Chapter 4: Freedom to Information Law
4.4 The Importance of Information Transparency to Technology Transfer
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4.4 The Importance of Information Transparency to Technology Transfer
It is believed that transparency in government allows citizens of democracy to control their government and oversee how the government works to reduce inefficacy in government performance, reducing government corruption and bribery. An open and transparent government allows the dissemination of information, which in turn helps produce greater knowledge and societal progress.
Technology licensing is a very delicate practice, of which it requires careful examination of various documents, information and data in each and every step of its development. Both licensee and licensor would have to understand each other well enough during due diligence process before making wise, suitable and commercially-feasible decision to license out or license in a technology. To make things short, information related to technology license disclosed on public domain and the accessibility of such information are crucial to the success of technology licensing, especially during due diligence process.
In this section, this study will analyze the importance of information transparency from both the technology acquirer (buyer) and technology holder (seller) point of view. The most important factor to be considered by a technology acquirer is the truth of a technology (information defining the technology). While for technology holder, of which in this study be restricted to governmental research organization’s technology transfer office, the most important factor is the ability to screen for the most suitable technology acquirer which could best benefit the taxpayer and public.
4.4.1 Information Transparency: From the Point of View of TTO Technology transfer office is being defined as the technology seller (licensor) in this study. For-profit research organization like pharmaceutical companies, private hospital research unit, privately funded research foundations usually pick licensee that could bring the most benefit financially and strategically to them. Unlike other licensors, TTO has to consider a lot of factors other than licensing royalty in a licensing transaction.
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Since most of the research funding from public research organization comes from the government and taxpayers, thus these public research organization has certain obligation to carry out when they are selling their technologies. Public research organization usually has to evaluate under what circumstances public interest are met.
A government-sponsored research should be made available to the market as soon as possible to benefit general public, thus TTO has to be sure that a technology is not being licensed to company of which intends to block the entrance of the said new technology into the market to extend it’s monopoly status, or to prevent the said new technology to be fallen into the hand of a competitor. TTO has to be aware not to license its technology to non-practicing entities (NPEs)65, since NPEs will not practice a patent technology but intend to utilize the patents for litigation purpose to generate revenue, which not only not bringing benefit the general public but further wasting government spending on litigation management.
It is relatively easier for TTO to perform due diligence on listed or public companies, however public companies often, but not always are not the target licensor of public research organization. Most public research organizations give priority to SMEs, of which barely has listed information available for investigation during licensing activities. Fortunately TTO has the privilege to request for information it needed and screen all potential licensor to secure the benefits of taxpayers. For example, TTO could request financial performance, available technology and future business plan from potential licensor for evaluation to avoid information asymmetry between two parties.
4.4.2 Information Transparency: From the Point of View of Technology Acquirer
Information transparency is especially crucial to technology acquirer. Since technology acquirer is the party that has to actively hunting for desirable technology, it
65 Non-practicing Entity, a less projective term for patent troll, or Patent Asserting Entity (PAE), often acknowledge as “Patent Cockroaches” in Asia. NPE is an individual or a company, which alleges companies that infringes its patent, but does not manufacture, or supply service based on the asserted patent.
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is crucial for technology acquirer to get access to information on every available technology. It would save technology acquirer a lot of time if they could have easy access to the process of technology licensing, available technology for licensing, detailed information about target technology and etc.
Most technology acquirers are active invention hunter, as R&D or legal personnel understands what technologies their company short of, and could take initiative to search for suitable technologies from academia or research institutes to license in the technology to bridge the technology gap. There are a lot of challenges lying ahead for technology acquirer seeking for information related to interested technology. Challenges including i) Limited information on target technology; ii) Language barrier; and iii) High transaction cost. The scarcity of accessible information posts high transaction cost and risk to technology acquirer because they have to invest more resources to validate if it’s a suitable technology and might risk wasting money shall a due diligence wasn’t (or could not) done properly.
While dealing with Technology Transfer Office that is more conservative and cautious about disclosing information related to target invention, technology acquirer will have to spend a lot of time communicating with TTO. Furthermore, language barrier might exist if acquirer were to communicate with TTO of which English is not the official language. If a TTO does not work hard to lower the transaction cost of technology acquirer and if the threshold of transaction cost exceeded the acquirer’s willing-to-pay standard, TTO might lose the opportunity to license out a technology because technology acquirer might look for the technology somewhere else.
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