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Intellectual Property and Innovation Development

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1 Intellectual Property and Innovation Development
WIPO/AEPPI INTERNATIONAL SYMPOSIUM ON INTELLECTUAL PROPERTY: CHALLENGES FOR DEVELOPING COUNTRIES IN A GLOBAL ECONOMY Marriott Hotel, Cairo, December 2 and 3, 2007 Patricia Simão-Sartorius Program Officer – Intellectual Property and Economic for Development Division WIPO

2 Intellectual Property - New Imperative and Focus Shift
Earlier, emphasis on strengthening legal infrastructure/IP offices capacity building and HRD After TRIPS, extended assistance contributed to better understanding of IP concepts greater use of system

3 New aim: capitalize on technical/legal assistance rendered for more economic, social and cultural deliverables Not merely to preserve market exclusivity but to build strategic partnerships IP assets - investment, not business costs Use IP for Economic and Cultural Development and to enhance Growth Competitiveness

4 Growth Competitiveness Index
Three Variables : 1. Public Institutions Protection of rights Resolution of disputes Efficiency / transparency 2. Macro Economic Environment Monetary and fiscal policies 3. Technology Without tech progress can accumulate capital but not sustainable growth

5 How is Technology Obtained
Core Innovation Technological Diffusion

6 R&D expenditures of selected region and countries: 1990–2003
Source: National Science board, Science and Engineering Indicators, 2006 1

7 Growing Investment in production of knowledge
EPO, Scenarios for the Future, 2007 Beatriz Amorim, Agosto de 2007

8 Technological Diffusion
Rapid growth if successful in adopting/adapting foreign technologies FDI - effective way of technology transfer and facilitated by the domestic environment Size of the market Stability of macro economic policies Free repatriation of profits and dividends Guarantees against nationalization Protection of Intellectual Property Rights

9 Patents and Technological Development
Facilitate transfer and investment Disseminate initial knowledge as free input (“public good”) to produce further knowledge as output (“private good”) Limit “free riders” not “innovators” Encourage licensing arrangements Catalyze new technologies and businesses

10 How Trade Marks Create Economic Value
Increase sales volumes and price Stabilize demand through consumer relationships Earn royalties through licensing and franchising Transfer brand equity to new product categories

11 Copyright and Economic Development
Protects creativity and ensures adequate recompense for creators and producers Balances public with private interest Preserves cultural heritage Prevents creation from being reproduced elsewhere and competing with original Enhances economic growth

12 Innovation Model Cash flow pattern for a product (innovation)
Product passes through the following stages Development Introduction Maturity Saturation Decline Investment expenditures continue after market introduction due to product variants design adaptations production automations new market investments

13 Product Life-Cycle Development Introduction Growth Maturity Saturation Decline Total Income Gross Income Sales Margins Operating Costs R&D Time Marketing Production Total Investment

14 Diffusion Processes for Innovations
Imperative to be competitive in technology related businesses In fact, to create economically successful new products Innovation a “routinized activity” Commercialization of product leads to buyer and seller diffusion Innovating company do their best to accelerate buyer diffusion for good profit margins prevent seller diffusion that reduces profit margins

15 Benefits For Innovator
Buyer Diffusion: Trademarks and Designs boost marketing efforts Patents signal technological superiority Seller Diffusion Limited/delayed by keeping process/technology secret Patents/copyright create entry barriers

16 Benefits For Society Benefits: Costs: innovators/producers net surplus
additional consumer surplus due to cost savings from the invention dissemination of patent information Costs: Installing and operating a patent system - offices, enforcement mechanisms, inventors costs etc

17 Some aspects of Innovation
Creative destruction, introduced in 1942 by the economist Joseph Schumpeter, describes the process of transformation that accompanies radical innovation. In Schumpeter's vision of capitalism, innovative entry by entrepreneurs was the force that sustained long-term economic growth, even as it destroyed the value of established companies that enjoyed some degree of monopoly power. Examples of this theory: Companies that once revolutionized and dominated new industries – for example, Xerox in copiers or Polaroid in instant photography – have seen their profits fall and their dominance vanish as rivals launched improved designs or cut manufacturing costs (lowering their own costs allows them to charge lower prices to customers, thereby drawing customers away from less efficient competitors who eventually close their doors or move into other products where they are able to find a cost advantage). Wal-Mart is a recent example of a company that has achieved a strong position in many markets, through its use of new inventory-management, marketing, and personnel-management techniques, using its resulting lower prices to eliminate the profitability of older or smaller companies. Just as older “giants” perceived to be juggernauts by their contemporaries (e.g., Kmart, Sears) were eventually undone by agile and more innovative competitors. Wal-Mart faces the same threat. Just as the cassette tape replaced the 8-track, only to be replaced in turn by the compact disc (which is now being undercut by MP3 players), the seemingly dominant Wal-Mart may well find itself an antiquated company of the past. This is the process of creative destruction.

18 Role of the State

19 Role of State In order to accelerate economic development policy makers need to prevent tendency to under invest in R&D How? i.e.: create incentives for additional investments; favourable financial system During its life-cycle, product is subjected to competition - initially weak, subsequently strong Innovators use property rights to check imitation and ideally should be able to count on effective enforcement system in order to stop it – results in encouragement of innovation. Easy in the case of physical property – associated with excludability However, difficult for IP, as knowledge characterized by non-excludability and non-rivalrousness

20 Hence, state intervention imperative in the form of IP protection
Market distortions created, but required for the wider good of society Provides innovator/creator with a source of potential competitive advantage In most cases for a limited period of time, during the early period of the product life-cycle For instance, patents enable inventor to obtain a steady stream of operating profits from product inventions cost reducing process inventions learning advantages-minor cumulative improvements

21 National Policies for Industrial, Economic, Educational, and Technological Development
Education / Capacity Building Basic Education Technical Education Science, Technology and Engineering Training Graduate Education Entrepreneurial Training Policies for continuous “learning” and for the built up of an indigenous technological capability IP Education at different levels of formal education Training for IP agents and IP technology managers Infrastructure and Institutional Framework Transportation Communication Energy Ports Standards and Certification Judiciary system Intellectual Property Offices IP enforcement / IP Specialized Courts Financial System / Funding agencies Banking system Special loan system for businesses undertaken in special areas Special Loans for SMEs Venture capital Incentives for investments in R&D Programs for the financing of IP protection (including the international protection of trademarks and patents) Science, Technology, and Innovation Science and Technology funding programs Programs for funding technology development within enterprises Policies for university-industry links Special policies and incentives for IP generation and protection among innovative actors (researchers, university professors and SMEs) Promotion of IP Management Strategies – valuing and commercializing IP Programs to support the establishment of TTOs Monitoring technology

22 National Policies for Industrial, Economic, Educational, and Technological Development (cont’d)
External Relations / Foreign Trade International Treaties – management of current agreements and analysis on the convenience of adopting new ones Promotion of bilateral and multilateral interactions on all fields Special policies for exporting Branding Strategies for Exporterdfihhsvi IP Audit – a tool to facilitate decision-making IP Strategies – requires policy measures at several levels, in several areas

23 WIPO’s Strategy

24 Strategic Use of IP for Development
Move from basic infrastructure needs to effective exploitation of assets At the macro-level examine interface between IP protection and growth Test, validate, challenge assumptions Enable SMEs to intensify IP use and expand role in employment generation, investment, exports Development/management of IP assets primary concern for private enterprises - technology and cultural industries sector

25 Some Elements Strengthened documented evidence on the effects of IP protection on economic development Development of conceptual frameworks, methodologies, indices to assess IP situations at national level Enhanced international exchange of research results Partnerships with stakeholders

26 Some Elements(contd.) Improved capacity by SME support institutions to deliver IP services to their units Strengthened ability of businesses and research institutions to develop and manage IP assets Greater awareness on financial support for IP asset development

27 Thank you

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