Despite introduction of new commercialisation rules in 2014, there are still legal barriers to implementing projects.
It will soon be a year since entry into force of the amendments to the Higher Education Law which introduced new rules for commercialisation of the results of scientific research and development and the related knowhow on 1 October 2014. (We reported on the new legislative path to commercialisation in the article “New rules for commercialisation of university research.”)
The purpose of the new rules was to encourage technology transfers from universities and research units to business. Less than a year is too little time to measure the influence of the new rules on the scale of research results commercialised in Poland, as commercialisation processes last fairly long. But the commercialisation practice during this period shows that firms, universities and research units are still struggling with legal barriers. This effectively hinders or even prevents conducting successful and quick commercialisation processes by generating legal risks, primarily for businesses interesting in acquiring commercialised goods.
Below we present a few of the selected legal barriers in the commercialisation process.
Problematic consent
One of the biggest difficulties in cooperation between business and academia in commercialisation projects is the need to obtain administrative consents for universities and research units to sell certain goods and rights. This results among other things from provisions of the Act on Exercise of Entitlements of the State Treasury.
In theory this requirement should be eliminated or significantly reduced in the case of commercialisation. In theory, the regulations in force provide for such an exception. In practice, however, the structure of the regulations raises serious problems of interpretation.
For example, Art. 86a of the Higher Education Law, which concerns special-purpose vehicles established for the purpose of indirect commercialisation, states in par. 3a that “the Act on Exercise of Entitlements of the State Treasury of 8 August 1996 shall not apply to establishment of a special-purpose company and performance of commercialisation activities.” In practice this means that there is no obligation for a university to obtain the consent of the Minister of Treasury to dispose of fixed assets as part of commercialisation.
But it is not clear whether this exclusion applies to commercialisation in general (indirect and direct) or only to indirect commercialisation. The first interpretation is supported by the wording of the provision (“commercialisation activity,” without specifying which type), but the other interpretation is supported by the location of this provision in the article concerning special-purpose vehicles, which mainly addresses indirect commercialisation.
Uncertainty concerning these consents translates into an unwillingness by businesses to participate in commercialisation. Typically the sanction for failure to obtained required consent is the invalidity of the transaction, and consequently failure to acquire the commercialised goods or rights. It is not even possible to obtain subsequent ratification to take the place of the original consent if it was lacking. For the business, this creates a high risk of failure of the investment because of imprecise regulations.
A solution would be a separate article in the Higher Education Law expressly excluding all commercialisation activities from the obligation to obtain such consents.
Controversial tender
There is a similar provision in the Research Institutes Act. Art. 17(1) excludes commercialisation activities by research institutes from application of the provisions of the Act on Exercise of Entitlements of the State Treasury concerning the requirement to obtain consent.
Another doubt is raised by Art. 17(2), which provides that “an institute shall sell elements of fixed assets to other entities on the basis of civil-law agreements by way of a public tender under the rules set forth in the regulations issued pursuant to Art. 46(4) of the State Enterprises Act of 25 September 1981.”
The broad definition of fixed assets in the Polish accounting regulations includes the intangibles that are typically the subject of commercialisation of research results. It is not clear, however, whether Art. 17(2) also covers commercialisation activities. Its wording does not suggest this, because there is no exclusion similar that in Art. 17(1).
This state of affairs creates a legal risk in cooperation projects between businesses and research institutes involving transfer of goods and rights developed through research, in the form of the lack of clarity on whether a public tender should be conducted. Obviously, if a public tender had to be held it would wreck the chances for success of any project in a consortium between a business and a research institute, because the private entity will normally want to be certain it has an exclusive right to acquire the commercialised goods and rights.
Failure to comply with the requirement for the research institute to conduct a public tender is subject to the sanction of invalidity of the transaction, which again shifts the risk of failure of the project onto the private entity.
Unified commercialisation regulations
Sometimes there are numerous entities of varying legal status taking part in commercialisation projects: businesses, universities, research institutes, scientific institutes of the Polish Academy of Sciences, and public institutions providing support for science.
The complexity of many projects also requires precision and clarity in the regulations. It would be desirable if the commercialisation procedure were identical regardless of the legal status of the entity involved on the research side. This could be fostered by a uniform set of defined concepts—even for the term “commercialisation” as such—which could be included for example in the Higher Education Law.
What next?
Eliminating the barriers discussed above requires no legislative revolution. All it requires is removing doubts in interpretation by clearing up certain regulations and modifying selected stages of the current path to commercialisation where the greatest number of projects now unnecessarily get stuck.
Soon the regulations introduced in 2014 will come up for review in terms of their effectiveness in encouraging the transfer of knowledge and technology into the economy. Getting rid of these legal barriers would certainly help achieve a more positive result.