1. International Transactions in Intellectual Property Group of Experts on the Impact of Globalisation (GGNA) Geneva 11-13 May 2009 Contact: nadim.ahmad@oecd.org Agenda item 6 Issue paper 9

2. Background Increasing importance of trade in IPPs coupled with recommended capitalisation of IPPs has reinforced the need for better data on IPP trade: –R&D –Computer software and databases –Mineral exploration and evaluation –Entertainment, literary and artistic originals

3. Recent Progress Revised MSITS and EBOPS have agreed the following classifications: 8 Charges for the use of intellectual property, n.i.e. 8.1Franchises and trademarks licensing fees 8.2Licenses for the use of outcomes of research and development 8.3Licenses to reproduce and/or distribute computer software 8.4Licenses to reproduce and/or distribute audiovisual and related products

4. But more is needed Key issue concerns trade between affiliates: Four main transactions to consider –Sale or license to use an IPP –Capital transfer –Provision by parent to subsidiary without a fee but expectation of future property income –Provision by subsidiary to parent in place of property income.

5. Recent Progress 10.1Research and development services –10.1.1Work undertaken on a systematic basis to increase the stock of knowledge –10.1.1.1Provision of customized and noncustomized R&D services –10.1.1.2Sale of proprietary rights arising from R&D 10.1.1.2.1Patents 10.1.1.2.2Copyrights arising from R&D 10.1.1.2.3Industrial processes and designs (including trade secrets) 10.1.1.2.4Other 10.1.2Other (testing and other product/process development activities)

6. Progress 11.1 Audiovisual and related services –11.1.1 Audiovisual services of which: originals – 11.1.2 Related services Complementary Groupings 2. Audiovisual transactions Charges for the use of intellectual property n.i.e. (8.4); Audiovisual and related transactions (11.1); Goods (CPC ver. 2 476 ) –2.1 of which: Licenses to use audiovisual products – License to use audiovisual products relating to Table 3: items a,b,c and d 3. Computer software transactions Charges for the use of intellectual property n.i.e. (8.3); Computer services (9.2); Goods (CPC ver. 2 478 ) 3.1 of which: Licenses to use computer software products License to use software products relating to Table 3: items a,b,c and d

7. TFIPP proposals Identified the need for more detailed, and targeted, enterprise surveys.

8. Issues for GGNA Cross border sales or licence agreements of IPPs between affiliated enterprises. Are these fees observed and recorded in BOP and the national accounts goods and services accounts? Cross border Capital transfers of IPPs between affiliated enterprises. Are these fees observed and recorded in BOP and the national accounts capital accounts. IPPs provided by parents to foreign subsidiaries without a fee but with the expectation of receiving property income in the future. IPPs provided by foreign subsidiaries to parents without a fee but in response to previous foreign direct investment. For the four flows described above, what adjustments, if any, are made to ensure that transactions are recorded as ‘at-length market prices’? When IPPs cross borders are changes made to the capital stock of IPPs. If so how? And are these only recorded for some of the four flows described above? How are volume estimates of the flows above and trade in IPPs more generally, estimated in your country? What price indices are used for deflation for example?