Is there a Standard Royalty Rate for Tech Transfer?
Updated: Jan 31, 2019
Here is my opinion on the Malaysian Intellectual Property Commercialization or the lack there off.
I had just returned from a 2 days Workshop"Setting Royalty Rates & Other Financial Terms" which sets out the methods, skills and tools in achieving appropriate royalty rates, carried out by an Adjunct Professor at Queensland University of Technology and a lawyer in Australia with more than 20 years of experience in licensing IP transactions, Mr. Philip Mendes.
According to Mr. Mendes, there is 'no magical numbers' or'one standard method' to calculate royalties to be set for IPs, as each and every IP has its own uniqueness and every single IP differs in the methods to be adopted, for achieving an appropriate royalty rate.
This is a good Workshop to be attended to by those in the Technology Transfer Office (TTO) and when I registered for this Workshop which last took place in 2014, I was expecting to be the one out of place, as I expected most participants to be the TTO officers..... but guess what??..... Out of the ONLY 7 participants, ONLY 2 were from the TTO! And that too, the 2 participants were from private Universities.
Where were the rest of the officers from the so many public University TTOs in Malaysia? Have we had so many technology transfers that the TTO officers are already too experienced, hence no need to attend such a Workshop? I was simply puzzled. According to Mr. Mendes who had just conducted a similar Workshop in Singapore, there were obviously more University participants in Singapore than in Malaysia.
Someone verbally shared during the Workshop, that ITMA, the so called NGO that trains on expertise in technology transfer and commercialization of IP, has suggested a royalty rate of 2%-6% for public Universities in Malaysia, in their IP commercialization! And surprisingly, this organization, I was given to understand is strongly supported by the Ministry of Higher Education (MOHE). On total contrast, according to Mr. Mendez, there is NO WAY one can come up with a standard rule. Every IP must be assessed on its own, based on a few methods he had spoken about.
ITMA is said to consist mainly of lecturers and TTO officers from the public Universities in Malaysia. I wonder if they had any formal IP education first and foremost to begin with, and any experience in IP at all. Hmmmm??? I believe that before one even talks about commercialization of IP, one needs to know about IP. How much of IP knowledge do people in ITMA have, I wonder? Just because you have patents..... make you an expert in IP? Have they had more than 20 years experience in commercialization of IP, that they are regarded as IP commercialization experts? Can ITMA say that they've conducted so many Training on this pricing issue, that they are all experts? If ITMA is not willing to answer these questions, perhaps MOHE can answer on behalf of ITMA, since they are said to support this organization.
To get a preview answer on this question, all one needs to look at, are the background of all those behind ITMA, MyInnoHub, Myain..... the organizations talking about IP commercialization and/or bringing Malaysia up the Global Index Innovation. As at February 2017, based on information from their respective websites, none of these organizations have a single IP expert in their Committee. One needs to have knowledge on IP first before even pursuing the matter to another stage...
The information on ITMA's suggestion of "royalty rate" and MOHE being very much in support of this organization is a hearsay as I can't seem to find this information written in any publication, but I wonder whether the people that form ITMA and all those others talking about IP and its commercialization in those other organizations, are those with any formal education on IP, because one thing for sure which I know personally is that, someone in ITMA once said that 'data exclusivity and patentability of second medical use are the same'! Come on..... Anyone knowledgeable in IP would know that these are two different areas of IP. And trust me, only those with basic knowledge on IP can do IP commercialization. It does not take an expert to tell you this.
So who is an IP expert? Well, I'll be frank..... I am an IP Expert in Malaysia with 20 years of experience in IP, BUT I am not an IP commercialization expert. I am of the view that ITMA currently consist of a bunch of people whom I call "the blind leading the blind". They have gathered to lead the industry and the Government to believe that they consist of experts in IP commercialization. How many experts on IP commercialization do we have in the Malaysian public Universities? The answer is NONE! We are still far behind commercialization of IPs. I am not saying that there are no IP commercialization at all in Malaysian public Universities. There are obviously some, but not many, that an organization can regard itself as consisting of IP commercialization experts! I reiterate that I am not an IP commercialization expert. However, I went and sought knowledge about this by attending the Workshop and it still does not make me an IP commercialization expert as I do not have hands-on.
To be an IP commercialization expert, one needs to have EXPERIENCE.
As we do not have any expertise in Malaysia in this area, lets gain from the outsiders. The Americans, the Australians, the British..... they all have expertise..... Yessss, they are expensive but it is worth the investment if we're talking about scaling up the Indexes..... So MOHE, please work with people who have knowledge in IP for example MyIPO and get them to introduce experts on IP commercialization to you, because no other organization is more competent to do this, than an organization which has worldwide contact on IP matters.
I hope to share more about what I have gained and learned from the Workshop in another article. All I hope is that this article is an eye-opener to those in the industry to know your experts, well before engaging them to advise you.
IP is about Rights..... not Law!!!