Transcript National Workshop: The TRIPS Agreement: Implications for

INTERNATIONAL ANNUAL WTO FORUM KALININGRAD
25 – 27th of March 2015
The TRIPS Agreement and technology
transfer
Anna Caroline Müller,
Legal Affairs Officer
Intellectual Property Division, WTO
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Part I
TECHNOLOGY TRANSFER & THE
TRIPS AGREEMENT
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What is technology transfer?
o Transfer of technology mainly refers to any process by which the technical
information of one party is acquired or learned by another and
successfully incorporated into the latter’s production structure.
o This information may be embodied in products and inputs or disembodied
as knowledge codified in blueprints and formulas or know-how. Or TT may
simply involve purchasing an input or service and placing it into
production without acquiring know-how.
o Full TT generally requires absorbing knowledge about how a process
works.
– No formal transaction in cases where a technology is easily imitated or copied,
such as software and pharmaceuticals. Complex machinery, processes and
financial services may not be so easy to copy without the co-operation of the
right owner.
– Absorption of knowledge presumes an initial level of knowledge – the higher
the initial level the quicker and more effective the absorption.
(This section adapted from SCP Document and Maskus 2012)
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How does technology flow across
borders?
o Trade in goods and services
o Foreign direct investment (FDI) through multinational enterprises (MNEs) –
mergers and acquisitions – acquiring tangible and intangible assets, technology
spillovers (but not automatic).
o Technology licensing, either within firms (where MNE retains proprietary control
of the intellectual property and know-how) or between unrelated firms at arm'slength – permission to use the technology in a specific way within specific
jurisdictions.
o
Mixed form of licensing and FDI - joint ventures
o Technology services -cross-border movement of technical and managerial
personnel – formal- through contracts , informal -through technology spillovers of
tacit knowledge
o Non-market channels such as imitation, where technology is in the public
domain
o
o
o
through product inspection, reverse engineering, de-compilation of software, and even simple trial
and error
studying patent applications, technical publications, documents
temporary migration of students and scientists to universities, laboratories, and conferences
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Trade, the TRIPS Agreement and
Technology Transfer
o Weak IPRs constitute significant barriers to manufacturing
trade
o Strengthening IPRs leads to more imports of IP-sensitive goods
(Maskus and Penubarti, 1997; Smith, 1999)
o Effects more in countries with effective imitation threats, weak imitation
countries suffer negative market power effects (Maskus, 2000).
o Ivus (2010): high-tech exports to reforming countries (GPindex wise) higher than low-tech exports post-1994.
o Addition of $34 billion in OECD countries = 8.6% higher quantitative
imports in non-colonial developing countries
o Maskus, Yang 2012: patent reform has significant impact on
exports in both developed and developing countries, esp.
post-1995 and in high tech areas
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Patents and global inventive activity
o Lerner 2002: Foreign patent applications, especially from high
income countries and large populations, increase with
strengthened patent protection:
o Not so much from countries with already high levels of protection
o Thus, countries with large populations and growing incomes and initial
weak patent protection could benefit in the long run
o Moser 2005: historically, countries with patents produced
more innovation in certain sectors such as machinery but not
so in food processing, textiles
o Branstetter et al, 2006: significant increase in foreign
applications
o Skeptic: Yi Qian, 2007: No significant impact of drug patents
on innovation even 10 years after introduction but interaction
with income, education levels and economic freedom
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TRIPS and inventive activity
o Arora et al, 2011: Indian pharmaceutical firms
increased R&D/sales ratio from 0.23 in 1990 to 8.5 in
2005, largest growth after 2000; patents in US also
increased 10 fold to 600 in 2005.
o Hu and Jefferson, 2009: Inter alia, Chinese firms
significantly increased propensity to patent in 20001, patent revisions, WTO?
o Earlier studies of La Croix et al showed this for Japan
but not for Korea.
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IP and technology transfer - some
prevailing ideas on solutions
o A legal view: legislate to directly access patented technology, e.g.
technology transfer regulations, patent exclusion, revocation, compulsory
licensing or government use orders
o An administrative view: construct mechanisms to facilitate technology
pooling or placing in the public domain
o all proprietary technologies/ just publicly funded/just public domain
o voluntary/compulsory
o non-exclusive/exclusive
o royalty-free/reasonable royalties
o Facilitate patenting and licensing
o Patent fast track;
o licences of right
o An information view: improve the flow of information about public
domain/patented technologies (patent landscapes) and about licensing
interests and opportunities
o An economic view: work on market incentives for both innovation and
technology diffusion; real barriers are poor trade and investment policies,
inadequate infrastructure and skill levels to absorb technologies.
o Need more than IPRs e.g. public investment to incentivise more innovation.
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How much technology transfer is taking
place?
o Hard to quantify how much generated and how much transferred – patent
counts and RLF one common proxy – problematic
o Not like any other commodity – depends on many factors, for instance,
the size of the market, anticipated growth of the relevant market,
geographical location of the market (such as proximity to a large market),
competition in the market, available labour skills and costs, physical and
telecommunication infrastructure, availability of financial services,
political and economic stability and transparent governance structure.
absorptive capacity..
o International RLF receipts for IP increased from USD 2.8 billion in 1970 to
USD 27 billion in 1990 (almost 10-fold in 20 years),and to approximately
USD 180 billion in 2009 (six-fold more in next 20 years).
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Where is the technology transfer taking
place?
o The global flow of RLF payments largely occurs among the
industrially more advanced countries of North America,
Europe and East Asia. In 2009, high-income countries
accounted for around 98% of the global RLF receipts, which
was unchanged from ten years earlier.
o Picture changing – With respect to RLF payments, however,
the share of high-income countries decreased from 91% in
1999 to 83% in 2009, while the share of middle income
countries increased from 9% in 1999 to17% in 2009.
o Globalisation – global value chains – MIWI
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Do IPRs help or hinder technology
transfer?
o What is clear is that stronger IPRs lead to more trade
(imports), more FDI and through this to more technology
transfer
o Intra-firm data shows royalty payments for technology
transferred to affiliates increase at the time of patent
reforms, as do affiliate R&D expenditures and total levels
of foreign patent applications - Branstetter et al (2006.
2011) – not clear if applicable to small countries.
o Some say stronger IPRs blocks learning by imitation –
anecdotal evidence
o Difference between sectors – debate about green
technologies
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Article 66.2
o Developed country Members shall provide
incentives to enterprises and institutions in
their territories for the purpose of promoting
and encouraging technology transfer to leastdeveloped country Members in order to
enable them to create a sound and viable
technological base.
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IMPLEMENTATION OF ARTICLE 66.2 OF THE TRIPS
AGREEMENT
Decision of 19 February 2003
o
o
o
o
Developed country Members shall submit annual
reports on actions taken or planned
They shall provide new detailed reports every third
year and,
In the intervening years, provide updates
These reports shall be submitted prior to the last
Council meeting scheduled for the year in
question.
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Reports to contain the following information:
a)
b)
c)
d)
an overview of the incentives regime put in place to fulfil
the obligations of Article 66.2, including any specific
legislative, policy and regulatory framework;
identification of the type of incentive and the government
agency or other entity making it available;
eligible enterprises and other institutions in the territory of
the Member providing the incentives; and
any information available on the functioning in practice of
these incentives
o These arrangements shall be subject to review, with a view to
improving them, after three years by the Council in the light
of the experience.
o LDC delegations have not engaged in a dialogue with
developed countries so far.
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Differences of view on definition of
technology transfer
o LDC view:
o Physical capital and goods; skills and know-how; information and data i.e.
the supply of hardware, such plant machinery, and the supply of software,
such as research, training and education.
o Developed countries:
o This broad definition of technology transfer is very similar to the one
provided by New Zealand (IP/C/W/594/Add.1) and Switzerland
(IP/C/W/594/Add.5), which is based on a UN definition. It includes four
key modes of technology transfer: (i) physical objects or equipment; (ii)
skills and human aspects of technology management and learning; (iii)
designs and blueprints which constitute the document-embodied
knowledge on information and technology; (iv) and production
arrangement linkages within which technology is operated.
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Part 2
SOME COMPARATIVE DATA
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Concluding remarks
o Link between trade, IP protection and
technology transfer.
o What measures are needed to increase
transfer of technology?
o Importance of investment in R&D, functioning
IP system to increase inflow of technology,
export of technology-intensive goods and
services.
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