Guidelines on the Commercialization of Technologies Developed by Agencies of the Department of Agriculture

March 12, 2008

DA ADMINISTRATIVE ORDER NO. 07-08

 

WHEREAS, The 1987 Constitution (Sections 10 to 13, Article XIV) recognizes the importance of science and technology in national development and mandates the state to protect and secure the exclusive rights of scientists, inventors, artists, and other gifted citizens to their intellectual property and creations;

WHEREAS, the fundamental law did not discriminate against scientists and inventors in the public sector, therefore, the courts themselves, or the oversight agencies of government should also make no distinction — ubi lex non distinguit, nec nos distinguire debemus — (United BF Homeowners' Association, Inc. vs. The Barangay Chairman and the Sangguniang Barangay of BF Homes Parañaque, G.R. No. 140092, September 8, 2006);

WHEREAS, the United Nations' Universal Declaration of Human Rights (Article 27(2)) states that: "Everyone has the right to the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author";

WHEREAS, the Civil Code of the Philippines (Articles 712, and 721 to 724) recognizes intellectual creation as a mode of acquisition of property and defines ownership of different intellectual property rights in favor of their creator or author;

WHEREAS, the General Appropriations Act of 2007 (Section 28 of the General Provisions, as well as those from 2000 to 2005) mandates that research efforts shall be geared towards achieving a wider commercialization of new discoveries and accelerating technology transfer; EHTIDA

WHEREAS, the Code of Conduct and Ethical Standards for Public Officials and Employees (Republic Act No. 6713) which identifies prohibitions against public officials and employees such as directly or indirectly having any financial or material interest in any transaction requiring the approval of their office, owning, controlling, managing or accepting employment as officer, employee, consultant, counsel, broker, agent, trustee or nominee in any private enterprise regulated supervised or licensed by their office, also allows exceptions to these prohibitions provided there is express authority provided by law or the Constitution;

WHEREAS, the Magna Carta for Scientists, Engineers, Researchers and Other Science and Technology Personnel in Government (Republic Act No. 8439) provides the general exception to the prohibitions against public servants in general provided by the Constitution and existing laws, rules and regulations, and expressly authorizes benefits to scientists and researchers engaged in R&D on top of the benefits already provided to them by the existing laws;

WHEREAS, under the Magna Carta, science and technology scientists, engineers, researchers and other personnel are entitled to receive share in royalties on a sixty percent-forty percent (60%-40%) basis in favor of the Government and the personnel involved in the technology/activity which has been produced or undertaken during the regular performance of their functions, and share in royalties is defined as a share in the proceeds of royalty payments arising from patents, copyrights and other intellectual property rights;

WHEREAS, under the same law, scientists, engineers, researchers, technologists, technicians and other S & T personnel are allowed to render consultancy services to the private sector and entitles them to receive such honorarium that may be paid to them by the private entity concerned, and such payments shall be over and above their salary from the government during the period of the consultancy and shall not be considered as double compensation, provided, that the consultancy work will not jeopardize or adversely affect the operations or activities of his originating office;

WHEREAS, the Magna Carta also provides that, scientists, engineers, researchers and other S & T related personnel who are employed on a regular basis in the government, whether or not they are conferred any rank under the Scientific Career System, are allowed secondment to any private entity whenever such services are required;

WHEREAS, the Administrative Code of 1987 (Book I and Book IV, Executive Order No. 292) provides the authority to Heads of DA agencies to enter into technology commercialization contracts in behalf of their agencies with the approval of the DA Secretary. However, where the operations of the DA agency regularly involves the commercialization of technologies, such as research and development agencies, the contracts may be executed by their agency heads; ISTDAH

WHEREAS, the General Accounting and Auditing Manual (GAAM) of the Commission on Audit (COA) authorizes the establishment and maintenance of revolving funds where said funds are expressly authorized by law, such as receipts derived from business-type activities of departments, bureaus, offices or agencies which are authorized by law to constitute these funds into self-perpetuating and self-liquidating revolving funds;

WHEREAS, the GAAM also provides that disposal of public property, including intellectual property, shall be through public bidding, but for justifiable reasons may also be disposed in the following manner: a) public auction, b) sale through negotiation, c) barter, d) transfer to other government agencies, and e) destruction or condemnation;

WHEREAS, the DA Biotechnology Program funded project studies implemented by the Philippine Rice Research Institute (PhilRice) which concluded that commercialization of publicly funded and generated agricultural biotechnology is possible under the DA agencies' existing institutional capacities, limited but useful commercialization experience, the positive perceptions of their scientists and researchers on intellectual property rights and commercialization, and the existing legal frameworks which they operate, particularly the rules and regulations issued by oversight agencies such as the Civil Service Commission and the Commission on Audit, and that there is also no need for a new law to effect such commercialization, because the existing laws are already sufficient to provide the legal basis therefor;

WHEREAS, under the intellectual property rights laws, scientists and researchers of the DA or other government agencies who are engaged in science and technology activities, can own or benefit from the commercialized agricultural biotechnology generated by them in the conduct of research and development activities as part of their regular duties, without violating the constitutional prohibitions against indirect, additional or double compensation, the statutory prohibitions on conflict of interest, and other prohibitions;

WHEREAS, there is a strong positive perception of DA scientists and researchers on intellectual property rights protection and its impact on the generation and commercialization of public agricultural biotechnology products despite the differences in their institutions' mandates and the traditional thinking that public agencies produce public goods to be given to the public for free, they appreciate IPR protection;

WHEREAS, the legal implications of IPRs, ownership, and commercialization of publicly generated agricultural biotechnology is tremendously positive and favorable to scientists and researchers who generate them and their respective agencies because if they can generate agricultural biotechnology or intellectual property with high commercial value, they are legally entitled to royalties and other benefits provided by existing laws, and are exempted from the usual prohibitions against double compensation and conflict of interest, and this realization should provide incentives for DA scientists and researchers to continue working in the DA and unleash their creativity to generate highly commercializable agricultural technology; and IAEcCa

WHEREAS, under the Intellectual Property Code of the Philippines and the Plant Variety Protection Act, and the existing laws, rules and regulations, the protection of the DA agencies' intellectual property appears no longer optional but mandatory among government agencies, even though these agencies are also producers of public goods which should be provided to the public for free.

NOW, THEREFORE, for and in consideration of the foregoing premises, I, ARTHUR C. YAP, Secretary of the Department of Agriculture, by virtue of the authority conferred upon me by the Administrative Code of 1987 and other existing laws, do hereby promulgate the commercialization guidelines of the Department of Agriculture and its attached agencies, as follows:

I.Purposes and objectives.

These guidelines shall apply to the commercialization of agricultural biotechnologies and other technologies generated by the scientists and researchers of the DA agencies, in the regular performance of their duties. These technologies include products, processes, or both, whether agricultural biotechnology or otherwise, which are new or novel, inventive or non-obvious, and industrially applicable, or in cases of varieties, new, distinct, uniform and stable, which can be registered as intellectual property rights under the Intellectual Property Code of the Philippines (RA 8293), or the Plant Variety Protection Act of 2002 (RA 9168), respectively.

Consistent with the public good mandate of the DA, the technologies to be covered under these guidelines may be focused on those which cannot be immediately made available to the farmers and other stakeholders because they require private investments for prototyping, upscaling, marketing, and attainment of economies of scale. Examples of these kinds of technologies are products of agricultural biotechnology such as genetically modified organisms the components of which may be proprietary, and require special technical and management expertise before the final products can be accessed by farmers and consumers.

This administrative order also provides the implementing rules and procedures for the policy pronouncements enshrined in DA Administrative Order No. 03 series of 2005 (DA Policy on the Protection of Intellectual Properties),and the DA Administrative Order No. 03 series of 2006 (National Technology Commercialization Program Document and Operating Guidelines).

Furthermore, this Order also provides general guidance and direction to heads of DA agencies to put in place in their offices appropriate mechanisms such as units, funds and facilities to encourage and support the effective and efficient commercialization of their technologies, consistent with their mandates. aDSHCc

Finally, these guidelines are also aimed at encouraging DA agency heads to enrol or register their respective scientists and researchers with the Department of Science and Technology (DOST) so that they can avail themselves of the benefits and privileges under the Magna Carta for Scientists, Engineers and Other S&T Workers and under these guidelines.

II.Definition of terms.

"Technology commercialization" refers to the transfer of publicly generated proprietary technology by the DA and its agencies to the open market, in partnership with the private sector.

"Technology commercialization fund" refers to a revolving fund established by the DA agency from its technology commercialization activities, comprised of royalties, fees, and dividends, and used exclusively to support its technology commercialization efforts, including the payment of the share of the scientists or researcher involved.

"DA agency" refers to any of the various units of the Department of Agriculture, including a bureau, office, unit, instrumentality, or government-owned or controlled corporation.

"Technologies" refer to innovations or inventions which can be registered as "intellectual property rights" under the Intellectual Property Code of the Philippines (RA 8293) or new plant varieties which can be registered under the Plant Variety Protection Act (RA 9168), generated by a DA agency official or employee in the regular performance of their duties.

"Intellectual property rights" or IPR refers to economic and commercial rights accorded to the creator of technologies, which can be registered as patents, utility models, industrial designs, topologies, plant variety protection certificates, trade and related marks, or copyrights.

"PVP Act," short for the "Plant Variety Protection Act" (Republic Act 9168), refers to the law that authorizes the registration of new plant varieties in the Philippines.

"Publicly generated technology" refers to technologies generated by officials and employees in the government using public funds, or other funds disbursed through the agency.

"Technology transfer arrangement, or technology commercialization agreement" refers to the contract or agreement between the DA agency and the private partner involving the transfer of technologies to the open market. aACHDS

III.Authorities and corresponding duties and responsibilities of the concerned DA agency head under these guidelines.

1.With the Philippine Rice Research Institute (PhilRice),the Bureau of Agricultural Research and other agencies as models, to establish, fund, staff and maintain a Technology Commercialization or Technology Transfer Office with the following powers and functions:

a.Implement these guidelines in the agency;

b.Manage the agency's Intellectual Property Rights (IPR) portfolio;

c.File, prosecute, and maintain the agency's IPR protection;

d.Train the agency's scientists and researchers on IPR;

e.Assist in conducting IP audit of research proposals and determine the patentability of research results;

f.Oversee all commercialization and technology transfer activities of the agency;

g.In coordination with the concerned scientist or researcher, assist the private sector partner in prototyping, business plan development, product development, upscaling, marketing, and in providing other incubation services;

h.Advise the DA agency head on the most appropriate technology commercialization arrangements;

i.Ensure that, in instances where the technology involves other proprietary technologies, there is freedom to operate the technology; and

j.Provide other kinds of services necessary for the effective and efficient commercialization of technologies.

2.Ensure that the technologies generated by their employees are registered and protected as intellectual property in the name of the agency and the employees who generated them.

3.Ensure that the technology transfer agreements or technology commercialization contracts are executed after the conduct of a transparent and competitive bidding and other authorized processes under these guidelines and other existing laws, rules, and regulations. AIDcTE

4.Establish a technology commercialization fund to support the technology commercialization and other R&D activities of the agency, and to ensure that the share of the official or employee in the generation of the technology are disbursed in their favor, without delay.

5.Ensure that their scientists and researchers are enrolled or registered with the Magna Carta for Scientists, Engineers and Other S&T Workers administered by the Department of Science and Technology.

6.Perform other needful functions to effectively and efficiently commercialize publicly generated technologies in favor of their respective agencies and employees.

IV.Procedure, processes and business models for the actual effective and efficient generation and commercialization of technologies by the agencies. (Please see Figure 1.)

1.Determination of IP and commercial potentials of R&D activities — DA agencies may, in addition to, and without sacrificing their original mandates, focus their R&D programs and projects on those with high commercial potentials, and approve certain R&D proposals for funding on the basis of their potentials in generating commercializable technologies.

2.IPR registration or protection before commercialization — the most important factor for commercialization is the determination of ownership of technologies. This is based on the simple logic that he who does not own something cannot transfer it. Ownership is determined legally upon approval of registration of technology for intellectual property right protection under the Intellectual Property Code of the Philippines, or the Plant Variety Protection Act.

Establishing ownership of the technology also assures the private partner that he or she has exclusive right to commercialize the technology. This assurance should encourage the private investor to invest in the further development and eventual commercialization of the technology.

3.Minimum standard required before award and execution of technology commercialization contracts — before award of the technology commercialization contract, particularly when the contract is exclusive, the DA agency must conduct competitive public bidding of the technology. Technologies may be bidded out to interested parties on a wholesale basis. Competitive public bidding ensures transparency of transactions and assures the private sector, who may have to invest in the upscaling and full commercialization of the technology, that the contract will stand scrutiny. HAIaEc

Upon failure of public bidding, the DA agency may still enter into a technology commercialization contract with the private sector through negotiation and other modes of procurement of contracts.

After undergoing a competitive and transparent process of seeking a private partner in technology commercialization, the following business models may be adopted by the agency concerned:

a.Joint venture — the DA agency may enter into a joint venture arrangement with the private entity in commercializing the technology, provided the DA agency is the minority owner. The technology may constitute the DA agency's investment in the partnership.

b.Outright sale — the DA agency may sell outright its rights to the technology to the private partner, in cash or installment basis.

c.Upscaling — DA technologies may be commercialized by raising them to a higher level, upgraded, or resized according to the technology commercialization or business plan for the technology of the DA agency.

d.Licensing — the DA agency may simply license the technology to the private business and collect royalties on the basis of gross or net sales or any mode agreed upon.

e.The inventor platform — as a minority partner, DA or its agencies may form a partnership, joint venture, or corporation with private partners around its personnel who will carry the vision for the new company and without whom the company would have no purpose. In reality, the sole purpose of the company is to serve as creative platform for the ideas and inventions of its founder.

f.The agency as owner of the IPR may also choose to simply give it away to poor farmers.

V.Ownership of IPRs generated by employees of DA agencies in the performance of their regular duties.

Pursuant to RA 8293 and 9168, and the Civil Code of the Philippines, ownership of IPRs of DA Agencies can be considered a co-ownership, and can be summarized as follows: DaEcTC

Type of IPR	Owner of IPR
		Employer		Employee
Patent/Utility model/Industrial		If part of employee's regular duty, unless there is an agreement, express or implied, to the contrary.		If not part of regular duty even if employee uses the time, facilities and
Copyright		If part of employee's regular duty, unless there is an agreement, express or implied, to the contrary.		If not part of his regular
Plant varieties or plant breeder's right		If resulting from the performance of his regular duty, unless there is a written stipulation to the		If there is a written stipulation allowing the employee to own the plant variety even if it is part of his regular duties.

VI.Other benefits and privileges to be enjoyed by the DA scientist or researcher as co-owner of the commercialized technology.

To vest the rights of DA scientists and researchers to these privileges, they must be enrolled or registered in the Magna Carta for Scientists, Engineers and Other S&T Workers administered by the Department of Science and Technology.

1.Share in royalties — share in royalties are share in the proceeds of royalty payments arising from patents, copyrights and other intellectual property rights, consisting of the following:

a.Copyrights and related rights;

b.Trademarks and service marks;

c.Geographic indications;

d.Industrial designs;

e.Patents;

g. ^*Layout designs (topographies) of integrated circuits;

h. ^*Protection of undisclosed information; EHTISC

The share in royalties shall be on a sixty percent-forty percent (60%-40%) basis in favor of the Government and the personnel involved in the generation of the technology during the regular performance of their functions.

2.Secondment to the private company commercializing the technology — in the event of the actual commercialization of their technologies, and to ensure the success of the commercialization, the DA scientist or researcher who generated the technology may be seconded to the private company commercializing the technology. He/She shall be entitled to receive compensation from the private company. Such compensation shall be over and above their salaries from the government during such period and shall not be considered as double compensation; provided, that the secondment does not jeopardize or adversely affect the operations or activities of the mother agency, and that the duration shall not exceed one year at a time subject to Civil Service Rules and Regulations. Such secondment shall not affect the personnel's security of tenure or result in the loss of one's seniority rights.

This Order shall take effect immediately and shall remain in force until revoked or modified.

(SGD.) ARTHUR C. YAPSecretary

Figure 1.Decision guide for commercializing innovations at the DA

The numbers in the figure represent the steps to be undertaken by the DA agency for the effective and efficient commercialization of the technology:

Step 1: IP Creation. A technology idea is generated from research and development activities. Funding may be supported by a research contract, research funding agreement, or a research grant.

Step 2: IP Disclosure, Review, and Assessment. Inventors shall be required to submit an IP disclosure form to the DA agency IP management office.

Step 3: Evaluation of Technology Potential. The same office will review the disclosure in the areas of scientific, commercial, and legal aspects. The first part of the evaluation is the scientific review and assessment, which consists of gauging the quality of science, uniqueness, technical viability, and overall significance of the invention. In the commercial review and assessment, the technology commercialization office may provide the information. In the legal review and assessment, a team of patent agents and legal experts shall help determine the uniqueness of the invention and potential cases of infringement. Once the technology was found to be low in its potential, it shall be returned to Step 1, else will advance in Step 4. IEHScT

Step 4: Technology Development. Pilot testing shall ensue, which is implemented by both the inventor and the DA agency commercialization office.

Step 5: Evaluation of Business Commercial Potential. The data shall be turned over to the technology commercialization office which then evaluates if the technology is commercializable or not. If the probability of market success is low, the process will return to Step 4, else, it will advance to Step 6.

Step 6: IP Protection. Protection of all IPs generated shall be sought through a copyright deposit with the National Library of the Philippines, industrial protection through the Intellectual Property Office, and PVP through the PVP Board. A technical staff composed of specialists and accredited patent agents shall assist in the preparation of IP application.

Step 7: Technology Transfer and Business Development. A business plan shall be done to strategize the commercialization of the technology. The technology commercialization office shall take full charge in this aspect, which will conduct environmental scanning and initially contact prospective takers.

Step 8: Determination of Mode of Commercialization. Once the business plan is done, the best mode of commercialization shall be determined. The DA agency shall announce its intent to enter into the market, and shall undertake the standard operating procedures in the commercialization of the technology according to government accounting and auditing rules and regulations, and other applicable standards.

Step 9: Incubation, Value Chain Analysis, and Pre-Market Launch. Should the DA agency chose to transfer its technology via a startup or build-to-sell, it will undertake the processes of incubation and value chain analysis before its pre-market launch.

Published in the National Administrative Register, Vol. XIX No. 1 (January-March 2008).