University Licensing Of Intellectual Property In Developing Countries: A Case Study Of The Purdue Improved Crop Storage (Pics) Technology

With five million bags sold in the 2007-2015 period and thousands of rural vendors, the Purdue Improved Crop Storage (PICS) bags have been a very successful innovation for African and Asian farmers. The primary Purdue University intellectual property (IP) in PICS is the trademark. The goal of this study is to describe the role of PICS trademark licensing in the PICS success. Some key points from the study: • Trademarking PJCS seems to have been an effective strategy for combating low quality imitators. Initially, PICS trademarking was suggested by a Nigerian PICS manufacturer as a way to manage imitators. While several large manufacturers have made their own version of the triple layer PICS bag, none of those larger businesses tried to use the trademark. The small "backyard" manufacturers who tried to use the trademark stopped when sent a cease and desist letter by Purdue. Anecdotal accounts indicate that West African farmers have confidence in PICS trademarked bags and prefer to buy them to store their crops. • As donorfunding wound downfor PJCS projects, the trademark became the main mechanism for Purdue support to manufacturers and licensees. The trademark license provides a formal, legal structure within which that relationship can function. Ina context where national institutions are weak, many manufacturers and distributors find that technical support from Purdue attractive. The support provided ranged widely from help with manufacturing problems to facilitating succession when a licensee died without leaving succession plans. • PJCS has shown that African and Asian licensees are willing topay licensefees, but the transactions and opportunity costs are high on both sides. Those transactions costs include bank wire fees, exchange costs, staff effort and informal taxes required for the paperwork. In the developing country context where cash is hard to come by and work capital perpetually lacking, there is a real opportunity cost of sending some of that money out of the country, instead of reinvesting it in the business. • The sustainability of the PJCS brand probably requires moving management outside of the university. University business processes are slow and cumbersome. Management costs are high because of public sector accounting and personnel rules. University faculty and staff have many responsibilities; they cannot devote full time to commercialization of an innovation. • The most durable impact of the PICS project is in the private investment in developing the next generation of hermetic grain storage for smallholder farmers. Twenty years ago those companies would have dismissed the idea of developing grain storage technology for small holder farmers. The perception was that smallholder farmers lacked the entrepreneurial motivation and/or the cash flow to be a substantial market. PICS showed the business community that there is a market on smallholder farms for technologies that solve their problems.