Intellectual Property in the Digital Economy PRESENTER: Erica K. Smith JIPO/WIPO Training for TrainersKingston, JamaicaJUNE 4-6, 2012

The Digital Economy As a result of technological changes, driven by the internet, the primary driver of economic growth is based on the ability to innovate, no longer is competitiveness based on the ownership of land or the access raw materials or capital. Thus the movement to a digital economy based on the ownership/control of intangible assets which are exploited digitally.

Definition The digital economy is the global network of economic and social activities that are enabled by platforms such as the internet, mobile and sensor networks. Australian Government, Department of Broadband, Communications and the Digital Economy

Importance of Innovation “Creativity is one of the last remaining legal ways of gaining an unfair advantage over the competition.” Ed Mcabe Innovation allows for job creation and the introduction of new markets and products E.G. I-pod, I-pad

Importance of Innovation Innovation is crucial to competitive edge, sustainability and relevance. That makes Intellectual Property (IP) policy an increasingly important tool for stimulating economic growth. Innovation is based on creativity.

Impact of the Digital Economy Enterprises are required to re- look their approach to business – sales, customer service, distribution and production Such changes are evident particularly in the creative sector – new business models for music, film with streaming, digital downloads.

Impact of the Digital Economy Digital music revenues up 8% to US$5.2 billion Global revenues to record companies grew by an estimated 8 per cent to US$5.2 billion in 2011 with strong consumer demand for both single track downloads (up 11 per cent by volume), digital albums (up 24 per cent by volume) and fast-expanding subscription services. The number of users paying to subscribe to a music service leapt by 65% in 2011 to 13.4 million worldwide. (IFPI).

Impact of the Digital Economy The other area of growth has been in the distribution of music on mobile phones with the most popular format being master or real tones. It is estimated that the mobile phone market will become the largest distribution channel for music with a shift in consumer preferences from the use of clips to the use of phones as a main form of receiving music.

Size of the Digital Economy According to PWC an estimated 1.8 billion of the world population now uses the internet, and that number will grow to almost 2.8 billion by J.P. Morgan expects business-to- consumer e-commerce (excluding travel) to increase from $572 billion in 2010 to over $1 trillion by 2014.

Size of the Digital Economy Research firm IDC estimates total global e-commerce will be approximately $16 trillion in When added to the global market for digital products and services the total size of digital economy is estimated at $20.4 trillion, equivalent to roughly 13.8% of all sales flowing through the world economy.

Role of IP in Digital Economy Intellectual Property (patents, trademarks, copyright, trade secrets, design etc) is the legal system which underlies creativity. IP grants the rights-owner a temporary monopoly which serves to encourage creativity by: Allowing the rights-owner to earn a return on investment Providing legal protection

Role of IP in Digital Economy IP can also act as a barrier to innovation and creativity if not properly managed where it is too expensive to access knowledge, where it is too complicated to use – a complaint of the music industry or where it is goes too far in obstructing market entry.

Role of IP in Digital Economy The challenge is to develop a system which is flexible to technology, consumer demand and particularly for developing countries allows for affordable access and development which meets the needs of country.

Impact on Specific Forms of IP Copyright: Need for efficient licensing systems Addressing orphan works Exceptions and limitations in the digital environment Territoriality Patents: Strong growth in patents: Use of patent trolls & thickets: Impact on ability to access needed technology

Cross Reaching Issues Valuation and Financing Use of IP as collateral and financing instrument Recognition of IP on financial statements Licensing Global trade in IP licences worth more than £600 billion a year or five per cent of world trade and rising.

Cross Reaching Issues Piracy/Counterfeit Goods The internet offers a number of advantages to copyright and trademark infringers including anonymity, flexibility, a huge market and market reach and the ability to deceive consumers about the products they are purchasing.

Cross Reaching Issues Piracy remains an enormous barrier to sustainable growth in digital music. Globally, one in four internet users (28%) regularly access unlicensed services, according to IFPI/Nielsen

Impact on Developing Countries Legislative Framework Implementation of WIPO Internet and other relevant treaties Addressing local priorities Access to knowledge, medicine, technology Resource Requirements Ability to handle large quantities of work effectively (IPOs) Effective Collective Management Organisations (CMOs)

Impact on Developing Countries Education: In order to fully engage in the digital economy and to reap the benefits thereof our educational system must promote innovation, creativity and the exploitation of IP. Infrastructure: The relevant support systems need to be in place to enable: the enforcement of rights a telecommunications systems that is responsive to changes in technology

Impact on Developing Countries Identity & Culture Importantly, with changing technologies and the widespread dissemination of cultural goods and services, there is the possibility of cultural homogenisation and marginalisation.

Impact on Developing Countries All of the above must also address the challenges of the emergence of a digital divide (inequalities in the population between those with access to technology and those without) which impacts access to knowledge and information and the ability to fully participate economically.

Intellectual Property in the Digital Economy PRESENTER: Erica K. Smith JIPO/WIPO Training for TrainersKingston, JamaicaJUNE 4-6, 2012