IP earnings: how early-stage tech innovators are profiting from licensing and sales

They’re doing so by securing more income from licensing deals and the sale of spin-off companies, according to the latest research data released by the Higher Education Funding Council for England (HEFCE).

The HEFCE’s annual HE-BCI survey 2016 shows that higher education institutions (HEIs) in the UK have increased their income from intellectual property-related activities, such as licensing deals and the sale of spin-off companies, by 18.5 per cent year on year – rising from £131m to £155m in 2014-15. When considering the income earned from licensing deals only (excluding the sale of spin-off companies) there was a more marked increase of 25.1 per cent year on year – rising from £82m to £103m in 2014-15. Income earned from the sale of shares in spin-off companies increased from £42m to £53m over the same time period, although the lion share of this income is generated by just two institutions.

Overall, the findings are a very positive indication that tech transfer initiatives within universities in the UK and externally-run incubator organisations are helping academic research departments to realise their commercial potential.

Government funding for early-stage innovators is helping to provide the right conditions for commercial success; by giving academic research scientists working on commercially applicable innovations access to investment support and professional networks. By seeking advice early on and protecting the intellectual property as they go, more innovators are successfully securing lucrative licensing deals and other commercial opportunities.

Importantly, the study’s findings also show that the higher education sector as a whole received almost five times as much income from licensing and spin-off equity in 2014-15 as it spent on IP protection.

The study demonstrates the value of intellectual property and its ability to generate strong returns for HEIs. It's clear that the higher education sector has woken up to this recently, and is recognising the benefits of the intellectual property system.

A few years ago, just a handful of universities were actively filing patents or registered designs, but now such activity is commonplace, particularly in sectors such as life sciences, software and consumer electronics.

More HEIs understand that licensing deals and opportunities to profit from spin-out businesses can only be secured if the right IP protection is in place; providing reassurance that inventions cannot be copied by competitors.”

Evidence of this growing commercial awareness at a grassroots level will be viewed positively by larger companies that are already investing in R&D programmes in the UK.

Multinational businesses have chosen to stay and innovate in the UK because of incentives such as the Patent Box regime, which offer tax relief on profits from patented inventions. For these businesses, proximity to research-led innovation, with development potential in their sector of choice, is an added bonus.

Joanna Thurston is a partner and patent attorney at intellectual property firm, Withers & Rogers