TECHNOLOGY TRANSFER: AREAS OF PROBLEM FOR INDIAN

EDUCATIONAL INSTITUTIONS

I. Introduction:
Biotechnology is one of India’s fastest growing industries. However, biotechnology
industry is still in its infancy compared with the robust and well-developed pharmaceutical
industry. Even as early as 1990s, 90% of the total global patents of biotechnology were
collectively concentrated in the hands of United States (41%), Japan (36%) and Europe
(19%). This can be attributed to the fact that major R&D establishments are stationed in
these developed countries. India too is focusing on the need to establish funds to finance
R&D. The R&D expenditure of the Indian industry in the year 2000 stood at 2% of the sales
compared with that of 18.5% of their US counterparts. But everything is not gloomy, as it
seems. Major pharmaceutical companies have started spending around 4-7% of sales on
their R&D.

In technology transfer, the control over hardware or software is institutionalized

through certain safeguards such as patents, so that rights of the possessor are protected.
The countries which have well established Research and Development (R&D) dominate in
the sphere of patents. In recent times, marked by liberalization and privatization,
transnational corporations have become major forces of R&D. Technology transfer is
implemented at two levels, at the government level between the states and at the private
level between transnational corporations. There are different modes of technology transfer
existing in the current international system. They include foreign direct investment,
licensing and joint ventures that involve the transfer of equipment and materials, skilled
manpower, know-how and organizational innovations. Other prominent modes of technology
transfer include franchising, design and drawing, management contract, marketing
contracts technical service contracts, turnkey contracts and international sub-contracting.

With this background in mind, this article plans to focus on the problems faced by
Indian Educational Institutions in Technology Transfer.

II. Problems faced by Indian Education Institutions:

Some of the problems faced by the Indian educational institutions in technology

transfer are diverse in nature. Few of them are illustrated hereunder:

1. Non-patented technology: Indian educational institutions face the problem in

technology transfer when the technology is non-patented (consisting of trade secret
and know-how). Non-patented technologies form a major chunk of technology
transfer agreement around the globe, especially in the United States and Japan.
Interestingly, in Japan, 50% of such technology transfer agreements cover know-
how or trade secret. Naisbitt, the author of “Megatrends” in his first chapter
describes the changeover from an industrial society to an information society,
mentions know-how as the new form of wealth. But when such non-patented
technology is to be transferred, it creates complex problems of scope, duration and
termination. For Illustration, if the technology is patented, the transferee pays
royalty only for the life of such patent (i.e. 20 years). Whereas, if such technology is
 non-patented, transferee would have to pay royalty for more than 20 years (since
the technology would have no expiry or protection terms).

2. Black Box problem: The second threshold problem is that of maintenance of

secrecy during negotiation of such non-patented technology. The Indian educational
institutions is not interested to pay unless they knows what exactly are they paying
for and the seller is not interested to disclose his non-patented technology unless he
receives payment. This is the so-called ‘black box” problem the Indian educational
institutions face.

3. Strategic importance of Trade secret: The Black box problem arise because the
owner of such non-patented technology prefers not to file for patent protection. Why
the owner of such technology does not file for patent protection is a strategic
business decision. Patent provides protection for 20 years while trade secret can be
protected indefinitely. Thus, there may be a clear incentive for the owner of such
technology to not avail patent protection. For illustration, Coca Cola is a trade secret
formula, which was strategically not patented but kept as a confidential trade
secret. Thus, when the technology is a trade secret, it creates even further problems
for Indian educational institutions.

4. Patenting Biotechnology in India: Another major problem in the area of biotech

technology is that the Indian Patents Act 1970 recognizes only process patents and
not product patents. This loophole resulted in the burgeoning pharmaceutical
industry, which is based on reverse engineering. Even though biotechnology is one
of the fast-growing areas, its growth is hampered by patent uncertainty. Similarly,
when an educational institution owns such biotechnology, it cannot patent it in India
creating problems in transfer and policing of such technology.

5. Technical problem in Evaluation of technology: The educational institutions in

India face a unique problem of evaluation of the technology. The so-called black box
problems present us with a problem of evaluation. Unless the educational
institutions know what they are buying, they may not be able to evaluate the
economic feasibility of the technology. This may lead the educational institutions to
either underestimate or overestimate the economic of such technology creating a
business blunder. Furthermore, what are the mechanisms available for a non-profit
organization like UoP to evaluate technology it wish to buy? Evaluating the
economics of technology is a difficult job for a non-profit organization if it has no
such business background (which of course is very typical of Indian educational
institutions).

6. Absence of Technology Transfer Center: The Indian Educational Institutions

need Technology Transfer Center on the basis of National Technology Transfer
Center (NTTC) in the United States. NTTC is a full-service technology-management
center, providing access to federal technology information, knowledge management
and digital learning services, technology assessment, technology marketing,
assistance in finding strategic partners, and electronic-business development
services. The NTTC fosters relationships with national clients, showcases
technologies and facilitates partnerships between clients and. industry.

III. Conclusion:
 The need to have a systematic system in place to deal with technology transfer is not
only going to help in the long run but assure the participation of many Indian educational
institutions in such a purported “long run”. The liberalization of Indian economy and the
WTO obligations wherein international education institutions could very much become part
of our education arena makes is empirical for Indian educational institution not only to
impart education but also to generate technology like their foreign counterparts and license
it to generate revenues.