TABLE OF CONTENTS

Paragraph reference

1.Introduction 1.1 - 1.6

2.Limited impact of measures to utilize research results 2.1 - 2.29

Publications 2.1 - 2.8

The number of scientific and technical publications 2.1 - 2.4

Dissemination policy 2.5 - 2.8

Patents 2.9 - 2.16

First element of technological power: the level of attainments 2.10

Second element of technological power: inventive creativity 2.11 - 2.13

Third element of technological power: trends 2.14

Fourth element of technological power: external influence 2.15

Overall appraisal 2.16

Promotion of Exploitation 2.17 - 2.24

Few productive files 2.17 - 2.22

Few licences granted 2.23

Very low level of royalties 2.24

The impact of the research programmes of the Brussels departments of DG XIII 2.25 - 2.29

Results worthy of attention 2.25 - 2.26

A new approach 2.27 - 2.29

3.The search for causes: 1. Deliberate action or passive procedures 3.1 - 3.56

Introduction 3.1

Shortcomings prior to the involvement of Directorate XIII-C 3.2 - 3.9

Dissemination of information 3.3 - 3.5

Promotion of Exploitation 3.6 - 3.9

Limited dynamism of the patents and publications departments 3.10 - 3.15

Promotion of exploitation in an upstream direction 3.16 - 3.53

Preponderance of staff in the least dynamic departments 3.17

Sometimes passive attitude of the promotion of exploitation department 3.18 - 3.32

Priority given to technical rather than commercial aspects 3.33 - 3.43

Research not sufficiently geared to the needs of exploitation 3.44 - 3.48

Promotion of the exploitation of research step-by-step 3.49 - 3.53

Inadequate assessment of the impact of measures 3.54 - 3.56

Sparsity of statistical indicators 3.54

Failure to assess the impact of publications 3.55

Failure to break down revenue and expenditure by project or operation 3.56

4.The search for causes: 2. Means disproportionate to requirements 4.1 - 4.20

Introduction 4.1

Human resources allocated to the utilization of research results, compared with research 4.2 - 4.3

Financial resources 4.4 - 4.8

Research: utilization ratio in the allocation of funds under the second framework programme 4.5 - 4.6

Ratio at budgetary level 4.7

Ratio under the 3rd framework programme 4.8

A few bases for comparison 4.9 - 4.10

Expenditure on experimental development according to the OECD 4.9

The energy demonstration programme 4.10

The operational consequences of the lack of resources 4.11 - 4.19

Conclusion 4.20

5.The search for causes: 3. Extensive dispersion of the activities of utilization of research results and of technology transfer 5.1 - 5.58

Dispersion of the responsible departments 5.1 - 5.30

Dissemination of results 5.1 - 5.10

The promotion of the exploitation of results 5.11 - 5.19

Share of responsibility for the framework programme 5.20 - 5.22

Limited organic links between departments 5.23 - 5.30

Separation of responsibilities from resources 5.31 - 5.50

Splitting up publication appropriations between several departments 5.31 - 5.40

Directorate XIII-C appropriations and JRC appropriations for support for the Commission's departments 5.41 - 5.45

Directorate XIII-C Appropriations and ECSC measures 5.46 - 5.50

Multiplicity of related activities which are managed separately 5.51 - 5.55

Introduction 5.51

The demonstration projects of DGs XI and XVII 5.52

The 'Sprint' programme 5.53

Innovation and different common policies 5.54 - 5.55

Conclusion 5.56 - 5.58

6.Recommendations and considerations for the future 6.1 - 6.26

Transparency and budgetary rigour 6.1 - 6.4

Better allocation of resources 6.5 - 6.6

The utilization of results: the final stage of research or a different occupation? 6.7 - 6.10

Promotion of exploitation: a cost-effective or publicly financed activity? 6.11 - 6.13

A set of specialised administrative departments or an autonomous integrated agency? 6.14 - 6.20

Application of a healthy principle of decentralization to innovation 6.21 - 6.26

Pages

The Commission's replies 34 - 46

SPECIAL REPORT No 2/91 on the utilization of the results of community research work accompanied by the replies of the Commission (91/C 133/01)

1. INTRODUCTION

1.1. Research is one of the Community's main policies. It is planned on a multi-annual basis, using 'framework programmes', which determine the main areas of research for a period of four or five years and set the corresponding budget. Three framework programmes have so far been adopted. These were for the periods 1984-1987, 1987-1991 and 1990-1994 (the third framework programme, adopted on 23 April 1990, therefore overlaps to some extent with the second one).

1.2. Community research work is carried out in two ways. Some is done by the Commission itself, at the Joint Research Centre (JRC), and at the Commission's cost. This is known as 'direct action' and in the 1989 budget 225,7 Mio ECU, that is, 15,7 % of the total sum of 1 441,4 Mio ECU, was allocated to it. The rest of the research is carried out mainly via contracts whose costs are shared by the Commission (Directorates-General XII and XIII) and third parties (research centres, universities and industries) and, to a lesser extent, by means of 'concerted projects' carried out in the Member States, for which the Commission does no more than provide and fund the coordination, without providing any funds for the research itself. Shared-cost research and concerted projects constitute 'indirect action', for which 1 215,7 Mio ECU was allocated in the 1989 budget, that is 84,3 % of the above-mentioned total.

1.3. Broadly speaking, the utilization of the results of research work can take three forms:

a)the dissemination of information. This includes not only the production of publications, but also the setting-up and management of data-banks and communication networks, participation in fairs, exhibitions, symposia etc. and training;

b)the protection of intellectual property rights in respect of inventions, that is, for the most part, the filing and management of patents;

c)the promotion of the exploitation of inventions, that is to say, the industrial and commercial development and promotion of them.

1.4. At the Commission, the utilization of research results is assigned principally to Directorate C of Directorate-General (DG) XIII, which administers budget headings B 7388 (formally heading B 7306) and B 7530 for this purpose. The Directorate consists of three departments, which correspond to the three activities mentioned above:

a)for the dissemination of information, Unit XIII-C.3 (scientific and technical communication);

b)for patents, the first sector of Unit XIII-C.1, which also deals, in another sector, with innovation and technology transfer;

c)for the promotion of exploitation, Unit XIII-C.2.

1.5. Over the period 1987-1991 (5 years), research and the utilization of its results were allocated, by a decision of the Council adopting the second framework programme for research and development measures(1)

5 396 Mio ECU, 5 358 Mio ECU of which was for research and 38 Mio ECU for the utilization of results, that is, a ratio of 141:1. The third framework programme, which covers the five year period 1990-94(2)

, was granted 5 700 Mio ECU, 5 643 Mio ECU of which was for research and 57 Mio ECU of which was for the utilization of results, that is, a ratio of 99:1.

1.6. When it came to carry out the investigation dealt with in this report, the Court chose not to restrict itself to auditing one department or a given budget heading, but to examine more generally how the Communities have carried out a particular task.

2. Limited impact of measures to utilize research results

Publications

The number of scientific and technical publications

2.1. Scientific and technical publications are entered in the Commission's annual publication programme and then produced, at the request of the various departments which wrote or commissioned them, via DG XIII-C.3, the publications department. In principle, all publications have to pass through that department.

2.2. The number of scientific and technical documents (periodicals, reports, books and conference papers) which the Commission, in its annual programme, decided to publish rose from 534 in the 1979 programme (50,6 % of the total) to 847 in the 1985 programme (73,5 % of the total).

2.3. The number of scientific and technical documents actually published via unit XIII-C.3 is lower than the programme forecasts, but it is rising: it increased from 485 in 1987 to 581 in 1988.

2.4. The actual number of publications is, moreover, higher than the recorded figures. In practice, a number of documents are printed, published and circulated directly by the departments that wrote them (which enjoy a measure of publishing autonomy) but independently of the programme, and without going through Unit XIII-C.3 or, moreover, through the Publications Office. Cases of this sort occur quite frequently at DG XII and at the JRC.

Dissemination policy

2.5. A study of a sample of 38 publication files dealt with by unit XIII-C.3 in 1988 revealed that the number of copies ordered from the Publications Office for free distribution by the Commission was of the order of 150 to 400.

2.6. The situation was quite different for publications sold by the Office. In a sample of 25 reports in the EUR collection which were published by the Office and became available between 1 July 1987 and 31 December 1988, the average number of copies sold as at 14 November 1989 was slightly over four per report. The best-selling report in the sample had sold only 17 copies. The number of sales is a reliable litmus test and an indisputable criterion of the interest aroused by a publication. On the other hand, it is always possible to distribute publications widely on a gratis basis, but then the impact is difficult to gauge without carrying out a special investigation.

2.7. On the other hand, when publishing is placed in the hands of a private publisher, the volume of sales per publication is much higher (several hundred). The sharp drop in sales from a few hundred to a few single copies when one compares private publishing with publishing by Publications Office suggests that the promotion of sales is not effective enough when carried out by the Community.

2.8. The Commission should therefore take a close look at the effectiveness of its dissemination methods. The only way the Office can promote sales is in a standardized, fairly unsophisticated manner. It has a single network of approved outlets for all Community publications. Only the department which wrote a particular publication could, thanks to its knowledge of the groups concerned, draw up and propose a specific type of promotion, that is, one better targeted to suit the type of publication. After all, the readership of a highly technical publication will always belong to a very restricted, relatively well-defined group.

Patents

2.9. If the scale of Community activity in the filing and maintenance of patents is to be grasped, it has to be put in context:

- the geographical context, since the performance of a body can only be assessed on a relative basis, and

- the temporal context, since knowledge of trends is needed to complement and, where appropriate, adjust the appraisal of a recent situation.

First element of technological power: the amount of accumulated knowledge

2.10. Technologies are bought and sold, or even hired, and the state of a country's 'balance of technological payments' can be used as an indicator to identify major 'veins' of technological resources, those countries that tend to be suppliers and those that tend to be customers. The state of affairs is clear: in 1985, according to the Organization for Economic Cooperation and Development (OECD)(3)

, the rate at which expenditure on technology abroad was covered by revenue of the same kind stood at 268,2 % in the United States, 79,9 % in Japan and only 61,4 % on average in the EEC Member States(4)

, which, as a group, were at the bottom of the league of OECD members.

Second element of technological power: inventive creativity

2.11. The filing of applications for patents can be viewed as an indicator of inventive creativity, provided, however, that inventions filed successively or simultaneously in a number of countries are counted only once. To prevent their being counted more than once, the OECD keeps separate statistics on 'indigenous patents', i.e. patents filed in a particular country by residents of that country, and 'foreign patents', i.e. those filed by non-residents. In 1986, EEC countries had to their credit 18,0 % of the total number of indigenous patents of all the OECD countries, compared with 14,1 % for the United States and 62,9 % for Japan alone.

2.12. More interesting are the statistics on the number of indigenous patents applied for per million dollars spent on research, since they give an idea of the returns on research, in terms of inventions. In 1986, the figure stood at 7,0 in Japan, 1,2 in the EEC Member States taken as a whole(5)

, 0,6 in the United States and an average of 1,9 in the OECD as a whole.

2.13. Is it possible to attempt to establish the position of Community activity in this respect? For Community action, the statistics enable a distinction to be made between the first time an invention is filed (in a given country) and subsequent filings of the same invention in other countries. Although they are not entirely identical, the 'first filings' of Community patents can be compared with the OECD's 'indigenous filings'. When inventors file patents in one or more countries, they rarely omit their own. In 1986, the number of first filings of patents in the Community per million dollars(6)

of research expenditure on direct action(7)

amounted to 0,11, a record 11 times worse than that of the EEC Member States taken as a whole and 17 times worse than that of the OECD countries taken as a whole.

Third element of technological power: trends

2.14. Between 1982 and 1986, the number of applications for indigenous patents rose by 22,3 % in the OECD countries and by just 4,9 % in the EEC Member States, whereas the Community's first filings fell by 24,1 %. Viewed in absolute terms, rather than as percentages, and over the longer period of 1972 to 1988, annual first filings fell from 67 to 19.

Fourth element of technological power: external diffusion

2.15. The only aspect in which the Community is seen to be setting the pace is in the geographical area in which inventions are protected. The Community often files a particular invention in quite a large number of Member States and even outside the Community (United States, Canada and Japan). For every first filing, the Community made 7,5 applications for extension to other countries in 1986 and 10 in 1988. By comparison, in 1986, inventors in the OECD countries requested 1,2 patents abroad for every indigenous patent, Japanese inventors requested 0,3, those of the United States 2,5 and those of EEC Member States 2,8.

Overall appraisal

2.16. The sum total of Community action as regards patents can therefore be seen to be extremely limited. The main reason for the fall in the number of inventions patented by the Community seems to lie in the reduction in the number of patentable inventions coming out of the JRC. Added to that is the increasingly restrictive practice as regards the renewal of patents, given the fairly high cost involved and the fact that only a small proportion of patents find any industrial application whatsoever (2 to 4 % according to JRC officials). Finally, indirect action still accounts for only a limited part of the activities of the patents department (see paragraphs 4.16 and 4.17).

Promotion of Exploitation

Few productive files

2.17. In the 21 years between 1968, when the promotion of exploitation department was set up, and 31 March 1989, 340 files were opened, which is an average of 16 files a year. In fact, the rate has fluctuated: three files were opened in 1968 and nine in 1973. In 1974, there was an isolated peak of 47 and another in 1984 of 45. However, generally speaking, since 1975 the annual number has ranged from around 10 to 20 a year, with 23 in 1988.

2.18. These figures should be compared with the number of research projects. In 1986, DG XII signed 1 672 shared-cost research contracts; in 1987 it signed 1 395. The JRC research programmes for the 1984-87 period covered 43 research subjects, those concerning the 1988-91 period covered 46. Each subject is sub-divided into projects.

2.19. It is clear from these few figures that very little research work is exploited downstream.

2.20. However, the fact that a file has been opened does not always mean that measures to exploit the research practically have been launched, let alone that they will succeed. A random selection of files revealed that most of them were no more than a few millimetres thick. Some consisted of only two sheets: the forms for opening and closing the files. Clearly, for some files, exploitation had been no more than an idea, with the work of the department being limited to collecting a few pieces of basic information.

2.21. At 31 December 1988, of the 327 files that had been opened, 121 had been abandoned, 41 were dormant and only 165 were considered as current by the Commission. The Court noted that some of the files referred to as current concerned at least provisional failures, pending their full development, which was itself sometimes hypothetical.

2.22. Since it was set up, the promotion of exploitation department has enabled a total of about 50 inventions of all kinds and origins to be put on the market and has led to the direct creation of some 280 jobs(8)

.

Few licences granted

2.23. The number of contracts for the grant of licences or know-how or for the transfer of technology stands at around five per year (one in 1984, five in 1985, four in 1986 and six in 1987). Taking the 1987 figures, this represents one contract for every 177,9 Mio ECU of financial commitments entered into for research.

Very low level of royalties

2.24. Table 1 provides a few figures on the royalties paid on licences and the remuneration of technical assistance. Already very small, the number of revenue-producing files is sharply decreasing. As for the amount of revenue, in 1988 it represented 1 ECU for every 204 ECU of expenditure on the exploitation of the findings of research (headings B 7306 and B 7530 of the general budget) and every 45 762 ECU of expenditure on research (chapter 73 of the general budget). The Court confirmed the weakness of these results (9)

during its audit visits to various Member States (10)

.

Table 1 - Royalties Received

Financial Year Number of files producing revenue Amounts of revenue (in ECU)

1984 15 19 563

1985 13 15 310

1986 15 79 782

1987 11 28 308

1988 4 21 043

1989 4 18 299

The impact of the research programmes of the Brussels departments of DG XIII

Results worthy of attention

2.25. The industrial results of the ESPRIT programmes(11)

, which are not exploited by the promotion of exploitation department but as part of the research project itself, have already achieved a scale that is well beyond that of other research programmes. An external assessment of the ESPRIT programme was carried out from October 1988 to May 1989. This included a sample survey of the participants in the projects. In all, 949 replies were analysed. To the question 'What kind of economic benefit has your organization gained from this project?', 69 % replied 'Improvement of know-how', 45 % stated that it had resulted in new products, 35 % had improved their products, 29 % had developed standardization, 25 % had reduced their costs or their production time and 12 % had improved their production methods. Only 15 % said they had not benefited at all from participating. It should be noted that these are practical results, at industrial level.

2.26. The ESPRIT programme was launched in 1984. Less time has elapsed in which to assess the impact of the RACE(12)

, AIM(13)

, DELTA(14)

and DRIVE(15)

programmes (1987 and 1988), which were implemented by the same departments as the ESPRIT programme (DG XIII-Brussels) and according to the same procedure. However, a progress report on the RACE programme in September 1989 revealed that 58 % of the participants had succeeded in developing products, 42 % had filed patents, 28 % had created and developed services and 79 % had pushed forward the state of the art.

A new approach

2.27. The much greater and more rapid success of the exploitation of this type of programme can, to a large extent, be attributed to its nature and the approach chosen. In this type of programme, utilization of the research results forms part of the programmes themselves. This is done in two ways. Firstly, some projects included in the programme are instruments for the utilization of other projects in the programme, particularly as regards the dissemination of information. This is true of the 'information exchange system' (IES) project and its data base, which simplify the exchange of information between participants in the ESPRIT programme, and the Eurokom 'electronic mailing system', a mail distribution service intended for current and potential users of data concerning the programme. Secondly, the research procedure in the ESPRIT programme is fully integrated and the objectives are defined in terms of the achievement of concrete results, for example, market shares to be won. While it is true that the research funded by the Commission does not extend to the stage of high-class commercial products, remaining pre-competitive, it does reach a stage of sufficient development to enable industrial participants to go on and perform, this time in their own names, additional research and develop procedures and products intended for the market.

2.28. The reasons for the success of this type of programme must be analysed in greater depth:

a)in these programmes, the projects are generally closely allied to their applications. Basic research accounts for only a small minority of projects;

b)industrial manufacturers are the main participants in the programme. In the ESPRIT programme, 12 very big companies took part in 70 % of the projects. Small and medium-sized enterprises (SME) (fewer than 500 employees) took part in 65 % of the projects. SMEs can not afford the luxury of carrying out research without having the determination to carry the results through to viable applications. In the conventional programmes of DG XII, in contrast, the large majority of contracting parties consists of research centres and universities;

c)industry's participation is not confined to the stage of implementing projects under shared-cost contracts, but begins at the stage of programme and subject definition, whereas the scientific content of conventional programmes is defined by administrative departments.

For all of these reasons, the research has every chance of leading to concrete results. The approach adopted for the ESPRIT programmes has also been adopted for other recent industry-orientated programmes managed by DG XII (BRITE-Euram and Biotechnology).

2.29. As far as the dissemination of results is concerned, it is enough simply to visit an event such as the 'Annual ESPRIT conference' to appreciate the scope and influence of the programme (in 1989, over 100 projects were presented, participants numbered several thousand and the conference speakers were of the highest scientific and political standing). It would be impossible to find anything on a par with this as a result of Directorate XIII-C's efforts to promote the exploitation of research.

3. The search for causes: 1. Deliberate action or passive procedures

Introduction

3.1. Utilization of the results of research work is just one specific type of technology transfer, which is by nature, and viewed as a whole, promotional and requires a driving force behind it. If those in charge take no initiative, nothing will happen. The exposition that follows is aimed at establishing to what extent the actual activities of the departments bear witness to this essential dynamism.

Shortcomings upstream of Directorate XIII-C

3.2. The framework programme assigns DG XII something of a role as regards the utilization of research results (see paragraph 5.20). This role is not adequately performed.

Dissemination of information

3.3. DG XII shoulders its responsibilities fairly systematically as regards the dissemination of research results. Virtually all the results are published, either by the contracting party or by the Commission.

3.4. DG XII also makes very frequent use of media other than publications to disseminate information. For instance, it creates data bases, draws up abstracts in fields of research of varying scales, and is involved in the exchange of experiences between researchers and in the organization of symposia open to third parties, including academics, politicians and also industrialists, that is, the people who will potentially make commercial use of the research, and in the training of researchers and consumers (e.g. the setting up of a European climatology school).

3.5. However, the approach to the problem of publications (choice of documents, nature and choice of media, publishing arrangements, print-runs, targeting of public, etc.) varies considerably within DG XII and generally depends on the scientific units and the dynamism and preferences of those in charge of them. These departments make the results known to the scientific circles involved in the subject, which they know well, but which are small, and do not systematically carry out more ambitious steps to promote the results. The impact of the publications is not assessed. There is a pressing need at DG XII for guidelines aimed at setting up uniform methods, revitalizing dissemination and optimizing impact.

Promotion of Exploitation

3.6. Though it is aware of its responsibilities as regards the dissemination of information, DG XII is less attentive to the role it should play in promoting the exploitation of results. There is a lack of continuity between the action of Directorate XIII-C, which, in its present circumstances, is able to identify the results that can be exploited in only a very incomplete fashion, and that of DG XII, which does not consider the identification of such results as its responsibility. However, in the link between research and exploitation, that is, in the process of transforming research findings into useable inventions, DG XII and Directorate XIII-C have complementary roles to play.

3.7. First, DG XII should ensure that it sends all shared-cost research contracts and all the final reports of the contracting parties to Directorate XIII-C. This requirement has never been completely satisfied. The submission of final reports depends, in this particular directorate-general, on the various scientific departments, whose practices vary considerably in this respect. However, for some time now there appears to have been a marked improvement. The Directorate-General ought - and this is far from being the case - to properly monitor the contracting parties on completion of the contracts, require that they submit their declaration of intent as regards the utilization of the results, if necessary make this a condition for the release of the final payment due and ensure that all these declarations really are notified to Directorate XIII-C. Here, too, DG XII's practices depend on the scientific units.

3.8. However, that would still not be enough. Although exploitation as such is not, in the main, the responsibility of DG XII, the objective of exploitation does have to be an essential consideration at every stage of its work: at the programme definition stage, in the choice of subjects, which should correspond to the actual needs of the economy; at the project selection stage, when the prospects of commercial exploitation have to become an important criterion for eligibility; at the progress monitoring stage, when researchers have to be directed along the most practical courses of work; on the completion of contracts, when checks are made to ensure that the former contracting parties are observing their obligations to exploit the research, and in the work of the assessment panels, to ensure that they make more effort to discover the impact of the results on the contracting parties and even, as far as possible, the indirect impact, which is more dispersed, on the economy.

3.9. Here again, the situation varies considerably from one scientific department to another and a lot remains to be done if DG XII is to understand its role in this way. Admittedly, DG XII's extending the life-span of its research is frequently useful, but this is by recycling the results within research itself, when the results can be used as a new starting point for subsequent research. On the other hand, it can be seen from project files that, in most cases, as soon as the final report and its formal approval have been received and the final payment due has been settled, no more entries are made in the file. However, the recent industry-orientated programmes, mentioned in paragraph 2.8 above, have given rise to more promising initiatives (the BRITE-Euram technical seminar; 'T' projects and 'European Laboratories without walls', which are part of the biotechnology programme and are close to the stage of application).

Limited dynamism of the patents and publications departments

3.10. In the 'promotion of exploitation-protection of inventions-dissemination' triangle, it is the promotion of exploitation department which most requires the promotional drive referred to in paragraph 3.1. The other two departments are satisfied with a more passive type of intervention. The patents department is admittedly only subsidiary to the promotion of exploitation; it ought, however, to concentrate on inventions resulting from indirect action, which have been too much neglected in the past (see paragraphs 4.16. and 4.17.).

3.11. The publications department of Directorate XIII-C plays a largely passive role in the Commission's publication system. The department acts at the request of the departments which have written the documents, as regards both annual programming and the actual publication of each individual document. Publications are obliged to pass through the publications department, yet it has no great influence on publication policy as such. At most, the department can prevent certain publications, for instance, if a research contract provides for publication by the contracting party itself, and, above all, it can postpone them when a patent has to be filed beforehand. Its role, therefore, is the limited and often temporary one of screening material. The department is not responsible for finding manuscripts to publish, except in rare cases, or for analysing production costs. Nor does it assess the impact of the publication on readers (see paragraph 3.55).

3.12. The production, reproduction and dissemination of written documents - in other words, the act of publishing - is just one type of scientific and technical communication. Microfiches, audio or audio-video magnetic data-carriers, and above all computerization are in the process of changing the scale of communication. It is this area that holds the greatest potential for vastly increasing in the future the impact of scientific documents resulting from research.

3.13. Unit XIII-C.3 already uses microfiches and, in particular, it manages the periodical 'Euroabstracts' and its computerized counterpart, the data base EABS, in which some 80 000 summaries or analyses of published documents are stored along with their references. All publications for which the department has identified the publisher are included in Euroabstracts and the EABS, the contents of which are the same. However, the information stored in this data base is not comprehensive enough. Many Community documents which are useful but have limited circulation, for example, those addressed only to members of an advisory committee, are missing. The EABS reflects the output of DGs XII and XIII and the JRC, but does not contain enough on the research and technical documents of other departments. Furthermore, it is often difficult, on the basis of the references given in the 'abstracts', to find an actual document, since there is no corresponding documentation centre at the Commission. Finally, although the main benefit of data-processing is to broaden the area of dissemination, the EABS base has few users.

3.14. It is more likely to be the Value programme, adopted by the Council on 20 June 1989(16)

, that will bring about a decisive change in the scale of science communication policy. In addition to the traditional medium of publication, the programme provides for the creation of the Cordis data base and the linking of the computer networks used for the communication of scientific and technical information across the Community. These two projects are now in progress. As regards the nature of the information, the Cordis base will be much broader and more diverse, since it will contain data concerning not only research results but also programmes, projects, prototypes, information centres, possible partners etc. As regards communication, the launching of Cordis should provide the opportunity to define bigger and bigger 'target groups' (eg. researchers, national administrations, companies etc.), with the result that although access would have to be paid for, it would be totally unrestricted.

3.15. However, these matters can at present be discussed only in the future, or even conditional, tense. The Cordis data base is not operational, nor is the network link, which is even less developed. And, above all, there is still no clear-cut answer for the most part as to how these projects would be managed and funded once they were properly under way. As regards funding, various options can be considered: Cordis could be managed without operating costs by Commission departments, as part of their administrative activities; or, funds could be taken at regular intervals from the appropriations earmarked for research programmes; or, consumers could be invoiced, at cost price, for the services offered; or, finally, there could be a compromise between the three solutions. As regards the management of the system, the choice is between creating an administrative structure and setting up an independent unit connected to the Commission by some sort of public service contract. However, no choice has yet been made between all these solutions.

Promotion of exploitation in an upstream direction

3.16. Out of a sample of around 30 promotion of exploitation files, those which were opened at the request or suggestion of the inventor - i.e. the JRC or the contracting party - form the minority. Unlike publications, most of the files are opened as a result of initiatives taken by the promotion of exploitation department. However, the Court is of the opinion that the effectiveness of the promotion of exploitation department is limited, first by its relatively inadequate size in Directorate XIII-C, and then, and above all, by its somewhat passive approach, since it always starts with research then looks downstream at productive activities. If this were complemented by a more deliberate process in an upstream direction, starting with the needs of productive activities and then turning to research, it would gain in dynamism.

Preponderance of staff in the least dynamic departments

3.17. In January 1989, of the 57 officials working in Directorate XIII-C, only 12 were allocated to unit XIII-C.2, the promotion of exploitation, compared with 19 to unit XIII-C.3 (publications) and 21 to unit XIII-C.1, which, admittedly, includes both the patents department (six employees) and the transfer of technology department (14 employees). Of the 34 officials in categories A and B, only eight had been posted to the promotion of exploitation department. It is paradoxical that this should be the situation in what is the spearhead department of Directorate XIII-C, whose activity requires a variety of competences and permanent monitoring of files, and involves many missions, both to the JRC and to partners, industrialists or consultants scattered throughout the Member States.

Sometimes passive attitude of the promotion of exploitation department

Time-lags

3.18. Obviously, the exploitation of research is a long-term activity, which may, in a complex case, take over 10 years to complete. Nonetheless, the time taken to implement certain measures is somewhat surprising.

3.19. It is not unusual for two or three years to elapse between the end of a research project and the moment when, sometimes following an assessment study carried out by a consultant selected via an ad hoc tendering procedure (the 'Expect procedure'), the decision whether or not to take action is made. In the case of the V267 project(17)

, the file was opened on 11 June 1985 to utilize the results of a research contract which had formally ended on 31 December 1983.

3.20. On the other hand, the Commission should be congratulated when, in order to gain time, it opens a file and begins to exploit a promising line of research even before it is completed. This was the case, for example, of files V275(18)

and V307(19)

, the former being the result of JRC research and the latter the result of a shared-cost research contract.

3.21. Following the opening of file V247(20)

on 28 March 1985, it took a year and a half to finally commission the technical and economic study under the Expect procedure, and then a further 15 months to sign a technology transfer contract. Some negotiations are interminable; for instance, it took two years (June 1985 to July 1987) to conclude a technology transfer contract concerning file V267 (1). One tenderer for a study to verify the accounts of the licensee of file V42(21)

was notified on 22 May 1987, after a wait of seven months, that his offer had been rejected.

3.22. The department sometimes reacts much too slowly to an event. The report on a mission carried out on 28 July 1988 to prepare market surveys for files V316(22)

and V317(23)

was not produced until seven months later, on 2 March 1989, thus causing a corresponding delay in the conclusion of the study contracts, which had still not taken place at the time of the Court's audit in May 1989. The Commission did not react until September 1987 to the unfavourable market prospects for the invention dealt with in file V61(24)

. This was despite the fact that as early as June 1982, the potential customers had declared the price of the equipment, a thermostatic oven, much too high and, in particular, that the market survey carried out in 1984 had warned the Commission and the licensee company of the severe limitations of the market in the range of temperatures the latter had selected for its products. However, the Commission has high hopes of successfully relaunching this project on a different basis.

3.23. Admittedly, as regards the question of delays and hold-ups, the promotion of exploitation department is often dependent on its external partners. A large number of study contracts are carried out with considerable delays. There was a delay of seven months added to the expected duration of just three months of the commercial development plan for a solar drier (file V295)(25)

. A technology transfer contract concerning the invention dealt with in file V268(26)

was carried out in 18 months, which was twice the time expected.

Prevention of litigation

3.24. The Commission has not always had the wisdom to include clauses in contracts it has awarded as part of its work of promoting exploitation that enable the respective rights of the contracting parties to be defined unambiguously in all eventualities. Technology transfer contract No CTT 136 of 31 December 1985 was not sufficiently precise either as to the nature of the invention or as to the event that would mark the start of the marketing period subject to the payment of royalties. As a result, the recipient body refused to pay royalties because it had changed the size specified for the equipment, whereas merely doing that did not in any way alter the principle of the patented invention. After expressing its disagreement, the Commission failed to take the matter any further.

3.25. In the case of file V42(27)

, on 24 June 1975, the Commission proposed to the licensee concerned the case-by-case negotiation of the basis of calculation of royalties, that is, the precise technical mechanisms on which they would depend - a formula that made for disputes and time-wasting. Having realized the weakness of such a solution, the Commission renegotiated and clarified it on 24 January 1986.

3.26. Also in connection with file V42, a scientist from the Joint Research Centre was seconded for two years from 1 July 1978 to 30 June 1980 to the Commissariat français à l'Energie Atomique (CEA). Instead of determining in advance the legal position as regards the proprietorial rights in respect of any inventions that might result from the joint work of the CEA and this researcher, the agreement provided for negotiations on a case-by-case basis between the JRC and the CEA. Fairly predictably, this lack of foresight led to a dispute over the proprietorship of a patent(28)

.

3.27. The departments that commission a study should themselves determine the terms of reference and not leave them up to the candidate consultant. However, this is what the promotion of exploitation department regularly does, often informing the candidate in very general, brief terms of the subject of the study. For instance, the marketing development plan for file V225(29)

was commissioned on 11 December 1987 with the following brief: 'To draw up a marketing development plan which will give us a better idea of the economic viability of the invention and of its potential to create jobs'. It was on this somewhat summary basis that the consultant was invited to submit his project(30)

. In case V61 (1), it was the licensee himself who drew up the specifications of the market survey commissioned by the Commission on 21 July 1983. Without taking any action, the Commission deplored the fact that technical aspects had been accorded greater importance than commercial ones. In fact, the company under licence had restricted the consultant to the areas that it had already explored technically, thus ensuring that it would be told only what it wanted to hear.

Verification of the recovery of sums due and debt monitoring

3.28. The Commission is not always sufficiently careful in its monitoring of the turnover on which royalties are due and, generally speaking, in its monitoring of the basis for assessment of royalties in licence or technology transfer contracts. Of course, it is not easy to find out exact turnover figures when, for example, a partner might be concealing all or some of them. However, the Commission should endeavour to find out and, if fraud has been committed, it should react.

3.29. The licensee in case V 42 (4) concealed some sales subject to royalties. Following frequent reminders by the Commission between 1984 and 1986, the licensee provided some of the missing declarations. However, a contract for the verification of the accounts awarded by the Commission on 16 December 1986 proved that the Commission's continuing suspicions were justified. During the financial year 1982 alone, several sales, of a total value excluding taxes, of 954 570 FF (around 140 000 ECU), had not been declared. The loss of royalty revenue for the Commission amounted to around 14 000 ECU.

3.30. In that respect it was the licensee and not the Commission that was at fault. However, on 23 January 1986, the Commission still did not know the figures for turnover from 1980 onwards. Can it be that the Commission's system of management makes it possible to forget all about the existence of a debtor for several years? In addition, the consultant commissioned to carry out the financial audit of the fraudulent company audited only the financial year 1982, although such a restriction was not laid down in his contract. There is therefore every reason to assume that undetected concealments were also committed in other financial years. The Commission neither completed the audit for the other financial years (the licence was valid from 1975 to 1986) nor, despite a number of warnings and the withdrawal of the licence contract in 1986, did it recover, by instituting legal proceedings if necessary, the unpaid royalties due.

3.31. At the same time, the company in question was under licence to a French university, which, more intelligently than the Commission, had included a clause on the payment of interest on arrears in the licence contract. Such a clause should be included in contracts involving royalties (contracts granting licences and technology transfer contracts).

Priority given to technical rather than commercial aspects

Main cause of failures - commercial rather than technical

3.32. A few years ago, the promotion of exploitation department analysed the reasons for the failure to exploit research. It discovered that over half the failures were connected with commercial factors. The Court has drawn similar conclusions from its control sample. Of the 13 failures discovered in the 29 files in the sample, three were partly due to commercial factors and six others mainly or even entirely due to commercial factors (sale price clearly too high, limited market, did not really correspond to what was wanted on that market etc.).

Over-optimism concerning commercial results

3.33. It quite regularly happens that not only the JRC or the promotion of exploitation department, but also the authors of market surveys and the companies under licence are over-optimistic about the likely results of an invention, particularly as regards the commercial aspects.

3.34. On 24 January 1978, the promotion of exploitation department valued the magnetic welding market (file V42)(31)

at 6 Mio FF (about 1 050 000 ECU) over five years. However, the sales declared by the licensee amounted to a total of about 1,4 Mio FF, after which the project was shelved. The company which obtained a licence in March 1987 to exploit the invention of file V282(32)

forecast the sale of five appliances in 1987 itself and a total of 20 in the following four to eight years. It has not yet sold any. The market forecasts given in market surveys and drawn up by the licensee with respect to file V61(33)

have consistently proved wide of the mark. The 1984 study referred to a world market of 30 appliances a year, which seems small, but is high compared with the actual results achieved since the conclusion in 1978 of the licence contract: so far a sum total of seven appliances have been sold.

A technical rather than a commercial standpoint

3.35. Most of the staff of the promotion of exploitation department are scientists. Several of them have in the past worked as researchers at the JRC. However, the purpose of exploitation of research is to link the world of research and the world of industry. Scientific abilities are therefore only one part of the necessary profile: knowledge of industry and the economy, attention to legal aspects and a keen sense of commercial requirements are also necessary.

3.36. This may perhaps explain the technical, rather than commercial, attitude displayed on some occasions. Of course, the Commission is not required to intervene in the commercial strategy adopted by the companies concerned, but it does concern itself - rightly, moreover - with the projects' commercial prospects. In a substantial number of cases, however, the impression is that the project is well-devised from the technical point of view but has been inadequately assessed and prepared on the commercial side. This was apparent chiefly in the market surveys.

Shortcomings of market surveys

3.37. A large number of technical and commercial studies and even market surveys contain too short an economic and commercial assessment. This was the case for the second market survey for file V42(34)

, the first and even the second market survey for file V225(35)

and the first market survey for file V61(36)

. The latter was carried out when the project was still at an early technical stage, which affected the study and made it necessary to carry out a second study, which, for its part, was carried out somewhat too late and was still not commercial enough. However, this is not a general shortcoming. The technical and commercial studies concerning files V275(37)

and V247(38)

are just as much commercial as technical.

3.38. In the case of file V61 (3) since the licensee was a German company, market research was focused almost entirely on Germany. In both the market surveys funded in this case, since the Commission had chosen German consultants and wanted to save money, the geographical coverage of the survey was limited to the Federal Republic of Germany, and the assessment of the European and world markets was made by simple proportional extrapolation. However, the invention is such that its commercial success can be considered only in terms of very large markets.

3.39. Moreover, it often happens that the limitations and inadequacies of the first market survey make it necessary to fund a second one (see paragraph 3.37 for file V61). The terms of reference of the first market survey carried out for file V42 (1) were much too short and it is clear why a second one was necessary, although, unfortunately, the instructions for this were scarcely any more detailed.

3.40. The promotion of exploitation department has frequently noticed these shortcomings and has taken action. In the case of file V225 (2), the department required the office that had drawn up the second survey to provide further details on the likely outlets (4 March 1986). Sometimes, the department draws the attention of the licensee to his obligations concerning commercial aspects (file V167(39)

, note of 8 June 1982) or makes recommend-ations in this respect (file V267(40)

, letter of 7 December 1988). Nevertheless, the lack of precision in the terms of reference of the requests for surveys is no doubt largely responsible for the dissatisfaction with the reports when they are delivered.

3.41. File V216(41)

is a classic example of an invention that is very worthwhile from the technical point of view, but which failed because of the lack of attention paid to commercial limitations. The invention in question consists of data-transmission software. According to the JRC, the invention was a 'remarkable achievement of Community research' (10 June 1986), 'the standard-bearer of European policy on data-processing standards' which 'constitutes a text-book example that can be used to discover whether the results of European high-technology research can be transformed into commercial reality' (12 November 1986). Enthusiasm was such that the JRC adopted the invention for its own internal needs.

3.42. Unfortunately, however, marketing was a total failure. The licence contract negotiations, which began as early as July 1983, were postponed for almost two years, until March 1985, pending the finalization of a new standard contract(42)

, as though administrative proceedings had to stand still pending the introduction of better legal instruments. Once the licence contract had been concluded, in March 1986, the indispensible market survey had to wait a further 20 months (November 1987). But it was already too late. The system was seen to be too costly and was technically out-classed by another software design promoted by the licensee himself.

3.43. This unfortunate example also illustrates the consequences of the fragmented administration of exploitation promotion, which will be criticized in Chapter 5 of this report. Alongside the work of Directorate XIII-C, and without warning it, the Brussels departments of the same Directorate-General and the JRC, in an effort to speed things up, agreed to carry out other measures, even going so far as to carry out a demonstration of the software in the People's Republic of China.

Research not sufficiently geared to the needs of exploitation

3.44. Exploitation extends the life of research downstream, towards productive activities. However, in return, the exploiter of research must also be able to request the research worker to carry out the adjustments and tests necessary to adapt the invention to industrial and market requirements. If the system prevents such upstream contact with research, exploitation loses a lot of its flexibility and the users of the research have to make up for this weakness by obtaining outside assistance, which is expensive. Such access to research workers is available at the Commission, since licence contracts provide for technical assistance to the licensee, which is generally provided by the JRC. However, it comes up against a number of obstacles, which are analysed below.

Research workers' lack of time

3.45. One of the reasons for the failure of files V134(43)

and V164(44)

recorded on the forms closing the files is 'lack of support for the invention'. Since the JRC researchers who created the invention on which file V275(45)

is based did not have enough time to carry out the necessary tests in 1988-89, the Commission had to come to a technical assistance agreement in March 1989 with an external laboratory.

3.46. In August 1985, staff movements in the invention department of the JRC, which was supporting the V61 project(46)

, led to a reduction in staff availability and assistance from this department. In addition, the departure of staff in 1982 from the licensee company had already made the continuation of the project more difficult. The promotion of exploitation department is clearly very dependent on the availability of the relevant people, both in industry and in the research departments - so much so that sometimes it has to stop a project for this reason alone.

End of programmes

3.47. Might there be greater flexibility in the Commission's cooperation with researchers not involved in indirect action? Project V247(47)

would appear to support this idea. Its promotion gave rise to joint financing between DG XII, as part of the non-nuclear energy research programme, and Directorate XIII-C, the former financing the part of the project that was technically the most developed and the latter the part furthest away from the competitive stage. However, whether it is a question of direct action or indirect action, the possibilities for cooperation end with the completion of the research programmes in question. As regards direct aid, the reduction in the support of the JRC in project V42(48)

was due to the fact that the invention resulted from a research project that the JRC had stopped financing several years earlier. A similar problem arose for the invention of project V268(49)

which, for its part, was the result of the shared-cost research programme on the production and use of hydrogen. The conclusion of this programme had prevented DG XII from continuing funding the project that had led to the invention (see report 6189 on an audit visit of 7 June 1985).

Prohibition of the use of exploitation appropriations to fund research

3.48. The worst example of the 'downwards ratchet-effect' is to be found in the fact that the promotion of exploitation department is forbidden to fund work it would like the JRC to carry out from its own appropriations. This obstacle will be explained in detail in paragraphs 5.41 - 5.45.

Promotion of the exploitation of research step-by-step

3.49. The present procedure, which moves downstream from research to industry, has one effect: action is taken invention by invention. Each research result is taken separately and assessed. If the assessment is favourable, the search begins for a future industrial partner. The Commission has no strategy whereby it attempts to give the promotion of exploitation an overall role as mediator between the world of productive activity and that of research. The insufficiency of funds, criticized in chapter 4, is one of the main causes of this shortcoming, which particularly affects policy on the granting of licences.

Licences non-exclusive in legal terms, exclusive in practice

3.50. The present practice as regards the granting of licences is unsatisfactory:

a)all licences are granted as non-exclusive, although only the Euratom Treaty lays down that licences should be of this nature (Article 12 and 17). The EEC Treaty makes no specific stipulation and gives the Council responsibility for determining the arrangements for disseminating information. In fact, neither the framework programme nor the Value programme nor the specific research programmes contain any details in this respect;

b)despite this disparity, the promotion of exploitation department has only one standard contract, which is closely modelled on the provisions of the Euratom Treaty;

c)in practice, although the contracts grant only non-exclusive licences, the promotion of exploitation department unofficially informs the licensee candidate that it will not actively look for other licensees for the same invention, provided the licensee in question observes his contract and his obligation to carry out exploitation. Licences are therefore de facto exclusive (see, for example, for file V42(50)

the letter of 5 March 1975 to the future licensee).

3.51. The ambiguity of the present situation provides exploitation with neither the advantages of exclusivity nor those of non-exclusivity. The lack of legal exclusivity sometimes deters candidates who wish to have long-term guarantees before making the necessary investments (see, for example, the refusal of Kernforschungszentrum of Karlsruhe to sign a cooperation contract with the Commission, letter of 29 June 1989, file V275)(51)

. However, if it ties its hands beyond its strict legal obligations by unofficially granting exclusivity, the Commission deprives itself of any safety net should the licensee fail to meet his obligations. This is what happened in the cases of files V42 (1) and V61(52)

. In the case of file V42, a company had sought the opinion of the Commission in 1983 on the possible grant of a licence for the invention. The promotion of exploitation department already had a licensee, and therefore did not follow up the inquiry, even though the failure of that licensee and the abandonment of the project had already been envisaged. Shortly afterwards (16 February 1984), the department warned the licensee that it would terminate the contract (which it did in 1986).

3.52. There is no clear solution to the problem. However, the Court urges the Commission to pay greater attention to both the legal aspects and those concerning the effectiveness of current practices and to improve its policy in this area.

A few suggestions

3.53. It is clear from the above how the process permits movement only in a downwards direction: the department is interested in industry only insofar as a particular invention it considers worthy of exploitation depends on it. It would be preferable if the process were two-way. In addition to systematically seeking out useful research results, the promotion of exploitation department would also be in regular contact with companies and their trade organizations. It would thus become the administrator of an invention portfolio and its activity would resemble that of a kind of 'invention exchange'. Of course, the Commission could object that its promotion of exploitation department does not have a large enough invention portfolio for it to take such steps. Since it was set up, the promotion of exploitation department has handled some 340 files, including failures. Some national agencies currently administer portfolios containing several thousand transferable technologies and disseminate their information to thousands of companies. But why not make use of precisely these national agencies, so as to take advantage of their dissemination and prospection networks? To take a concrete example, the national research exploitation organizations of five countries (BTG in the United Kingdom, Fraunhofer Gesellschaft in the Federal Republic of Germany, Anvar in France, TNO in the Netherlands and DIC in Denmark) have set up a club, called Eurotech, to pool exploitable projects. Each organization provides the club with projects and the other members are invited to propose licensees, but although this club was set up as part of the Sprint programme, which is administered by Directorate XIII-C, the promotion of technology department, which belongs to the same Directorate, is not actively involved in it, having only observer status! 'Light-weight structures', with limited means, are supposed to try to support themselves using the logistic means of the 'heavy' structures.

Inadequate assessment of the impact of measures

Sparsity of statistical indicators

3.54. As regards the exploitation of research results, the statistical indicators are both hard to come by and difficult to interpret. This does not simply apply to the Commission: the Court encountered this weakness in all the national research exploitation organizations that it visited. Nevertheless, some of them, aware of this weakness, are endeavouring to make improvements. The Court therefore recommends that the Commission should broaden its groundwork as regards estimating the number of jobs created and turnover produced, and extend it to other indicators (e.g. added value, market shares and, more generally, the cost-benefit aspects of exploitation).

Failure to assess the impact of publications

3.55. The publications department of Directorate XIII-C does not assess the impact of scientific and technical publications. How indeed could it do so, given that it is not informed, from the outset, of all those who receive the documents published? The distribution lists are in fact divided between unit XIII-C-3 itself, the Brussels departments of DG XIII, DG XII, the JRC and the Publications Office. Added to this, where they arise, are sales by private publishers, on which there is more information. Unit XIII-C-3 does not systematically receive statistics from the Publications Office on distribution and sales. Not only is information poor as regards quantity, but qualitative assessments of impact are not carried out either, and the department does not ask the addressees and readers for their opinions on the documents published by the Commission. Given that publication policy is an entirely separate part of the utilization of research results, a minimum amount of assessment is imperative.

Failure to break down revenue and expenditure by project or operation

3.56. Since there are various types of intervention, it is not possible, in present circumstances, to identify the expenditure and, where applicable, the revenue, arising from a given exploitation project, or to break these down by project according to the type of transaction, such as study costs or the cost of participating in shows and exhibitions. In general, it is not possible by examining exploitation files to draw up a definite statement of revenue and expenditure arising from a project, or even to ascertain what patents have been applied for, obtained or abandoned in connection with it. Even worse, there are no regular statistics breaking down expenditure between the three sectors of activity - publications, creation and maintenance of patents and the promotion of exploitation, to which should be added expenditure specific to the Cordis project and expenditure on subprogramme II of the Value project (integrated computer networks). In order to provide access to this information, a very simple system of codifying budgetary transactions for internal use ought to be introduced.

4. The search for causes: 2. Means disproportionate to requirements

Introduction

4.1. Whatever the total commitment agreed by the Community for research and its exploitation, there are many relations - technical, human, economic and financial - between these two stages of scientific and technical progress, and it is essential to seek an appropriate balance between the resources allocated to each. The resources allocated to utilization must not be under-used because there are too few exploitable research results, and inventions worth exploiting must not end up confined to filing cabinets because of inadequate means to exploit them effectively. In Chapter 4, the Court will endeavour to assess whether a proper balance is being observed in Community action.

Human resources allocated to the utilization of research results, compared with research

4.2. In January 1989, the number of permanent officials in Directorate XIII-C dealing with the utilization of research results amounted to 43, taking into account all categories from A to D. In comparison, there are 3 176 posts for research and investment in the budget for the financial year 1989. According to these figures, the number of staff allocated to the utilization of research results corresponded to 1,4 % of research staff. Even this percentage is somewhat overestimated, since it takes into account only those research posts funded under part B of the budget, although there is a minority of posts funded under part A (administrative appropriations).

4.3. These figures mean that if staff were the only production factor for both research and its utilization, it would take, for instance, only a very small percentage change in the allocation of this factor to research to change, in the opposite direction and in much bigger proportions, the resources devoted to utilization activities.

Financial resources

4.4. A similar calculation can be carried out as regards the financial resources allocated to research and to the utilization of its results.

Research: utilization ratio in the allocation of funds under the second framework programme

4.5. The sum of 5 396 Mio ECU was allocated to the framework programme for the period 1987-91 (five years)(53)

. Heading 8.4 of the programme, 'dissemination(54)

and utilization of S/T research results' received an allocation of 55 Mio ECU and even so 17 Mio ECU of this allocation was given over to financing the Eurotra programme, although this constitutes research rather than the utilization of research. The utilization of results has therefore received only 38 Mio ECU, the remainder, that is, 5 358 Mio ECU, being allocated to research itself. The result is a research:utilization ratio of 141:1. Again, this means that, for instance, a very small percentage change in the appropriations allocated to research would be enough to cause a big change in the percentage of resources earmarked for the utilization of results, with the total budget of the framework programme remaining the same. The objection might be raised that, in addition to Community funding, the utilization of the results of indirect action is probably also funded nationally. However, assuming that a figure can be put on this, the share borne by the contracting parties in the overall cost of the same indirect action should also be taken into account. In that case, it would not be 5 358 Mio ECU that would have to be entered against research, but some 10 016 Mio ECU!

4.6. Furthermore, the allocation of the 38 Mio ECU should be looked at in detail. The specific programme known as 'Value' is a programme for the dissemination and utilization of scientific and technological results and covers a period of four years, beginning on 27 June 1989(55)

It has been allocated the sum of 38 Mio ECU, that is, all the resources earmarked by the framework programme for the utilization of results. However, 2 Mio ECU of this is reserved for 'work on requirements for confidentiality and integrity of information', work which is aimed at defining a legal framework rather than utilizing concrete results. The sum of 6 Mio ECU has been allocated to the collection and dissemination of information on research programmes and not on the dissemination of results. Finally, 2 Mio ECU has been set aside until the fifth half-year of the programme. This means that, in real terms, for the time being 28 Mio ECU has actually been allocated to the utilization of results. A breakdown of this is given in Table 2. The Commission's wishes were different: in its proposal, of the 38 Mio ECU, it had allocated 31 Mio ECU (instead of 28) to the utilization of results, 17 Mio ECU of which for promotion of exploitation (instead of 10).

Table 2 - 'Value' programme - Breakdown of resources allocated to the exploitation of research results

Mio ECU

- dissemination of results 14,0(1)

-legal protection of results (patents) 2,0

-promotion of exploitation 10,0

-common tasks (identification, characterization and selection of results) 2,0

(1) Of which 6 Mio ECU for the creation of communication networks in computer systems.

Ratio at budgetary level

4.7. Viewed in budgetary terms (financial year 1989), research received 1 436,0 Mio ECU of commitment appropriations and the utilization of results received 8,85 Mio ECU (including the appropriations retained in Chapter 100), which produces a ratio of 162:1.

Ratio under the third framework programme

4.8. In the third framework programme(56)

, which has just been adopted for the period 1990-94, of a total allocation of 5 700 Mio ECU, research received 5 643 Mio ECU and the utilization of research 57 Mio ECU, which gives a more favourable ratio of 99:1.

A few bases for comparison

Expenditure on experimental development according to the OECD

4.9. Table 3 shows how, according to the OECD, the research expenditure of the state sector is broken down in some of the OECD Member States. It can be seen that a substantial part is granted to experimental development, particularly in the United States and Japan, two world leaders in technology, whose governments devote over half of their R& D funds to experimental development. The OECD's definition of this concept of experimental development(57)

coincides very broadly with what the Community calls 'innovation and technology transfer', including the utilization of research results. These OECD figures therefore greatly reinforce the impression that one of the keys to technological progress lies in the importance attached to the final stage of innovation and that the low level of resources granted by the Community for the utilization of research fails to match the importance of what is really at stake.

The energy demonstration programme

4.10. The sum of 500 Mio ECU was allocated to fund demonstration projects in the energy sector for the period 1986 to 1989 (four years). Up to the end of 1992 (in two and a half years), the Commission may commit 350 Mio ECU to the 'Thermie' programme(58)

, which will cover the period 1990-94. This amounts to an average of 140 Mio ECU a year, almost 15 times the average annual allocation for 'Value'. This is despite the fact that energy demonstration projects are very similar to the projects which can be developed under the 'Value' programme. In addition, 'Thermie' is a programme for a specific sector, whereas 'Value' can take action in all sectors, including, where appropriate, energy! Compared with the sum of 350 Mio ECU (which does not take into account appropriations that will be granted in 1993 and 1994), the framework programme grants 1 173 Mio ECU in research appropriations for the energy sector, that is, a research:experimental development ratio of 3,35:1, compared with the ratio of 141:1 in the 'Value' programme (see paragraphs 4.5 and 4.6). There is no question of the Court's calling into question the budgetary allocation of the 'Thermie' programme, which would not reflect its opinion, or come within its mandate, but of confirming the extent to which the appropriations for the exploitation of research are low compared with research funds and exploitation requirements.

The operational consequences of the lack of resources

4.11. The measures taken to utilize and promote the exploitation of research are far from covering all such research results. First, a significant proportion of the results is not even examined or assessed for the purpose of deciding what action should be taken, even if the decision were to be negative.

Table 3 - Breakdown of public-sector research expenditure between the three stages of research and development, according to the OECD (1)

(in percentage terms)

Country Basic Research Applied Research Experimental Development Total

France (1983) 12,4 31,9 5,6 49,9 (2)

Spain (1985) 29,6 54,5 15,9 100,0

Italy (1985) 30,0 47,0 23,0 100,0

Netherlands (1985) 29,3 54,7 16,0 100,0

Portugal (1986) 7,3 53,6 39,1 100,0

United States (1985) 14,9 24,2 60,9 100,0

Japan (1985) (natural and engineering sciences only) 12,9 27,5 56,3 96,7 (3)

(1) National research only. The OECD in fact identifies a sector made up of international research centres or those working abroad, which is not included in this table. (2)Not specified = 50,1 %. (3)Not specified = 3,3 %.

4.12. From the point of view of information sources, first of all, Directorate XIII-C does not receive, as we have seen, all the contracts and final reports of DG XII's contractors and does not see any of the contracts and final reports connected with the research programmes administered by the Brussels department of DG XIII (ESPRIT, RACE, AIM, DELTA and DRIVE programmes). Nor does it receive, as a rule, the final reports on the work of the JRC. Since, owing to insufficient resources, it cannot carry out an exhaustive screening of final reports, until recently, Directorate XIII-C had protested little about this situation. Initially, therefore, the information on which the work of Directorate XIII-C was based in practice was considerably less extensive than the total amount it could in theory deal with.

4.13. Whole areas of the theoretical field of competence of Directorate XIII-C are quite simply ignored. To date, the Directorate has not dealt with the BRITE and Euram programmes or the biotechnology programme. On the grounds that the Brussels departments of DG XIII intend to promote the exploitation of the ESPRIT, RACE, AIM, DRIVE and DELTA programmes themselves, it has not dealt with these programmes apart from in rare exceptions (e.g. the project to improve combustion in fuel-driven engines; the Cristal operation etc.) and has scarcely any contact with the departments that administer them, even though they belong to the same Directorate-General. Nevertheless, there is no legal obstacle to Directorate XIII-C's taking action in these fields. The Directorate now takes very little action in the promotion of exploitation in demonstration projects, in particular those of DG XVII (Energy). This is despite the fact that, strictly speaking, it is competent, underArticle B 753 of the budget, to take joint action with DG XVII in these projects.

4.14. In fact, as can be seen from Table 4, the promotion of exploitation department concentrates to a large extent on a small number of areas, which are the only ones for which its staff possesses the necessary expertise. Consequently, it deals either not at all or very little with health, nuclear energy, data-processing, telecommunications, agricultural and agro-industrial research, fisheries and the exploitation of marine resources, or development technologies.

4.15. Even in the fields in which Directorate XIII-C does take action, analysis of the results is far from exhaustive. Even with the help of the consultants chosen in connection with the Expect procedure, the Directorate's staff are physically unable to read all the final reports on contractual research. On the other hand, one member of the staff does manage to examine most of the progress reports and final reports of the JRC, which are either studied in Ispra itself or collected from there.

4.16. The work of the promotion of exploitation and patents departments has so far dealt mainly with the results of the JRC. Indirect action is much more divided between a large number of projects than is the work of the JRC. It is also less well known, because it is external to Community departments. The contracting parties, which are obliged to inform the Commission of measures to utilize results, do so only to a very limited extent, and the patents and promotion of exploitation departments possess only a limited knowledge of what the contracting parties have by way of inventions to be protected or exploited. Consequently, compared with direct action, indirect action would be bound to use up more resources - probably financial but particularly human - and could therefore not be systematically utilized. It is therefore easy to understand that, given the shortage of resources, the departments have tended to utilize and promote the exploitation of the less diverse, more familiar work of the JRC first. In addition, the rather rare interventions of the patents department in favour of contracting parties have been limited to technical assistance. The department does not allow any funding in this area, although there is no rule against it.

4.17. Admittedly, as regards the patents department, there is another reason why its activity is concentrated on direct action. Unit XIII-C.1 is alone competent at the Commission for the filing of patents for inventions belonging to the Community. The JRC has to make use of this unit. In contrast, the contracting parties of shared-cost research projects are free to file their patents without Community assistance. Moreover, direct action is gradually beginning to be less dominant. While, between 1972 and 1982, 64,6 % of the proposed patents recorded concerned direct action, between 1983 and 1988 this was true for only 54,3 % of them. However, it should also be borne in mind that, in the 1983 to 1988 period, the share of research appropriations earmarked in the initial budgets for direct action fell from 36,3 % to 20,1 % (13,3 % for 1989).

Table 4 - Breakdown of promotion of exploitation files by research sector concerned

Research sector % cumulative %

1. JRC 33 33

2.ECSC 22 55

3.Non-nuclear energy 15 70

4.Raw materials and recycling 14 84

5.Environment 4 88

6.Miscellaneous 12 100

4.18. However, this drop, at least in relative terms, in the appropriations granted to the JRC, the decline in inventive creativity which indisputably arises from it, and also, it must be said, the fact that the JRC does not rule out the possibility of some day carrying out the task of intra muros exploitation, and, finally, the rapid increase in the appropriations earmarked for shared-cost research, must all constitute sufficient urgent grounds for Directorate XIII-C to transfer a sizeable portion of its resources to indirect action.

4.19. There is one final yardstick by which to gauge the limitations of the Department's action due to the lack of available resources: that of the number of missions carried out per promotion of exploitation file. In a significant sample, compiled by the Commission itself, out of 100 promotion of exploitation files, the average number of missions carried out per file amounted to 3,5. Furthermore, 43 of the files had been the subject of just one mission.

Conclusion

4.20. There is, therefore, a body of data pointing to the same conclusion: the ratio between resources allocated to research and resources allocated to the utilization of research results is so unfavourable to the latter that a large proportion of research work is condemned never to achieve its practical potential. The third framework programme(59)

has already done much to redress the situation. However, an improved distribution of appropriations between research and its utilization is not the only conceivable solution. Chapter 5 of this report highlights the considerable 'vein' of resources available in the budget for innovation in general, which could, in part, possibly be used for the utilization of research results.

5. The search for causes: 3. Extensive dispersion of the activities of utilization of research results and of technology transfer

Dispersion of the responsible departments

Dissemination of results

5.1. To all appearances, unit XIII-C-3 has the prime responsibility for the dissemination of research results. In the context of the Commission's annual publications programme, Unit XIII-C-3 is responsible for what could be called the sub-programme of publications of a scientific and technical nature. Each year, unit XII-C-3 gathers together and screens the proposals for publication from the various departments, and passes them on to the Publications Coordination Committee, which is an interdepartmental committee. The secretariat of the Committee was recently made the responsibility of the General Secretariat(60)

. In the course of the year, unit XIII-C-3 may take a decision to publish on its own initiative, and any publication of a scientific and technical nature, from any department whatsoever, requires its approval. This unit also manages the periodical 'Euroabstracts', in which a resumé or summary of any scientific and technical publications is published, and the EABS database, which collates and disseminates the same material as 'Euroabstracts' in computerized form. In actual fact, however, the responsibilities in matters of scientific and technical publications are very widely dispersed.

The publications service and research bodies

5.2. For the bulk of research results publications, the choice of which documents are to be published is made by the researchers and the departments of the Commission which manage the programmes in question. In matters of direct research action, it is the JRC itself which chooses which documents are to be published. In the case of indirect action, since the research results are the property of the contracting parties, it is normally up to them to publish the results, subject to compliance with the contractual clauses on confidentiality. For the DG XIII programmes, overall, that is indeed the case. A good proportion of DG XII's reports are published on the initiative and at the expense of the Commission by DG XII, which reserves that option by contract (Article 6.6 of Annex II to the standard contract).

Originating departments and Publications Office

5.3. Unit XIII-C-3's decision-making autonomy is encroached upon from two sides. On the one hand, the originating departments control the choice of titles and, with the Publications Coordination Committee, share the power to opt for free dissemination or sale; even if they choose the sale option, they are free to draw up a list of recipients who are subject to no charge, and can themselves approach a private publisher of their choice. On the other hand, the Publications Office, as the Community's logistical publications agency, provides the formal quality control for manuscripts, makes the management decision between internal and contracted-out printing work, fixes the selling price and is partly responsible for the distribution of, or the sales promotion for, the printed document.

5.4. It is then up to the publications department to carry out quality control on manuscripts (quality of presentation, to the exclusion of any check on the scientific value), to indicate the correct publication medium ('EUR' document, photocopy runs from microfiches, choice of private publisher insofar as the originating department has not already made this choice), to negotiate with the Office regarding the setting of prices, to ensure free distribution other than that decided by the originating department and better targeted sales promotion than that carried out by the Office.

Ordinary publications and priority publications

5.5. In the Commission's annual publications programme, each Directorate General and each department has its share of publications according to its own responsibilities, while the Publications Coordination Committee, via the General Secretariat of the Commission, plays the role of screening, planning and budget planning. Once the coordination committee has given its opinion, the Commission adopts the programme which is presented to it by its President and by the Member of the Commission with responsibility for information policy. On 30 October 1986, however, the Commission decided that, each year, its publications would, as a matter of priority, focus on its policy concerns at the time. Hitherto, the priority subject has been the realization of the single market by 1993. Thus, for some scientific and technical publications, the decision to publish and the management of the corresponding resources do not fall to the management departments (DG XII, DG XIII and JRC) but are in fact the responsibility of the General Secretariat.

Unnotified publications

5.6. Although the Publications Office is, in principle, the technical body responsible for publishing all Commmunity publications, or having them published, the Commission has recommended that its departments commission private publishers directly. This recommendation has been taken up on a vast scale where scientific and technical publications are concerned. Furthermore, DG IX has reproduction workshops serving all the departments of the Commission and the JRC is technically capable of colour-printing documents.

5.7. To set up these facilities is not to authorize the departments that make use of them to evade the rules regarding the programming of publications. In practice, however, the facilities have been the source of a considerable number of publications produced without the knowledge of unit XIII-C-3, the Publications Coordination Committee or the Publications Office. This means that the publications in question are not subject to planning, do not feature in the Commission's catalogue of publications and are not deposited with the official distributors of the Community. Nor is their sales promotion carried out by the Office.

The new approaches to the dissemination of research results

5.8. For the moment, the initial stages of implementation of the 'Value' programme(61)

cannot fail to result in a considerable increase in the dispersion of responsibilities for dissemination of knowledge. The data-bases and networks to permit the dissemination of data complement each other, but while the computer networks come under 'Value' sub-programme II, oddly, the 'Cordis' data bank comes under sub-programme I. While the 'Cordis' project is to be set up and run by Directorate XIII-C, as the overseer of the 'Value' programme, sub-programme II is to be implemented by Directorate XIII-A, in view of its links with the ESPRIT programme. Furthermore, the supervision of the 'Cordis' programme by Directorate XIII-C, which is located in Luxembourg, is to some extent theoretical, inasmuch as the project head is an official of Directorate XIII-A, which is located in Brussels, and remains physically and administratively linked to this Directorate.

5.9. At the very least, close coordination might be expected between the 'Cordis' manager and the managers of sub-programme II, since they belong to the same Directorate and are located in adjacent offices. In fact, though, the two measures are being carried out separately and are not synchronized. In all probability, the 'Cordis' data-base will be operational before the work on the networks is completed. This being so, it is planned to link the Cordis base, at least temporarily, to the networks which are being set up for the purposes of the participants in the ESPRIT programme through the IES ('Information Exchange System') project.

5.10. Lastly, three quite broadly discrete types of measure are being implemented in the context of the same 'Value' programme: the traditional publication activity, the creation of the 'Cordis' base and the setting up of the interconnected communication networks.

The promotion of the exploitation of results

5.11. At first sight, there would seem to be two channels of responsibility for the commercial exploitation of the results of Community research. The results of direct action by the JRC belong to the Community and their exploitation is promoted by Directorate XIII-C. The results of indirect action are the property of the contractors, whose responsibility it is to utilize them under the contractual arrangements agreed by the Commission.

Directorate XIII-C and departments which manage indirect action programmes

5.12. In fact, the Commission does play a part in the utilization of the results of indirect action. Its rôle vis-a-vis the contractors can and must be to provide assistance in terms of promoting exploitation. This requires a level of expertise and professionalism which research institutes, universities and small and medium-sized enterprises (SMEs) do not always possess. In their efforts to protect inventions by patent, to assess market prospects or to obtain financing for developing prototypes and for the industrial launch of products or processes, they may need the technical and financial aid of the Commission. It is usually the responsibility of Directorate XIII-C to provide this assistance.

5.13. But, in accordance with the model contract, contractors are obliged, as far as possible, to promote the exploitation of the results of their research (Article 7.1.) within a period to be agreed by contract (Article 17(2) of Annex II). In order to allow the Commission to monitor this obligation, 'details on the possibilities for the exploitation or commercialization of the results are to be provided (by the contractor) at the latest simultaneously with the final report' concerning the research project in question (Article 6.1). The contractor must also 'keep at the disposal of, and if required make available to, the Commission information and documents permitting the latter to verify if the obligations to exploit or commercialize the results' have been complied with (Article 17.6 of Annex II).

5.14. These are the regulations. Hitherto, in fact, the contractor's declaration of intent has had to be sent not to Directorate XIII-C, which is responsible for measures to promote the exploitation of results, but only to the departments which manage the programmes. This entails an element of risk, at least where the staff of DG XII are concerned. Since they have no particular responsibilities in matters of promotion of exploitation, they can have no real incentive to monitor the contractors' efforts to ensure the promotion of exploitation or to oversee the reception of declarations of intent. This lack of incentive is doubtless one of the reasons for the poor level of compliance by contractors with the obligation to declare their intentions.

5.15. Directorate XIII-C does, however, try to make up for this risk: its aim is systematically to contact the contractors some time before the end of their contracts so as to make them aware of the possibilities it can offer. A very recent internal DG XII circular (20 February 1990) requires the heads of the scientific units to pass all the final reports and the declaration of intent to Directorate XIII-C. Directorate XIII-C ought also to be given notice of all contractor meetings held under the programmes managed by DG XII and ought to be officially able to take part in them. This is far from being the case.

Programmes entailing a large degree of industrial participation and traditional programmes

5.16. In the ESPRIT programme(62)

and the other DG XIII research programmes, the large degree of industrial involvement, already cited at 2.28, leads to some promotion of exploitation by the contractors as a continuation of the research work, involving close monitoring by DG XIII (Brussels staff). It is therefore hardly surprising that involvement by Directorate XIII-C in the utilization of these programmes has been non-existent or extremely limited.

5.17. Certain DG XII programmes, e.g. the BRITE(63)

, BRITE-Euram(64)

, Eclair(65)

programmes, and the revised version of the biotechnology programme(66)

, are close to the ESPRIT model, particularly in view of the marked involvement of enterprises, including SMEs, in the projects. But DG XII has not been as active in utilizing these programmes as DG XIII (Brussels) has in those for which it is responsible. And while the BRITE and Biotechnology programmes have been running for long enough to have produced a large proportion of their exploitable results already, Directorate XIII-C has only very recently concerned itself with them.

5.18. In the context of the traditional DG XII programmes, which are first and foremost professional researchers' programmes, with a lesser degree of participation by enterprises and universities, no serious guarantees exist that the results will be systematically utilized and promoted, unless powerful assistance to this end is forthcoming. There therefore remains wide scope for action which Directorate XIII-C has yet to explore adequately.

Final observation

5.19. To conclude, the promotion of exploitation is divided, on conditions and to a degree which varies from one programme to another, between four bodies: Directorate XIII-C, the contractors, DG XII and the Brussels staff of DG XIII. Only the JRC plays no part in this process for the moment. The sole activity in support of the promotion of exploitation which is rigorously centralized is the filing and use of Community patents, for which the patents staff of unit XIII-C.3 have responsbility.

Share of responsibility for the framework programme

Duplication of activity for the utilization of results in the framework programme

5.20. The framework programme for research activities for the period 1987-1991(67)

introduces a dual element in the work to utilize results. On the one hand, it includes a special allocation for the dissemination(68)

and the utilization of results (heading 8.4 of Annex 1), which is at the root of budget line B7388 and specific activity to utilize results. On the other hand, it provides for 'dissemination of knowledge' to be carried on in the context of the specific programmes (Article 2.3). This provision gives no clear indication as to whether it includes promotion, but Community terminology, which may be open to discussion, lends itself to this interpretation: in Chapter II of the Euratom Treaty, entitled 'Dissemination of information', aspects of the promotion of exploitation are discussed in terms of the granting of licences and the transfer of know-how. To say that the utilization can be defined in the context of the programmes is also to say that the departments which manage these programmes - DG XII, DG XIII and the JRC - can themselves carry on utilization activities in addition to the departments which were specially set up to that end. The new framework programme for 1990-1994(69)

maintains the two poles of management and the ambiguity as to their respective responsibilities (15th preamble and Article 4), but announces a Council decision which, it is to be hoped, should remove this ambiguity. This decision remains to be taken.

Separation of demonstration activities

5.21. In some technological areas (non-nuclear energy and the environment), the Community provides financial aid for the execution of pilot projects, i.e. one-off innovative developments which are, however, generally likely to be exploited by a manufacturer or user and which are also likely to be disseminated to some extent to their users. These are 'demonstration activities'.

5.22. Unlike the first framework programme, applicable to the period from 1984 to 1987(70)

, the second framework programme (1), covering the period from 1987 to 1991, excludes demonstration activities from its scope. This solution, which separates research and demonstration, was arrived at at a time when, in February 1986, the Single Act had, by contrast, just provided that the framework programme would embrace all research, technological development and demonstration activities as a whole (Article 24, creating the new Article (EEC) 130 I). However, the budget for 1990 made anticipatory provision for certain demonstration projects to come under the 1990-1994 framework programme(71)

. Yet the latter, which has recently been adopted (3), does not include demonstration activities. This is all very inconsistent.

Limited organic links between departments

5.23. Overall, the three departments of Directorate XIII-C act in parallel, each within its area and in no hierarchical order. Certain minimum functional links do, however, exist. The main one is certainly the subordination of any authorization for publication by unit XIII-C.3 to assent by the patents department, in order to avoid a possible usable invention falling prematurely into the public domain and to give the patents department the time to file the invention.

5.24. The promotion of exploitation and patents departments also carry out a review of their portfolio of pending files each year. This annual review is carried out for each department with the participation of the other. When the patents department plans to file for a patent, it informs the promotion of exploitation department accordingly. The results of a small market study carried out, at its request, by the promotion of exploitation department are often among the factors leading to its decision. Similarly, when the exploitation department plans to exploit an unprotected invention, it occasionally informs the patents department of the case for registering the invention.

5.25. Inasmuch as each department discharges different responsibilities, which correspond to distinct objectives, the Court sees no need to replace the current arrangement with an unwieldy system of central planning and full hierarchical stratification. It nevertheless considers that the current organization could usefully be reworked, as indicated in the following paragraphs.

Common sources of information

5.26. The three departments work on the basis of the same fundamental sources of information - the research results; it is therefore to be recommmended that the acquisition and storage of this information should themselves be joint activities. This is not so currently. Only the publication department uses additional sources of information which are unique to it: the requests for publication from the originating departments. Likewise, the study department, if it is set up, ought to be common to the three departments.

5.27. While the final research reports are filed in the records with the corresponding research contracts, there is no link between the filing of the contracts, the filing of the promotion of exploitation dossiers and the filing of the patent department's invention records. It ought to be possible to link every dossier to the original dossier created following the research contract (or, where the JRC is concerned, the research project) without difficulty.

5.28. Similarly, it is hardly satisfactory for two searches to be carried on in parallel, one for the identification of patentable inventions and the other for the identification of promotable inventions. The patent is in substance no more than a prerequisite for possible promotion of exploitation. Moreover, the promotion of exploitation itself entails a whole series of very different steps: market surveys, technical studies and financing packages. It seems distinctly preferable for the choice of measures to be taken to be determined by a single, initial, global assessment, even if this involves carrying out gradual evaluations in each departme