Transferring Technology Can Leverage Global Investments

By Vicki A. Barbur and Barry A. Costa

Photo: Getty

Today’s global economies are based on the command of knowledge and information. Knowledge in this sense is created by basic and applied research.

Incorporating emerging and advanced technologies that are positioned for technology transfer can increase benefits to society and defense of the nation — outcomes that are within the bounds of public interest. Enhancing economic prosperity through job creation, providing access to breakthrough capabilities to protect a nation and creating long-term investment in R&D are all critical to success.

International technology transfer is a valuable mechanism that can benefit both local and foreign governments and industries. It can also boost economic growth and regional economic development by being the catalyst for the creation of new, entrepreneurial business ventures.

Evaluating overall return on investment from these activities to date is ongoing, yet it is increasingly clear that technology transfer is becoming a central feature of the research-and-development system.

Technology transfer is defined as the movement of scientific methods of production or distribution from one enterprise, institution, or country to another, as through foreign investment, international trade, licensing of patent rights, technical assistance, or training.

The process to commercially leverage the output of research and development efforts varies widely. Exposure to the leading international companies, corporations and national laboratories as part of early stage innovation provides an opportunity to participate in technology exchange — technology transition/transfer in its broadest global context — alongside opportunities for partnering and collaboration, and related licensing and venture investments to and from within-country groups.

In addition, these channels create opportunities for direct communication with organizations where new products or services can add value to a targeted group of industry professionals.

Technology and technical know-how are typically transferred through a license agreement in which the entity grants its rights without relinquishing ownership — or government use rights, in the case of nationally funded initiatives — in the defined technology to a third party for a period of years, often limited to a specific field of use and/or region of the world, for financial and other benefits.

The licensee — the third party licensing the technology — may be an established company or a new business start-up. Licenses are essentially contracts that include terms requiring the licensee to meet certain performance requirements and at times to make financial payments — some of which may be royalties — to the originator of the technology.

An option agreement is sometimes used to enable a third party to evaluate the technology for a limited period of time prior to making any decision about licensing. Some portion of the royalties is shared with the inventors or inventors’ organization dependent upon any company policies. The remaining funds from the royalties are reinvested to support further research, development and continued participation in the technology transfer process.

Open source remains an important means of technology transfer, although it is just one method in a repertoire of licensing alternatives.

Technology transfer of government-funded innovation provides federal organizations with innovative capabilities in a cost-effective and expeditious way, since it brings private investment to bear on technology of government interest.

It has proven to be a valuable means by which national laboratories accomplish their mission to advance and disseminate technology, and thereby return value to the nation’s economy.

Simultaneously, it supports and positions a country’s competitiveness in the global market. For industry, transferring technology from government-funded efforts offers a way to acquire higher risk, advanced technological research.

The outcomes are often superior to a company’s internal efforts, which may be shorter term, lower risk, focused initiatives, frequently focused on immediate challenges, and necessarily constrained to core legacy product competencies.

Research institutions tend to hire and retain experts in focused fields of study that are likely to have benefits to such high-risk R&D initiatives, and that also have high value to companies wanting to explore emerging areas of technology that are too early-stage for their aligned and competitive product landscape.

For a successful global business, international technology transfer will be an important part of the infrastructure. It involves several models. Product or process technologies can be transferred to a host country within a multinational company.

Other models include the sale or licensing of technology. In these cases, a company other than the technology owner takes it to a host country. International technology transfer involves many factors, such as the kind of transfer vehicle — license, royalty or sale — government trade policies across borders, risk of losing technology and the influence of industry associations.

Fundamentally, technology transfer provides ideal access to game-changing technologies, collaboration opportunities, investment and business development channels with all the stakeholder groups crucial to moving innovation from the laboratory to the commercial sector, via an open and interactive approach.

It has been practiced with increasing emphasis for the past several years, and is common in academic institutions throughout the world to generate new growth and additional visibility for their staff and students, as well as pinpoint prestigious outcomes from investment in breakthrough research.

Federally funded research-and-development centers in the United States also participate in this landscape, largely due to their charters, which highlight an expectation that they will release technical outcomes for the good of the nation.

The U.S. government, through its agencies, invests public funds in furthering advances in science and technology, whether for improving national security and defense, the health of the community, space exploration, approaches to education and learning, or reducing environmental impacts.

Many of these investments lead to improved security and, through job creation, higher standards of living. Advances in science and technology funded in this way are, however, only valuable when the outcomes of the research are utilized, deployed appropriately and made available for use by the appropriate populations, either in the interests of the public or to protect the nation.

There is an established precedent based on recent U.S. laws that promotes the sharing of federally funded research efforts between the federal laboratories and private industry. Not only is the interaction encouraged, but the direct transfer of intellectual property for commercial use is actively promoted. Additional opportunities will result from sharing and exploiting expertise through the proposal to extend initiatives into the international domain. It is a progressive approach, and enables additional benefits derived from the two-way traffic of new ideas, innovations and solutions.

Government laboratories, national laboratories, university-affiliated research centers and federally funded labs strive to support the mission that U.S. government-funded efforts deliver, yet it is increasingly important to extend the value of these initiatives by making relevant inventions available to commercial industry, whether in the homeland or with strategic partners elsewhere in the world.

Government agencies are encouraged to make others aware of the outcomes of their funded initiatives and then to share the details broadly. Frequently, this objective is accomplished via publishing activities, presentations at significant meetings, open source transfer, and directly through relationships with industry and other research partners.

A highly successful example that illustrates the value of technology transfer comes from the Federal Aviation Administration and its Center for Advanced Aviation System Development, operated by The MITRE Corp. The FAA sponsored the center’s effort to develop a prototype system that would provide small aircraft with the same level of situational awareness in the air that larger planes with costly and sophisticated systems enjoy. 

The center developed the universal access transceiver beacon radio, which affordably incorporates the community’s standard automatic dependent surveillance-broadcast technology. It helped address several important operational and safety needs, both for the FAA and for small aircraft operators. MITRE has since licensed this technology to more than 20 companies. 

Transferring the results of this federally funded research has created a new market, revolutionized private aviation and increased safety in the skies.

International technology transfer emphasizes the opportunities for gaining greater access to the global breadth and diversity of technology. There are benefits from, and impediments to, an effective system. Benefits arise from the way countries that take full advantage of technology transfer maximize learning potential and ensure that their resources are not wasted on inefficient production technologies or redundant efforts.

Transitioning in new concepts allows a country to accelerate and often bypass the initial baselining challenges; it can move in once the foundation is in place and quickly build on the opportunity.

There is evidence that cross-country differences in the timing of adoption of new technologies are minimized due to broader connectivity and access to the internet. Word of the new technologies is quickly disseminated and their value appreciated. In addition to facilitating productivity gains and supporting economic development in recipient countries, tech transfer provides means for addressing specific social and environmental problems with technical solutions available from diverse countries through a best practice approach.

Impediments arise from several general factors: information problems deterring technology transactions; market power associated with advanced technologies and facilitated in part by intellectual property rights; unfavorable economic and governance conditions in recipient countries; and the inability of scientific and technical personnel in those countries to establish meaningful linkages with global research and innovation networks.

In addition to interacting with sponsors and making research efforts more visible and available for applications, government funded entities in the United States must, by legislation, actively transfer technologies to commercial organizations when appropriate so that these entities can bring the resulting products and services to market.

Neither government labs, national labs, nor federally funded research-and-development centers hold any mandates to manufacture products, as full-scale commercialization is not part of their mission.

There is a critical need to ensure that innovative government funded technologies make the best possible impact whether by protecting critical private infrastructure or simply growing the economy. Additionally, allowing profit-making corporations to take on the new concepts for production purposes ensures that the nation has economically viable solutions readily available for expeditious, full-scale, supported deployment within the agencies and to support any mission-based planning or deployment needs as they arise.

Recent global standardization in intellectual property rights has eliminated most country variations; all jurisdictions now work under the “first-to-file” mentality, and the World Trade Organization has simplified the process of securing broader coverage for patent protection. Reforms undertaken by emerging and developing economies in patents and other types of intellectual property rights and other pressures have been significant. These reforms have stimulated greater flows of high-technology trade, foreign direct investment and technical licensing across borders.

Such reforms also have facilitated the technology-oriented activities of affiliates of multinational enterprises in major emerging countries. One example of a global entity in this space is MassChallenge, an innovation bridge incubator originating in Boston, that has overcome boundaries so its participants can benefit from its global presence. The Australian government recently spent some $208,000 to attract this U.S.-based non-profit start-up accelerator to Australia to help local entrepreneurs grow their business and to strengthen the nation’s start-up innovation/technology transfer ecosystem.

International technology transfer in its broadest sense is a crucial component to ensure maximum value from a country’s investment in innovation and subsequent generation of novel solutions to contribute to a nation’s economic landscape and potentially to its security. Diversity in thought and approach significantly underwrite any output, and an international, cross-border approach to transfer of outcomes leads from elevating one’s own nation’s influence to something that has far-reaching, demonstrable value to all.

Barry A. Costa ( is director of technology transfer and Vicki A. Barbur ( a technology transfer associate at The MITRE Corp.

Topics: Infotech, International, Global Defense Market

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