Implementation Plan of Shanghai Municipality for the Pilot Innovation and Reform of Scientific and Technological Advancement Commercialization

With a view to implementing the directives of the 20th CPC National Congress, as outlined in the Third Plenary Session of the 12th CPC Municipal Committee, this Implementation Plan is hereby formulated to enhance the reform of policy on licensing, disposition, and profit rights for scientific and technological advancements, to amplify the innovative potential of scientific researchers and to foster technology transfer and commercialization, according to the principles outlined in the Specific Plan for the Technical Factor Market under the 14th Five-Year Plan, the Opinions of This Municipality on Further Delegating Power and Loosening Restrictions to Stimulate Scientific and Technological Innovation Vitality, and other documents.

I. General Requirements

1. Guiding principle

Guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, we aim to comprehensively implement the directives issued by the Party's 20th National Congress and capitalize on the opportunity to reinforce a leading, global scientific and technological innovation center. This approach involves a comprehensive implementation of the innovation-driven development strategy, recognizing that the true value of scientific and technological advancement innovation can only be realized through commercialization and that the failure to commercialize is the greatest loss. We will create new systems and models for advancing the development of scientific and technological advancement commercialization, and endeavor to remove any barriers limiting such commercialization in order to facilitate the deep integration of science and technology with the economy.

2. Fundamental principles

Consolidate responsibility and improve motivation. Fully encapsulate this Municipality's experience with earlier similar pilot reforms to create development policies; enhance the primary responsibilities of pilot entities and boost their initiative in participating in the pilot project.

Let the market lead and the government guide. Adhering to market economy principles and scientific and technological innovation laws, maximize resource allocation based on the decisive role of the market, maximize benefits, and optimize efficiency. The government shall enhance organizational coordination, policy guidance, and service guarantees, and exercise prudent and inclusive regulation.

Issue-oriented, targeted policies. Taking into account the bottleneck problem faced while commercializing scientific and technological advancements, prioritize the operability of the reform policies, allocate more technical factor market resources, and gather more professional forces to provide support and guarantees.

3. Pilot entities

The pilot project will focus on public scientific research and higher education institutions such as universities, research institutes, and medical and health institutions willing to participate. These institutions should have a perfect mechanism of commercialization and a proven track record in commercializing scientific and technological advancements and be recognized as having had a vital role in such commercialization. Shanghai-based public scientific research institutions under the Central People's Government are encouraged to participate.

II. Main Tasks

The scientific and technological advancement commercialization pilot innovation and reform will focus on three main aspects: the reform of the property rights system for scientific and technological advancements, the operation and management of scientific and technological advancements, and ensuring compliance during scientific and technological advancement commercialization, encompassing seven pilot reform tasks and one compliance task.

1. Assigning scientific researchers title to their scientific and technological advancements

Title to intellectual property created by a pilot entity's scientific researchers shall be held by the entity and deemed state-owned assets. We will expand the reform of the property rights system for scientific and technological advancements and trial assigning full or partial ownership of works made for hire to the inventors, provided that the rights and interests of the entity involved in the commercialization of scientific and technological advancements are explicitly defined. Based on actual conditions, pilot entities may also assign part of the ownership of the works made for hire owned by the entity to their inventors, making the pilot entities and their inventors joint owners. Alternatively, they may assign their share of ownership rights to the inventor through a technology transfer, and the inventor may independently commercialize the advancements after obtaining complete ownership. However, works made for hire that may impact national security, national defense security, public security, economic security, social stability, and other matters that pertain to national interests and significant social public interests, as well as those involving state secrets, shall not be included in such assignments.

Inventors shall reach a written agreement with their team members on matters such as the benefits distribution ratio, and appoint a representative to request the pilot entity assign ownership appropriately. The pilot entity will then review and approve such requests and announce their decision internally for no less than 15 days. The pilot entity and the inventor will then enter into a written agreement on matters such as a reasonable ratio for the distribution of benefits arising from the commercialization of the scientific and technological advancements, the decision-making process during the commercialization, how commercialization expenses are to be shared, and intellectual property rights protection expenses, and the agreement shall also specify the rights and obligations of all parties involved in the work made for hire.

2. Granting scientific researchers long-term licenses to their works made for hire

Pilot entities may grant scientific researchers a long-term license to use their scientific and technological advancements for at least ten years. Researchers shall be required to submit an implementation plan for commercializing these advancements to the entity, and then, independently or in collaboration with other entities, implement the commercialization. The pilot entity shall review and approve the plan, and announce the results internally for no less than 15 days. The pilot entity and the inventor of the scientific and technological advancements shall sign a written agreement on the reasonable distribution of benefits from the advancements and other applicable matters. Pilot entities may then decide to extend the long-term license if the inventor(s) has(have) fulfilled their part of the agreement and the commercialization yields positive progress and benefits. Any long-term licensing agreement entered into and in force during the pilot period shall remain valid pursuant to the applicable agreement.

3. Creating a separate management system for works made for hire

Pilot entities shall be granted full autonomy in managing scientific and technological advancements. Municipal pilot entities will also receive additional support to manage works made for hire pursuant to the municipal public institutions' policies for managing state-owned assets when advancing the commercialization of scientific and technological advancements. Additionally, Shanghai-based entities under the Central People's Government shall continue actively exploring possible solutions based on actual circumstances.

Pilot entities are required to abide by laws on the commercialization of scientific and technological advancements, set up functional departments, optimize management procedures, and refine assessment methods. Research should also be conducted on the processes for managing scientific and technological achievement assets distinct from ordinary state-owned assets, ledger registration, rights protection, advancements abandonment, and other aspects of advancement management throughout the whole commercialization process to improve standardized asset management in areas such as identification, use, and disposition of scientific and technological advancements. A market-oriented value assessment path will also be established and optimized to transition advancement management from "administrative control of assets" to "resource allocation by the market".

Asset evaluation is not required when a pilot entity assigns, licenses, or invests its scientific and technological advancements for a price to a wholly state-owned enterprise. However, if the pilot entity’s transfer, license, or investment in its scientific and technological advancements at a price involves a non-fully state-owned enterprise, the entity can independently decide whether an asset evaluation is necessary. All income obtained from the commercialization of scientific and technological advancements will be retained by the pilot entity. This income will be incorporated into the entity’s budget and will not be submitted to the State Treasury. Instead, it will be used by the entity for work such as scientific and technological research and development and advancement commercialization.

4. Creating a professional and efficient operational system for scientific and technological advancements

Pilot entities shall set up specialized technology transfer organizations (agencies) to improve financial security. Technology transfer organizations (agencies) shall also establish a professional, efficient service system with flexible processes and diversified models for operating scientific and technological advancements. They will actively cooperate with third-party professional technology transfer organizations in the creation of a benefits-sharing system and jointly carry out services such as advancement disclosure prior to patent application, commercialization value assessments, commercialization process designs, intellectual property rights protection, and technology investment and financing, or outsource such services to the latter to achieve centralized custody operation of scientific and technological advancements, such as patents.

5. Creating an incentive system for employees involved in the commercialization of scientific and technological advancements

Pilot entities are responsible for setting up a system that ensures job security and promotions for employees involved in the commercialization of scientific and technological advancements, as well as a class-based position evaluation and promotion system based on the characteristics of scientific and technological advancement commercialization and professional service employees. Eligible higher education institutions are encouraged to advance academic education in technology transfer and improve talent reserves in this field.

6. Creating channels for the development of start-ups by scientific researchers

Establish a compliance development process featuring well-defined property rights and clear benefit distribution to support pilot entities in expanding opportunities for scientific researchers to form ventures by granting them property rights or long-term licenses for their works made for hire. Pilot entities are also permitted to undertake compliance rectification for ventures previously formed using their scientific and technological advancements.

7. Establishing a professional indemnity framework for the commercialization of scientific and technological advancements

Pilot entities shall consolidate primary responsibilities for the commercialization of scientific and technological advancements, and clearly define the subject of responsibility, scope of responsibility, scope of liability exemption, liability exemption processes, negative lists, and other matters in the commercialization while following the principle of "Three Distinctions" to create a professional indemnity framework in line with the entity’s actual circumstances.

8. Establishing a market-based evaluation and compliance transaction guarantee system for scientific and technological advancements

This Municipality's technology transaction venue shall take a proactive role in serving the innovation and reform activities of the pilot entities. It will establish a rights and interests registration service system for scientific and technological advancements applicable to tasks such as separate management of scientific and technological advancements to ensure the compliance of pilot entities' transactions and liability exemptions. Moreover, it will establish a reasonable and feasible market-based evaluation system for scientific and technological advancements that links professional institutions capable of assessing technological value to facilitate the determination of the value of advancements and assist advancement owners during the commercialization decision-making process, as well as the funding parties’ investment decisions.

III. Pilot Requirements

1. Enhancing organizing and implementation

Pilot entities shall prioritize pilot work and set up a management team or specialized management team for the commercialization of scientific and technological advancements to be responsible for organizing and coordinating internal scientific research, finance, state-owned assets, human resources, disciplinary review, and audit departments.

2. Developing management systems

Pilot entities shall participate in the pilot based on actual circumstances and the task items involved and create a supporting management system within one year of the commencement of the pilot. The system shall encompass the workflow and decision-making process for different escalation methods, a separate management system for scientific and technological advancements, and a professional indemnity framework. Additionally, processes for scientific and technological advancement ownership and the distribution of the benefits from their commercialization, and for researchers starting their own businesses shall be improved.

3. Improving support

Pilot entities shall designate their technology transfer organization (agency) or appoint an appropriate management agency to carry out the pilot tasks. The designated organization (agency) shall actively explore opportunities for advancement commercialization and collaborate with third-party professional technology transfer organizations to better manage the commercialization of advancements, improve collaborations with incubation platforms, such as university science and technology parks, and provide platform support for the formation of new entities based on commercialized advancements.

4. Prompt summaries and reports

Pilot entities are expected to provide periodic summaries of their work during the pilot project, utilizing systems such as annual reporting systems and technical contract registration. Pilot entities shall report annual pilot project work as required, and promptly identify and address common problems and existing issues.

IV. Pilot Guarantees

1. Enhancing organization coordination

Following the municipal joint meeting system for the development of scientific and technological advancement commercialization, the Municipal Science and Technology Commission will form a specialized development group in conjunction with the appropriate municipal departments to coordinate with the applicable national departments, hold ad hoc exchanges with pilot entities at least quarterly, and offer prompt solutions and corrections for issues and discrepancies encountered by pilot entities. Additionally, the group shall regularly summarize and assess the pilot entities' experiences and the policies they implemented to serve as models for future initiatives.

2. Improving resource allocation

Improve guidance and services offered to pilot entities, in addition to strengthening policy guidance and resource allocation for the pilot entities and their advancement commercialization activities. Pilot entities shall be guided to establish an association of pilot entities to bring together different technology transfer institutes and platform resources, fostering an open environment that encourages sharing, mutual learning, and mutually beneficial collaboration. Professional courses and practical training bases focused on technology transfer will be provided for technical managers to receive education with formal schooling documents or without such documents via platforms such as the National Technology Transfer Personnel Training Base, and pilot entities shall be given priority in the provision of technical management trainees tailored to their actual needs.

3. Prudent and inclusive regulation

On the basis of adhering to fundamental principles, trial and error in innovations and market self-corrections are acceptable. Together with other appropriate municipal departments, the Municipal Science and Technology Commission shall develop operational guidelines for the professional indemnity framework and management guidelines for works made for hire to facilitate pilot reform work, encourage pilot entities to commercialize their advancements, and encourage scientific researchers of the pilot entities to be creative and take the initiative to start their own businesses.

V. Pilot Arrangements

1. Pilot period

Three years, following the launch of the pilot initiative.

2. Application process

Following discussions with other municipal departments, the Municipal Science and Technology Commission will issue a notice on the pilot initiative pursuant to this Implementation Plan. Entities applying for the pilot must prepare their implementation plans in compliance with the requirements outlined in the Notice and, together with the appropriate commissions, offices, and bureaus (administrations), the Municipal Science and Technology Commission will organize expert demonstrations and issue the finalized list of pilot entities.