10 ways to boost intellectual property creation

Intellectual Property (IP) can open new revenue streams, create jobs and boost growth. Traditionally, governments have encouraged their citizens to create IP by improving laws and regulations that protect innovation. Here are ten ways to reinforce those traditional measures, based on results of a poll of the Members of the Forum’s Global Agenda Council on the Intellectual Property System:

1. Assess the impact of Intellectual Property on busines deals

Hong Kong reportedly plans to solicit information from publicly listed companies about how IP is used in deals such as mergers and acquisitions. Other governments could consider doing the same. This information not only includes useful details on the transfer of IP titles and their monetary value, but also helps to spread knowledge on IP accounting.

2. Encourage public-private partnerships

Intensify public-private partnerships where the government supports business in developing infant or new technology.

Singapore has been working with banks to extend loans to entrepreneurs who use IP as collateral. To encourage such loans, the government recently introduced a scheme to guarantee a portion of the loan. Some government agencies have also provided test-bed facilities to start-ups.

3. Provide smart financial incentives

Some countries already provide financial incentives for companies to generate Intellectual Property. Such support is generally focused on the prototype and commercialization stages up to pre-IPO, and take the form of subsidies, seed money, outright grants, loans or equity participation.

SPRING, a Singaporean government agency supporting small and medium-sized enterprises, has two funds called the Start-up Enterprise Development Scheme (SEEDS) and the Business Angel Funds (BAF). The former matches the investments of third parties dollar-for-dollar, up to S$ 1 million, while the latter matches up to S$ 1.5 million from two business angel funds called BAF Spectrum and Accel-X.

Singapore’s National Research Foundation has a scheme that invests in early-stage venture capital funds. Selected firms that raise at least S$ 10 million from third-party investors will receive dollar-for-dollar matching up to a maximum of S$ 10 million to invest in technology start-ups. Start-ups can approach the venture capital firms directly to seek funding of up to S$ 3 million.

4. Establish best practices for IP valuation

Governments could work with one another or with global bodies such as the World Intellectual Property Organization (WIPO) to develop international models, methodologies and best practices for IP valuation. This clarifies the value of IP assets to investors and government officials and provides additional certainty. Accounting firms could be encouraged to nurture specialists in this domain.

5. Tap publicly owned Intellectual Property

Governments are learning to audit, document and monetize IP generated through public services. There is potential value in the IP behind textbooks, teaching syllabi and pedagogical methodologies, examination papers, lectures and case studies. Other examples include large data sets and technological improvements linked to infrastructure and healthcare. The Intellectual Property could be offered free to public-sector users and licenced against payment to business and overseas users.

Some governments have set up national centres for this purpose. IP Finland liaises with public partners to identify and promote industrial licensing. In Ireland, the Central Technology Transfer Office provides services for companies that want to use IP generated from publicly funded research.

6. Encourage entrepreneurship at universities

Governments can improve the offer of  incentives to universities and research centres to create start-up companies, reward personnel, liberalize rules for IP ownership by inventor-employees, relax university rules on ownership of IP and permit easy creation of spin-off companies run by enterprising academics and researchers. They can also actively push for closer collaboration between universities and small and medium-sized enterprises.

Singapore’s government allocates about S$ 3.5 billion to research and development each year. Finland promotes collaboration, for example, between Nokia and the country’s technical universities. The Foundation of Finnish Inventions provides funding for start-ups and individuals.

7. Attract IP professionals

Governments can boost innovation by opening labour markets to skilled IP professionals. This policy could target patent and trademark agents, licensing specialists, IP portfolio managers, IP valuers, angel investors, venture capital managers, researchers, scientists, engineers and designers as well as information and multimedia technology specialists.

8. Open up financial markets in IP

Some governments are encouraging patent auctions and technology exchanges where IP rights, especially patent rights, can be bought and sold or licenced.

An example of this is the IPXI, the world’s first financial exchange focused on intellectual property rights, based in the United States. This exchange enables efficient technology transfer, facilitates reasonable, market-based pricing and assists IP owners in unlocking the value of their assets. Shanghai is reported to have started an IP exchange.

9. Provide IP tax breaks

Fiscal incentives may include tax holidays or breaks, accelerated depreciation of machinery and equipment, waivers of sales tax or lower employment taxes.

Australia has created a 45% refundable research and development tax offset, equivalent to a deduction of 150% and available to small companies with an annual aggregate turnover of less than A$ 20 million.

In Ireland, tax relief is granted for profits earned on commercialized IP, whether from patents, designs, trademarks or copyright. The tax relief ceiling is the law’s corporate tax rate of 10%. Israel also extends tax benefits.

10. Speed up tech patents

For many applicants, any delay in a decision by the patent office could hit future earnings. Giving higher priority to patents with good prospects for delivering public benefits, e.g. green technology or certain drugs, would help make efficient use of resources.

Australia, Brazil, Canada, China, Korea, Japan, the United Kingdom and the United States all have Green Patent Fast Track programmes. These measures provide incentives for innovators to explore areas of national priority.

 Image: The headquarters of the World Intellectual Property Organisation REUTERS/Denis Balibouse