How Can Korea Fill Gap of Tech Transfer, Commercialization with Advanced States?

Government to raise the ratio of tech transfer and commercialization investments from the current 2 percent of total R&D outlay to 10 percent in 2014

The following are excerpts of an interview between NewsWorld and Lee Chang-han, director-general for technology policy at the Ministry of Knowledge Economy (MKE), who elaborated on government R&D policies to secure core and original industrial technologies.
Question: Will you tell our readers about the budgetary status of commercialization compared to the nation’s R&D outlays and prospects?
Answer: Korea’s national aggregate R&D budget tends to be on a constant rise. The nation’s national aggregate R&D outlays from the government and the private sector stood at 34.5 trillion won in 2008, representing an annual increase rate of 11.8 percent in the recent five years ― between 2004 and 2008. The growth rate was compared to 8.9 percent in the national defense sector, 7.5 percent in the educational field and 7.5 percent in government finances. In terms of the portion of R&D outlays of gross domestic product (GDP), Sweden was at the top with 3.60 percent, followed by Finland with 3.46 percent, Japan with 3.44 percent and Korea with 3.37 percent.
On the other hand, the ratio of technology transfer and commercialization investments out of the government’s R&D outlays stood at less than 1 percent. But Small Business Innovation Research of the United States reported that 2.5 percent of the U.S. R&D budget was allotted for technology transfer and commercialization for SMEs in 1982. In the United Kingdom, the ratio of technology transfer and commercialization investments of the R&D budget plunged from 3.3 percent in 1992 to 1.4 percent in 1997 before continuing to rise up to 4.0 percent in 2007.
PROSPECTS OF FUTURE INVESTMENTS ― Since it is important to translate the outcome of the already-completed R&D investments into performance proliferation, technology transfer and commercialization investments need to be expanded in the long-term perspective. Given the gap in the technology transfer and commercialization environment between Korea and advanced countries, the MKE’s mid- and long-term financial plan, established in June, calls for raising the ratio of technology transfer and commercialization investments out of government R&D outlays from 3.2 percent in 2010 to 5.5 percent in 2011, 7.0 percent in 2012, 8.5 percent in 2013 and 10.0 percent in 2014. Figures made available in 2008 showed that the technology transfer and commercialization environment index was 71.3 percent in Korea, 90.3 percent in the United Kingdom and 87.2 percent in the United States.
Q: What strategies do you have in place to facilitate technology transfer, like technology transfer outsourcing?
A: The government plans to increase the number of leading technology licensing offices (TLO) from the current 28 to 40 in 2011 and 60 in 2015 in an effort to narrow the discrepancy with latecomer ILOs and step up state-financed R&D institutions’ capability to transfer technology. Approximately 150 out of about 270 R&D organizations have a TLO. A strict yearly survey of business performance and evaluation has been made to expedite competition among ILOs through differentiation.
In a bid to encourage TLOs’ technology transfer capabilities and create an environment boosting the morale of those at work at TLOs, the government will strive to: expand expert manpower in the technology areas, including in-house patent practitioners; operate interactive educational programs tailored to create expertise in the technology transfer areas; and offer more incentives to those who contribute to technology transfers. A draft revision of the Act on the Facilitation of Technology Transfer Commercialization would add pay for performance, equivalent to more than 10 percent of technology fees instead of the current 5 percent or more of technology fees.
A joint TLO support corps comprised of officials from patent companies, technology exchange institutions and R&D service organizations and in-house experts will be formed and managed by the Korea Research Council for Industrial Science and Technology (ISTK) to provide support for TLOs with weak capabilities.
The transfer of state-financed R&D organizations’ untapped technology will be facilitated via outsourcing in order to supplement a lack of technology transfer capabilities.
Q: Will you tell us about strategies to make the most of intellectual properties?
A: As a knowledge-based economy has been ushered in, global corporate leaders are engaged in maximizing profits by making the most of their core intellectual properties to secure a monopolistic status through a jumpstart in markets and an assault on rival companies. Multinationals saw the revenues from intellectual properties in global markets surge from $30.3 billion in 1991 to $146.8 billion in 2006.
Meanwhile, Korea has made strides in terms of quantitative R&D growth as the nation ranked fourth in the number of international patent applications. Korea posted approximately $3.1 billion in technology trade deficit in 2008 as the nation’s intellectual properties suffered a lack of a competitive edge.
Recognizing these woes facing the nation, the government announced strategies designed to develop Korea into a global intellectual property powerhouse in July 2009 with the Presidential Council on National Competitiveness playing a leading role.
They call for enhancing R&D outcome availability by creating invention capital and securing national competitiveness by occupying core and original technologies ahead of others. Invention capital is proceeds from transforming ideas or technology patents purchased earlier into value-added ones and selling them to firms in return for licensing fees.
The government and the private sector have jointly established a IP management company specializing in creating profits on the basis of invention capital. The company strives to make profits by forming IP portfolios with high yields based on the ideas, technologies and patents it has explored. The IP management firm, which was inaugurated in July 2009, will be in full-fledged operation from 2011 by luring investments from the private sector.
The primary role of the IP management firm is to create an intellectual property market. It makes it easier for developers to raise funds by receiving due compensation for their creations or ideas and obtaining patents for building IP portfolios. National competitiveness can be obtained by securing and developing core and original technologies by building demand-oriented IP portfolios. Overseas leaks of Korean universities and research institutes’ prominent ideas and research achievements can be prevented by domestically establishing companies specializing in upgrading technology value.
Q: Will you elaborate on the current status and future plans of international joint technology development projects?
A: Global technology powerhouses are rushing to adopt open innovation approaches due to technology convergence and shorter technology longevity. The U.S. National Science Board stressed partnerships on science and technology in priority diplomacy and R&D policies in 2008. Europe has been with EUREKA, a Europe-wide network for market-oriented R&D activities and Framework Program (FP), the European Union’s chief instrument for funding research. Japan established the third science and technology master plan between 2006 and 2010, calling for a focus on R&D internationalization.
In keeping with these global trends, the Korean government has expanded its budget for improving technological power and globalization among domestic industry, academia and research circles while striving to facilitate global joint R&D collaboration by forming global networks.
The MKE ploughed 194.6 billion won into executing 292 international technology collaboration projects during the period between 2004 and 2008. The investments surged from 17.6 billion won in 2004 to 29.2 billion won in 2005, 32.8 billion won in 2006, 36.7 billion won in 2007 and 78.3 billion won in 2008, representing an annual average increase 45.2 percent.
Korea has held regular meetings on technology cooperation with major countries in order to establish networks of joint R&D collaboration. Korea and the United States held the inaugural meeting of the Joint Committee on Commercial Cooperation in Washington, D.C. this past July; the Korean-German Cooperation Committee on Science and Industrial Technology was held in Seoul this past March; and Korea and the United Kingdom held the joint cooperation committee on industrial technology in London in November 2009. The Korean and Israeli governments are operating a joint fund in which each side contributes $1.5 million in accordance with a mutual agreement ratified in December 1999.
Korea has seven global tech centers in which Korean researchers’ match with foreign partners can be arranged ― Silicon Valley, Atlanta, Frankfurt, Moscow, Tel Aviv, Tokyo and Beijing.
For this year, the government has set aside 47.1 billion won for executing bilateral and multilateral joint R&D projects with the goal of strategically implementing policies and maximizing the linkage of R&D and commercialization.
The bilateral R&D collaboration projects that Korean industry, academia and research organizations conduct with foreign partners are divided into bottom-up demand-oriented projects and task-specific ones tailored for national technology needs. Starting this year, global R&D collaboration efforts with foreign prominent engineering colleges with commercialization capability are being launched for local market entry. Overseas market exploration projects for providing the cost for producing prototypes to organizations designated as multilateral firms’ R&D outsourcers have been introduced as a new business model designed to maximize commercialization.
The government is concentrating its support for Korea’s participation in the existing multilateral technology cooperation networks like EUREKA and FP. Now that Korea has been admitted to EUREKA as a subordinate member of the European 39-member R&D network in June 2009, Korean research organizations are allowed to make project proposals.
As part of efforts to expand international R&D cooperation in the years to come, the government plans to raise the ratio of its investments into global collaboration projects of the nation’s total R&D outlays from the current 2 percent to 10 percent in 2015. It plans to overhaul its support program and systems so that investment outcomes can be maximized with the goal of ensuring continued industrial development by stepping up Korea’s global competitive edge and securing core technologies at the earliest possible date through brisker global R&D collaboration with Korean research organizations.
Q: What steps are in store to prevent industrial technology leaks?
A: Companies are rushing to compete with their rivals to obtain technologies. In some cases, such illegal practices as industrial espionages and hacking take place. Chances are high that such Korean core technologies as semiconductors and telecommunications, reaching high-level technological standards, can be leaked overseas as related Korean companies have expanded their overseas presence. The government has established institutional tools designed to prevent industrial technology leaks, as The Act on Prevention of Leakage of Industrial Technology and Protection thereof went into effect in April 2007. Last December, steps to prevent industrial technology leaks and to protect industrial technologies were established at the second meeting of the Industrial Technology Protection Committee, presided over by the prime minster.
This past January, the government put on public notice a list of 49 national core technologies in eight industrial areas whose exportation is required to obtain government approval. The list has narrowed to a minimum of essential technologies so as to facilitate free corporate management activities. The list of the national core technology is now on public notice, but the database of the core technology holders and manpower will be built and systematically managed in the future, while a joint inspection team will be formed and operated in order to cope with industrial technology leaks in a swift manner.
The government is backing up industrial core technology holders’ buildup of industrial technology protection equipment. It plans to set aside 30 billion won during the three-year period between 2011 and 2013 in order to help about 1,000 firms build security devices. Such manpower as chief security officers and computer emergency response teams will be nurtured and software security capabilities will be strengthened through educational programs.
Industry, academia and research organizations plan to make concerted efforts to prevent illegal industrial technology leaks by sharing information on industrial security certification and qualification systems and forming cooperative networks.
The government is seeking to fix the loopholes of the Act on Prevention of Leakage of Industrial Technology and Protection thereof and secure practical efficiency. It is striving to clarify the definition of industrial technologies and simplify the approval process of national core technologies so as to respond to fast technological changes. The government is considering stiffer penalties on those who fail to report the exportation of prohibited national core technologies.
Q: Will you explain the current status and future plans of collaboration projects that industry, academia and research organizations are carrying out?
A: Despite its efforts to promote collaboration among industry, academia and research organizations through such demand-specific manpower development and joint research efforts, Korea is faced with insufficient technology transfer and commercialization, manpower demand-supply mismatch and insufficient regular networks among industrial and academic circles.
In this regard, the government is seeking to shift into a system of universities and colleges pursing industry-academia collaboration along with the strengthening of corporate support as part of its ways to expedite cooperation among industry and academic circles. It plans to provide systematic support for the creation and proliferation of excellent research outcomes by promoting cooperation among TLOs, while considering expanding support for TLOs. The government plans to set guidelines on industry-academia joint research agreements so as to ensure balanced distribution of performances, including IP rights among industry and academic circles, spread industrial convergence clusters so that regular industry-academia collaboration can be attained by relocating industry-academia cooperation facilities and universities into industrial complexes. It is seeking to expand the linkage of hiring manpower and job seeking between schools and firms and industry-academia collaboration by facilitating sector councils for manpower development. nw

Lee Chang-han, director-general for technology policy at the Ministry of Knowledge Economy (MKE)