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«March 2014 Can a Stronger Patent Regime Result in Growth of Patenting Activities in Africa? Lessons Learned from Five African Countries March 2014 ...»

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Can a Stronger Patent Regime Result in

Growth of Patenting Activities in Africa?

Lessons Learned from Five African Countries

March 2014

Can a Stronger Patent Regime Result in

Growth of Patenting Activities in Africa?

Lessons Learned from Five African Countries

March 2014

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To order copies of Can a Stronger Patent Regime Result in Growth of Patenting Activities in Africa? Lessons Learned

from Five African Countries by the Economic Commission for Africa, please contact:

Publications Economic Commission for Africa P.O. Box 3001 Addis Ababa, Ethiopia Tel: +251 11 544-9900 Fax: +251 11 551-4416 E-mail: ecainfo@uneca.org Web: www.uneca.org Contents

Abstract

Executive summary

Acknowledgement

List of acronyms

1. Introduction

2. The global debate on the benefits of Trade-Related Intellectual Property rights on technological capabilities in developing countries

3. Methodology

4. Countries’ experiences

4.1 Synopsis of institutional progress made to promote scientific, technology and innovation by the selected countries

4.2 Effects of patent regimes on inventive activities

4.2.1 The South African experience

4.2.1.1 Major improvements made on the patent regime subsequent to enactment of Trade Related Aspects of Intellectual Property Rights............... 9 4.2.1.2 Effects of stronger patent regimes on patent applications

Summary of the findings and lessons learned

4.2.2 The experience of Egypt

4.2.2.1 Major improvements made in the patent regime subsequent to the enactment of Trade-Related Aspects of Intellectual Property Rights.............. 13 4.2.2.3 Effects of stronger patent regimes on patent applications

Summary of the findings and lessons learned

4.2.3 The experience of Kenya

4.2.3.1 Major improvements made on the patent regime subsequent to enactment of Trade-Related Aspects of Intellectual Property Rights

4.2.3.2 Effects of stronger patent regimes on patent applications

Summary of the findings and lessons learned

4.2.4 The experience of Nigeria

4.2.4.1 Major improvements made on the patent regime subsequent to enactment of Trade-Related Aspects of Intellectual Property Rights

4.2.4.2 Major improvements made on the patent regime subsequent to enactment of Trade-Related Aspects of Intellectual Property Rights

–  –  –

Conclusion and recommendations

References

List of Figures Figure 1. Average patent strength

Figure 2. Shares of patent applications by top 10 fields of technology (1998-2012).

............ 10 Figure 3 (a). Patent application by nationals

Figure 3 (b). Patent application by foregners

Figure 4. Average patent strength

Figure 5. Shares of patent applications by top 10 fields of technology

Figure 6 (a). Patent applications by nationals

Figure 6 (b). Patent applications by foreigners

Figure 7. Average patent strength

Figure 8. Shares of patent applications by 10 fields of technology (1998-2012).

................. 18 Figure 9 (a). Patent applications by nationals

Figure 9 (b). Patent applications by foreigners

Figure 10. Average patent strength

Figure 11. Shares of patent applications by top fields of technology (1998-2012).

.............. 21 Figure 12. Patent applications abroad

Figure 13. Average patent strength

Figure 14. Shares of patent applications by top 10 fields of technology

Figure 15 (a). Patent applications by nationals

Figure 15 (b). Patent applications by foreigners

–  –  –

List of Boxes Box Major lessons learned from country experiences

vi Abstract This brief report provides evidence on the question of whether as argued by its proponents, a strong patent regime can result in a rise in inventive capacity in least developed countries, particularly in African countries. It finds that stronger patent regimes would result in a rise in inventive capacity and patenting activities when such regimes are commensurate and are thus apt responses to actual and steady increases in the key pillars of the national innovation system, which mainly include research and development (R&D) expenditures (R&D intensity), R&D capabilities and business and market sophistication. The finding is based on a case study of five African countries: Algeria: Egypt; Kenya; Nigeria; and South Africa, from 1998 to 2013, and can inform other countries that are contemplating strengthening their patent regimes and encouraging inventive activities. Some innovation policy implications are discussed.

vii Executive summary In most developed and increasingly in some developing countries, the view that stronger patent regimes promote the growth of technical inventions — the backbone of technological innovation — has widely been established even though debate continues unabated on the incentive effects of patents among policy makers and academics. Strong patent regimes serve as incentives to encourage inventors and firms to commercially exploit their inventions in their home and foreign markets; as such regimes are associated with reduced risks of imitations and misappropriation by potential or actual competitors. Thus, strong regimes increase the rates of disclosure of scientific and technical information developed by inventors, firms, researchers for protection — a basis upon which further generic and proprietary knowledge and know-how can be built, developed and used for social welfare.





A weak patent regime is seen as a major disincentive to inventive activities and deters the rate of innovation globally, as well as slows international trade. This has been one of the major reasons behind the push for many decades to set up an internationally harmonized patent system, which has led to several bilateral and multilateral conventions. The most comprehensive of these agreements is the Trade-Related Aspect of Intellectual Property Rights (TRIPS), which was concluded by member countries of the World Trade Organization (WTO) in 1995. TRIPS provides a minimum set of standards for administering and enforcing intellectual property (IP) laws with the ultimate implicit aim of increasing the global capacity to invent, develop and transfer and use new technologies.

However, some developing countries — especially some in Africa — were and remain concerned that stronger patent regimes, particularly those outlined in TRIPS, could immeasurably constrain their technical learning processes and acquisition of technological capabilities due to their heavy reliance on knowledge and technologies developed in advanced economies. Others argue that complying with TRIPS could have a positive impact on the continent’s innovative capacity and capability to absorb new technologies from the north, learn and develop endogenous technical capabilities This dualism constitutes a serious dilemma to policymakers charged with responsibility to design optimal patent regimes that keep going knowledge production and use. Such design should be informed by clear analyses on how patents affect inventors’ behaviours. Furthermore, it depends on how patent laws and enforcement provisions are aligned with the key pillars of national innovation systems.

This report is an attempt to clarify the effects of strong patent regimes on in inventive capacity based on evidence from five selected African countries: Algeria; Egypt; Kenya; Nigeria; and South Africa. Its ultimate purpose is to identify the outcomes and lessons and experiences emerging from these national experiences that can be transferred to other countries contemplating reform of their international property rights (IPRs) architecture. The major lessons learned and findings are outlined in box 1 below.

viiiBox. Major lessons learned from country experiences

Lessons learned To sustain or spur inventive capacity, the reforms to national patent regimes should be crafted in a manner suitable to the steady increase made in the key inputs and enablers of the research and development (R&D) system, such as R&D intensity, capabilities, and market and business sophistication.

Patent reforms should favour broader national priorities beyond the traditional short-term need to attract foreign direct investment (FDI), which are mostly geared towards supporting the traditional production system and thus, limit the prospects for innovation National experiences

1. South Africa. South Africa has a reasonably strong R&D system and innovative capacity. The reforms built on this foundation and were thus, to a large extent, suitable to the local need associated with increased R&D expenditures, capabilities and business and market sophistication. They have resulted in steady, rapid and significant growth in patent activities among national inventors.

2. Egypt. The reforms were, to a large extent, suitable to the local need, mainly R&D intensity, infrastructures, capabilities and outputs. They have resulted in a rapid and significant rise in the number of patent application by Egyptian nationals.

3. Kenya. The reforms moderately corresponded to the local need — growing R&D intensity, capabilities and outputs. They have resulted in sharp increase in patent applications, although the number of applications is a lot smaller than that of Egypt and South Africa.

4. Nigeria. The reforms were beyond the level of local R&D intensity and infrastructures and outputs (proprietary knowledge); they only resulted in a very small rise in patent applications filed abroad between 2009 and 2011.

5. Algeria. The reforms were slightly beyond the local demand determined by R&D intensity, capabilities and outputs; they have resulted in a rapid, but small rise in the ix Acknowledgement This report has been written by Mr. Louis M Lubango, Scientific Affairs Officer, New Technologies and Innovation Section (NTIS) in the Special Initiative Division (SID), ECA. The analysis was undertaken under the direct supervision of Mr. Kasirim Nwuke, Chief NTIS and the general guidance of Ms. Fatima Denton, Director of SID. Author is grateful for the valuable contributions of NTIS staff members including Kasirim Nwuke, Victor Konde, Mactar Secke, Afework Temtine, Abebe Chekol and Tsega Belai to various drafts of this report. Author also acknowledges the research support of Mr. Asfaw Yitna and the administrative and secretarial support of Ms. Hidat Mebratu. The assistance of staff of ECA’s Publication and Documents Section is gratefully acknowledged.

x List of acronyms BERD Business expenditure on research and development CBD Convention on Biological Diversity EU European Union FDI Foreign direct investment GATT General Agreement on Tariff and Trade GDP Gross domestic product GERD Gross expenditure on research and development M&A Merger and acquisitions NEPAD New Partnership for Africa’s Development OECD Organization of Economic Cooperation and Development PCT Patent Cooperation Treaty PPP Purchasing parity power R&D Research and development STI Science, technology and innovation TRIPS Trade-Related Aspects of Intellectual Property Rights UNCTAD United Nations Conference on Trade and Development UPOV International Union for the Protection of New Varieties of Plants SASOL South Africa Synthetic Oil Limited WEF World Economic Forum WTO World Trade Organization WIPO World Intellectual Property Organization xi

1. Introduction The role of stronger patent regimes in stimulating technical inventions and technological progress has been widely observed in most advanced economies. However, attempts to generalize such regimes globally, particularly in the South, has generated both optimistic and pessimistic views among policy scholars and practitioners over the past four decades. Optimists believe that a strong patent regime would increase the global rate of inventions (upon which the bulk of technological innovation is based) while pessimists fear that such a regime would only benefit advanced economies and result in significant decreases in patents from less developed countries, particularly from Africa countries, as they tend to rely heavily on technological progress made in the West. The present report outlines the findings of analytical work conducted to assess whether and when a strong patent regime can result in growth of inventive capacity and activities in some African countries.

The report helps clarify the effects of strong patent regimes on the inventive capacity of Algeria, Egypt, Kenya, Nigeria and South Africa, all of which made a number of changes in their patent regimes over the past two decades. It also provides a brief analysis of the evidence emerging from a subset of these countries with an aim to identify and discuss the outcomes, as well as draws on lessons and experiences that can be transferred to other countries contemplating reform of their IPRs. A patent index that defines patent strength is used in the discussion.

The analysis strongly draws from recently observed expansion in the volume of scientific and technical articles by nationals of these countries; the rise in R&D expenditures by private sectors; increased availability of scientists and engineers devoted to R&D; inflows of FDI (WEF, 2009; UNCTAD, 2014; AUNEPAD; 2010), and sophistication of their market and business structures (WEF, 2010).

For this report, strong patents refer to the existence of modern and flexible patent laws and enforcement practices, in accordance with the TRIPS agreement that recommended the minimum standards to WTO member States to promote innovation, trade and global growth. Briefly, patents grant exclusive rights to inventor(s) or owner(s) for a limited period of time to exploit their inventions, in exchange for the public disclosure of the underlying information. They have an essential function of supporting learning, scientific and technical progress that is useful to society, although they can be misused by some anticompetitive inventor to frustrate this aim.



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