Approaches to and methods for evaluating new technologies in Technology Transfer Offices : how long is a piece of string?

The lack of a practical method to value Intellectual Property Rights (IPRs) is the main challenge faced by Technology Transfer Offices (TTOs) in the commercialization of inventions generated by university scientists. This report reports the discussions of a day long workshop organised by the JRC on two issues of interest to TTOs, viz. methods for valuation that can close the gap in investor and inventor perceptions and how best to value early stage technologies. Trying to value a novel technology is akin to asking how long is a piece of string? There can be no definitive valuation of a novel technology; its value to users will vary depending on the use to which the technology will be put and the size of that product market, whether buyer or seller is conducting the valuation, and whether the valuation is subjective or objective. However, TTOs that grapple with this problem need to select the technologies that need valuation as well as identify those that need nurturing before they can be transferred to a private firm for further development. The report presents the different options for both that were shared at the workshop held on 22 November 2016. The first part of the report contains the approaches to valuation used by private sector technology brokers who typically manage a portfolio of technologies in different technology domains. These approaches and methods may prove useful for TTOs that are organised centrally at the university level. The main problem highlighted is deciding which technologies to pursue and what assets the university should count as capable of generating intellectual property income streams. The second part of the report focuses on the approaches used to value of RTOs early stage technologies by TTO circle members - most of the presentations were by TTOs organised around specific technology area. The depth of knowledge about the area meant that these organisations typically had the resources to evaluate the potential of technologies and markets much better and implemented a form of real options valuations in preferring to develop and spin out the technology before selling it. Patents were used a means to pin the technology to the company. The valuation needs of the two types of TTO organisations are different but they share some common obstacles. The uncertainties faced by the TTO in valuation could be partially mitigated by maintaining a register of technology valuations by technology class which other TTO members could use in their negotiations with private firms. These data may also allow more sophisticated real options analysis about the sorts of investment and time horizons that may be required to make incubation pay-off for the TTO. A second concern shared by all TTOs is the tension between exploitation of technology by society and the often implicit requirement of generating a profit for the university. Clarity about the objective of technology transfer activities should be part of the mandate of TTOs.