Innovation is a key factor in economic growth but is not only about research as it is a system with many different interacting parts including R&D as one of those elements, a senior developed nations group representative said this week. Governments need to promote policies that integrate the cross-cutting nature of innovation and favour evidence-based decision making, he said.

Innovation is a “bundle,” said Andrew Wyckoff, director of the Organisation for Economic Co-Operation and Development (OECD) Directorate for Science, Technology and Industry, presenting the OECD Innovation Strategy at the World Intellectual Property Organization on 13 July.

Research and development is the focus of public support but innovation is more than R&D, he said, adding, “We found many firms that do not conduct R&D are very innovative.”

The nature of innovation has changed and firms are collaborating at the national and international level, Wyckoff said, as demonstrated by a rise in co-authorship in scientific publications.

Bridges need to be built between the different parts of innovation, and information and communication technologies should be “a natural tool for doing this,” he said. According to the innovation strategy, “to transform invention into innovation successfully requires a range of complementary activities, including organisational changes, firm-level training, testing, marketing and design.”

The landscape of innovation has changed with young companies very active in patenting in several countries – in the United Kingdom and the Nordic areas for example – to the benefit of overall employment, and a change in the innovation leaders, with far eastern countries like Korea and China in the top echelons of innovative countries.

Innovation is a “major driver of rising living standards,” according to the innovation strategy. Estimates have shown that in several OECD countries, firms now invest as much in intangible assets as they invest in other areas such as machinery and equipment.

Policies need to encompass those changes and provide a coherent framework, the strategy said, going beyond science and technology, and recognising that innovation involves a wide range of investments in intangible assets and actors. It is essential to adapt education and training policies to current societal needs, give greater attention to the creation of growth of new firms, improve mechanisms to help the diffusion and application of knowledge through functioning networks and markets, and have new approaches and governance mechanisms for international co-operation in science and technology, according to the innovation strategy.

It also is essential to empower people to innovate, to take into account the “human capital” or consumer side, Wyckoff told Intellectual Property Watch in an interview. There is a lot of innovation “push” where products are proposed to consumers by industries, but there is a need for innovation “pull,” where consumers create a need for innovation, he said. According to the strategy, consumers influence the “design, methods of supply, introduction and uptake of new products and services,” and firms recognise this innovation pull as a way to explore new growth opportunities at lower risk.

“Unleashing innovation” is also key to the strategy, as business – particularly young firms – is the main source of job growth from innovation. Entrepreneurship should be encouraged and supported, OECD said.

And innovation should be applied to address global and social challenges, he said. A good example of this is climate change, said Wyckoff, where technologies needed for carbon capture and storage, for instance, are too expensive to be tackled by industry alone, governments need to be involved to address the issue. Some could be getting that message, as for instance a bill was introduced [pdf] in the US Congress the day after Wyckoff’s presentation that would provide incentives for research and deployment of these technologies.

Intellectual property rights are an important contributor to the building of efficient networks and markets, and they provide incentives to invest in innovation, said the strategy. However, although protecting and enforcing IP rights is essential, policies and mechanisms facilitating access and transfer of knowledge should be available.

“IP rights regimes should be of high quality and balanced,” according to the strategy. “Competition authorities play an important role in ensuring that patenting procedures are not abused and that patents are not used anti-competitively.”

IP rights are also a way to diffuse knowledge and several collaborative mechanisms, such as licensing markets or pools, and clearinghouses, are part of emerging business models promoting knowledge diffusion and creating value.

However, some nuances are necessary in the IP system, and “one size may not fit all,” Wyckoff told Intellectual Property Watch, with different needs according to economic sectors and countries. “We need more sophisticated way to look at this,” he said. This echoes a remark to the event by panellist Pedro Roffe, senior fellow, Programme on IP and Development at the International Centre for Trade and Sustainable Development.

James Pooley, deputy director general, Innovation and Technology Sector at WIPO said “IP is the package in which innovation gets delivered and disseminated,” it is the way the commercialisation is possible.

IP policy has not generally been based on evidence, said Roffe, and maximalists and minimalists have been holding the debate. There is a need to promote evidence-based policymaking and have policy coherence.

Interview with Wyckoff

On policy actions, Wyckoff said in an interview that governments take on challenges where markets fail, such as in the case of climate capture and storage technologies, which are very expensive and experimental. So the report addresses harnessing innovation for such cases. For instance, in the climate case, giving subsidies encourages people to burn too much carbon-based fuel, so making the fuel more expensive should create an incentive for innovation to occur, such as inventing new hybrid cars, he said. But then this is very long term and expensive and hurts growth in the short term, so the report raises ideas about addressing these various challenges such as using open, network innovation bringing solutions to problems “from fields you would have never expected,” he said.

“Serendipity plays a large role in innovation and you can end up getting solutions to problems from fields you would have never expected,” he said. For instance, he said he “would expect battery-technology breakthroughs to come as likely from the ICT sector as they may from the energy sector.”

During his visit to Geneva, Wyckoff met with leaders from WIPO, the World Trade Organization and UN Conference on Trade and Development, among others. He told Intellectual Property Watch that from his meetings he saw a “general recognition that innovation is much broader than just science and technology.”

“I think WIPO sees itself as part of a greater system, as does World Trade Organization – trade has a big role to play here,” he said. WTO and WIPO “need to work together to share best practices, he added. “The intent of my meetings was to look for some of these intersection points.”

There is common interest in an evidence base – data – which is difficult in cutting edge areas, he said. There also is interest in updating and expanding our economic models and theory to better reflect the importance of intellectual assets, some of which are not covered by existing IP regimes. “What is their role in economic growth?” he said. “We sense it’s important and growing, but our tools and our measurements here leave us a little bit not as clear as we would like to be.” This will involve working collectively with the WTO, he added.

On where exactly the balance lies between enough patenting to incentivise innovation and too many patents choking innovation, Wyckoff declined to try to quantify it but suggested a qualification. He said there is a “high variance across sectors and across countries at their level of development,” and where some headway might be achieved is in “knowledge networks and markets” involving a more active exchange of these materials. So far these markets have tended to be “small, peakish,” and “rather thin,” and they are trying to make them “thicker” and “more rich,” with more actors. This would allow a better evaluation and exchange, and the ability to see through prices and other factors the valuation, which, he said, “gets you toward that balance.”

Separately, WIPO will hold a conference on climate change and innovation on 14-15 October.

Leslee Friedman, an intern at Intellectual Property Watch, contributed to this article.