WTO TRIPS Council: For Some, IP-Intensive Industries Are Engine Of Economy. For Others, IP Alone Is Not Sufficient

The World Trade Organization committee on intellectual property met this week and gave an opportunity to WTO members to discuss the value of intellectual property for micro, small and medium sized enterprises (MSMEs), and its importance for IP-intensive industries. Several members, such as the European Union on behalf of its members presented data to illustrate the importance of IP for MSMEs. Meanwhile, India and South Africa remarked that IP is only one factor to promote innovation, but are not a sufficient ingredient.

The WTO Council for the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) meeting took place on 27 February, finishing in one day. This is the first of two articles on the event.

In a document tabled [pdf] for this session of the TRIPS Council, Australia, Canada, the EU, Japan, Singapore, Switzerland, Taiwan, and the United States summarised discussions on inclusive innovation and micro and small and medium-sized enterprise (MSME) growth which took place in 2017 at the TRIPS Council.

A few days later Australia, the EU, Japan, Switzerland, Taiwan (and separate customs territory of Taiwan: Penghu, Kinmen and Matsu), and the US submitted a communication [pdf] introducing the theme for discussions on IP and innovation in 2018 at the TRIPS Council.

The theme for 2018 is the societal value of IP in the new economy. According to the document, the discussion on IP and innovation in 2018 will be threefold, the first one focusing on IP-intensive industries and their economic impact on society, followed by IP improving lives, and IP and new business.

EU: 42 Percent of Economy Comes from IP-Intensive Industries

According to an EU source, the EU Intellectual Property Office (EUIPO) gave a presentation at the TRIPS Council on IP rights intensive industries and economic performance in the EU.

A total of 342 IP rights intensive industries are set up in the EU, according to the presentation, most of them intensive in more than one type of IP rights (trademark, design, patent, copyright, geographical indications, and plant variety rights).

Those IP rights intensive industries generated 28 percent of all EU jobs (60 million) between 2011 and 2013, and 42 percent of the total economic activity in the EU (€5.7 trillion – US$6.95 billion), the presentation said.

According to the presentation, Luxembourg is the top trademark filer in the European Union, followed by the United Kingdom, Italy, Spain and France.

When it comes to industrial designs, Germany, Italy, France, the UK, Spain, and Poland are in the lead. For patents, Germany, France, the Netherlands, the UK, and Italy are top filers.

The EU presentation however said that the majority of SMEs are not very familiar with IP rights, and the main reasons motivating SMEs to register an IP right are to prevent copying, gaining better legal certainty and increasing their value and image.

Some 65 percent of companies that have registered an IP rights believe that it had a very positive or positive impact on their business, the presentation said.

Major Swiss Economic Sectors IP-Intensive

Switzerland said many of the major economic sectors in the country are IP-intensive industries, including the most important export industries: the chemical and pharmaceutical industry; the mechanical and electrical engineering industry; and the watch industry, according to its statement.

The Swiss Federal Institute of Intellectual Property (IPI) has established some measures tailored to the special needs of SMEs, start-ups and inventors, the statement said. The Swiss statement also mentioned the increasing risk of counterfeiting due to the availability of new technologies, in particular in the watch and the health sectors, and notes the Swiss anti-counterfeiting and piracy platform called “Stop Piracy.”

“IP-intensive industries serve an important function in the international community,” said the statement, adding, “Innovation, creative processes, research and development of new technologies – in short the investment into new and better products and services – creates opportunities, but at the same time requires a solid IPR regime and protection.”

India, South Africa: IP Only One Factor

“Intellectual property is only one element in a larger innovation ecosystem and IP laws alone do not promote technology development,” India declared in its statement. The statement also said that levels of IP protection in developed countries increased as their industrial and technological capacities improved over time.

According to the Indian statement, “while IPRs may provide an incentive to innovate, they are neither a necessary nor a sufficient condition and could only be effective in certain contexts.” IP rights cannot boost innovation if the required conditions, such as skills, information, capital, and market prospects, do not exist, it said.

South Africa also said that IP may be valuable and may contribute to economic development and growth, but many factors determine whether IP protection may create appropriate conditions that enable MSMEs to effectively exploit IP, according to a South African source.

In his statement, the South African delegate said, “MSMEs are a hot topic globally, but especially in South Africa, where the National Development Plan (NDP) stipulates that 11 million jobs need to be created by 2030 – 90% of these by SMEs.”

However, there is no common understanding of what constitutes MSMEs, he said, adding that developed countries’ definitions of MSME encompass much larger enterprises than developing countries’ definition. In the EU, he said, any company with less than 250 employees is considered a MSMEs, as in most African countries, a company with more than 100 employees is a large company. The informal sector escapes the definition of MSMEs, as they are not registered companies, he said, but large parts of economic activity in developing countries occur in that informal sector.

“IP rights are only useful to businesses if they can use IP protection to generate innovation. This requires financial resources that MSMEs might not possess,” he said. “In this way, IP may only serve the largest firms, unless complementary policies are in place.”

The delegate remarked on the fact that during the 19th century, “today’s advanced economies used the IP system and the flexibility it accorded as they pursued their industrialisation objectives. This allowed those countries to strengthen their IP regimes at their own pace, and in support of overall progress in their economic development.”

The evidence of the relevance of IP protection to encourage innovation, is “at best, inconclusive,” he said.

As South Africa is reviewing its IP policy, “we are seeking to ensure that appropriate balances are struck in providing protection for innovation and ensuring that benefits are shared in society. In particular, we are interested in ensuring that the IPR regime in South Africa supports our wider development objectives and underpins our efforts at industrial development objectives,” he said.

 

Image Credits: Catherine Saez