Survey of Knowledge Commercialization Companies in Israel 2016

Survey of Knowledge Commercialization Companies in Israel 2016

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*Previous Press Release, May 22, 2016

Jerusalem

August31, 2017

257/2017

Survey of Knowledge Commercialization Companies in Israel 2016

Reports on Inventions, Patents, License Agreements, Income and Startup Companies

  • In 2016, there was an increaseamongcommercialization companiesin the number of invention disclosure reports, the number of license agreements, and in the number of new patent applications, and a decrease in involvement in establishing of start-up companies.
  • Revenue from salesof intellectual property in 2015 decreased, compared with 2014.
  • The companies' expenditure in 2016 decreased, compared with 2015 and the number of professional employeesincreased.
  • In 2016, approximately 1,328invention disclosure reports were submitted by the researchers of the various universities and R&D institutions for examination by the commercialization companies; an increase of 32% compared with the previous year. About 605 of the reports were submitted to companies associated with the universities, an increaseof 17% compared with 2015.
  • Commercialization companies filed635original patent applications in 2016, compared with 509 in 2015, an increaseof 25%.
  • In 2016, 813 original patent applications were approved, compared with 540 in 2015.
  • In 2016, commercialization companies were involved in the establishment of 34 startup companies.65% of them were established by companies associated with the universities.
  • The revenue from sales of intellectual property and grossroyalties amounted to NIS 1,507 million in 2015, compared to NIS 1,702 millionin 2014, a decrease of 11%;97% of the revenue were from the companies associated with universities.
  • The International comparison for 2015shows that Israel was relatively high in revenue from intellectual property (IP) as a percentage of the total R&D expenditure in the country, yet the United States was the highest in the revenues from IP and the number of patents approved. Canada was the highest in the number of startups established. However, the United Kingdom was the highest in the comparison with regard to other indicators: invention disclosures, number of full-time jobs of professional employees per institution, and the number of license agreements.

To Diagrams'DataDefinitions

The survey of commercialization companies in Israel for 2016included companies associated with research universities (eight companies for the eight universities), companies associated with hospitals (six companies) and with research institutions and academic colleges (five companies). This is the sixth survey conducted by the CBS on commercialization companies.

This survey was initiated and supported by the Israel National Council for Research and Development, of the Ministry of Science, Technology and Space. The questionnaire dealt with the following topics: expenditure and personnel in the field of managing IP (intellectual property), IP and its protection (inventions, patents, etc.), revenue from IP, startup companies and more.

The Activity of Commercialization Companies

  • The role of commercialization companies is to search out, develop, and market the knowhow accumulated in the institutions mentioned above, to turn a patent into a commercial product, and help in creating startup companies. Commercialization companies with these activities contribute substantially to the growth of the economy concomitant with increasing the income of the institutions they represent.
  • Commercialization companies deal with the management of intellectual property (IP). IP is a generic term referring to rights associated with intangible resources that were a person's intellectual creations, such as patents, copyrights, and trademarks. These property rights enable the holder to form a monopoly on the use of the item for a certain period and in certain countries.
  • There are different types of intellectual property: inventions, computer programs, databases, educational means, other means, industrial designs, un-registered trademarks (™) or registered trademarks (®), new varieties of plants, etc.
  • The commercialization process in these companies usually takes this form: Initially the companies approach the academic staff at the university, hospital or research institution to receive the ideas, innovations and new inventions. Commercialization companies then examine whether the ideas, innovations or inventionsare able to be legally protected and whether they have commercial potential that justifies a patent application. They decide to continue the process with selected ideas and reject others.
  • In the continuation of the process, the companies submit patent applications to the appropriate authorities in Israel and abroad, and attempt to market the patent rights to companies in Israel and abroad. The companies may sell exclusive or non-exclusive rights on the use of the patent but usually do not sell their ownership of the patent.

Invention Disclosure Reports

In 2016, commercialization companies received 1,328 invention disclosure reports, about 605of them were received bycommercialization companies associated with universities.

In 2016, there was an increase of32%intotal invention disclosure reports in all institutions. In the companies associated with universities, there was an increase of 17%, compared with 2015.A significant increase was noticed in reports to the research institutions and the colleges.

Table A - Invention Disclosure Reports

2014 / 2015 / 2016
856 / 1,009 / 1,328 / Total
566 / 517 / 605 / Companies associated with universities
144 / 176 / 185 / Companies associated with hospitals
146 / 316 / 538 / Companies associated with research institutionsand colleges

Patent Applications

In 2016, 635neworiginal patent applications were filed, and in 2015, 509 were filed, an increase of 25%. In companies associated with universities there was an increase of 23%; incompanies associated with hospitals there was an increase of 18% and in researchinstitutions and colleges there was a significant increase of 51%. Most of the applications were filed by companies associated with universities: approximately 72% in 2016 and 73% in 2015.

Table B - Original Patent Applications in Israel and Abroad

2015 / 2016
509 / 635 / Total
372 / 457 / Companies associated with universities
88 / 104 / Companies associated with hospitals
49 / 74 / Companies associated with research institutions and colleges

Diagram 1 - Original Patent Applications in Israel and Abroad
in Companies Associated with Universities

The highest number of applications filed by commercialization companies associated with universities was in 2016.

Table C -Number of OriginalApprovedPatent Applications in Israel and Abroad

2015 / 2016
540 / 813 / Total
464 / 731 / Companies associated with universities
49 / 66 / Companies associated with hospitals
27 / 16 / Companies associated with research institutions and colleges

The number of approved applications (regardless of submission year) in 2016, increased by 51%, compared to those approved in 2015.

Patent Families

During the years in which the commercialization companies were active under the auspices of the institutions included in the survey, the companies accumulated a large inventory of current patents that were marketed or yet remain to be marketed. Theinventions inventory ofthe companiesis represented in table D.

Table D - Patent Families in the Active Portfolio

2015 / 2016
4,367 / 4,467 / Total
3,434 / 3,530 / Companies associated with universities
497 / 468 / Companies associated with hospitals
436 / 469 / Companies associated with research institutions and colleges

*Active portfolio- meaning at least one patent out of the family patent is operative.

The number of patent families rosein 2016 by 2%, compared with 2015. The patent families in commercialization companies associated withuniversities were79% out ofthe total.

License Agreements

The role of commercialization companies is to market and deliver the knowledge generated in universities, hospitals, research institutions and colleges. This is normally accomplished with license agreements.

The number of newlicenseagreements with external companieswas 234 in 2016, compared to 162 in 2015, anincrease of 44%. Most of the agreements were signed with companies from Israel - 79% in 2016, compared with 73% in 2015. Most of the agreements in 2016 were signed with companies associated with universities – 65%, compared with 66% in 2015.

Table E - New License Agreements with External Companies

2015 / 2016
Abroad / Israel / Total / Abroad / Israel / Total
44 / 118 / 162 / 49 / 185 / 234 / Total
32 / 75 / 107 / 37 / 115 / 152 / Companies associated with universities
6 / 30 / 36 / 5 / 46 / 51 / Companies associated with hospitals
6 / 13 / 19 / 7 / 24 / 31 / Companies associated with research institutions and colleges

Revenues of the Commercialization Companies

Total revenues fromselling IP, which include sales of patents, royalties, options, license feesoptions, income from ownership of startup companies (dividends, profits from the sale of startupsand other income from IP, amounted to NIS 1,507 millionin 2015. Most of the revenues from selling IP came from the companies associated with universities (97%). The revenues from sellingIPat companies associated with universities decreased by 12% in 2015, compared to 2014 (NIS 1,661 million).

Total revenues of allcommercialization companies(incl. income from research)decreased by 9%. Revenues from other activities (mainly from research) comprised 29% of total revenues.

Table F - Revenues of Commercialization Companies, by Type of Revenue, 2015

NIS million

Income from other activities of the company (2) / Revenues from selling IP (1) / Total
623 / 1,507 / 2,130 / Total
533 / 1,464 / 1,997 / Companies associated withuniversities
55 / 18 / 73 / Companies associated with hospitals
35 / 25 / 60 / Companies associated with research institutionsand colleges

(1) Revenue from selling IP includes: sales of patents, royalties, license fees, options, income from ownership of startup companies (dividends, profits from the sale of startups, etc.) and other income from IP.

(2) Income from other activities includes: contracts and research grants, external studies, usage of labs, income from Israel Innovation Authority, refunds for issuing licenses, etc.

Diagram 2 - Revenue from Selling IP, by Companies Associated with Universities

In time-series it can be noticed that the revenues from selling IP at companies associated with the universities,were especially highin the years 2009 and 2012.

Involvement in Establishing of Startup Companies in Israel and Abroad

A startup company is a company that was founded with the aim of developing an innovative product or service, usually in the field of high tech. It ceases to be considered a startup company after it is sold to an established company or after it becomes established itself (i.e., the company begins to sell its products or services).

Startup companies are usually financed by venture capital funds, technological incubators or private investors (angels). The initial capital serves to establishing the company, recruiting staff, developing products or services and selling them. Table G presents startups that were established according to the technology developed by researchers in the aforementioned institutions, even if the commercialization company had no ownership.

Table G - Involvement in Establishment of Startup Companies

2015 / 2016
53 / 34 / Total- Israel and Abroad
45 / 22 / Companies associated with universities
8 / 10 / Companies associated with hospitals
- / 2 / Companies associated with research institutions and colleges

In 2016, there was a decrease of 36% in the number of established startup companies. In 2016, 65%of the startup companies were established by commercialization companies associated with the universities.

Expenditures and Personnel in Commercialization Companies

In 2016, the number of professional employees (dealing with IP) in commercialization companies was131,compared to 122 in 2015, anincrease of 7%.The number of full time jobs of professional employeeswas 97 in 2016, compared to 91 in 2015, anincrease of 7%.

Table H -Professional Employees (Dealing with IP) at Commercialization Companies

2015 / 2016
Number of full-time jobs of professional employees / Number of professional employees / Number of full-time jobs of professional employees / Number of professional employees
91 / 122 / 97 / 131 / Total
56 / 67 / 60 / 69 / Companies associated withuniversities
12 / 21 / 13 / 24 / Companies associated withhospitals
23 / 34 / 24 / 38 / Companies associated withresearch institutions and colleges

Diagram 3 -Professional Employees at Commercialization Companies
Associated with Universities

The number ofprofessional employeesin commercialization companiesassociated with universitiesincreased significantly over the years, from 37 in 2009 to 69in 2016 (data for 2010 is missing).

In 2016, total expenditure[1]on the management of intellectual property in Israel was NIS 90,698thousand, compared to NIS 91,816 thousand in 2015, a decrease of 1%.Of this expenditure, payments to external bodies amounted toNIS 51,247thousand, compared to NIS 49,003 thousand in 2015, anincrease of 5%.

International Comparison[2]- Israel, Australia, United Kingdom, United States and Canada, 2015

The data presented is for all commercialization companies. All the indices are standardized by the total R&D expenditurein each country, in accordance with the international comparisonpublishedby Australia.

A standardized international comparison shows that in 2015 Israel was relatively high in the revenues from IP, yet the USA was the highest inrevenues from IP and the number of patents approved. Canada was the highest in the number of start-ups established. The United Kingdom was the highest in all other indices:the number of invention disclosures, full-time jobs of professional employees per institution and the number oflicenseagreements.

Table I: Indices of International Comparison, 2015

Canada / United States / United Kingdom / Australia / Israel / Indices
257.4(2) / 5,028.9 / 463 / 231.3(3) / 130.6 / Total expenditures on R&D of the country (100 million US$, PPP)
37.3 / 38.0 / 39.3(2) / 18.6 / 7.7 / Invention disclosures
5.6 / 10.0 / 8.4(2) / 1.8(3) / 4.1 / Number of patents approved
8.3 / 12.5 / 27.5(4) / 9.8 / 4.8 / Number of full-time jobs per institution
14.4 / 11.9 / 364.1(2) / 8.8 / 1.2 / Number of license agreements
1.9 / 1.5 / 1.2(2) / 0.6 / 0.4 / Number of startup companies
1.0 / 3.8 / 2.0(2) / 1.8 / 3.0 / Revenue from IP(1)as a percentage of the total R&D expenditure in the country

(1)One must be careful in interpreting the data of revenues from IP, since in some of the countries royalties only areincluded, and in some countries the definition is broader.

(2)Data refer to 2014.

(3)Data refer to 2013.

(4)Data refer to 2012.

Table J - Invention Disclosures - International Comparison

2008 / 2009 / 2010 / 2011 / 2012 / 2013 / 2014 / 2015
5.7 / 5.8 / 6.9 / 6.3 / 6.9 / 6.3 / 7.1 / 7.7 / Israel
26.8 / 26.6 / 27.8 / 28.6 / 23.5 / 20.8 / 17.5 / 18.6 / Australia
45.1 / 44.3 / 46.5 / 47.1 / 45.0 / 43.2 / 39.3 / - / United Kingdom
38.7 / 37.6 / 35.0 / 35.8 / 37.3 / 36.9 / 38.3 / 38.0 / United States
40.7 / 39.5 / 34.7 / 38.9 / 39.3 / 42.6 / 42.1 / 37.3 / Canada

Diagram 4 - Invention Disclosures - International Comparison

Table K:Revenues from IP as a percentageof the Total R&DExpenditure in the Country - International Comparison, in Percentages

2008 / 2009 / 2010 / 2011 / 2012 / 2013 / 2014 / 2015
4.7 / 5.4 / 4.8 / 4.5 / 4.6 / 4.0 / 3.6 / 3.0 / Israel
1.5 / 3.9 / 1.9 / 1.6 / 3.9 / 1.3 / 1.4 / 1.8 / Australia
2.1 / 1.3 / 1.1 / 1.2 / 1.3 / 1.9 / 2.0 / - / United Kingdom
6.6 / 4.3 / 4.1 / 4.0 / 4.1 / 4.2 / 4.3 / 3.8 / United States
1.0 / 1.0 / 1.0 / 1.1 / 1.3 / 1.0 / 1.6 / 1.0 / Canada

Definitions

  • Intellectual property (IP) - IP is a generic term referring to rights associated with intangible resources that were a person's intellectual creations such as patents, copyrights and trademarks. These property rights enable the holder to form a monopoly on the use of the item for a certain period and in certain countries.The legal proceedings begin with a court decision that determines the owner in each branch of the IP, the conditions of protection, and the scope of the rights.
  • A patentis anexclusive rightof use granted by the state to the owner of the invention to prevent others from illegal use of their invention.
  • Original patent–this refers to the first request for protecting a new invention with a patent, submitted to the appropriate authority in Israel or abroad (such as the Patent Office, Designs and Trade Marks of Israel, USPTO, EPO, etc.), on a national or international track (PCT), including provisional patents.A particularly important role of commercialization companies is protecting an invention by submitting patent applications.

A patent is an exclusive right of use granted by the state to the owner of the invention for a limited time, whether a product or a process in a technical field. To receive a patent on an invention one must submit an application to the appropriate authority in that country – a patent is valid only in the countries where it is registered.

An application for a patent may be submitted in several countries, and therefore a patent is often registered in more than one country in order to obtain maximum protection for the idea or innovation.

  • A patent familyincludes the original patent granted in a certain country and the rest of the patents granted in its wake, for that same invention, idea, or piece of knowledge, in other countries with an affirmation of the precedent of the initial patent.That is, all the patents directly originating from the original patent (by priority date).
  • Commercialization of knowledgeis searching out, developing, and marketing the knowledge accumulated in research universities, hospitals, research institutions and academic colleges, to turn a patent into a commercial product, and help in creating startup companies.
  • A license agreement is a signed contract between the commercialization company and a company or institution for developinga product according to new know-how or a patent.By means of this contractthe commercialization company transfers the rights to use IPin their possession to the licensingcompany.

  • A startup company is a company that was founded with the aim of developing an innovative product or service, usually in the field of hightech. A startup company develops through the following stages:

1. Examining the feasibility of the idea and preliminary research.

2. Developing the product, corrections and the transition to production.

3. A completed product and increasing the rate of sales.

It ceases to be considered a startup company after it is sold to an established company or after it becomes established itself (i.e., the company begins to sell its products or services).

Startup companies are usually financed by venture capital funds, technological incubators or private investors (angels). The initial capital serves to establishing the company, recruiting staff, developing products or services and selling them.

  • PPP (Purchasing Power Parity) - is a special exchange rate which can be used to deduct the differences in price levels between countries. With the amount of money that was replaced using Purchasing Power Parity (PPP), it is possible to buy an identical basket of goods and services in all countries. In this way we can estimate the purchasing power of different currencies on a uniform basis.

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Survey of Knowledge Commercialization Companies in Israel 2016 31/08/2017

[1]The total expenditure includes salaries, fees for patents and licenses, and various other expenditures.

2Source for international comparison: Australian Government, Department of Industry, Innovation and Science (2017). National Survey of Research Commercialization.