2005年4月号
特集  - 産官学連携による技術革新とベンチャー企業育成の促進
Joint Lecture Meeting Promotion of Technological Innovation and Fostering of Venture Companies Through Industry-Academia-Government Collaboration
顔写真

Rechard B.Dasher, Ph.D Profile

Director, US-Asia Technology Management Center
Executive Director, Center for integrated Systems
Stanford University
Board of Directors, Tohoku University


>> Ladies and gentlemen, thank you all for waiting. Now we would like to begin the study session. The theme of our study session today is “Promotion of Technological Innovation and Fostering of Venture Companies through Industry-Academia- Government Collaboration”.

First, as the opening speaker representing this venue, we would like to have a word from Mr. Toyoshima, the chairperson of the World Trade Center.

【Toyoshima】 Thank you very much. I am Toyoshima from the World Trade Center Tokyo. This is the 32nd Joint Lecture Meeting which we have jointly organized with WTC Building, and also once again with Tokyo American Center for the first time in quite some time. As mentioned earlier by the master of ceremony, today’s meeting features Dr. Dasher’s lecture on the theme, “Promotion of Technological Innovation and Fostering of Venture Companies through Industry-Academia-Government Collaboration”. I would like to express my sincere gratitude to all of you who have kindly spared your precious time coming out here to make this meeting such a well attended event. I also personally would like to take this opportunity to thank you deeply for your continuous generous support to our daily activities at WTC Tokyo.

As you are probably already very familiar with Dr. Dasher, I’m sure there is no need for me to add in particular in introducing you this wonderful guest speaker. So allow me to speak a little about myself instead. When I left the Ministry of International Trade and Industry 20 years ago, the theme we chose for this lecture meeting was still not regarded as a major discussion matter. But when I look at the recent movements in Japan, I come to realize how much our society has changed over the years. For example, when I recently picked up the latest edition of METI’s public relations magazine, “Keizai Sangyo Journal”, formerly published as “Tsusan Journal”, I not only found that the issue of collaboration between the industrial, governmental and academia circles and the nurturing of venture business was taken up in this magazine, but also to my surprise, it was covered as this edition’s feature article. In that sense, I think the theme we chose for this lecture meeting is a very timely one, and feel very fortunate to have Dr. Dasher here to enlighten us on this important subject matter. So I sincerely ask you to listen closely to his presentation until the very end and gain the most out of what he has to share with us today. Once again, thank you very much.

>>  Next, I would like to ask Ms. Gilles to deliver her opening remarks. Ms. Gilles is the Deputy Director of Tokyo American Center, who literally became the key person in organizing today’s event.

【Gilles】  Ladies and gentlemen, good afternoon. I thank you all for finding time out of your busy schedules to join us today. My name is Joanne Gilles. I am the Deputy Director of Tokyo American Center. It is a pleasure to welcome you all today.

The theme of today’s symposium is “Promotion of Technological Innovation and Fostering of Venture Companies Through Industry-Academia-Government Collaboration”. We have invited Dr. Richard Dasher, who is the Director of US-Asia Technology Management Center and Consulting Professor Associate of Stanford University, to share with us his expert knowledge on industry-academia-government collaboration with main focus on how this partnership can contribute to regional development and promotion of international competitiveness.

As today’s chairperson, we have Professor Yuko Harayama, who is the professor of the Department of Technological Social System, Graduate School of Engineering at Tohoku University. Professor Harayama is a specialist in higher education policies, scientific technology policies and international comparison of industry-academia collaboration. After Dr. Dasher’s lecture, Professor Harayama will be sharing with us her comments on the current conditions and future prospects of industry-academia-government collaboration and university-born venture enterprises in Japan.

Now, I would like to turn the mike over to Professor Harayama. Professor Harayama, please.

【Harayama】  Thank you very much. As has been introduced, I am Harayama from Tohoku University. Today, I would like to serve as the chairperson, a commentator and also the moderator of the Q&A session.

First, I would like to start by introducing you our guest speaker for today’s session, Dr. Dasher. I’ll make this part rather brief since he is already well renowned in Japan and also in various international circles.

Dr. Dasher is a professor at Stanford University, who is not only actively engaged in teaching but is also deeply involved in building the industry-academia partnership in practical terms, which includes his direct commitment in carrying out his own programs pertaining to the earlier mentioned issue of nurturing venture businesses. In addition, Dr. Dasher is the Director of US-Asia Technological Management Center, as well as the Executive Director of Stanford’s CIS, which stands for Center of Integrated Systems. So we can say that Dr. Dasher has precisely been playing the role of providing a bridge between the university and the industry through his multi-faceted endeavors.

In terms of his relationship with Japan, Dr. Dasher also serves as the Advisor to US-Japan Business Incubation Center, and as many of you already know, he has an excellent command of Japanese and speaks the language almost as fluently as a native. Although he will be delivering his lecture today in English, I’m sure he will be able to directly understand any questions you may raise later on in Japanese without gaining much help from an interpreter. He has visited Japan many times, and during these very frequent trips, he has also traveled to various parts of the country to give a lecture on matters related to enterprises and industry-academia collaboration.


Lastly, I like to mention about his relationship with the American Center. Dr. Dasher has past experiences directing US State Department’s Foreign Service Institute training centers in Japan and Korea. So all in all, we can say that he has had very close and strong associations with Japan.


And now, would you please welcome Dr. Dasher. His lecture is expected to run for approximately 25 minutes. Thank you in advance for your kind attention. Dr. Dasher, please.


  【Dasher】 Thank you very much for the introduction. I would like to thank the World Trade Center Tokyo and also the Tokyo American Center for inviting me to come and speak. I consider it an honor.


Today’s talk is going to be divided into four parts. First, we’ll talk about the traditional roles of universities, industry and government, how each of them is supposed to benefit society; second, we’ll talk about why a need for an improvement in university-industry relations has arisen; third, we’ll talk about implementing new patterns of university-industry collaboration; and finally, we’ll talk about specific opportunities and challenges for Japan.


So, first, let’s look at the traditional functions of the university, industry and society and how each of those sectors should benefit society. The main output of universities is graduates and research papers. This is of direct benefit to society; especially in a democracy it’s very important to have a well-educated public. When you add industry to the picture, the main output of industry is products and services. These benefit society and, in return, society provides the company with a profit. Now, of course, industry also benefits society by employing people, but that is really not the main purpose of industry. Industry is there to sell things and this is a benefit to society. Industry also hires university graduates and research papers from university are read by people in industry who come up with new business ideas. So, really, a lot of the university’s contribution to society already depends on industry.


When you add government, it has two main functions. The first is really to build a good environment for the present. Through regulations and laws government ensures the safety of its citizens and also provides a fair place for businesses to work in. Government also invests in the future of society. Defense is really an investment in the future of society as well as its present safety, and investment in research and development is a major way that government benefits society in the future. At this point, we can compare Japan and the U.S. a little bit. In Japan, the government’s investment in the future through the university has mainly been by way of ministry of education budgets. In the United States, it’s mostly been through competitive grants, where professors compete against each other to bring in money for their universities.


Similarly, on the industry side, Japan’s investment in the future has been through organizations such as the research consortia of METI. And, again, in the United States it’s been through competitive grants; companies compete for government funding to carry out a particular project. So you see differences, but in general we can say that in the United States and Japan the functions of university, industry and government have mostly been independent of each other. Of course there are relationships and of course there are individual contacts. In Japan, the relationship between a professor and his or her graduates is a very close human relationship that lasts a lifetime, but the sectors themselves have not been very connected. As you might expect, knowledge transfer between the sectors has really been in one direction and not in real-time. A student learns at the university, then graduates, then goes to work in a company. The government identifies a technology need, sends out a request for proposals; then people compete for the funds; the research is done, and finally a report goes back to the government. It’s very much linear, not real-time.


But new needs have arisen in society and these new needs really require university and industry to work together in real-time. When we look more closely at these needs for closer cooperation, closer relationships, we see that the sectors have not abandoned their traditional roles. It’s very important to remember that universities will always basically be universities; industry will always basically be industry, but there are new needs that cannot be met either by universities or industries individually; instead, they have to cooperate with each other in order to meet the new needs of society.


The government role in this process is to act as a catalyst, to make sure that the workings of these new relationships indeed benefit society.


Why have these new needs arisen? In a word, it’s all about innovation, especially innovation in the early stages of the process. Innovation is a process, usually seen as going from the initial discovery or invention of an idea or technology all the way to its practical implementation. This practical implementation often happens by commercialization. So, at the early stages of the process, you don’t know what kind of practical applications there are. In contrast, in the later stages of the process, the driving force is the practical application, not the technology. So, in the early stages you’re doing basic research and maybe a good idea happens. In the late stages, you know you need to develop a new type of chip that will fill a particular function and you have a very severe deadline. It’s not surprising that usually different people are involved in the different stages. You have exceptions like Thomas Edison, but in most cases different people are interested in different kinds of activities.


Now, when you look at the roles of different sectors in an innovation system, you need to look, first of all, at the flow of money, and second, at who actually conducts the research and development process. With regard to money, governments are about the only organizations that can make the investment in basic research that society really needs for the future. Especially now that monopoly utilities are being privatized, it’s becoming more and more rare to find basic research being done inside companies. But as you get to the later stages of the process, industry invests the money in product development. With regard to who carries out the process, the university is especially well suited to basic research. People are in the university because they’re interested in theoretical issues; they’re interested in discovering new things, and they may not really care about whether there’s a practical application. So, universities are very well suited to carry out basic research, and industry is uniquely suited to do product development. The transition is at the stage of applied research. And so, if you’re looking for a place where there will be technology transfer, it’s likely to happen somewhere during the applied research stage.


This slide explains what we have just talked about.


So, why have these new demands arisen? First of all, innovation is critically important for any advanced economy. This is because new ideas and new products intrinsically have higher value added. So, innovation is critical for an advanced economy where you need higher profit margins.


Second, we’re in the middle of an era of very rapid technological progress. New markets appear very suddenly. This means that uncertainty and the risk is very high, especially the further out toward basic research that you get. And at the same time, because of the Internet, because of the globalization of business, industry is under more severe economic pressure than ever before. Most companies have had to cut back their research programs from investing up to five years in the future; now they really can only invest in technology research for products that may be realized three years in the future. So, you see, this combination of things means that something has to happen in the early stages of the innovation system.


Add to that the major economic restructuring that’s going on in Japan. Japan has to shift from a production-based economy to wledge-based competitiveness. Standardization of manufacturing processes will lead those activities to laces where land and labor prices are cheaper. At the same time, the Japanese government is ending its protection of inefficient industries. As part of the effort to reduce cost overhead, companies are gradually getting away from lifetime employment and, to make matters worse, in a few years the Japanese government’s budget deficit will create a very severe shortage of funds, especially for universities. Finally, the population is getting older in Japan. And all of this has an impact that, simply put, means that Japan needs to improve its early-stage innovation system.


Japan has already led the world in late-stage innovation. The works by scholars such as Professor Nonaka in regard to the knowledge-creating company really deals with company internal later-stage innovation. And yet, now, what really matters is the transition point from basic research to applied research. If you ask what Japanese business really wants, I think “earlier identification of business opportunities” is something many people would say. They also need to be able to allocate their research funds more effectively. Research funds are limited and there are many more possible directions or technology development. And so, there needs to be help in improving the efficiency of a system at precisely that point.


Now, just as an aside, entrepreneurs are very important in early-stage innovation. This slide is my own adaptation of Christensen’s Innovator’s Dilemma book, and if you look at technology risk and market risk, only startup companies can deal with both risks simultaneously. A big company will develop a new technology if there’s already a big market for it. A big company will also find a new market for a technology it already has. So, where entrepreneurs and startup companies become especially important is where market risk and technology risk are high; in other words, early-stage innovation.


Now, startup companies do play a part in university-industry collaboration. Often, they’re the only people who will license a university technology. And in the United States, where the principle of assigning intellectual property rights to the university is very well founded, many of these startup companies are actually students and professors who have to buy their own IP rights back from their university in order to start their company. So, often, they’re important licensees for university technologies. They’re also a good place for the university and industry people to talk with each other. We’ll come back to this point, but often, both sides really need to invest time and resources in making the startup company successful. Startup companies may use university laboratory facilities and pay a fee to develop their prototypes. But one important point is that, a university cannot expect a startup company to pay a lot of money to support university research. Startup companies have to devote all of their resources to their own product and business development.


So, let’s look at implementing these new patterns. What new patterns are we talking about and how will they be implemented?


First of all, there are three main paths of technology transfer from university to industry. The traditional path is called linear hand-off, and it’s exactly what we were talking about. A student studies at the university, graduates, then goes to work in industry. The knowledge is handed off in one direction and not in real-time. Academic papers work in essentially the same way. Since the early 1980s, in American universities, there has been a major focus on the development of technology spillover models. And technology spillover really is exactly real-time, two-way knowledge sharing between university and industry people. There are various channels for technology spillover, such as joint research and development projects, open university labs, visitors from industry at the university; even students going to work on internships in companies is a kind of technology spillover. So, there are various channels, and we’ll talk more about this.


The third pattern that really grew up since the 1990s is technology licensing. And if you look at technology licensing, it’s really the same type of technology transfer as is the traditional linear hand-off. It just happens at a different time. But when a company buys a university technology, it is not investing in what the university will do; it’s paying money for what the university has already done. And universities really need research support for what they will do. We’ll come back to this.


Technology spillover is very different. It involves long-time relationships; it involves a lot of people-to-people contact; it involves people stepping outside of their traditional role and playing in the other person’s field a little bit, as when professors become consultants.


Now, technology spillover is really important to meet these new demands. First of all, it is this real-time kind of two-way knowledge sharing. The second point is it focuses best on the transition between basic and applied research. There’s a natural area in which it’s better for a company to give money to a university to let the university do research rather than paying the entire cost, including the opportunity cost, of doing it in-house at the company. So, if you get to later-stage innovation, then the company needs secrecy; the company needs exclusive IP rights, and that fits head on against the university’s need for academic freedom and open publication. Also, Ph.D. research timelines usually take too long to fit into processes of product development. So there’s a natural place where university and industry can work together in real-time, and it’s really the transition between basic and applied research.


If we look at Stanford’s School of Engineering as a case study, you see that the university budget accounted for 22 percent of all of the funds that were spent in 2002-2003. Stanford’s endowment income added another 12 percent. So, university money made up about one third of the total budget for the School of Engineering. The largest single source of funding was sponsored projects or contracted research. Sponsored project is the Stanford term. But of the sponsored projects, three fourths were sponsored by the United States government. Next to the United States government you have private foundations. Next to private foundations you have foreign governments. Then you finally get to sponsored projects from individual companies. As we’ll see, that accounts for less than 10 percent of all sponsored projects, or maybe 4 percent of the total engineering budget.


Where industry spends its money is in this “other” category; that includes gifts to professors; it includes membership in industry affiliated programs; and it does include technology licensing. But I’d like to point out that while technology licensing is an important incentive, it’s not a very large source of funds. Stanford’s Office of Technology Licensing is very proud that it generated $50 million of revenue in 2002-2003. Fifteen percent of that really kept Stanford’s Office of Technology License going. Then the remaining money was divided one third each-one third to the inventors; one third to the schools in which the inventors are employed or studying; and one third to the departments in which the inventors are employed or studying. That means that the School of Engineering and the engineering departments only got about $700,000 that year from licensing fees. That’s about 1 percent of the total School of Engineering budget.

The other problem with licensing revenues is that it usually takes five or sometimes even ten years before a university patent appears in a real product. And it’s only after the patent appears in a product that you really get major revenue. So, you can’t wait five or ten years for revenues in the future.


So, as I mentioned, industry pays for industry affiliated programs. These are membership-based research centers that typically sponsor exploratory research at exactly the stage between basic and applied research. Companies also give gifts to support individual professor’s research. In the same way, these funds are unrestricted and a professor can use them for exploratory research. Why do companies do this? In the United States, the companies get preferential access to the professors and the students who are involved in the research they support and also in related research areas.


They also get the right to send visiting researchers to participate in the research groups at the university and they do have a fuzzy influence in the directions that this exploratory research will take. A smart professor will not ignore what the companies are really interested in, but it’s not a control relationship. We’ll come back to this. Companies also pay for using university labs at Stanford -about $2 million in 2002.


Now, at this point, I’d like to just mention about entrepreneurship at Stanford. It’s really driven by individuals, not by the university itself. If you really see who wants to start a company at Stanford, more than the professors, it’s the students. So the students have an idea how to apply some of the technology that they’re doing research in, and that’s what they want to do with their lives. The university concentrates on teaching these students best practices in startup company creation and growth. The Stanford people, professors and other mentors of the students, help provide access to all of the business people that you really need in order to start a company. There is some limited funding by Stanford in venture funds, but this is actually treated as a business activity and outsourced to a professional fund management company. There is no business incubator at Stanford, but in Silicon Valley you don’t really need one.


Now, the other thing that Stanford does is to pay very close attention to conflict-of-interest policies. We’ll come back to that.


In general, I’d like to talk about what I see as three major opportunities and three major challenges for Japan in implementing these new patterns of university-industry cooperation. First of all, university-industry cooperation in Japan is going to change. No matter what anyone does, the big changes in Japanese society and economy are going to cause changes in how university and industry interact. First of all, Japanese companies will reduce their cost overhead. They will devote less funds to basic research. They will become more actively engaged in mergers and acquisitions. This is not because of a policy; this is because they will do this to stay competitive. Similarly, I think that lifetime employment will gradually disappear in Japan, and as lifetime employment disappears, companies will spend less money training their employees in-house. Instead, you’ll have a system much more like the United States in which employees take responsibility for their own careers, and when they evaluate a job opportunity, they will think what they can learn from the job as well as what kind of money they can make. They will also think about going back to the university later to learn a new skill. So, we have this kind of a change.


The government funding patterns will also change, and this is probably something that cannot be avoided in Japan. So, how can Japan take best advantage, make sure that these changes are positive ones?


First of all, let’s look at the category of joint research. It works if you focus on the right kind of technology. If you look five to ten years into the future, then the university has something to offer industry that it does better than industry -at least it does it more cost-effectively than industry will do. Second, you need to have a very flexible framework in how this research is sponsored to allow for exploration. Professors need to have a way to try out new things. This means that universities and industry need to influence each other, but not to try to control each other. Fixed deliverables are not possible in this stage of research. It’s much better to have flexible goals and see what happens.


True joint research is rare. By that I mean it’s rare for both a company and a university to devote people to the same project at the same time. One reason for this is that companies have to teach their best people for their own in-house work. So, true joint research is rare. What usually happens is that industry supports research in the university and finds ways for its people to be involved in that research, or possibly a university will send a student out to work in a company on an internship. In that case, it’s the company’s research, but the university is participating. The second point about making joint research effective is really the pricing. It has to be less costly to the company than doing it in-house. This is why industry affiliate programs in the United States have been successful. Companies like Intel, AMD, IBM, Hitachi, and Philips, have all joined the same research center, even though they’re competing companies, because five to ten years in the future, it’s going to be better to pool your money and support a bigger body of research and then take the results and work on it separately in-house.


The second point about this is that it’s very important that the joint research leverage the full research program at the university. These companies would not be interested in supporting research at Stanford unless Stanford had a much bigger scale of research going on. That’s why the government grants are also very important to Stanford. We estimate that it’s a leverage of ten to one. A company invests $1 million in research at Stanford; and they get access to about $10 million of things that are interesting to them. Of course, the university can’t lose money in getting into these projects either.


The third opportunity is technology licensing. And just in the last two or three years, the situation in Japan has become much more clear. There are many recent advances in Japan in this regard. But for a TLO, a technology licensing office, to be successful, it really has to cooperate very closely with the faculty and support them. It must be a service organization, not something that the faculty doesn’t like. It’s very important for the university to send information about its intellectual properties to its strategic research supporters, not just to the people in the companies who might buy technologies.


And finally, the most important thing is to have a business model that is really friendly to the licensee. Lower fees to companies who are major supporters of research in the future are a very important thing to consider.


Then we come to three challenges, and my talk will be over.

First of all, university spin-off ventures are a real challenge, because they require expert knowledge from the business world. No matter how smart a professor or the students, you really need a professional investor to talk about the company valuation. You really need a marketing expert to talk about the company business plan. You also need access to employees who have experience building and growing companies. Most university teams start to hire people from outside the university by employee number three. So, this is important. It’s also important for the university not to try to be a general manager of an investment fund itself. It’s fine to be a limited partner, but leave the investing to the professionals.


The second point about university ventures: the most difficult thing for any startup company in Japan is getting to the first customers. Typically, startup companies are put through “technology evaluation hell” by the product development divisions at major customers. Their technology is evaluated forever and they never get to make a sale. So, the university needs to do helping the companies get customers. Maybe the university should buy the product itself. This will improve as more success stories appear.

The second major challenge is conflict-of-interest and secrecy policies. The situation in Japan is now more relaxed than it is in the United States. I think in order to stimulate university-industry cooperation, the government in Japan seems to have taken an especially relaxed view toward conflict of interest, and it’s very important to protect the rights of students especially. If a company demands secrecy, if a company demands exclusive access to the results of a research project, it’s probably not a good project for a university. A student needs to be able to graduate and evaluate several different job offers, not only to be able to go to work in one company. So, you know, the rights of a student really have to be protected. And ultimately, what matters is protecting the core mission of the university. University-industry cooperation is critical to keeping the university from being an ivory tower, but if professors start to care more about commercial gain than about the progress of knowledge, the quality of their research will probably go down.


The third point: it’s very important to have realistic expectations. University-industry relationships are naturally closest in the fields of engineering and medicine, but to be effective a university needs to have really basic research in the natural sciences, humanities and in other fields as well. This is because it’s very important for creativity to benefit from discussion between professors and students in these different disciplines.


Finally, closer university-industry relations are not going to solve all of the problems that Japan faces in improving its early-stage innovation. The need to develop into a knowledge-based economy involves a much larger shift -corporate restructuring, government restructuring; it involves the university doing a better job as a university, not just cooperating better with industry. It involves companies doing better, not just being better at cooperating with universities. So, it’s important to remember what role university-industry relations can really play.


So, we’ve seen that it’s really because society has new needs that universities and industry are being called on to have real-time, two-way communication. In a way, that really hasn’t happened too much before in Japan. The new patterns of university-industry collaboration need to build on the natural strengths of each party. They also need to be priced right. University-industry relations are only part of the solution to early-stage innovation. And I hope that one thing that has been apparent throughout this talk is that university-industry cooperation is really much more than just a funding relationship. It is the development of new people-to-people partnerships.

This concludes my presentation. I look forward to your comments and questions. Thank you very much.


【Harayama】 Thank you very much, Dr. Dasher. It was a very informative and substantial presentation. I think what we need to do is to redefine what industry-academia collaboration is from its very basics. I would like to pick up a few keywords that will help us understand more clearly what these basic points are.
The first point is that the industry-academia collaboration must be promoted with a mutual understanding of the university’s basic stance. What is its stance? It is all in all, the education and research conducted in the individual universities. Industry-academia collaboration may sometimes take the form of industry-academia-government collaboration, and the role of the government in this collaboration has also been explicitly explained and defined in Dr. Dasher’s presentation. Industry-academia collaboration functions as a detonator of innovation when the industry and the university succeed in discovering a sort of new direction by sharing and utilizing each other’s intrinsic strengths. As Dr. Dasher clearly identified, the role of the government is to act as a catalyst that enables the industry and the university to meet this mutual interest. Moreover, Dr. Dasher also mentioned that the process of industry-academia collaboration should not be a one-way path nor should it be a stage for the university to transfer its knowledge and technology to the industry, but rather a process where the university and the industry can both learn from each other and start an innovation.

There are various channels where industry-academia collaboration can take place, and one of the most effective means is the startup companies because they can provide a solution to the issue of risk-taking, especially in the context of the risks involved in technology transfer that big companies are reluctant to take. Startup companies play an important role in dealing with these risks including the technological risk, and particularly in the case of Stanford University, the students have been a very strong driving force in establishing the startup companies. At the same time, we must not forget the significant role played by the members of the faculty and the mentors at Stanford University in supporting the students and providing them the opportunities and the freedom to experiment new ideas on their own. For these faculty members to be good mentors who can guide the students the practical know-how to run their startup companies, they must be knowledgeable and experienced themselves, not only as educators but also as specialists engaged in business activities or services outside the campus, may it be for an industry or the government. I must say that ii is still quite difficult to find faculty members who meet these requirements fully in Japanese universities, and that development of such human resources is the direction to which the Japanese universities should move from now

Secondly, in regards to the issue of technology transfer, Japan began its endeavor by establishing technology licensing offices, or TLO. While TLO is also functioning as an important medium for technology transfer in the United States, we must note that those concerned in the American universities as well as the TLO staff members basically share in common the understanding that TLO is a medium that serves as a base to seek opportunities to explore other channels for technology transfer rather than as a money-making machine. In this context, the most important keyword mentioned in Dr. Dasher’s presentation was the term “spillover”. Although licensing is one of the practical ways of technology transfer, I think industry-academia collaboration will prove that it can provide us a far greater number of spillovers than licensing.

In regard of the structure of industry-academia collaboration, the Japanese universities the state-run institutions in particular, have been recently obligated to become a corporate entity. As a result of this legal enforcement, the Japanese universities are now undergoing a transitional phase in which they are currently redefining their relationships with the industrial circles, and working very hard to set up new rules on how they can collaborate with them. What I mean by rules here are is the basic ways of thinking that serve as the guiding principles for the universities. But as Dr. Dasher mentioned, for the university and the industry to enjoy a good working relationship, it is important for them to leave the relationship or partnership somewhat fuzzy, because the industry-academia collaboration is bound to face its limits if everything is too rigidly fixed from the very beginning. In other words, the number of spillovers will inevitably lessen if the university and the industry are too strictly tied up with restrictions. I feel this is a very important point to keep in mind.

According to the case of Stanford University, the strength of this university is in engaging in exploratory researches rather than in researches that are directly linked to commercialization. The Japanese universities are still at the stage of preparing themselves to be capable of supporting and encouraging these exploratory types of researches, and I personally think this is the next step to which the Japanese universities must definitely consider moving in order to meet the growing demands for industry-academia collaboration.

This concludes my summary, and now I would like to move on to the Q&A session, as I believe there are many of you who would like to ask questions to Dr. Dasher directly. Those who wish to ask a question, please raise your hand. Also, since we has a simultaneous interpreter residing, please use the microphone when you speak. And before you get into the question, please introduce yourself by telling us your name and the organization you belong to. Lastly, because we want as many people as we can to have a chance to speak, I would like you to limit your question to just one and make your question brief. Would anyone care to start the Q&A session?

【Question】 Dr. Dasher, I would like to ask how you assess the current situation of Japanese startup companies. In Japan, many companies born in the university or through spillover cannot sustain, due to the failure in management of the technology, or lack of competent managers with a potential to lead their startup companies like the experienced CEOs of big firms. I personally think that this issue can be solved if the industry can offer one of their promising employees with managerial skills to the startup company. I’m sure this would not be so easy here in Japan, where the business environment is quite different from the United States. I would like to ask if you think this would be one of the feasible ways to solve the issue of heavy shortage of people who are capable of running startup companies in Japan. Could you sort of assess the current Japanese situation and advise us how we should go about dealing with this issue?

【Dasher】 I’m very positive, because young people in Japan are looking for new ways to be successful. In the era of high economic growth, the way to be successful was to join a big company, to take entrepreneurial risk inside a big company and then to have, you know, your new idea become a major money-making technology or product for the big company. Now, what we are seeing is that big companies in the United States need to manage risk by not taking on very aggressive weird new ideas. Instead, they’ll let a startup company take the risk for the new idea and maybe buy the entire company within four or five years. The problem in Japan right now is that for young people socially, there are too many negative things attached to becoming an entrepreneur. I am sure there are many mothers in Japan who would be very unhappy if their son decided to start up a company instead of going to work for a big company. They’d worry about what kind of person would want to marry him. Parents are like that, but as success stories in Japan increase in number, you’ll see entrepreneurship becoming a much more attractive route for young people in Japan, and I personally know quite a few young people in Japanese universities who very much want to try something different.


So I’m very positive over the long run. I think that the human resource shortage right now can be solved on a case-by-case basis, by hiring people from different places. It’s difficult process, but even in the United States it’s a difficult process. The entrepreneur has to convince every possible employee that this is the world’s next great company. So, I think that the hiring of people who are in mid-career needs to become more active as an immediate solution.

【Question】  I express my heartfelt thanks, many thanks, to Mr. Dasher for your wonderful presentation. We have been enormously enlightened on this very important subject.

Although I have several questions in mind, I‘ll limit it to one as requested. My question is in regard of the recent headline news on the court ruling on the lawsuit pertaining to blue diode. As I’m sure Professor Dasher is also already familiar with this news by reading various related articles covered in the newspapers, the Japanese district court and high court rendered a different judgment on this case. Can I please hear your comment on this issue?

【Dasher】  Thank you for your question. My immediate reaction is that there is a consulting company in the United States that trains people in how to do negotiations, and it says, “You don’t get what you deserve; you get what you negotiate.” And I think that Professor Nakamura is a very interesting example of an entrepreneur who worked through the traditional framework in Japan. He went to work for a company -in this case, not one of the biggest companies, but, you know, a large company -and he did his work inside the company. If Professor Nakamura had been in the United States, he would have certainly started his own company and probably gotten investment funding from certain large companies -maybe Nichia Chemicals would have been an investor -he would have had stock in that company. And as the company grew bigger and eventually was bought by a big company or even went public on the stock exchange, he would have made a lot of money. Now, whether the specific amounts being discussed in the news now are accurate, correct or not, is very difficult to say, but I do think that the principle of being rewarded for the contribution you make is an important one, and I think that more and more people in Japan will demand that kind of reward, whether it’s $280 million or $6 million, I don’t know, but I think that, first of all, you’ll see more people doing things like Professor Nakamura did in startup companies. And second, you’ll see a different attitude toward what benefit you have to give an employee inside a company in order to keep them. That will change in Japan as well. So that’s really my impression.

【Question】  Dr. Dasher, I found your explanation about spillover to be very interesting. As I listened to your explanation, I got the impression that spillover seems better than licensing because it is real-time and interactive. But I understand that spillover actually began in the 80’s whereas licensing came into practice later in the 90’s. I am wondering if there was any problem with spillover that consequently led to the development of licensing as a new method to supplement the weak points of spillover. Was this the case?

【Dasher】  Thank you, that’s an excellent question. The spillover model in the United States began in the early 1980s, because American industry was terrified of Japanese research consortia. And for American industry to come together and discuss directions of technology and possible research directions, because of American antitrust laws, they had to have a neutral location and, thank goodness, they also saw value in the opinions of the university professors. So they came together at the university, because the university is an open forum; there’s no cartel activity if you’re working to support university research. The university intellectual property policies were clearly preferential to companies that supported research, but did not exclusively own it. So this model really started in the U.S. at that time because of the specific unhappiness in America with our own innovation system which existed then.

The licensing of technologies really only became of interest to universities recently because, I think, universities saw a need to do a better job of policing their own intellectual properties and enhancing their business models. There’s no real disappointment with the spillover business model, but only big companies really participate in university research like that and talk about future research. When you’re talking about technology licensing, you’re also talking about how smaller companies need to give something to the university, even if it’s only stock in the company, in exchange for the contribution that the university made to what that company can use for business.

Stanford did not get one penny of licensing revenue from Sun Microsystems, Cisco Systems or Intel, name the companies. They all came from an era before the university became clear about its intellectual property policies. Now, the people who founded those companies have given major gifts to Stanford. And one reason we don’t want to be too severe in demanding a lot of money for intellectual property is that you can get even more money from people if they like you. But it really started in the early 1990s when Stanford became aware of best practices in university-based industry creation, and the spillover model is still very active inside not only Stanford, but in other universities in the U.S. as well.

【Question】   My question is somewhat related to the previous one. I understand that industry-university cooperation initially took place at Stanford in the 80’s in the form of establishing a pharmaceutical research center, that was then followed by, such as, CSLI that was jointly established by Xerox, Hewlett-Packard and Stanford. In the case of CSLI, there were also researchers responsible of the fundamental research sent from the industry side. For example, there were Xerox researchers specializing in psychology or some other fields who were allowed to stay in the center. Even in terms of the exploratory types of research, they were not limited to those that belonged to the university but also included those already started in the industry. This exemplifies the fact that in the United States, there seems to have been a much better understanding and support toward industry-university cooperation from a long time ago. But recently I hear that even CSLI is finding difficulty these days gaining substantial financial support from Xerox and Hewlett-Packard whose contribution ratio is respectively dropping quite sharply. This trend directly reflects the loss of interest in the industry to support fundamental researches financially, as you have explained in your presentation. Taking this change of mind of the industry into consideration, I assume that probably from around the 90’s, Stanford also had to adapt to this change by devising new industry-university collaboration models that allowed itself to join hands with various types of enterprises that included those interested in funding research projects more closely linked to the market demands. To gain enough funds to carry out exploratory researches, the university must convince the top management of the firms with attractive research objectives that meet their interests in order to gain their understanding and ample financial support. I’m sure Stanford also had to go through some adjustments and transition to cope with the changes in the practical needs. I also believe that not all attempts proved to be successful. Can you give us some examples, including the failures if any, that helps us understand how and what Stanford did to adapt to the changes in the interest of the industry and the financial conditions over the years?

【Dasher】  Thank you, that’s also an excellent question. One of the most important aspects of implementing university-industry relations is that it requires continued work. The effort never stops. And one of the reasons that you have to keep working is that, from the university standpoint, you really have to keep up with exactly those kinds of changes in industry, so that you know what industry wants and what industry is willing to pay for. Sometimes that involves changing the field of research a little bit. From CSLI there’s a new program called Media X; that costs five times as much money and yet probably meets the needs of a certain industry that’s related to CSLI.

One of the centers I work with, the Center for Integrated Systems, focuses on semiconductor technologies. We find that the companies are more interested than ever before in research that’s clearly not ready for commercialization yet. Things like nanotechnologies, new types of processing that have nothing to do with standard CMOS processes. So, keeping up with changes is important. The other thing is you really have to keep selling what you’re doing to both sides, really. The university professors fall into a standard distribution of people who are really interested in working with industry, people who are a little bit interested if industry can give them something that they don’t have otherwise -and this is most of the professors -and professors who are very much against working with industry. So you have to keep promoting research collaboration inside the university and you certainly have to keep working with the companies.

Your point about keeping in touch with the top levels of the company is absolutely right, because those are the people who have the strategic responsibility of looking five to ten years into the future. So, at the same time as you’re looking at the senior vice president in charge of research and development, you’re also looking at the 20 people who are laboratory managers who might become the senior vice president of research and development. Otherwise your contact leaves the company, and you’re lost. This is an experience I’ve had at Stanford. You don’t always keep companies involved with the university. And so, you have to keep grooming the next generation at the same time as you’re working on the current contacts. So, it’s a very good point.

I think that there’s a need that’s greater than ever before to have exploratory research that industry thinks might be important. They don’t necessarily know it’s important, because if they do, they’ll do it themselves. But if you’re doing things that they think might be important, you’ve got something to sell.

【Question】  My question to Dr. Dasher regards the role taken by the university’s partner -the industry, You have presented us the information on how the role and interests of the industry has evolved from the 80’s to the 90’s in the United States. In Japan these days, there seems to be a trend for big companies to seek opportunities to be the sole financial sponsor of joint projects with the university. Do you think that this trend has a conflicting aspect or negative impact on medium and small sized enterprises? Could you please elaborate on this by referring to the past models implemented in Silicon Valley, and in the context of whether or not the spillovers and venture companies may be affected in industry-university collaboration sought by big companies, and if yes, how and what the dominant factors may be, including the factors that may have nothing to the involvement of big companies?

【Dasher】  Thank you that’s another good question. I think that there are two aspects of the partnership that are important to address. First of all, you give extra benefits to the research supporters, but you do not shut out everybody else. That’s very important for a university, because it’s important to maintain academic freedom and also to have the very best job market possible for students.

Now, from the standpoint of getting industry support, big companies pay for certain kinds of things and medium-sized companies pay for things that are a little bit different. The big companies may pay for Ph.D.’s who are specialists in a technology that the company is making a major investment in over a five to ten year period. The medium-sized companies typically want more masters-level students. So you really have to know what the different companies want and how to address their particular needs within a flexible framework. That’s really the second point to address is the need for this kind of flexibility.

Inside the Center for Integrated Systems, we have the huge companies like Intel; we’ve also got medium-sized chip companies like National Semiconductor. National Semiconductor was aware that they were not able to hire Stanford Ph.D.’s, because they were going to work in other universities; they were going to work in places like Intel or IBM that have the major research facilities. So, they developed a cooperative program through the Center for Integrated Systems, through which to work with the professors who teach analog chip design and also to arrange not only summer work for students in the company doing development projects, but to have the teachers teach those students special classes before and after their summer internship so that the students got their masters with much more practical experience than ever before. The first year they did this they hired five students for the summer and then gave job offers to four of them when those students graduated. National Semiconductor considered that a success. It met what they wanted.

So, it is possible for conflicts to appear. A university needs to be aware not only of the conflict, but of the appearance of conflict. And if a company thinks that the university is owned by some other big company, they’re not going to do much with you. All of these are practical implementation problems that you really need to consider. So your point is well taken.

【Question】   My question is related to Stanford’s industry affiliate programs that you’ve mentioned in your presentation. In Japan, just this Monday, Tokyo University launched an association called Tokyo University Industry-Academia Collaboration Council in cooperation with Japan Federation of Economic Organizations, also known as Keidanren. While listening to your explanation on Stanford’s industry affiliate programs, I have closely associated this new endeavor by Tokyo University with Stanford’s industry-collaboration models. In case of Tokyo University or Todai, 384 companies have already signed up to be the member of this council. How would you compare it with Stanford’s industry-collaboration models, or the industry affiliate programs in particular, which many, I understand, have already started in the 80’s. I appreciate if you can include in your answer the information on how and from around when the Stanford models have been established, and also how many corporate members do each program normally consists of.

【Dasher】  Thank you. I only looked briefly at that news article, but I did see the news, and this kyogikai, “liaison council,” I suppose, would be good English for that. I’m not sure whether it’s really there to study best practices in university-industry relations or if Todai intends to implement a business model that’s really more like MIT than like Stanford. If it’s the former, what you have is a research center about university-industry relations itself. That’s fine; that’s a very legitimate thing to do. If it’s the latter, what I’d like to introduce is two different ways of handling university relations.

At Stanford, there is no central organization. There are about 60 different industry affiliate programs, each of which focuses on a certain area of technology. In some ways we’re all in competition with each other, as well as trying to go out and get money that might otherwise go to other universities. At MIT there is an industrial liaison office that essentially acts as the front door for companies that want to have a relationship with the university and this liaison office recommends particular groups to be involved with inside MIT.

There are merits and difficulties with both approaches. On the merit side, I think it’s very difficult for a company who is not familiar with some things about Stanford, to know where to go to start with at first. On the difficulty side, of course anytime you create an organization it has overhead costs. The transaction costs go up, and so, maybe we do a better job at Stanford of cost-effectively putting more of the company support into research instead of into the organization itself. But it will be interesting to see what this new liaison council does at Todai.

【Question】  I would like to ask Dr. Dasher about the role played by local governments. The first slide you showed in your presentation touched on the role played by the government in industry-academia-government collaboration. In Japan, the government bodies involved in this partnership would be the central government ministries, such as, the Ministry of Economy, Trade and Industry and/or the Ministry of Education, Culture, Sports, Science and Technology. Considering that the role of the government is to act as a catalyst to promote real-time, interactive communication between the industry and the university as you have mentioned, I feel that the local government can serve this role better than the central government. .How do you view this on the basis of the relationship between the federal government and the local government in the United States?

【Dasher】  Thank you very much for identifying an area I did not have time to mention in my talk, because this is also a great point.

The central government really can provide funding for research. Regional governments, even state governments, rarely can provide large amounts of funding for research. The initiative by the State of California to support stem cell research is remarkable and extremely unusual. But regional and local governments play a different part in creating a good environment for startup companies and a good environment for university-industry relations. They may provide a forum for joint meetings, for the university professors to meet the industry people and for ideas to be discussed. They may provide business incubators that give very good conditions to the startup companies that are leaving the universities.

The role of local government in Japan is a bit different from that in the United States because the tax system in Japan is so centralized. But one of the ways in which Japan will probably improve its innovation system is to encourage more regional competition. Now, if this is not done through tax reduction, which is what happens a lot in the United States, there may be other incentives that local governments can offer to startup companies that are headquartered in their district. One of the best ways would be to buy their products. Right now, getting government procurement is next to impossible for a startup company in Japan.

Think about it -- a government official takes a huge risk if they do not buy a brand name technology. So, if there can be some sort of incentive system, whether it’s rebates or, you know, regional development money that would encourage local governments to buy things from startup companies, there are various kinds of things that could happen. However, I think that the regional governments have a very important role to play in investing in local infrastructure, in investing in things that will make it easier for universities and industry to cooperate in that particular region, but they cannot really provide major funding for basic research.

【Question】  I’ll try to be brief and get right to the point.

In Japan, the development of very-large-scale integrated circuit (VLSI) has, in one sense, been fully funded by the government. We borrowed the money from the government and paid back with the profit we made from it. Whereas, in the United States, the industry formed an organization called Semiconductor Industry Association (SIA). The money to run the project was funded by the military. The association received about the same amount we borrowed. The difference between SIA and us was that SIA, unlike us, did not have to return the money. In 1986, this difference became one of the sources of the so-called semiconductor trade friction between Japan and the United States. This is basically the background of where my question derives from. Now, let me get to the question. While I was involved in COMSAT for 4 years, we were able to accomplish 4 inventions within the expenses allowed to us as the official budget. This dates back to 1966, so of course, the difference between us and the counterpart in the United States that was exempt from returning the project money did not develop into such a big issue. I would like to know if this financial policy is still in effect in the United States today. If so, is there any criteria that separates government funds that need to be returned and those that do not? In relation to the recent news on blue diode, I personally think that this court ruling should not be looked at simply as a decision made by one judge based on his or her professional instinct, but rather, should be much more carefully examined and calculated on the basis of a firm philosophical ground. I would appreciate your views on these points that I’ve just brought up.

【Dasher】  The question of return is a very difficult one. And I think that -I want to start by mentioning something that a person told me about the large amounts of money in research that the American government, through DARPA, and the Defense Advanced Research Projects Agency, had given to universities. And someone asked what they really got for their money. What they got was a generation of scientists and engineers who all got Ph.D.’s, thanks to this research.

Human resource development inside the university is an important type of return. I do think that coming up with a philosophy for how inventors should be rewarded for their work is an important one, but I do not see any substitute for case-by-case negotiations. Risk is a subjective thing and certainly without the invention new business would never happen, but without the investment in time and resources for business development, the invention wouldn’t be used. So, both sides have something to say. And what we’ll see in Japan is we’ll see ultimately what happens with Professor Nakamura’s patent, you know, his return; we’ll see a few other cases like that that will establish some precedents for future decisions and future negotiations. So, over the long run, nobody will be happy, because everyone will think they should be getting more or less, but I do think that we’re at the beginning in Japan of establishing these precedents.

【Question】   Dr. Dasher, you mentioned in your presentation that, in the United States, it is mainly the graduate students who are engaged in establishing startup companies and seeking entrepreneurship. In Japan, the intellectual property rights are mostly owned by the professors and not by the graduate students. I would like to ask you how the professors and graduate students basically share the IP rights among them in the United States.

【Dasher】  I want to thank you for your question. I want to thank everyone, because these are wonderful questions.

Inside the United States, if all inventors are not named on a patent, the patent becomes void. So it’s very important to name every person that participated in the invention. But actually, what’s happening in Japan now is that too much of the academic paper tradition has gotten into the intellectual property process so that you have these patents with nine or ten people’s names on them. And one person I know in Japan who is working with an intellectual property office for a university says that he goes through and asks the professor, “What did this person do in making this invention? What did that person do in making this invention?” And if there’s not a specific part of participation in the development of the IP, the name is erased off of the technology disclosure.

A further problem is in evaluating what percentage of creativity belongs to each person in a joint patent. Stanford has an easy job now. There are so many precedents in the United States that it generally comes down to: This student gets 30 percent; that student gets 30 percent; the professor gets 5 percent. You know, you divide it off among all the people relatively fairly. This is something Stanford requires the disclosing team to do. Stanford requires the inventors to decide who gets what percentage of the inventor’s revenue. In Japan, I think there will probably be a need for a while to actually do more education about the creative process itself, the process of inventing itself, so that best practices can be established, so people will know how to make that kind of decision.

At Stanford, every graduate student, as well as every member of the faculty and staff, sign an agreement with the university. In the case of faculty and staff, it’s part of their employment agreement that they will assign patent rights to the university for anything they develop while engaged at the university. So, that principle is clearly established in the U.S. I think that’s pretty normal at most American universities now. It’s still new in Japan and some of the related problems have not yet been solved. But I think the IP ownership is much clearer this month than it was in January last year here in Japan. And what the investors need, what business needs, really what the university inventors need is clarity. You know, uncertainty is a terrible barrier to any kind of business.

So, I look forward to this continuing to develop in Japan. Thank you very much.

【Harayama】 Thank you all. The time is soon going to be up, so I would like to end the Q&A session right here. Dr. Dasher, thank you very much. The Q&A session also turned out to be very substantial exchange of questions and answers, so much so that I now feel as though I attended two presentations in a row! Thank you all for your active participation in this session.

As the closing remark, I would like to point out that the real challenge for us in pursuing a sound form of industry-academia collaboration is to find and provide what we think is the best environment to practice industry-academia collaboration in any given situation, based on the realization that industry-academia collaboration is not something that can be fully defined with a set of rules or by creating suitable models because it is an evolutive process that continues to progress along with the changes in the industrial and academic circles. For the Japanese, there are many things we can learn from the American experience. At the same time, I hope that there would also be something in the Japanese system that can offer new additional benefits to the American system.

Finally, I would like to mention that Japan is also moving in the direction of developing a regional innovation system, and that the processes taken at Stanford serve as a very good source of reference in building our own system. I truly hope we can continue learning from the Stanford experience and maintaining close ties with the American predecessors.

I would like to express my sincere gratitude to the members of the World Trade Center and Tokyo American Center who provided us this wonderful opportunity. Thank you very much. At this time, may I ask everyone here to please give a round of applause to Dr. Dasher once again. (Applause)

This concludes this meeting. Ladies and gentlemen, thank you very much.