The Changing Geographies of Innovation: opportunities and challenges
October 18, 2012
Director General Gurry, Ambassador Wasescha, Excellencies, distinguished guests, it is an honor to address you tonight on the topic “The Changing Geographies of Innovation: opportunities and challenges.”
From the early days of the United States, our Founding Fathers recognized the importance of protecting creations of the mind. Article 1, Section 8, Clause 8 of the United States Constitution empowered the U.S. Congress: “To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”
More than 200 years later, President Obama is continuing this legacy by launching a number of very important initiatives.
One in particular is the U.S. government’s Strategy for American Innovation, which is being funded to the tune of $100 billion from the American Recovery and Reinvestment Act. The goal is to spur innovation in a number of key sectors.
In his 2009 announcement, the President commented that, “History should be our guide. The United States led the world’s economies in the 20th century because we led the world in innovation. Today, the competition is keener; the challenge is tougher; and that is why innovation is more important than ever. It is the key to good, new jobs for the 21st century. That’s how we will ensure a high quality of life for this generation and future generations.”
Innovation is one of America’s greatest assets, because it lays the foundation by promoting cultural development, fostering economic growth and protecting public health.
In another measure designed to stimulate innovation in the United States, the U.S. Congress passed the Leahy-Smith America Invents Act of 2011, which is undeniably the most significant reform to the U.S. patent system in more than a century. The AIA makes the United States patent system more efficient and helps innovators and entrepreneurs move their inventions into the marketplace as quickly as possible by providing certainty to patent rights sooner; preventing and removing poor quality patents; and by building a 21st century patent system that is more accessible and responsive to the needs of small entities and individual inventors.
On the international scene, in every year since 1978, U.S. filers (businesses and individual inventors) have accounted for the greatest number of applications filed under the Patent Cooperation Treaty (PCT). In 2011, the U.S. filing rate under the PCT was 48,596 applications. Following the U.S. was Japan with 38,888, Germany with 18,586, and China with 16,406.
Nonetheless, as WIPO’s 2012 PCT Yearly Review points out: “There is an ongoing shift in the use of the PCT system – from North America and Europe towards Asia. Applications originating from Asia accounted for 38.8% of total applications in 2011, while applications originating from Europe and North America accounted for 30.9% of the total, respectively. Five years ago, North America, with 35.6% of the total, was the main region of origin for PCT applications.”
In the U.S., we have recognized that the growing harmonization and :internationalization” of the patent system has contributed to the growth of foreign patenting. The result is that foreign patent grants exceeded domestic patent grants for the first time in 2007. This is not necessarily a negative from a U.S. perspective, as U.S. inventors have also been filing more abroad. I think it is safe to say that most, if not all, countries have seen an increase in foreign patenting. This really just emphasizes the growing globalization of the world economy.
To illustrate this, I will outline what we refer to as the “success decades” of patenting:
- In the 1970s, Japan took off. They continue to outpace all other foreign patent filers in terms of magnitude. However, their growth has tapered somewhat as their economy has matured.
- In the 1980s, we saw high growth in Korea and Taiwan.
- In the 1990s Korea maintained its growth, but India began competing on a larger scale. The Indian growth is attributable mainly to its adoption of stronger IPRs in the 1990s (through the TRIPS agreement, among other reforms). This enabled India to attract Foreign Direct Investment and also to transition from a “copying” economy to a research and innovation economy.
- In the 2000s, we saw Korea and Taiwan follow the maturation of Japan. India continued to grow quickly, and China came online as it followed India’s footsteps in adopting stronger IPR protection.
Next, I would like to highlight some of the more significant shifts and initiatives that are taking place in Asia.
One thing to note is that despite the high growth in Chinese patenting in the U.S., it remains a small proportion of the total, especially in comparison to Japan.
The U.S. and Chinese IP agencies have an ongoing cooperative and intensive dialogue that ensures innovation policies are: consistent with principles of non-discrimination; provide support for market competition and open international trade and investment; provide strong enforcement of intellectual property rights; and, consistent with WTO rules, leaving the terms and conditions of technology transfer, production processes and other proprietary information to agreement between individual enterprises.
India is in the process of developing formal IP and innovation strategies. Innovation has been a key priority of the Indian government for several years in its efforts to promote economic development, employment and entrepreneurship. The Indian Government is focusing on micro, small and medium sized businesses, and encouraging indigenous innovation. In the last few years, there has been a noticeable shift innovation promoting innovation for sustainable development.
The Indian Government has also committed funds to several ministries to build capacity and raise IP awareness – specifically the Ministry of MSME (Micro, Small and Medium Enterprises). MSMEs form the economic backbone of the Indian economy constituting about 50% of the country’s industrial production (about 13 million MSMEs in India), employing over 30 million people and forming over 40% of India’s total merchandise exports.
And interestingly, both of the major Indian business chambers (FICCI and CII) operate IP facilitation cells for the Indian government.
Many countries in the ASEAN region are promoting innovation and creativity by building capacities in IP management and Technology Commercialization.
The Philippines recently passed a technology transfer law similar to our Bayh-Dole Act, which will help identify and commercialize inventions originating under government-funded research projects. The Philippines has established a network of Innovation & Technology Support Offices, with the help of WIPO. The USPTO has continued to provide training and capacity building support to this network.
Singapore has been recognized as having one of the best IP systems in the world. According to the Global Innovation Index 2012 (WIPO), Singapore is the third most innovative country in the world and the first most innovative country in Asia.
These examples do confirm that the locus of innovation is shifting in our ever-changing world of globalized economies, and that the impact of these changes are having ripple effects.