Challenges and Opportunities for Innovation in the Public Works ...

5. Assurance that each discovery is separately evaluated to determine
the nature of potential product liability risks.
6. Assurance that the qualifications of each potential commercial
participant in a technology transfer venture are thoroughly reviewed
respecting the participant's financial and technical capacity and
capabilities.
The adequacy of each element must be independently measured to assure that the
management structure and the organization of the institution affords the appropriate level
of control consistent with the need to protect the financial integrity of the institution.
The most delicate aspect of any technology transfer effort is the selection of the
commercial partner. It is this entity that will bear all or a major portion of responsibility,
depending upon the form of technology transfer, for the transformation of the discovery
into a commercializable form, the development of a means of production and the
marketing of the resultant product. The commercial partner may also assume
responsibility for the perfection of intellectual property rights and will certainly play a major
role in the financing of the enterprise. This being the case, it is remarkable the degree to
which agencies and institutions are ready to do business with entities that lack
demonstrated capacity to fulfill those tasks.
There is an affirmative obligation on the part of the agency or institution to very
carefully and diligently screen potential commercial partners to ascertain that they have
the ability to perform in the expected fashion. Such a review must cover both the
substantive expertise and experience of the company in the commercialization of the
specific discovery and its financial situation. It must at all times be recalled that it is the
agency or institution that is transferring something of value to the commercial entity, and
it is therefore as much the latter that must prove itself worthy as the institution must
demonstrate the value of the discovery. Such a position is as important from the
perspective of risk management as it is a component of an effective negotiating strategy.
B. SHIFTING THE BURDEN OF LOSS: INSURANCE, INDEMNIFICATION
AND ASSUMPTION OF RISK.
The best internal management cannot assure complete protection from losses
arising out of technology transfer activities. It is therefore incumbent upon the agency or
institution to make use of available methods of risk transfer to ensure that such losses as
may occur do not impair the functioning of the institution. It is important to note that the
shifting of the burden of loss does not in any way affect the issue of liabili1y. Rather, it
speaks to the question of who pays one liability is established. Thus, primary attention
must be paid to reducing the risk of loss: indeed, the cost of risk transfer devices is to
a significant extent driven by the degree of risk against which the protection is sought.
To the extent the agency or institution has reduced the risk of loss through the various
techniques discussed in this analysis, the availability and the economy of loss transfer
mechanisms will be enhanced. Conversely, to the extent an agency or institution fails
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