Brussels, 10 Oct 2006

The Science l Business news service has launched a nine-point innovation manifesto intended to cut to the heart of where Europe is going wrong with its innovation efforts. It includes recommendations on technology transfer offices, seed investment, fiscal incentives and patents. In his introduction to the manifesto, Richard Hudson, editor and CEO of Science l Business, questions whether the next 'round of tech subsidies' - the Seventh Framework Programme (FP7) - with its bigger budget, will be able to bridge the gap between the laboratory and the market place.

'At Science l Business [...], we believe it's time for the politicians to stop fussing about the spending gap between the US, Europe or China - and focus instead on a different kind of gap, between industry and academia. Into that gap falls the patent that goes unexploited, the research report that gets ignored, or the researcher who leaves for richer labs in San Francisco or Singapore,' writes Mr Hudson.

The manifesto contrasts with the Commission's recent 10-point action plan 'to achieve a broad-based innovation strategy for the European Union' by being more liberal-market-oriented in its approach. This is likely to make it controversial in some quarters, but should assist Science l Business in its efforts to 'broaden the debate beyond the usual core of technocrats - to engage wider comment, and genuinely new thinking, on the problems of Europe'.

The document is divided into four sections: the problem with universities, raising the cash, protecting new ideas, and what industry needs.

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The problem with Europe's universities, according to Science l Business, is money. Academics continue to generate impressive results, but their discoveries are ignored, under-funded or exploited elsewhere. To prove this point, the manifesto presents a table on university revenues from industry. The highest earner in the US is Columbia university, with €115.4 million. In contrast, the highest earner in Europe, France's Pasteur Institute, receives only €32.6 million, and there's a huge gap before Europe's number two, the University of Edinburgh, which earns only €4.5 million.

Idea 1 is that funders should be Darwinian: 'treating government research grants like an instrument of regional development or social equality is counter-productive,' states the manifesto. Further down, the authors add that 'If Europe is to strengthen its university research system, its politicians must make unpalatable decisions.'

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Idea 2 is reforming technology transfer offices (TTOs). Although offices in Europe tend to have more staff, they make 5% of the revenue made by their US counterparts. 'University administrators, and their political masters, should set only one goal for the TTO: make money - as much as possible, as quickly as possible, for the sole benefit of the university. Let the head of the TTO choose the means. And then fire that person if the promised results aren't delivered, and provide bonuses if they succeed [...]. Social goals are right for the rest of the university. A simple financial goal is for the TTO.'

In order to raise money, public funds could be used to encourage seed investment, suggests Science l Business. 'Government subsidies, if judiciously applied, can embolden otherwise risk-averse private investors,' reads the manifesto.

Another recommendation addresses taxes. The current situation is described as 'a Swiss cheese of loopholes, poked one by one, special interest by special interest, country by country', which 'encourages bizarre investing habits'. For this reason, Europe's wealthy are reluctant to invest in Europe, and particularly in technology, which already has a high risk attached.

Further ideas propose the deepening of stock markets for young companies, and making intellectual property protection cheaper and easier. The World Intellectual Property Organization states that the share of international patents awarded in Europe fell from 35% to 29% in the last five years. It is not hard to see why when one knows that in Europe, it typically costs €200,000 to file and maintain a patent over 20 years. In the US, it costs €10,000.

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The harmonisation of Europe's patent system has been attempted several times over the last 30 years, and is now being backed anew by EU Internal Market Commissioner Charlie McCreevy. 'The solution may lie in the trivia,' suggests the manifesto. 'Take small steps, one issue at a time.' EU Member States could start by endorsing the London Protocol, which Science l Business describes as 'a relatively modest bureaucratic exercise to reduce the number of languages in which patents must be filed'.

The manifesto's final chapter addresses the needs of industry, and it opens with some worrying figures for Europeans: 'In the EU, 54% of all R&D [research and development] spending is by the private sector. In the US, it's two-thirds - and of a bigger overall budget. Worse, much of what European companies do spend goes to labs in Boston and Palo Alto, not Basel and Paris. Europe's trade deficit in R&D - how much more EU companies spend on US labs than Americans spend on European labs - jumped five-fold between 1997 and 2002, to €2 billion.'

These problems go deeper than any of those discussed above, according to Science l Business. 'The solution: a root-and-branch change in the way Europe runs its economy, encourages entrepreneurs, and rewards its investors, corporate and individual.' The manifesto poses two solutions: provide a better-trained, flexible labour force, and drop the barriers that make Europe unattractive.

Europe is losing out as companies such as BASF and Novartis move their research funding out of the continent. The reason, says Science l Business, is that Europe's economy has been a world laggard for the last 35 years, with high costs, inflexible markets and slow growth. Only when Europe addresses inflexibilities in areas such as how much it costs to hire someone, how hard it is to lay them off or move them around, and how difficult it is to cross borders, will Europe win back investors, warns the manifesto.

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