Sunday, July 21, 2013

IP Australia: Economic Opportuntities in Asia

The role of intellectual property in capturing economic opportunities in Asia

Asia is one of the most important opportunities open to Australian businesses. If we play it right, there are numerous ways innovative enterprises can use their intellectual property to help Asia solve some of its most pressing issues, including food security, energy and environmental challenges.

At the recent IP Forum hosted by IP Australia, Scott Bouvier, a partner with law firm King Wood and Mallesons, outlined the Asian context for Australian firms wishing to expand into Asia. As he noted in his address, given he works for an entity that combines established law firms in Australia and China, he is uniquely positioned to reflect on the potential for Australian businesses to use their intellectual property to expand their operations across Asia.

THE POLICY CONTEXT

Certainly, the policy framework is in place to help support Australian businesses wishing to leverage their intellectual property into Asia. Central to this is the Federal Government's Australia in the Asian Century whitepaper, which acts as a comprehensive roadmap to increase engagement between Australia and Asia.

The paper sets out five pillars of productivity, of which innovation is one. As Bouvier notes, "intellectual property is a large part of innovation." Therefore, it will be key to identifying better ways of doing business, as well as developing new business models  and products tailored to Asian nations.

The second key policy initiative that will be central to Australian businesses capturing commercial opportunities in Asia, explains Bouvier, is the Federal Government's recently released statement on industry and innovation, "A Plan for Australian Jobs".

Part of the statement is a pledge by the Federal Government to set up Industry Innovation Precincts. The 'Manufacturing Precinct and Food Precinct' will likely be a springboard for Australian businesses to develop Asian-centric initiatives.

"Precincts will enable firms to collaborate and build scale with researchers and with each other to improve knowledge and skills, deploy technology, create new products and services and take advantage of business opportunities," explains Bouvier.

He believes the Industry Innovation Precincts will boost productivity by fostering clusters of innovative firms and encouraging better connections with Asian researchers and industries.

The third plank in the policy armour that will help shepherd the best of Australian intellectual property into Asia is the National Food Plan, which outlines the immense opportunity for Australian food exporters to Asia. As the paper notes, "By 2050, world food demand is expected to rise by seventy seven per cent in monetary terms. Much of this growth will occur in Asia where demand will double."

The food plan works in concert with the cross-border governmental study Feeding the Future: A Joint Australia-China Report on Strengthening Investment and Technological Cooperation in Agriculture to Enhance Food Security.

The report recommends the initial focus of technological cooperation should be sustainable agriculture, plant genetic resources, plant biosecurity, animal disease control and health, plant biotechnology, agricultural processing technologies, animal genetic resources, environmental remediation, remote sensing technologies for agriculture and supply-chain development and improvement.

"These policy initiatives focus on Australia being Asia's food bowl, in the context of a growing need for food security in Asia," explains Bouvier.

"There is a significant emphasis on innovation, collaboration and R&D with China in these policy initiatives. In my mind, this sets the scene for intellectual property to play an important role in developing Australian commercial initiatives across Asia," he adds.

THE INTELLECTUAL PROPERTY CLIMATE IN ASIA

Bouvier notes that across Asia, intellectual property laws are becoming stronger, and the number of patent filings is increasing, especially in China, Japan and Korea. "But there seems to be real challenges in turning innovation into commercialisation," he says.

Nevertheless, there is huge potential for Australian firms to be part of the shift as the Chinese economy, which has traditionally been based on manufacturing, moves to a knowledge-based economy.

"What we're seeing is a shift from 'made in China' to 'designed in China', which is a reason why there is a focus on strengthening their IP laws," he explains.

Bouvier acknowledges counterfeiting, especially in electronics and pharmaceuticals, remains a problem. He stresses the ability to enforce intellectual property rights is improving in Asia, but points to the failure of foreign investors to establish rights in China as a key issue.

"Many fail to register their trademarks or patents, often turning a difficult enforcement situation into an impossible one," he says, adding that the "best solution is to file early and monitor carefully."

Of course, China is not the only Asian market to offer Australian businesses economic opportunities. As Bouvier notes, Japan is a key intellectual property market and there are more patents held in Korea than any other Asian country. There has also been a big increase in patent filings in India, but he says enforcing intellectual property rights is extremely challenging on the sub continent.

Overall, says Bouvier, the intellectual property system is strengthening in Asia, which is a positive for Australian businesses wishing to leverage their intellectual property in Asia. He also stresses that although it's easy to hold a stereotype that Asian intellectual property laws, as well as the enforcement system, remain difficult, the situation is rapidly progressing.

"Things are improving in Asia, a region that will be at the centre of the world's economy in twenty years. It's important to remember that even in Australia we don't always get it right. What's key is to focus on using our technologies to help Asia face its food, energy and environmental challenges. It's a great opportunity and it's important we don't miss it," he says.

To learn more about IP Australia, please visit their website.

IP Australia: The Future of Intellectual Property in Australia

The Australian Intellectual Property system is ranked in the top five systems globally.

Intellectual property remains an issue of national significance as Australia gears up to take its place in the ‘Asian Century’. Data shows the Australian intellectual property system is robust – as a nation our intellectual property system routinely ranks in the top five systems globally.

But our level of investment in intangible assets, which includes intellectual property, is far behind that of our tangible assets – things like roads, mines and buildings. In addition, although our innovation inputs - for instance patent filings - are high, our outputs and record when it comes to commercialising innovative activity could be better.

So what can we do to better support innovation and intellectual property in Australia? This was the central question that framed discussion at IP Australia’s recent IP Forum in Sydney.

Keynote speaker Christine Emmanuel, executive manager, intellectual property and licensing, CSIRO Operations, believes as a nation we could be better at talking about the value of innovation.

“We don’t have a good way of communicating value, as well as no way of talking about innovation in the language of the government.”

According to Emmanuel, this inability to adequately communicate around innovation is a problem when it comes to attracting investors to innovative projects, which is a reason why innovative businesses find it challenging to attract venture capital.

But importantly, as we resolve this and nurture our intellectual property system, we need to make sure we don’t give too much away.

“We need to have our scientists think about the value of innovation for our economy and our country. Scientists need to understand the value of their work from a commercial perspective. We seem to think scientists must have integrity and not bow to commercial pressures, but that’s nonsense. Both science and commerce should be going in the same direction. We need to teach our scientists to work on problems that will create value.”

Another keynote speaker, Scott Bouvier, a partner with law firm King Wood and Mallesons, suggests to generate better business outcomes from the innovation process, intellectual property advisers need to become better business advisers.

“Advisers need to broaden their role so that they understand the commercial context and to develop intellectual property within that context. Intellectual property advisers also need to be working with clients on commercialisation strategies,” Bouvier argues.

Nevertheless, another keynote presenter, Christine McDaniel, deputy chief economist, IP Australia, says we should not take for granted that our intellectual property system is well-functioning. The fact it’s possible to obtain high quality patents, which can be opposed and defended, within a transparent intellectual property system is a situation to which many countries aspire.

As to how or even whether our intellectual property system needs to be improved, McDaniel says “it’s a reasonable goal just to maintain the system.”

So what’s the place of government in encouraging investment in innovative activities? According to McDaniel, governments have a role in helping new, innovative firms enter the market, as well as in promoting innovation in existing firms.

Public sector involvement in innovation can take a number of forms – it can include support of ongoing research and development, acquisition of external knowledge through activities such as buying patents, as well as encouraging new business processes and new ways of organising people.

McDaniel says according to OECD figures, the Australian government is already a strong supporter of innovation. Data suggests sixty per cent of large firms receive support for innovation and twenty per cent of small firms receive government support to be innovative.

“But the question is whether we’re doing it the right way – how do we know whether we’re giving financial support to the right firms? It’s very hard to pick winners,” she states.

According to McDaniel, a new way of approaching this challenge is for governments to invest in performance-based innovation. So the idea is that if an innovative firm receives government funding, if it can demonstrate it is performing, it will qualify for further government support.

“But the challenge is how to measure performance – this is the big question,” says McDaniel.

She says there is also a role for governments in providing opportunities for innovative firms to be networked through trade shows, to assist in the collaborative process.

“Governments can help create the circumstances for firms to collaborate, but ultimately collaboration happens at the individual firm level.”

Emmanuel says as a nation we’re actually good at collaborating. “We do that well and to innovate you have to collaborate – no-one can innovate in a silo. Scientists are always sharing information at conferences and sharing information across universities, as well as travelling overseas to collaborate. So we’re seeing that activity – it’s just whether this translates into value.”

Bouvier says the intellectual property sector must work from more of a position in which intellectual property portfolios are created with the purpose of attracting investment.

“We need to understand investors’ drivers and look for collaboration based on intellectual property. By doing that we will be able to improve the services we provide to the sector and also improve innovative outcomes. Businesses need a mix of skills to be able to translate innovation into commercial results and advisers need the right skills to assist in this process.”

Fundamentally, says Bouvier, intellectual property needs to be properly structured so investors can securely invest. “Poor decisions about the way intellectual property is structured are very hard to undo and investment deals can die just on the terms of licenses.”

“We have undertaken the right steps to reform the industry. Our IP system is highly regarded. We have the right framework and what we need to do now is work more effectively within it,” he says.

For more information about IP Australia, please visit their website.