In Search of Evidence: The IP Statistics For Decision Makers Conference (IPSDM) 2016

A summary and analysis of the IPSDM conference 2016, Sydney

By Ines Duhanic

The annual “Intellectual Property Statistics for Decision Makers Conference” took place in Sydney, Australia on 15-16 November. After Vienna last year, the Organisation for Economic Co-operation and Development (OECD) as the key initiator organised the landmark forum this time with the Australian Government through its national intellectual property office, IP Australia. In this environment where the Australian economy could recently mark its 25 years of continuous growth and where the government just launched a new “National Innovation and Science Agenda” in the form of a new tax reform package, we could follow panel discussions and speeches about how empirical evidence can be gained for innovation.

1. The IPSDM as Empirical Research Project

Session 4 on “Trade marks, brands and geographical indications” with Hazel Moir (Australian National University) discussing her paper on “Geographical indications: EU policy at home and abroad.” Left to right: Luke Meehan (IP Australia), Andrew A. Toole (USPTO), Beth Webster (Swinburne University of Technology), and Hazel Moir.

Evidence-gathering is omnipresent in all relevant intellectual property policy debates. It became so important that the OECD started a few years ago to cooperate with national intellectual property offices in data exchange projects. What originally started as simple workshop resulted in one of the key policy conferences worldwide.

Still a young undertaking, the IPSDM aims at discussing how intellectual property data, statistics and analysis are used to identify possible potential and shortcomings for decision-makers. A decision-maker means in this context any individual within a business-relevant entity accustomed to making business-relevant decisions to find the best possible solutions to everyday problems – either as governmental stakeholder or as director of a small-sized company.

While being faced with the pressure to define highly important strategic steps in an often fast-paced environment, questions such as whether the company should invest in research and development (R&D) projects and protect their innovative outcomes under a trade mark or patent become crucial as the costs can be enormous. What are the statistics in the relevant industries? What is the profitability of trade mark portfolios? How is intellectual property (IP) regulated in free trade agreements? How are entrepreneurship and firm growth connected? What is the survey evidence in patent value? These were some of the questions raised at the IPSDM conference in Sydney.

The conference invited submissions on all empirical research relating to intellectual property, such as IP rights and firm performance, geographical indications and regional IP policies, or IP and start-ups. The outcome was a two-day reunion of the conference scientific committee members, such as Mark Schankerman from the London School of Economics, Reiko Aoki from Hitotsubashi University, or Yann Ménière from the European Patent Office (EPO) discussing and questioning submissions from highly regarded experts within the field of innovation policymaking.

2. Program Outline and Key Presentations

The conference kick-started with the thunderbolt of the first interesting statistics: Gender equality in female inventions has risen and is extraordinarily high in China and South Korea. The greatest gender gaps among the top Patent Cooperation Treaty (PCT) countries are in Germany and South Africa, according to the introductory speech of Francis Gurry, director general of the World Intellectual Property Organization (WIPO).

While emphasising that more data are necessary to improve those crucial areas and establish a fair market for everyone, Gurry also said that the lesson we have learned from the digitalisation and technical development is that we are not used to answering economics and law related policy questions on a global level. Recent developments regarding the changing structure of global value chains show us, according to Gurry, how traditional business chains such as book retailers are changing their creation, production and distribution cycles. New business models as in the case of the digital giants, Amazon or YouTube, as major content distributors, indicate the need for reviewing current intellectual property policies on the International level. Trade secrets, transparency in communication, storage of knowledge, and data exclusivity are sensitive areas and “hot potatoes” according to Gurry, which require more data.

Key speakers such as the chief economist at the European Commission’s Directorate General for the Internal Market and Industry, Kamil Kiljanski, referring to the EU Single Market Strategy 2015, stressed the importance of being united in an already globalised world and how we already failed on the European level by allowing the loss of the UK as an important member of the European Union. Other chief economists such as Pippa Hall from the UK Intellectual Property Office explained the causal relationship between economic theory and IP policy implementation from the UK perspective by analysing formulated guidance standards for evidence-making and by explaining the last two governmental reviews on intellectual property law in the UK, the Gowers Review 2006 and the Hargreaves Review 2011.

In the first session “International patent protection and trade,” we heard, for example, about effects of patents on trade and how new studies show as presented in the papers by Paul Jensen (University of Melbourne), Alfons Palangkaraya and Beth Webster (Swinburne University) that the patent system affects International trade flows by blocking the would-be exporter’s rights to lawfully export their inventive goods to jurisdictions with “weak” patent regimes.

Session 2 focused on “Entrepreneurship and firm growth with a patent data lens” where it has been emphasised how causal linkages between patents and firm value remain ambiguous in entrepreneurial-firm environments. A new study, discussed by Arvidis A. Ziedonis (Stanford University and Boston University), provides evidence on the private value of patents for 3,414 venture-backed US companies founded between 1987 and 1999.

Other paper presentations identified the effects of patents on medium-sized companies’ growth and how the geographical location of a company, the distance to the nearest attorney or other instrumental variables impact the probability of obtaining a patent, which lead to more active R&D, higher sales and added value.

After discussions in session 3 about “Patent quality and value” the conference focused in session 4 on “Trade marks, brands and geographical indications”. The linkage between brand equity and firm profitability was highlighted, followed by the interesting statement of Andrew Toole from the US Patent and Trademark Office (USPTO) that it takes four years before brand-related investments such as a trade mark registration show a positive return and that the dynamic profile of brand-related investments has an inverted U-shape that reaches its peak after eleven years.

Hazel Moir from the Australian National University acknowledged in her presentation “Geographical indications: EU policy at home and abroad” the fundamental key question of whether geographical indications belong to national agriculture or rather international intellectual property policy by examining the underlying principle of consumer information. Why and when is the consumer confused by selling, for example, Burgundy-style wine? While highlighting the EU as the principal driver in policy on geographical indications, Moir analysed in her paper unclear areas of recent trade treaties, for example, the Trans-Pacific Partnership agreement (TPP), the regional free trade agreement concluded on 6 October 2015 (but not yet in effect) between Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, Peru, New Zealand, Singapore, the United States and Vietnam.

We also heard interesting remarks from three important policy makers on the global level: The chief executive of the Intellectual Property Office of Singapore (IPOS), Daren Tang, the director general of IP Australia, Patricia Kelly, and the chief executive officer of the Canadian Intellectual Property Office (CIPO), Johanne Bélisle, provided in their panel speeches a 10-year retrospective on how innovation policy has been implemented in Singapore, Australia and Canada.

Bélisle from CIPO highlighted Canada’s strong economic fundamentals as an open economy and pro-trade plan as part of the government’s plan to create jobs and growth at home. Like Australia, Canada is, according to Bélisle, a large country with a highly educated workforce. She set out her vision to build up a stronger strategic IP evidence plan in order to boost the still low R&D rate which affects the productivity gap of many businesses.

Each of the national IP offices representatives spoke with great passion about the internationalisation efforts of domestic companies while emphasising the global nature of intellectual property and the need to continue with a clear, transparent, and harmonised IP rights standards regime. Agreements such as TPP and a stronger relationship between national IP offices remain an indispensable factor in creating social welfare and economic development. The Singaporean view indicated on the panel how recent political developments such as Britain’s looming departure from the EU and protectionist trade policies by the United States under incoming president Donald Trump indicate a major transition in trade policies which bring new uncertainties. In addition, we are facing non-synchronous developments in our global IP law system. The Asian countries, particularly China, as a rising economic power overtaking the science industry, indicate a “pulling-up trend” in IP protection. Meanwhile, the western countries, notably the United States with the 2014 landmark decision of the Supreme Court Alice Corp. v CLS Bank International which set a precedent by applying a strict approach for patents based on computer-implemented abstract ideas, are heading towards an opposite IP protection system.

In the last panel, session 5 “Patents, standards and technology development”, participants discussed strategic technologies in China while questioning the current concern about the violation of the national treatment principle at the Chinese patent office and how far there is empirical evidence backing this concern.

The IPSDM conference was concluded with the closing speech of the Hon Craig Laundy, the Australian Assistant Minister for Industry, Innovation and Science, highlighting the continuing success of the Australian economy through the ability to innovate, adopt new technologies and capitalise new markets.

3. Summary: “We know that we don’t know enough.”

Three key conference initiators: Mariagrazia Squicciarini (OECD), Alessandra Coleccia (OECD), Benjamin Mitra-Kahn (IP Australia)

The IPSDM in Sydney highlighted the already existing trend to focus on the economic side of the intellectual property policy analysis. National IP offices are going through a new identity definition process shifting from a purely administrative governmental body managing trade mark and patent registrations to a complex institution of analysing, defining and promoting innovation by formulating and implementing policies. Some of them created the role of “chief economist” in order to provide empirical input to high-level policy discussions on the economic impact of intellectual property rights. The EPO appointed its first chief economist in 2004, followed by the Canadian IPO in 2006, the USPTO in 2010, and WIPO also introduced a team responsible for economic research. IP Australia also appointed its first chief economist a few years ago.

What can also be noticed is, although the conference is intended to focus on intellectual property statistics, thus statistics on industrial property as functional commercial innovations and on copyright related rights were completely missing this year.

Mariagrazia Squicciarini, one of the conference initiators and senior economist at the OECD, said in an interview with Intellectual Property Watch: “We simply have no data or statistics from the creative industries.” While trying to collaborate with a few European collecting societies to gain more empirical data, cooperation attempts failed on the side of the copyright bodies.

“However,” said Squicciarini, “we gained so much insight into evidence-based IP theories and what we have learned from this conference is that we still know too little. We know that we don’t know enough and that’s the reason why we even more need to continue with our conference.”

In summary, the need for exact, foreseeable data is immense. This conference shed some light onto the complex nature of innovation policymaking and serves as further answer to the question what a good IP policy system looks like.

Accordingly, an optimal policy framework will focus on: further cooperation between IP offices; clear guidance standards concerning economic evidence theories; more harmonisation; further focus on the rapid change of global value chains which have become the world economy’s backbone; encouragement of R&D investment; and will also provide an incentive for the best technologies to become standardised.

Incentive, however, should not then mean in future policymaking debates that companies would get the simple reward of getting the crucial IP right granted by the government just by obtaining as many patents as possible solely based on the intention to use the patent as litigation strategy without any genuine will to appropriately use the trade mark.

The already existing problem of cross-licensing agreements and also the problem of “cluttering” of patent or trade mark registers, particularly in the information technology and life sciences industries.

Ines Duhanic, LL.M. (Stockholm University), legal studies at Humboldt-University of Berlin and the European University Viadrina, admitted to the Berlin Chamber of Lawyers, is an IP lawyer / Law Reporter in Sydney. Full bio can be found on: www.linkedin.com/in/ines-duhanic-392a81121

Image Credits: Ines Duhanic