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The Ministry of Science has major responsibility for state support of technology commercialization in Russia. This support includes technology development, business incubators, assistance for small innovative enterprises, venture capital, support of State Research Centers, and dissemination of information on innovative technologies. Infrastructure incentives include development of commercial law, taxation reform, standards, and laws on foreign investment; however, there is also a strong need for laws (and enforcement mechanisms) less directly related to commercialization, such as control over crime and corruption. The commercialization of Soviet and Russian military technology has been attempted by the Russians both independently, through conversion programs, and in cooperation with foreign partners.
There have been other state initiatives for improvement of the infrastructure, such as programs to render the legal structure more conducive to innovation and investment. These include development of commercial law, taxation reform, standards, and laws on foreign investment; however, there is also a strong need for laws (and enforcement mechanisms) less directly related to commercialization, such as control over crime and corruption.
The Soviet Union placed a high priority on science and technology and built a huge assembly of research institutes, educational programs, design bureaus, and production enterprises embodying some measure of science and/or technology. This assembly concentrated overwhelmingly on military applications. Approximately three-quarters of this complex was located in Russia, but essential elements of many programs were located in other republics.
Starting in the Gorbachev regime the need to reduce military expenditures and increase the civilian economy was recognized. A major element of this has been the attempt to direct a much greater effort toward the development of commercial products and services based upon technologies and skills developed in the military-industrial complex (MIC).
Source: David Bernstein, on Industrial Restructuring and the Political Economy in Russia Stanford University’s Center for Inter- national Security and Cooperation, June 1999
The commercialization of Soviet and Russian military technology has been attempted by the Russians both independently, through conversion programs, and in cooperation with foreign partners. The success of attempts at cooperative commercialization by U.S. companies and Russian enterprises have also been modest, but they illustrate workable models that could be utilized by other cooperative ventures.
Almost all technology in the Soviet Union resided in the military industrial and research enterprises, and these enterprises designed and produced almost all civilian products with a technological content such as civilian aircraft, consumer electronics, and household appliances. While in Russia commercialization of technology meant that the products came into being for commercial applications, in the Western sense it meant using advanced technology to make products more competitive in cost or quality. In general these products were not competitive with Western ones, and the only exports of consequence were to satellite or client states.
In Russia technology commercialization is one element of a broad spectrum of economic reforms that are being attempted to stimulate a severely depressed economy. One could be the establishment of a sustainable business in Russia. Another definition could be the acquisition of Russian technology by an American company with a resultant improvement in products or processes followed by increased exports of American products. A venture can be successful by one definition while simultaneously a failure by the others.
The information below is primarily on the study of several cases of cooperative attempts by U.S. companies and Russian enterprises to commercialize Russian technology. They show models of what can be achieved, as well as some of the problems encountered in technology commercialization. While the cases illustrate many important aspects of technology commercialization, there are limitations on the data and analysis that must be borne in mind.
Many Russian enterprises that had been engaged in military R&D or production did attempt to convert to civilian output as their primary strategy for dealing with the sharp decline in military procurement. But in many cases this was unsuccessful. The domestic market also became more competitive as trade restrictions were removed. Foreign producers had only to take their proven products to the Russian market. The enterprises that failed to make conversion profitable continued to receive state subsidies, but they also fell into debt to their suppliers, workers, and the tax collectors.
There are several defense enterprises and new companies in Russia that have sought to operate market-oriented, profit-seeking businesses. Some of the more successful enterprises derive most of their revenue from outside of the country, but this is often a difficult market to penetrate.
The principal sources of data in this report are the interviews conducted with U.S. and Russian companies that are engaged in cooperative technology commercialization projects, during 1998. The enterprises/companies studied were
Most of the organizations have more than one commercialization venture. The case studies may discuss the spectrum of their ventures but often go into greater depth on one or two of them. The ventures chosen were judged to be illustrative of some of the major factors discussed. It was not feasible to cover all of the interesting sectors of industry or all of the interesting cases within a sector. In this sense the data are not as complete as one might desire. It is more important to be able to go into some depth with a few organizations to gain an understanding of the evolution of their thinking and operation. Some of the cases are fairly long and comprehensive; others are much shorter and deal only with a small fraction of an organization’s commercialization ventures.
In Russia the matters were clarified in 1992 with the passage of a series of laws regulating intellectual property matters. These laws constitute the primary source of intellectual property law in the Russian Federation, and despite a number of amendments throughout the years, are still in effect today.
In the Russian Federation, Rospatent is the federal executive branch body entrusted with the task of regulating the sphere of intellectual property rights, such as patents, trademarks, trade secrets, copyrights, and other related rights. The basic functions of Rospatent are similar to the ones of USPTO or any other national Patent Office: it reviews patent and trademark applications, records assignments, accredits and oversees patent attorneys and agents, maintains a publicly accessible database of issued patents and published applications, and in general serves to protect various intellectual property rights of the public. Rospatent is headquartered in Moscow. Its website provides a number of valuable resources in English.