Technology Commercialization: Russian Challenges, American Lessons (1998)

A.N. Ozerin

Institute of Synthetic Polymer Materials

The Institute of Synthetic Polymer Materials (ISPM) is part of the Russian Academy of Sciences Division of General and Technical Chemistry. The activities of the ISPM conform to the conditions set forth in Point 3 of the Statute on State Accreditation of Scientific Organizations: scientific and scientific-technical activities are fundamental at the institute; the volume of such work totaled 100 percent of all work performed at the institute during the past three years; and the institute's charter provides for a scientific council to serve as one of its administrative organs.

Research at the ISPM mainly focuses on the creation of fundamentally novel polymer materials and composites and the development of technologies for producing them. In recent years, the institute has:

• developed models for a process of high-temperature multiple fragmentation of multi-component polymer systems—models important in the creation of new environmentally safe technologies for producing composite polymer materials;
• discovered a "macromolecule-particle" and devised fundamentally new methods for synthesizing dendrimer and superbranched organosilicate macromolecules—a new class of functional polymer structures with broad applications;
• developed principles for creating heavily loaded systems that efficiently absorb electromagnetic radiation in the super high-frequency spectrum; and
• developed a technology for producing a wide range of composite materials using secondary polymer materials, including composites with flame-resistant properties.

With its unique processing and research equipment, which meet world standards in chemical engineering, the institute can conduct a full array of research on the structure and properties of polymer materials and composites.

With its highly-qualified scientific personnel (110 researchers, including one member and one corresponding member of the Russian Academy, 10 doctors of science, and 51 with the candidate of sciences degree [equivalent to the Ph.D.]), along with the theoretical, computational, and experimental methods at its disposal, the institute is capable of solving basic and applied problems concerning the physics and chemistry of polymer materials. In addition, the institute educates scientific personnel through its professional training system. As part of this system, the institute has established a special on-site Polymer Physics Department at the Moscow Physical-Technical Institute (MPTI). Approximately 20 students are educated and receive specialized training at the department each year. The department's graduate school offers degrees in three fields. Among the institute's staff are 18 young scientists (under age 33) and 15 graduate students.

The institute maintains strong scientific ties with institutes of the Russian Academy of Sciences (RAS); universities; industrial or sectoral institutes and design bureaus; and foreign scientific organizations such as the University of Ulm (Germany), Chalmers University (Sweden), and the Dow Chemical and Armstrong companies (United States).

For a long time, the activities of the institute were directed toward research to create fundamentally new types of polymer materials as part of the overall state plan for scientific and technological development. This work was performed in accordance with the RAS research plan, which had been worked out by the country's planning agencies. Given this organization of scientific activity, commercialization of research was not a task for the research institutes themselves. Instead, the end results of scientific research were passed on to the industrial scientific production centers, which had their own experimental production bases to conduct testing and design work and to develop concepts to the level of industrial technology demonstration projects, at which point the finished technologies were handed off to industry.

With the process from scientific development to industrial production organized in this manner, the question of property rights to newly created scientific products did not arise as the results of the work of all those involved in the process belonged to the state. Moral incentive was the main factor giving researchers an interest in creating new scientific products. However, the scientific collectives that proposed new developments, and thus displayed their high creative potential, received additional support from industrial centers. This support took the form of contracts for research on the technological issues that these centers addressed.

With the transition to a market economy, the scientific organizations of the Russian Academy of Sciences face two major challenges. The first is identifying new areas of strategic development. The second is attracting sources of

financing to supplement funds from the state budget, thereby ensuring that research meets world scientific standards.

Under current economic conditions, a very important element has disappeared from the process leading from scientific development to industrial production—the industrial research and production centers. As a result, society's demand for science in Russia has diminished substantially. Now scientists rarely gain the satisfaction of seeing their discoveries employed for the public good, further reducing their incentives to create new scientific products. To maintain their scientific potential and find support for their scientific activities, research groups at RAS institutes have three options: (1) participate in various competitions, including international competitions, to conduct research; (2) solicit the involvement of foreign industrial firms in cooperative activities; and (3) attempt to sell the results of their scientific activity.

Financing under the first option is directed entirely toward support of basic scientific research. Such support is unlikely under the second option because foreign industrial firms are not inclined to make significant material investments in basic research in Russia. Typical research contracts have an average value of $10,000–$15,000, and a maximum value of $60,000. As a rule, the firms insist in the contract that they maintain exclusive ownership rights to any intellectual property created in the process of work on the contract. Nevertheless, the funds received by scientific groups working under contract to foreign firms represent an important additional source of financing, allowing these groups to satisfy their day-to-day needs, such as purchasing reagents from abroad or repairing imported scientific equipment. Therefore, such contracts are rather attractive to RAS institutes.

Financing under the third option, commercialization of scientific developments, is potentially the most significant for RAS institutes. To a large extent, such financing can and should be directed toward the support of basic scientific research, thereby creating material incentives for industrially oriented development work. However, this option is the most difficult to implement. This paper will examine typical problems that the RAS Institute of Synthetic Polymer Materials (ISPM) continues to face in the practice of commercializing its research products.

Senior researchers in Russia's scientific institutions (including the ISPM) possess considerable experience in practical scientific activity. The heads of laboratories or departments often have 30 or more years of seniority. As a rule, scientists conduct many years of research in the same scientific institution where they began work immediately after graduating from a university or institute. Long years of experience in practical work in a given scientific field enable institute section leaders to follow trends in the development of world scientific

thought rather closely and to plan their own promising research accordingly. Therefore, the lab director or department head is an expert on any new scientific task at hand and often one of the most qualified researchers to deal with it. To ensure a high level of leadership for scientific research, these manager are periodically certified and must be re-elected (usually terms are five years). In addition, the significance of the work performed by their research groups is evaluated by the broad scientific community.

While many excellent senior scientists remain active, ensuring a constant stream of young specialists into the research sphere is a problem. It has become a particularly urgent concern because the attractiveness of scientific work among young people has declined noticeably in recent years. Thanks to its on-site department at MPTI, the ISPM successfully attracts undergraduate and graduate students to assist in its scientific work. These students have a good basic education in physics and mathematics and a mastery of current computer technology.

Young specialists trained at MPTI face a lengthy period for preparation of the master's thesis. Students come to the base institute (one of which is ISPM) after three years of preparation at MPTI in the basic disciplines: general and applied chemistry, physics, mathematics, and two foreign languages of their choice (English, German, French, or Japanese). During their first year of study, the students carry out projects at the base institute (ISPM) and receive bachelor's degrees. During the next two years, they continue working on their areas of specialization, after which they receive master's degrees. Having provided three years of instruction, the base institute (ISPM) has an opportunity to hire excellently trained young specialists who are well acquainted with the problems and tasks they will face in the future. The young specialists also are given the opportunity to continue study at the graduate level and obtain the candidate of sciences degree. During their next three years of study, students spend an increasing amount of time at the ISPM. In this way, the student's research supervisor—who as a rule is a professor at the on-site department at MPTI and simultaneously head of a research lab at ISPM—has the opportunity to work constantly with the young specialist during the three (or six) years of his or her course of study. MPTI undergraduate and graduate students are critical to the development and adaptation of modern research methods and facilitation of cutting-edge research at ISPM in the newest scientific areas. Their work is very highly regarded throughout the Academy of Sciences, and ISPM attaches great significance to this important source for qualified young specialists.

One important element in selecting long-term research objectives is information. Scientific groups therefore regularly track information published in the open press. In the field of polymer materials, the most informative and popular publications among Russian researchers are Chemical Abstracts, Macromolecules, Trends in Polymer Science, Polymer Symposia, Modern Plastics International, and Polymer News. Information accessible on the Internet has taken on special significance in recent years. Unfortunately, long-

term planning of scientific research is hindered by the limited number of scientific periodicals received by the country's main scientific libraries in recent years and the unsatisfactory level of development of the Internet in Russia. One way to solve this problem might be state support for major scientific-technical libraries and the accelerated development of the Internet for state-financed organizations, including RAS institutes.

For long-range research planning, periodic analysis of global trends in natural science disciplines (physics, chemistry, biology) also would be exceptionally useful. The task of compiling such forecasts might be assigned to the scientific councils for the various specialties represented in the RAS divisions. The coordination and support of the Russian Ministry of Science and Technology would facilitate this work.

The existing system for evaluating world markets in order to plan scientific products also should be considered completely unsatisfactory at present. A possible solution to this problem would be the creation of a network of state (or international) centers to study market conjuncture and demand in the most important sectors of industrial production.

The efforts noted above would significantly enhance the quality of research planning at RAS institutes and would facilitate the efficient use of federal budget funds.

The scientific developments considered below were the result of a comprehensive program of basic scientific research, planned in the late 1980s, on ''Environmentally Safe Chemical Processes and Technologies." Research areas were chosen by the ISPM scientific collective under the leadership of Academician N.S. Yenikolopov. In this case, the deciding factor in the selection of these areas was the practical experience and intuition of the scientific group and its leader, not the importance of the problem, which had yet to be established at the state level. By 1994, a demonstration of the technological potential of the institute's research results and the commercialization of these results was possible.

The results of ISPM's research on the properties of solid-phase chemical processes in polymers under mechanical stress could be successfully put into practice on an industrial scale. These results include the discovery of highly efficient and environmentally friendly methods for the high-temperature fragmentation of plastics and rubbers, the development of principles for using these materials in the creation of various composites, and the development of prototypes of equipment for carrying out these processes.

In pursuing this particular program of experimental research, ISPM encountered no great difficulties and was given sufficient financing because the research was included in the ISPM's work plan. At the next stage of the work,

additional funds were obtained on a competitive basis from the Federal Targeted Scientific-Technical Program "Environmentally Safe Processes for Reprocessing Secondary Polymers." These funds played a decisive role in moving the project forward. In the final stage of the project, the level of this support equaled that provided by the state.

On its own, ISPM could not identify all of the potential areas of application of the processes and materials it developed. One reason is that the institute lacks the equipment necessary to conduct comprehensive research and testing of new materials. One possible solution to this problem might be for the state to support the network of collective-use centers created recently by the Russian Foundation for Basic Research to facilitate work on grants for basic experimental research. Such centers make it possible to use unique and expensive research equipment under favorable terms to work on scientific projects financed by the state budget.

The ISPM encountered serious difficulties in evaluating the practical significance of the scientific results noted above. In general, the economic assessments were made by the members of the scientific group. The information used for these assessments was obtained by analyzing materials published in scientific periodicals, evaluating the current patent situation in a given field, and talking with colleagues, including foreigners visiting the ISPM. Such an analysis is obviously not comprehensive, and the conclusions can be implemented only to a limited extent.

Such analyses should be performed by specialized state centers designed to study potential demand for these products, because the customer and end-user of work carried out under various environmental programs is the state. The need to create such centers was noted above. The centers could be equipped with small experimental production facilities capable of producing representative sample batches of new materials to be sent to potential customers for testing. The centers might organize permanent exhibitions of new research developments, which could be of substantial assistance in the search for investors for the industrial production stage. The necessary regulations for cooperation between the centers and the institutes would need to be worked out.

Many patents have been granted on new materials and processes as a result of past scientific developments at ISPM (SU Patent Numbers 1653281, 1703468, 1655008, 1669933, Applications Number 96108551/04 [014070] and 96122084/04 [028755]). Through licensing of patented developments, production of a multilayered material for use in protective coatings on buildings

and structures has been initiated, and technologies for fragmenting and separating mixed industrial and domestic polymer wastes have been implemented at enterprises in the city of Moscow and in other regions of Russia.

The successful commercialization of scientific developments has become possible thanks to the convergence of interests among the researchers working on the problem, the institute where the work is performed, and the enterprise that wishes to implement the research concept in industrial production. Existing patent legislation makes it possible for the parties to settle issues of intellectual property rights. However, monitoring and enforcement of agreements have not yet been fully established, nor has a mechanism for realizing the rights of intellectual property owners. In essence, agreements are really only "gentlemen's" agreements, and mechanisms for resolving disputed situations remain an open question.

ISPM has encountered serious problems with commercialization of its scientific developments. Given current Russian economic conditions, the active participation of inventors at all stages of the process is needed to bring an idea to the industrial production stage. A reasonable balance between the interests of the individuals involved and the institute as an organization also is needed. The lack of a Law on Inventions Made in the Course of Employment and the absence of needed changes in the Patent Law on State Ownership Rights to Intellectual Property seriously complicate the establishment of such a balance.

One question that has arisen in determining the cost of a license for a process or material or in organizing a joint production venture with foreign partners is the process to be used to establish the value of expenditures incurred by the Russian side. Analysis of this question is needed at the state level.

The practice of commercializing individual scientific developments at ISPM shows that these developments are sufficiently competitive in the market for scientific-technical products and can be brought to the industrial production stage. Nevertheless, the institute's experience is more along the lines of the experience of mistakes instead of the experience of successes. Under the crisis conditions facing Russian science, successful commercialization of a scientific development is more the exception than the rule. Scientific developments are not "launched" into a market which is ready to adapt them immediately, but rather these developments are slowly "pulled" into the market. The only positive point in this process is the rich experience and knowledge of all characteristics of the modern technology market that institute staff members are acquiring.

Many external factors hinder the successful advancement of ISPM scientific developments from reaching the market. The following actions would accelerate substantially the movement of the institute's scientific developments to the commercialization stage:

• effective state support for major scientific-technical libraries and accelerated development of the Internet for state-financed organizations, including RAS institutes, to ensure that these organizations have full access to information about scientific developments during the research planning stage;
• periodic publication of forecasts of global trends in the natural sciences (physics, chemistry, and biology) to facilitate long-range planning of scientific research;
• creation of a network of state (or international) centers in Russia to study market demand in the most important sectors of industrial production;
• state support for the network of collective-use centers recently created by the Russian Foundation for Basic Research to facilitate work on grants for basic experimental research; and
• immediate adoption of the Law on Inventions Made in the Course of Employment and changes in the Patent Law on State Ownership Rights to Intellectual Property.