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Involving Researchers in Spin-offs

FITT

(Fostering Interregional Exchange in ICT Technology Transfer)

2 | 19.02.2010 Name / EventInvolving Researchers in Spin-offs

“The Innovation law”& the mobility for researchers

French Law for Innovation and Research of 1999 aims at fostering the creation of innovative companies and the transfer of public research towards industry.

The scope of the law is wide and covers 4 main items:

Mobility of the human resources Cooperation between public research organization and enterprises Fiscal framework for innovative companies Legal framework for innovative companies

Focus here on the mobility part i.e. a legal framework to incite researchers to participate in the creation or development of innovative companies.


A substantial change for the employees of public research organisations

Really favourable conditions for public research employees to be involved with private companies exploiting their work !


4 schemes for researchers to be involved with an innovative company


The employees of a PRO who want to be involved with innovative companies according to the conditions described in the 1999 Innovation law must comply with the following generic principles:

The company must exploit the research work of the employee

Respect of the interests (moral & material) and functioning of the public research organisation (PRO)

Respect of the research or technical mission of the employee

Absence of risks endangering the independency and neutrality of the PRO

Drafting of a contract between the company and the PRO

Prior authorisation of the PRO the national Commission of Deontology for public service

The National Commission of Deontology must be informed on the contracts and partnerships signed between the company and PROs (duration of the authorisation + 3 years)

A few requirements


1) Creation of a company

Initial position in the PROInitial position in the PRO

Ask for the autorisation of organisation and Commission of Deontology BEFORE

creating the company

Ask for the autorisation of organisation and Commission of Deontology BEFORE

creating the company

YesYes NoNo

Quit prior activity in the PRO (derogation possible for part-time teaching activities)

Contract between employee and research organisation

Contract between company and PRO on management of Intellectual Property)

Position of « détachement » or « mis à disposition », to work for the company

The employee can be a partner or manager of the company

Quit prior activity in the PRO (derogation possible for part-time teaching activities)

Contract between employee and research organisation

Contract between company and PRO on management of Intellectual Property)

Position of « détachement » or « mis à disposition », to work for the company

The employee can be a partner or manager of the company

After 2nd and 4th years

Ask for the autorisation of the PRO & Commission of Deontology

Ask for the autorisation of the PRO & Commission of Deontology

Stay in the company and quit the PRO

Stay in the company and quit the PRO

Return to PRO(put an end to cooperation with

company within a year)

Return to PRO(put an end to cooperation with

company within a year)

After 6th years (maximum possible)

YesYes NoNo

Articles L 413-1 to L413-7 of the Code of Research (formerly article 25.1 of the Law of Innovation dated from July 1999 ):

Procedure if an employee of a public research organisation wants to create a company to exploit technologies that he developped.


2) Consulting activities (“Conseil scientifique”)


Ask for the autorisation of the PRO and national Commission of Deontology

Ask for the autorisation of the PRO and national Commission of Deontology

YesYes NoNo

-Contract between employee and company (on content of consulting activities, duration, remuneration…)

-Contract between PRO and company about intellectual property matters

-Scientific activity only (no management)

-Consulting activities must be done outside the laboratory

-No participation in the negotations between PRO & company

-Not more than 20% of the time

-Maximum remuneration fixed at 66 000€ per year (Gross income)

-Contract between employee and company (on content of consulting activities, duration, remuneration…)

-Contract between PRO and company about intellectual property matters

-Scientific activity only (no management)

-Consulting activities must be done outside the laboratory

-No participation in the negotations between PRO & company

-Not more than 20% of the time

-Maximum remuneration fixed at 66 000€ per year (Gross income)

Every 5 years, as long as the company

valorizes the research work of the employee

Ask for the autorisation of the PRO and Commission of Deontology


YesYes NoNo

Articles L 413-8, L413-10 and L413-11 of the Code of Research (formerly article 25.2 of the Law of Innovation dated from July 1999 ):

Procedure if an employee of a public research organisation wants to provide scientific support for a company exploiting his research work whilst remaining in the public sector


3) Participation in the administrative or advisory board of a company


Ask for the autorisation of the research organisation and national Commission of Deontology


YesYes NoNo

-Only remuneration possible is director’s fees (« jetons de présence »). The maximum is determined by decree.

-Obligation to inform the PRO about the revenues resulting from the director’s fees, dividends or the selling of titles.

-Not compatible with consulting activities (« Concours scientifique »)

-The participation in the capital of the society and voting rights cannot exceed 20%

-Only remuneration possible is director’s fees (« jetons de présence »). The maximum is determined by decree.

-Obligation to inform the PRO about the revenues resulting from the director’s fees, dividends or the selling of titles.

-Not compatible with consulting activities (« Concours scientifique »)

-The participation in the capital of the society and voting rights cannot exceed 20%

Every time the term of office is

finished. Ask for the autorisation of the research

organisation and Commission of DeontologyAsk for the autorisation of the research

organisation and Commission of Deontology

YesYes NoNo

Articles L 413-12 to L 413-14 of the Code of research (formerly art 25. 3 of the Law of Innovation dated from July 1999 ):

Procedure if an employee of a public research organisation wants to participate in the decision board of the company.

When the authorization has ended, the employee has 3

months to give up his rights in the company. If he wants to keep

them, he must quit the PRO

When the authorization has ended, the employee has 3

months to give up his rights in the company. If he wants to keep

them, he must quit the PRO

Giving up the rightsGiving up the rights

Keeping the rightsKeeping the rights


4) Participation in the capital of a society




YesYes NoNo

-In the exercice of his activity, the employee should not have had a position of control over the company or have been involved with contracts between the company and public research services in the last 5 years.

-Not possible to have a position in the top management of the company (but compatible with consulting activities)

-Limit : 49% of the capital and 49% of the voting rights

-Obligation to inform the research organisation about the incomes related to the participation in the capital of the company.

-Contract PRO/company about technology transfer and between employee/company about the condition of participation in the capital

-In the exercice of his activity, the employee should not have had a position of control over the company or have been involved with contracts between the company and public research services in the last 5 years.

-Not possible to have a position in the top management of the company (but compatible with consulting activities)

-Limit : 49% of the capital and 49% of the voting rights

-Obligation to inform the research organisation about the incomes related to the participation in the capital of the company.

-Contract PRO/company about technology transfer and between employee/company about the condition of participation in the capital

Every 5 years, as long as the company valorizes the

research work of the employee



YesYes NoNo

Articles L 413-9, L41310 and L413-11 of the Code of research (formerly art 25. 2 of the Law of Innovation dated from July 1999 ):

Procedure if an employee of a public research organisation wants to have a participation in the capital of a society exploiting his research work

When the authorization has ended, the employee has 1 year to conclude his participation in

the capital of the company.

When the authorization has ended, the employee has 1 year to conclude his participation in

the capital of the company.


When?

Law n°99-587 of July12, 1999 published in French “Journal Officiel” dated from July 12, 1999, modifying the art. 25 of the law n°82-610 of July 15, 1982 (Orientation and Programmation for technological Research & Development)http://www.legifrance.gouv.fr/affichTexte.do;jsessionid=E06C858F5BDE540E506BA53962AD884D.tpdjo06v_3?cidTexte=LEGITEXT000005628198&dateTexte=20090921

Also included in the of the Code of Research (articles L 413-1 and following)http://www.legifrance.gouv.fr/affichCode.do?cidTexte=LEGITEXT000006071190&dateTexte=20090921

The content has been slightly modified since :- “Loi de programme pour la recherche” n°2006-450 (18 avril 2006): the limit regarding the participation in the capital of a company went from 15 to 49%.- “Loi de modernisation de la fonction publique” n°2007-148 (2 février 2007): creation of a specific commission for research-related decisions.


Who?

Researchers, teachers-researchers, engineers, PhDs, technical and administrative staff

Who is concerned by the law:

Cre

dit:

Mic

roso

ft O

ffic

e


Applicable in most public research organisations:

- EPST (Etablissements Publics à caractère Scientifique et Technique) such as CNRS, INSERM, INRA, INRIA

- EPSCP (Etablissement Publics à caractère Scientifique, Culturel et Professionnel) including universities and public engineering schools developping their own research.

- EPIC (Etablissements Publics à caractère Industriel et Commercial) such as CEA are not concerned.

Where?


Pros & Cons

PRO’s

Strong incentive for Technology Transfer : allows researchers (and other empoyees) to engage in TT activities outside their laboratory whilst keeping the advantages of public service.

Measures to promote mobility of the staff can be adapted at a institution level (not necessarily a law). Lobbying towards decision-making persons is a decisive point.

CON’s

Because it is a law, this plan relies on the government’s agenda.

The law is supposed to prevent the employees who are involved in starting up companies from being penalized in terms of research careers but since there is no concrete measures, there is a risk that this principle is not put into practice.


Why?

Why was the Law established?

The French government was not satisfied by the transfer of the results of public research to industrial products or services. The Innovation Law was adopted to reverse this trend and provide a legal context that fosters the creation of innovative technology companies, notably by young people, whether they be researchers, students or employees.

What was the context?

The law fit in a more general governmental action to stimulate the dynamism of enterprises in the field of research.

The 1999 Innovation Law introduced other measures alongside the mobility of researchers : decision to create

incubators and Technology transfer offices in each university, improvements for research tax credits...

In 1999 the national award for creation of innovative companies and thematic seed funds were also introduced by

the government.


From 2000 to 2006 (7 years)

Nbr of referrals Nbr of agreements % of the total

Art.25.1 153 133 23

Art 25.2 482 418 72

Art 25.3 36 31 5

Total 671 582 100

Average for a year 96 83

Source : Etat de la situation et bilan au 31 décembre 2006, Ministère de l’Enseignement supérieur et de la Recherche, DGRI, Juin 2007

Applications to Commission of Deontology and decisions between 2000 and 2006

Between 2000 and 2006, almost ¾ of the cases targeted consulting activities, nearly ¼ pertained to the creation of start-ups while the participation in the management of the companies was less common.

The number of civil servants eager to create a company based on their research work has dropped significantly: from 30 cases/ year in average to approximately10 since 2004. Staff from PROs seem more reluctant to quit their status of civil servant and consider in priority other ways to transfer technologies.

Outcome


2000 2001 2002 2003 2004 2005 2006 Total

Nombre d’avis

93 94 138 117 67 98 77 684

% of the total

14% 14% 20% 17% 10% 14% 11% 100%


Evolution of the number of decisions of the Commission of Deontology

After 4 years of increase, the number of referrals (i. e civil servants from PROs asking to benefit from one of the schemes : creation, consulting activities, participation in the capital or in a board) has decreased and tends to stabilise.

Outcome


Job categories Number of referrals % of the total number of referrals

Number of agreementsdelivered by the Commission of

Deontology

% of agreements according to the job

cathegory

University professors 21 27 14 67

University « Maîtres de conférence »

15 19 11 73

Research Director 18 23 18 100

« Chargé de recherche » 11 14 11 100

Research engineers 2 3 2 100

Others 10 13 9 90

Total 77 100 65


Repartition of the decisions according to job categories in 2006

Applications come from different backgrounds careers levels. Quite logically, researchers are predominant in this classification, with 84% of the total for this year. The remaining 16% represent applications coming from administrative and technical staff.

Outcome


Plans for the future

Will the best practice be continued/changed/adapted?

If so, in what way will it be continued/changed/adapted?

The Innovation law is a result of a governmental action and the French Ministry of Higher Education and Research has not announced changes of the law in its current form.

However, the Ministry has recently commissioned the Académie des Sciences to perform a study of this scheme and to draw recommendations to improve it. The conclusions of the Académie des Sciences were issued in February 2010 (see Suggested Readings). The law may be modified in the future.


Lessons Learned

Looking back now, what would you …

• … do different?

• … improve?

• … recommend to others?

The Innovation law is a result of a governmental action and this information is not available.


Suggested Readings

Link to bibliographyG.D. Markman, P.T. Gianiodis, P. H. Phan, D.B. Balkin, Entrepreneurship from the Ivory Tower: Do Incentive Systems Matter? Journal of

Technology Transfer, Vol.29, no 3-4, August 2004

Académie des sciences, Rapport du groupe de travail sur la loi 99-587 du 12 juillet 1999 Innovation et recherche , 1st February 2010 http://media.enseignementsup-recherche.gouv.fr/file/2010/45/9/rapport_Academie_des_sciences_Loi_inno_136459.pdf

Ministère de l’Education supérieure et de la Recherche, Recherche et développement, Innovation et partenariats, Rapport 2008 http://media.enseignementsup-recherche.gouv.fr/file/inov_et_rech_techno_-_rapports/90/5/Bilan_SETTAR_23dec09_131905.pdf

Ministère de l’Education supérieure et de la Recherche, Innovation et recherche technologique, état de la situation et bilan au 31 Décembre

2006 http://www.enseignementsup-recherche.gouv.fr/cid21238/etat-de-la-situation-et-bilan-au-31-decembre-2006.html

Link to code book

Mobility; Law; Entrepreneurship; Career; Spin-off; Consulting activity; Motivation

Link to related websites Integral text of French Code of Research (see articles L 413-1 and followings)

http://www.legifrance.gouv.fr/affichCode.do?cidTexte=LEGITEXT000006071190&dateTexte=20090921

Webpage on the 1999 Law on Innovation and Research, Ministry of Higher Education and Research

http://www.legifrance.gouv.fr/affichCode.do?cidTexte=LEGITEXT000006071190&dateTexte=20090921

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