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Cablegate: Moscow State University's Science Park Successful In

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RR RUEHAST RUEHDBU RUEHDH RUEHHM RUEHLN RUEHMA RUEHPB RUEHPOD RUEHSL
RUEHTM RUEHTRO RUEHVK RUEHYG
DE RUEHMO #0072/01 0141104
ZNR UUUUU ZZH
R 141104Z JAN 10
FM AMEMBASSY MOSCOW
TO RUEHC/SECSTATE WASHDC 5917
INFO RUEHXD/MOSCOW POLITICAL COLLECTIVE
RHMFIUU/DEPT OF ENERGY WASHINGTON DC
RUEKJCS/SECDEF WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEHLN/AMCONSUL ST PETERSBURG 5579
RUEHYG/AMCONSUL YEKATERINBURG 3794
RUEHVK/AMCONSUL VLADIVOSTOK 3448
RUEHZN/ENVIRONMENT SCIENCE AND TECHNOLOGY COLLECTIVE
RUEHRC/USDA FAS WASHDC
RUEAUSA/DEPT OF HHS WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEHPH/CDC ATLANTA GA
RHEHNSC/NSC WASHDC
RUEAEPA/HQ EPA WASHDC
RUEHC/DEPT OF INTERIOR WASHDC
RHFJBRQ/NSF POLAR WASHINGTON DC
RUEAFCC/FCC WASHDC

UNCLAS SECTION 01 OF 04 MOSCOW 000072

SIPDIS
SENSITIVE

DEPT FOR OES/OA, OES/STC, OES/PCI, OES/SAT, EUR/ACE, EUR/RUS,
EUR/PGI, EUR/PRA, ISN/CTR
OSTP FOR HOLDREN, ROLF
STATE PLEASE PASS TO NASA, USAID, AND NSF
HHS PLEASE PASS TO NIH and CDC
USPTO FOR LAMM

E.O. 12958: N/A
TAGS: TSPL TNGD TBIO TINT KIPR KPAO OEXC SCUL SOCI PGOV
ECON, RS

SUBJECT: MOSCOW STATE UNIVERSITY'S SCIENCE PARK SUCCESSFUL IN
PROMOTING INNOVATION

REFS: A) 09 Moscow 2885, B) 09 Moscow 2782, C) 09 Moscow 0333

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Sensitive but Unclassified; Not for Internet Distribution

1. (SBU) Summary: Over the past five years, Moscow State
University's (MSU) Science Park has launched 85 high-tech start-up,
mostly in the IT and biotech fields. Raising awareness of the
importance of IPR protection is a key MSU priority. With its
science park and other innovative activities, MSU is at the
forefront of President Medvedev's efforts to increase innovation by
commercializing research and producing the skilled high-tech
specialists needed to modernize Russia's economy. Even though they
do not have MSU's powerful high-tech cluster or political clout,
other universities and scientific institutes are still optimistic
that they will be able to take good advantage of an August 2009 law
that permits them commercialize research results by establishing
small innovative enterprises. End Summary.

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2. (SBU) On December 10, Environment, Science and Technology, and
Health section staff and Post's Intellectual Property Attache joined
a visiting U.S. Patent and Trademark Office (USPTO) attorney on a
visit to MSU's Science Park. Established in 1992 with initial
funding from the university, Ministry of Science (precursor to the
Ministry of Education and Science), and private sources, MSU's
Science Park is a joint stock company that stimulates innovation at
MSU and in the Moscow region by helping MSU's 5000 students and
scientists (including 170 Russian Academy of Sciences academicians)
start businesses based on technologies developed at MSU. The oldest
of Russia's approximately 50 science parks, the MSU Science Park now
brings in enough income from rent and its services to be fully
self-sustaining. However, both MSU Rector Sadovnichiy and Minister
of Education and Science Fursenko remain on its Board of Directors.
Its 2.5 acre campus includes an Information Technology Center and
eight smaller buildings in which 2,500 employees work in
approximately 45 high tech companies (60 percent in IT/software and
40 percent in telecom, biotech/ecology and new materials). Several
MSU Science Park companies are well-known and profitable, including
the DEC software center, REDLAB (part of Sun Microsystems), GARANT
(producer of Russian legislation databases), Intelligent Security
Systems, and three of Russia's most popular search engines: RAMBLER,
APPORT, and NIGMA.

--------------------------------------------- ------
Two MSU Successes: Nanocatalysts and Influenza Drug
--------------------------------------------- ------

3. (SBU) During a brief tour, Oleg Movsesyan, Science Park Chief
Executive Officer, explained that MSU actively reaches out to
prospective clients interested in launching high tech companies.
MSU Science Park employees provide clients with information,
training, fundraising support, advice in business plan development
and IP protection, and even assistance in finding investment at
every developmental stage, from idea to start-up. Companies do not
pay fees for services rendered until they have officially formed.
The Science Park boasts impressive results; it has accepted 197
applications since 2004 and helped give life to 85 new start-ups
(not all choose to rent office space on the premises) with an
average turnover of $300,000. Movsesyan highlighted a September
2009 investment of $10 million by the Russian Corporation for
Nanotechnologies (Rusnano) and Russian Venture Fund (RVS) into
"Start-Catalisator," a small start-up launched in 2006, for testing
and prototype development of nanocatalyst devices for cleaner
associated gas in oil fields. Movsesyan lauded MSU Science Park
start-up "MolTech Ltd" for winning first prize in Russia's 2008

MOSCOW 00000072 002.2 OF 004


Innovation Convention for designing a pharmaceutical drug called
"Grippaverin," that mitigates influenza symptoms and is currently on
sale in the Russian market. (Note: We visited a few pharmacies,
but were unable to find Grippaverin. End note.)

--------------------------------------------- --
Nano Education and Innovation Activities at MSU
--------------------------------------------- --

4. (SBU) MSU Science Vice-Rector Aleksey Khokhlov explained that
MSU's technology cluster includes the Science Park, supercomputer,
Institute of Carbonic Materials and Technologies, Center of Natural
Resources, BioIncubator, and a new Nano Research and Educational
Center. Earlier that day, Khokhlov noted that he had attended the
opening ceremony of MSU's new 500-teraflop supercomputer, which he
claimed was the seventh fastest in the world and second fastest in
Europe. (Note: Press reports after President Medvedev's November 25
visit to the supercomputer said it ranks 12th in the world. End
note.) With more than $15 million investment from the university
and the government, MSU is currently constructing a
3000-square-meter Biotech Incubator building. With twenty
applications already pending, Science Park officials expect the
BioIncubator to open in 2010 and produce up to ten start-ups per
year from 2011 onward.

5. (SBU) Khokhlov emphasized that MSU can only realize its three
key missions--education, research and innovation--by developing new
multidisciplinary educational programs, such as in nanotechnologies.
Therefore, in 2008, MSU opened its Educational and Research Center
on Nanotechnologies with courses available to fourth- and fifth-year
students. Selected faculty from the departments of Physics,
Chemistry, Biology, Material Science, Bioengineering and
Biocomputing, and Fundamental Medicine teach courses in three
specializations: nanosystems and nanodevices, functional
nanomaterials, and nanobiomaterials and nanobiotechnologies.
According to Khokhlov, the NanoCenter will prepare approximately 50
students per year for careers in Russia's growing nano industry.

6. (SBU) Beginning in February 2010, MSU will select 25 students
for a Rusnano-sponsored program at MSU that will allow private
companies to share the costs of training nanospecialists. Khokhlov
noted that this is similar to the U.S. private sector's funding for
graduate students. A December 2008 MSU-Rusnano cooperative
agreement will pay for a modern MSU Innovation Center of
Nanotechnology that will train nanospecialists for MSU's existing
Nano Educational and Research Center, provide Rusnano with
specialists in the project expertise stage, and involve MSU
laboratories in Rusnano's certification process.

7. (SBU) Even with the financial crisis, Movsesyan was optimistic
that the Science Park can continue incubating 20-25 start-ups per
year. However, he and his colleagues commented that the
entrepreneurial spirit is less developed in Russia than in the
United States because "Russian investors are hesitant to take risks
on innovative projects without proof that new products will work."
Movsesyan noted that the August 2, 2009 law allowing universities to
commercialize technology should enable the Science Park to increase
the involvement of scientific leaders and MSU department heads in
small business development. (Comment: Neither Movsesyan nor his
legal staff were able to explain us how the Science Park operated
during the period from the mid-nineties until 2009 when universities
were not allowed to have small businesses. Legal experts have told
us that the Russian government granted MSU special permission to
establish its Science Park due to the influence of its many

MOSCOW 00000072 003.2 OF 004


prominent scientists. Deputy Minister of Education and Science
Vladimir Miklushevskiy told the press in 2009 that 187 universities
would launch 2,500 enterprises, providing jobs for as many as 30,000
graduates. Although other universities have been optimistic with us
that they will be able to use this new law to good advantage, they
do not have MSU's political clout or relatively robust warchest. In
October 2009, Aleksandr Suvorinov, Head of Department of Innovation
Development and Technology Commercialization, Federal Agency for
Science and Innovations, credited the bilateral Innovation Council
on High Technologies (ICHT) recommendations with shaping the law,
particularly allowing universities to create small businesses. The
law was somewhat controversial, with Senator Nikolay Ryzhkov
comparing it to the law in the early nineties that allowed
universities to create commercial organizations. "Half the
oligarchs whose names you're always hearing are a result of that
law," said Ryzhkov. "It's the single most corrupt law and allows
for everything we create with state money to be pumped dry." End
Comment.)

----------------------------------
Technology Transfer and IPR Issues
----------------------------------

8. (SBU) Movsesyan explained that Science Park staff makes
significant efforts to raise IPR awareness. The concept of
safeguarding intellectual property is the first topic his
consultants must explain to students and scientists, who often do
not understand either the importance of protecting their work or
that they "should not disseminate their ideas for free." In 2004,
MSU opened a Center for Technology Transfer which provides no cost
assistance to scientists who want to commercialize research results.
Working closely with MSU's Science Park, the Tech Transfer office
provides educational programs and information for MSU-based small
companies and compiles databases of all MSU research results. The
MSU Tech Transfer Office provides services to protect IPR,
functioning like similar offices at U.S. universities, whereas the
Science Park focuses on the incubation of start-ups and creating
favorable conditions for small enterprises. Both institutions
stated that rightholders in Russia experience problems with IP
protection due to deficiencies in IP legislation, lack of clear
procedures for civil litigation, and poor IP enforcement in general.
Even before Russia rehauled its IP legislation in 2008 by enacting
Part IV of the Civil Code, Russian law allowed for both "exclusive"
and "non-exclusive" licensing agreements. Although rightholders
have tended to license their IP via "non exclusive" contracts,
Movsesyan commented that individual investors may in the future
prefer to own their IP on an exclusive basis. The Science Park
offers courses on how to protect intellectual property rights,
including the legal aspects of concluding exclusive licensing
agreements.

10. (SBU) Comment: MSU has used its Science Park and the other
elements of its innovative infrastructure and its unparalleled
political clout and funding to create a comfortable environment to
partner with innovative businesses, racking up some impressive
results. However, significant obstacles to innovation on a national
scale remain. Few universities have the funding to develop high
tech clusters with the top-notch equipment, facilities, and staff
that MSU offers. President Medvedev is a strong supporter of the
National Education Project, begun in 2005, to increase Russia's
global competitiveness by improving education. If successful, it
will go a long way toward improving innovation and addressing
problems with brain drain. But for Russia to become a global player
in high tech, as President Medvedev exhorts, it must also do more to

MOSCOW 00000072 004.2 OF 004


improve the business environment, foster entrepreneurship, address
deficiencies in IP legislation and enforcement, and expand
innovative elements of infrastructure nationwide. END COMMENT

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