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