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Enhancing Hong Kong’s Innovation System: Is There a Role for IP Policy?

Enhancing Hong Kong’s Innovation System: Is There a Role for IP Policy?. Poh-Kam Wong Professor, Business School & LKY School of Public Policy Director, Entrepreneurship Centre National University of Singapore. Scope of IP Policy. Protecting and enforcing IP rights

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Enhancing Hong Kong’s Innovation System: Is There a Role for IP Policy?

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  1. Enhancing Hong Kong’s Innovation System: Is There a Role for IP Policy? Poh-Kam Wong Professor, Business School & LKY School of Public Policy Director, Entrepreneurship Centre National University of Singapore

  2. Scope of IP Policy • Protecting and enforcing IP rights • Raising awareness & education • Developing legislative framework & enforcement institutions • Promoting the creation of IP and facilitating their commercial exploitation and market transactions • In addition to promotion of R&D activities • Supply stimulation, e.g. • subsidies for patent application expenses • using patent output as a performance measure of public R&D institutions • SBIR policy in the US mandating the allocation of certain % of R&D budget on exploring commercialization of IP • Demand stimulation & market transaction facilitation, e.g. • incentivising SMEs to license-in & exploit IP • promoting the development of intermediary industries (IP professional services, entrepreneurial financing institutions)

  3. Development of IPR Protection Policy • Since 1997, HKSAR has developed a relatively comprehensive legal framework for protecting intellectual property rights (IPR), and is a party of all major international IP conventions • In terms of institutional development, the IP Department of HKSAR (created in 1990) has also been relatively efficient in terms of creating IP awareness & providing IP administrative infrastructure, while the Customs & Excise Dept (CED) has stepped up IPR enforcement • While the IPR environment of HKSAR has thus improved over the last 10 years, other economies like Korea, Singapore and Ireland have achieved even greater improvement based on a number of international benchmarking indices

  4. Patent Rights Index, Economic Freedom of the World Report Note: The index is based on five categories: (1) coverage (the subject matter that can be patented); (2) duration (the length of protection); (3) enforcement (the mechanisms for enforcing patent rights); (4) membership in international patent treaties; and (5) restrictions or limitations on the use of patent rights. Source: 1960-75, 75-90 -- W. G. Park,“Intellectual Property & Patent Regimes”, Economic Freedom of the World: 2001 Annual Report, Chapter 4; 2000 -- W.G. Park & S. Wagh, “Index of patent rights”, Economic Freedom of the World: 2002 Annual Report, Chapter 2

  5. GCR IP Rights Protection Index, 2000-2008, selected years Notes: In 2000, the Likert scale is 1 to 10. Figures in bracket are re-scaled to the 1 to 7 range. In 2004, the index is measured by responses to the following question: Intellectual property protection in your country (1 = is weak and non-existent, 7 = is equal to the world’s most stringent).  The index in 2008 is measured by responses to the following question: Intellectual property protection and anti-counterfeiting measures in your country are (1 = weak and not enforced, 7 = strong and enforced).  Source: Global Competitiveness Report, various years

  6. Development of IP Creation & Commercialization Policies • Relative lack of Strategic IP policy directions by the Innovation and Technology Commission (ITC) • IP policy in the Public University sector – by and large, relative autonomy by individual universities to pursue its own IP policies, with no central direction • No policy to promote the development of IP professional services industry • Policy to promote the development of industrial designs primarily limited to physical infrastructure • Little policy emphasis on promoting the development of entrepreneurial financing for IP-based ventures since the dot-com crash

  7. Comparing HKSAR vs. Singapore • Compared to HKSAR, the Singapore government has greater policy emphasis on promoting IP creation & commercialization • Strategic visioning to become a regional IP creation & commercialization hub • Creation of Exploit Technologies (ETPL) to centralize IP management and commercialization for all public R&D institutions funded by A*STAR • New National Research Foundation (NRF) program has an explicit “academic entrepreneurship” promotion component targeted at IHLs • Explicit investment & talent attraction policy to promote IP professional services by EDB; IP Academy created to promote manpower development for IP professional services industry

  8. Did the more active IP Policy intervention by Singapore matter? • Comparative analysis of IP output pattern and performance trends of HKSAR vs. Singapore in recent years • focus primarily on patents granted by USPTO • distinguishing utility patents vs. design patents • quantity as well as quality indicators • compare differences before mid-1990s vs. after

  9. Growth of Hong Kong and Singapore Patents, 1976-2007 Notes: Where a patent is assigned to more than 1 country, it is allocated according to the country of the first-named assignee Patents by Hong Kong (Singapore) inventors include all patents with at least one inventor who is a Hong Kong (Singapore) resident Unassigned patents are allocated to Hong Kong (Singapore) assignees Source: Database of the USPTO and NUS Patent Database

  10. Growth of Hong Kong and Singapore Utility Patents, 1976-2006 Notes: Where a patent is assigned to more than 1 country, it is allocated according to the country of the first-named assignee Patents by Hong Kong (Singapore) inventors include all patents with at least one inventor who is a Hong Kong (Singapore) resident Unassigned patents are allocated to Hong Kong (Singapore) assignees Source: Database of the USPTO and NUS Patent Database

  11. Growth of Hong Kong-Invented Utility Patents vs Singapore-Invented Utility Patents 1976-2006

  12. Utility Patenting Propensity, Selected Economies, 1985-2005

  13. Comparison of Hong Kong and Singapore Patents by Patent Type, 1976-2006 Note : Includes patents by at least one locally resident inventor and patents with the first-named assignee is locally listed

  14. Breakdown of Patents by Hong Kong and Singapore Inventors1 (Local vs Foreign Assignee) (1976-2006, Percentage) Notes: 1Patents where at least one inventor is a Hong Kong (Singapore) resident Unassigned patents are included in “individuals” Allocation of assignee is based on first-named assignee University patents include patents from companies formed to commercialize university technology Source: Database of the U.S. Patent and Trademark Office (USPTO) and NUS Patent Database

  15. Citation Indices for Hong Kong and SingaporePatents Average Citations Received per Utility Patent by Hong Kong and Singapore Inventors 1976-2006 Note: Computed using citations up to 2006. Because of truncation effect, more recent patents tend to have lower forward citation counts due to having less time to attract forward citations Relative Citation Index, 1976-2005

  16. Citation Indices for Hong Kong and Singapore Patents (contd) High Impact Index1, 1976-2005 1Top 5% most highly cited utility patents within 1-digit technology class

  17. Herfindahl Index of Technological Concentration, 1976-2006 Notes: Nationality of Patent is defined as having at least one inventor resident in the specified nation Herfindahl Index computed using classifications at the IPC Section level, with 8 categories in total. Sources: Computed from Database of the U.S. Patent and Trademark Office (USPTO) (various years) and the NUS Database of US Patents

  18. Comparison of Technology Class of Patents by Hong Kong and Singapore Inventors, 1976-2006 Note: Patents include those where at least 1 inventor is a Hong Kong/Singapore resident Source: Database of USPTO (various years) and NUS Patents Database

  19. Top 20 Organizations with Hong Kong Patents1 1Patents where at least one inventor is a Singaporean. The first assignee company is used to count patents which are assigned to more than one company. 2Includes Vtech Communications Ltd, Vtech Electronics Limited, VTech Telecommunications Limited, Vtechsoft Holdings Limited 3 includes Johnson Electric Engineering, Ltd, Johnson Electric Industrial Manufactory. 4 includes North American Philips Corp., U.S. Philips Corp. 5 includes STD Manufacturing Ltd., STD Plastic Industrial Ltd. 6 includes Timex Group B.V. Source: NUS Patents Database

  20. Top 20 Organizations with SingaporePatents1 1Patents where at least one inventor is a Singaporean. The first assignee company is used to count patents which are assigned to more than one company. 2Includes US Philips Corp 3A company called Tri-tech Microelectronics was granted a total of 56 patents before filing for bankruptcy and entering liquidation in 1999. 4Includes ASM Technology Singapore Source: Database of the U.S. Patent and Trademark Office (USPTO) (various years)

  21. Trademarks Applications and Registrations with USPTO

  22. HKSAR vs. Singapore: Overall Findings • utility patenting in Singapore has grown faster & overtaken HKSAR in quantity and quality in recent years • universities and public R&D institutions, as well as subsidiaries of global high tech MNCs make greater contributions in Singapore patenting vs. HKSAR • higher level of technology specialization in high tech clusters targeted by government in the case of Singapore • trade-mark registration and design patents also growing faster in Singapore, although HKSAR still leads

  23. Role of IP policy in HKSAR: Overall Recommendation • A case can be made for a more strategic role of the government of HKSAR in formulating and implementing a coherent set of IP creation and commercialization policies to support the drive towards a more advanced innovation system. • While recognizing that the role of IP varies significantly with the nature of technology fields and business sectors, there should be a high-level strategic overview by ITC to ensure that IP-related issues are taken into consideration in implementing sector-specific innovation strategies. • The strategic review exercise may be able to identify some common IP issues that cut across technology and business sectors.

  24. Recommendations I • Promoting the development of HKSAR’s IP professional services industry • to serve not just HKSAR, but also China in general and the Pearl River Delta (PRD) region in particular • PRD (and China in general) will be significantly increasing its innovative activities in the future, and hence will represent major market growth potential for IP professional services • HKSAR will risk being bypassed unless its IP professional services industry is upgraded, and develops greater domain expertise on China IP law • Market opportunities for IP professional manpower development & training – opportunities for HKSAR universities/public institutions in addition to private sector firms?

  25. Recommendation II • Strengthening the role of the leading HKSAR universities as IP creators and commercialization facilitators • giving the universities more funding resources for IP creation/commercialization activities (e.g. like Singapore NRF’s innovation fund for universities) • adaptation of US SBIR-like scheme to allocate proportionate resources to IP commercialization activities as a function of R&D funding (e.g. mandating 5% additional funding for IP commercialization activities on top of public R&D funding) • using the universities’ IP management capabilities as a leverage to access China’s much larger R&D manpower base and potential sources for IP

  26. Recommendations III • Promoting the development of HKSAR as an industrial design industry hub • Industrial design as a special form of IP • HKSAR already has comparative advantage & regional leadership in industrial design capabilities • Potential for HKSAR to serve not just HKSAR companies, but also China and the Asia-Pacific region • Potential for universities in HKSAR to play a greater educational role in industrial design, but need to go beyond technical training to encompass design IP management & commercialization/business expertise

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