patents each year, which is a waste of S&T resources and public financial funds.”

According to Sui Xueqing, ICT attaches great importance to research in applied technologies and promotes high-tech industrialization via technology transfer. Over the years, ICT has tried many approaches of technology transfer. After years of exploration, ICT has learned how to select the most appropriate way for technology transfer and radiation based on its technologies, R&D personnel as well as the specific circumstances of the market. These methods include patent licensing, technology incubation, joint lab construction, intellectual property investment, free opening and many other ways. ICT has gradually condensed these methods into three major models: common technology radiation, patent licensing/ transfer and business incubation.

According to Pan Xueyin, Director of the ICT Technology Transfer Office, ICT set up a whollyowned Beijing Haidian ICT Technology Transfer Center in August 2004, aiming to build a complete technology transfer chain and strengthen technology marketing capacity. The center is a non-profit service agency specializing in technology transfer and technology achievements industrialization. Based on the technology and personnel of ICT, the center integrates advantageous resources to speed up technology transfer, promotes the use of advanced technology in transforming traditional industries, accelerates the development of high-tech industries and optimizes the industrial structure. The center is committed to promoting the industrialization of S&T achievements, promoting technical innovation, enhancing core competitiveness of enterprises, and exploring new ways of coordinating industryuniversity- research partnerships under the new conditions.

“The center adopts the operating mode of independent business departments and independent innovation teams under the leadership of the Center Council. Several companies have been incubated, such as Loongson, Golaxy and a network information security engineering center. There are four more business departments and six innovative teams under incubation at present. By means of technical verification, market validation, secondary development and patent protection, the center seeks partners for technical innovation in ICT so as to achieve technology licensing or start new businesses. The center also undertakes the patent transaction work of ICT by transferring or licensing tradable patents,” Pan Xueyin said.

While promoting the existing technology transfer modes, ICT is also actively exploring the patent auction mode. It successfully held the first patent auction in December 2010. The auction was the first concentrated auction organized by a professional research institution with large quantities of patents. It was also an important initiative and trial to explore the method for scientific research institutions to serve the independent innovation of enterprises and promote the industrialization of scientific research.

Sui Xueqing projected that, “patent auction has broad coverage and open, transparent bidding rules. It will facilitate the rapid transfer of S&T from research institutes to enterprises, which is of positive significance in complementing technology transfer channels and playing the leading and radiation role. It is also a successful practice in response to the ‘try first, implement first’ policy proposed by the National Intellectual Property Strategy Outline.” He continued, “to improve the auction process, ICT commissioned the Technology Transfer Center to establish the working mechanism which involves technical trading organizations, intellectual property service agencies and auction institutions. With integration of various types of high-quality service resources, we are building a standardized, efficient and circulated platform for intangible assets such as patents and technologies. This fall, we will continue to organize the second patent auction. According to the preliminary plan, we will organize a large-scale patent auction every other year in the future.”

As the entrusting party of the auction, the center and China Technology Exchange (CTEX) worked closely with various contractors without calculating gains and losses, and laid a good foundation for cooperation. Pan Xueyin stressed: “since we have different standings, it is natural that we may have different angles of thinking. As a public institution funded by government finance, ICT itself has little market-oriented operating experience and therefore must depend on professional intermediaries. This coordination mechanism will be repeated in the next auction.”

Sui Xueqing shows a positive attitude for the results obtained from the first patent auction. He believes that a patent auction brings many benefits to patentees and the following two aspects are the most obvious: promoting the continuous improvement of patent quality and bringing in economic returns. ICT uses economic instrumentation and distributes the incomes to the institution, research group and inventors with reasonable proportions, which in turn mobilizes the enthusiasm of related staff. This method not only supplements research funds, but also raises the income of researchers, and increases the sense of self achievement of the inventors.

Patent auctioning also plays a guiding role in the future research direction of ICT, and the success urges researchers to pay more attention to the quality of patents. For example, ICT organizes one technical innovation contest every other year, and has held three sessions so far. The contest serves as one of the approaches to technology radiation, which will help employees find entrepreneurial technologies and help ICT find talents willing to innovate and start entrepreneurship. With entrepreneurship, employees can realize their personal values and create more job opportunities and values for others. The contest will also promote patent exhibition, raise patent value, create favorable patent transformation environment and improve the patent transfer rate. The quality of the achievements made in the third session improved greatly compared with the previous two sessions. This sort of advancing improvement is another one of the benefits of the patent auction,” Sui Xueqing said.

Promotion of on-site S&T services

After the successful organization of the first patent auction, ICT made a comprehensive analysis on all the working details, affirmed the achievements and summarized where there was room for improvement.

“Different from tangible products, patents have the features of ‘invisibility and intangibility,’ therefore it is difficult to assess its auction price. It is also hard for the bidding enterprises to judge the value, thus the auction results are difficult to predict,” Sui Xueqing said, “for example, at the invitation phase prior to the auction, some auction subjects enjoyed high market recognition and many enterprises inquired about them. Therefore, we placed them in the front positions on the auction list. However, the results turned out to be unsatisfying and some of them did not even receive an offer. We can also see the complexity of the patent auction from this.”

Sui Xueqing said that the next auction would fully learn from the lessons of the first session and that they would start the preparatory work earlier and nail down the auction subjects and their reserve prices as soon as possible. Of course, these will bring great pressure and challenge to the auction organizers.

Sui Xueqing stressed that it is extremely necessary to fully communicate with the enterprises prior to the auction and understand the actual application needs of enterprises.

Inventor Luo Haiyong couldn’t agree more with this view. He believes that from the perspective of the inventor, patented technology obtained from research work is just a small point, while its specific application in enterprise is a systematic project. Inventors should make in-depth analysis on enterprises’ purpose for the patent purchase, make targeted communication with different types of customers and give enterprises a comprehensive introduction of the advantages, contents and application fields in order to meet their different needs. In addition, in order to transform patented technology into real productivity, enterprises should also have certain level of digestion and absorption capacity, and gain follow-up support from the original patent inventors.

Sui Xueqing also said that ICT should think from the stand-point of enterprises and try to understand their difficulties. Many companies are not located in Beijing. Therefore, it is unreasonable to expect them to invest a great deal of time, effort and expenses and endure complex procedures to buy a patent worth several thousand or even tens of thousands of yuan.

“Scientific research is a means, but not an ends. The fundamental purpose of our research work is to serve the economy. Technology should not be highbrow or superior, but should be oriented to grassroots needs and enterprises,” Sui Xueqing pointed out, “it is our common practice to provide on-site S&T services. Our service is targeted at the whole country. In order to provide effective technical services for local businesses, since 2002, ICT has opened 12 divisions or branch offices in Suzhou, Shanghai, Zhaoqing, Ningbo, Dongguan, etc. A research institution network has been formed and each local branch has carried out scientific research and technology radiation work based on the characteristics of local industries.”

Sui Xueqing hopes that the next auction will be able to provide more innovative services and comply with the relevant laws and regulations. It is expected that the auction subjects can be sent to the “doorsteps” of enterprises that are in need of the patented technologies and on-site demonstrations in addition to the auction can be successfully achieved.

Sui Xueqing said, “With the courage of carving out a new path for technology transfer, ICT has done a great deal of exploratory work. Now that we have established a sound reputation in the industry, we must insist on progressing along this path.”