1 initiative for strengthening technology commercialization and

International Journal of Intellectual Property Rights (IJIPR), ISSN 0976 – 6529(Print), ISSN 0976 – 6537(Online) Volume 1, Number 1, Nov - Dec (2010), © IAEME

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INITIATIVE FOR STRENGTHENING TECHNOLOGY

COMMERCIALIZATION AND THE INTELLECTUAL

PROPERTY RIGHTS SYSTEMS IN SOUTHEAST ASIA

AND INDIA

L. Chandra Sekaran

Research Scholar Anna University Coimbatore 641046

E-mail: [email protected]

Dr. S. Balasubramanian

Research Supervisor Former Director – CIPR

Anna University Coimbatore 641046 E-mail: [email protected]

ABSTRACT

Technology is a key resource of profound importance for the well being of a

national economy as well as international competitiveness; it is also vital for corporate

profitability and growth. Development and commercialization of new technologies has

inherent uncertainties and associated risks. In a competitive world of scarce resources,

new technologies fight for survival against developed technologies that promise

immediate returns with comparatively little risk. Technologists and policy makers need to

provide wider perspectives that encourage an entrepreneurial spirit that nurtures new

technologies in an enabling environment through appropriate policy initiatives.

Mounting evidence suggests that intellectual property rights – and patents in

particular – are crucial to long-term economic growth. Patents provide a necessary

incentive to invest in research and development activity, which in turn builds

technological capacity and Economic efficiency within an economy. In part to meet

treaty obligations, several members of the Association of Southeast Asian Nations

(ASEAN) have over the last 10 years introduced modern intellectual property rights into

International Journal of Intellectual Property Rights (IJIPR), ISSN 0976 – 6529(Print), ISSN 0976 – 6537(Online) Volume 1, Number 1, Nov - Dec (2010), pp. 25 - 47

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IJIPR

© I A E M E


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their legal systems. However, while most ASEAN members have intellectual property

laws on the books, they have given insufficient attention to building the requisite

infrastructure required to make effective use of these laws. ASEAN members thus are at

a pivotal point in efforts to equip themselves with an intellectual property environment

capable of catering to global investment needs. Recognizing this, the Kenan Institute

Asia, the International Intellectual Property Institute, and the Chulalongkorn University

Intellectual Property Institute conducted this study aimed at identifying the current

capacities of one critical area of the region’s intellectual property infrastructure – namely,

patent administration.

While patents provide incentives for investment, they do so only because they

provide the patent owner the right to make exclusive economic use of a discrete

application of a new idea. A good patent administration is necessary to ensure that the

patent right is both valid and justified. In the absence of good patent administration, the

ability of patent rights to spark investment is diminished. Thus, the goal of this study was

to investigate the current capabilities of patent offices within ASEAN countries, looking

specifically at factors such as organization and structure, technological infrastructure, and

human resources, and to provide recommendations on how these systems could be

improved.

Findings suggest that, although room for improvement exists in each of these

countries, the types of improvements needed most varied based on the level of economic

development of the country. For countries classified as least-developed (Cambodia, Laos

and Myanmar), there is no modern intellectual property system to speak of Intellectual

property laws have yet to be passed and no functional infrastructure, i.e., patent office,

exist. For countries classified as developing countries (Indonesia, Malaysia, the

Philippines, Thailand and Vietnam), intellectual property laws and some infrastructure,

including operating patent offices, are in place.

However, for all these countries, patent offices lack the resources to effectively

carryout their function, and thus we see a lack of trained patent examiners, adequate

technological infrastructure and access to necessary databases and other bibliographic

materials. Lastly, Singapore stood alone with a fairly effective patent administration,

primarily because it makes use of the examination capabilities of patent offices outside


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ASEAN. Note that Brunei Darussalam decided not to participate in this study. To address

the problems identified, this report recommends a series of short-term interventions and

presents possible long-term solutions. The short-term interventions focus on addressing

problems in the flow of work within patent offices, organization of intellectual property

policy making bodies, building minimum technological infrastructure, providing

assistance in developing intellectual property legislation and providing training for patent

office staff and others crucial in the overall intellectual property infrastructure.

The possible long-term solutions presented includes 1) each ASEAN member

makes a deliberate decision to strengthen their respective patent office capacity, 2) the

adoption by ASEAN members of a certification process for approving patent applications

similar to the one in use in Singapore, and 3) the creation of a regional patent office

through a phased process that begins with the establishment of a regional prior art search

center. For each long-term solution presented, the report reviews the pros and cons and

suggests a general implementation plan. The next step is to continue a meeting of

intellectual property policymakers to discuss the options and develop a plan for moving

forward.

The next step is for the ASEAN members to address the short-term interventions,

which could be implemented over a 2 – 3 year time frame. Meanwhile, additional study

and consensus building is needed to arrive at a decision on the long-term solution. A

coordinated and consistent approach to provide foreign technical assistance can greatly

enhance ASEAN’s efforts. The realization of these recommendations will undoubtedly

result in a healthier and more efficiently functioning IP environment throughout the

region, strengthening the economies and international pecuniary relationships of the

ASEAN nations.

The main objective of this study is to develop a plan of action for implementing

improvements in national patent office administration, and in particular to present ideas

that would help foster greater regional cooperation and standardization.

PATENTS AND ECONOMIC DEVELOPMENT

Among the different forms of intellectual property rights, arguably the most

important form– at least from the point of view of many economists – is patents. Since


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the development of economics as a field of study, economists have been searching to

identify the factors that allow economies to grow and prosper. Economists for some time

have realized that the key to long-run economic growth is tied to productivity– that is, the

efficiency of a country to make use of its resources in economic production. Classical

economists held that factors such as the quantity of labor, machinery (i.e., physical

capital), and availability of natural resources were the main ingredients in a country’s

overall productivity.

However, beginning in the 1950’s, economists began to realize that these

traditional factors, when added together, could not account for the economic growth that

many countries in the West had experienced. Investigating this economic phenomenon

further, economists began to realize that the use of improved technologies was increasing

productivity beyond what traditional economic inputs accounted for. Building on this

early work, contemporary economists looking into the role of technology in economic

growth have found that increasing the stock of technology through sustained investments

in research and development activities has been a key factor in the long-run economic

growth of developed countries. With increases in the stock of technology, countries have

continually been able to increase productivity and thus grow their economies. Economists

have also found that the ability for countries to achieve economic growth through

technology development is not exclusive to developed countries.

Indeed, evidence suggests that the relative increases in productivity that

developing countries receive through increasing their stock of technology are much

greater than the productivity gains developed countries receive. As such, an important

component in the formula for any developing country to achieve sustainable economic

growth is policies that increase the stock of technology available. The most direct route to

achieving this is through investments in research and development activities and

intellectual property policies, patents in particular, have proven to be important in

promoting such investments. Contemporary wisdom holds that patents provide an

economic incentive for inventors and businesses to create new inventions, or in other

words, patents promote the development of new technology.

This wisdom, however, has been challenged by many in the developing world

who claim that only in the absence of intellectual property rights can developing


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countries afford to build the technical capability to imitate and then improve upon the

current stocks of technology in the world. While there may some merit to this argument,

particularly as it applies to least-developed countries, this argument generally does not

apply to most developing countries. Indeed, studies have shown that the availability of

patent protection in developing countries has a significant effect upon the ability of these

countries to stimulate investment in research and development activities.

Furthermore, it has been shown that the availability of patent rights also

encourages international technology flows through both foreign direct investment and

through licensing. These mechanisms for technology development are especially

important to developing countries as foreign investment in research and development

activities tend to promote larger gains inproductivity7 and the technology that flows from

these exchanges tend to be technologies that are more advanced than recipient countries

would otherwise have access to.

IMPACT OF POOR PATENT ADMINISTRATION

As mentioned, patents provide an incentive to invest in research and development,

either directly or through international technology flows. Businesses rely on patents to

protect such investments. If a competitor were to attempt exploitation of patented

technology, the patent holder could file suit in a court to prevent such unauthorized use,

seek damages and to prevent further abuses. While the ability of the patent holder to

enforce his right is generally tied to the capability and efficiency of his/her country’s

court system, the strength and reliability of a patent is first derived from the quality of the

examination performed. A well-functioning patent administration requires substantial

resources without which the quality of patents issued will invariably suffer.

While all patent offices have some sort of collection of prior art, such collections

are relatively small in many of the world’s patent offices, comprised mainly of the

patents issued in that country alone. Often, patent offices have very limited computer

resources, if any, which impedes their ability to access internet or electronic databases.

Additionally, most patent offices have difficulties recruiting, training, and retaining

qualified patent examination staff. Patent offices attempting to perform prior art searches


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with such limited resources cannot adequately compare new inventions to existing

technologies, resulting in the issuance of patents that do not warrant patent protection.

Furthermore, if a patent office is understaffed, the time it takes to issue a patent –

referred to as patent pendency – may be great. Given the quick pace at which technology

is developed and the fact that the term of a patent begins when the application is

submitted, the longer the pendency is, the less time an inventor has to make use of the

patent once it is finally issued. When a patent office issues poor quality patents or suffers

from a substantial period of patent pendency, assurance of the enforceability of its patents

is reduced. In larger, more lucrative markets, poor patent quality and high pendency

periods mean a likely increase in patent litigation, as competing firms that are unwilling

to give up the market rely on the courts to settle their patent problems. This in turn may

have a chilling effect upon other innovating firms, dissuading them from researching

technology that would put them at risk of being sued. In smaller markets, this chilling

effect is even more pronounced, causing companies to altogether avoid making risky and

unprotected investments in local research and development and/or technology transfer

efforts. Of course, any reduction in research and development investment, whether in a

large or small country, will prove detrimental to long-run economic growth in the

country.

As a means to reduce the costs and administrative burdens associated with patent

administration, some blocks of countries have come banned together to establish regional

patent offices. These include the Eurasian Patent Organization (composed of the former

Soviet Republics, including Russia), the African Intellectual Property Organization

(composed of French speaking African countries), the African Regional Industrial

Property Organization (composed of English speaking African countries) and the EPO

which provides patent administration for 31 European countries. As established by

international agreements authorizing each respective regional patent office, each office

may perform all patent administration tasks for their client countries, including receipt of

application, collection of fees, and performance of formal and substantive examinations.

In order to best accomplish this, each country participating in a particular regional patent

office must have relatively similar substantive and procedural patent law. Furthermore,


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the regional patent office itself should utilize a common operational language (or

languages).

THE ECONOMIC SITUATION IN SOUTHEAST ASIA

Southeast Asia is a diverse and culturally rich region of the world. In 1967, five

Southeast Asian countries created an international body known as the Association of

Southeast Asian Nations (ASEAN) in order to promote regional economic growth and

security. Today, SEAN has ten members, which comprise a population of about 550

million people and combined GDP of USD $884 billion. While the combined members of

ASEAN constitute significant economic force, the economic situation in individual

member countries is as diverse as are the people and cultures. Thus, in order to

understand the stark differences uneconomic capabilities of ASEAN countries, it is useful

to divide them into three main groups.

The first group is composed of Cambodia, Laos and Myanmar. These three

countries are officially classified as least-developed countries by the United Nations.

Each country has a per capita GDP below USD $500 and each has export earnings below

$4 billion. For both Cambodia and Laos, foreign assistance constitutes roughly 13% of

their GDP. Myanmar, by contrast, received less than 1% of GDP from foreign assistance.

The current account balance is negative due to a deficit in the trade balance. The

economies of these countries rest primarily on the exploitation of natural resources.

Foreign trade for Cambodia and Laos is composed mostly of exported and consumption

goods from other ASEAN countries and China. Myanmar’s trade with the United States,

Europe and Japan is negligible; the majority of Myanmar’s trade occurs with other

ASEAN members and China. The second group is composed of Indonesia, Malaysia, the

Philippines, Thailand, and Vietnam. These countries are classified by the United Nations

as developing countries. In2005, they each have per capita GDPs ranging between USD

$635 and $5,008.

Each economy is driven by export-led growth, with export earnings between USD

$28.6 and$140.5 billion. Of note, each of the countries in this group receives FDI inflow

amounting to at least 3-5% of their GDP which has fueled much of the export-led activity

(in several of these countries, this percentage has recently been much higher). Building


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upon this strategy, all of these countries are implementing various reforms, including

strengthening their intellectual property infrastructure, as a means of stimulating greater

FDI. The volume of this group’s exports to the United States, Europe and Japan

amounted to USD $162billion, or about half of the total export volume of these countries.

However, the vast majority of exports from these countries are low-cost manufactured

goods such as low-end electronic products and textiles.

The last group consists of Singapore alone. While Singapore is classified as a

developing country, it clearly is much further along in the development process than any

other country in the region. In 2005, per capita GDP in Singapore is USD $26,880 and

export earnings are just over $200 billion. The consumer price inflation was low 1.3%

and the re a growth rebounded to 6.4% in 2005 after recording lower growth in 2002 and

2003 due to the effects of SARS. Foreign direct investment to Singapore was over USD

$5 billion and the FDI stock (active accumulated FDI) amounted to $120 billion. Foreign

companies are clearly willing to invest in Singapore, as evidenced by the presence of

over 1,500 United States-based firms operating in the country. Furthermore, Singapore

has built a robust local high-technology industry that includes semi-conductors, computer

equipment, chemicals, and pharmaceuticals.

POLICY INITIATIVES IN INDIA

The importance of technology was spotlighted by its incorporation as a key factor

in the first scientific Policy Resolution of India enacted in 1958. A large-scale

development of technology was envisaged to support early and critical stages of

industrialization. The Technology Policy Statement (TPS) in 1983 spoke of technology in

the broadest sense, including the agricultural and service sectors as well as the obvious

Manufacturing sector, which stretches over a wide spectrum ranging from small scale?

Village and cottage industries (often based on traditional skills) to medium, heavy and

sophisticated industries [50].

The policy has a basic objective of developing indigenous technology and

encouraging efficient absorption and adaptation of imported technologies that are

appropriate to national priorities and resources. Its aims are to attain technological

competence and self-reliance; to reduce vulnerability; identify obsolete technologies still


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in use and arrange for modernization of equipment and technology; and to develop

technologies that are internationally competitive, particularly those with potential

The TPS stated that, within technology development, special emphasis would

focus on: Indigenous technology — strengthening and diversifying domestic technology

bases in order to reduce imports and simultaneously expand exports to ensure

international competitiveness. TPS emphasize the following requirements for developing

indigenous technologies: (a) importance of technology development, (b)inventions, (c)

enhancing traditional skills and capabilities, (d) ensuring timely availability,(e) upgrading

to prevent obsolescence, (f) increasing the demand for indigenous technology, (g)

preferential treatment, (h) fiscal incentives, (i) design engineering,(j) engineering

consulting, and (k) establishing in-house R&D centers. Technology acquisition —

industrializing a country requires a heavy price to import Science and technology in the

form of plants and machinery, well-paid personnel, and technical consultants.

The early and large-scale development of science and technology in India would

greatly reduce the drain on capital during the early stages of industrialization. The TPS

advocated a mix of indigenous and imported technology. With a view to further

strengthening the Indian economy and to assisting the nation to fulfill its role in the

global economy with both confidence and urgency, a draft paper for a new technology

policy was initialed in 1993. It aimed to inculcate renewed sense of purpose for

accelerated development and use of indigenous technology in the context of the 1991

industrial policy statement while keeping in view the need to adhere to international

quality and to preserve the environment. It focused on issues such as: (a) technology and

society, (b) technology and environment, (c) human skills, (d) thrust areas, (e) role of

research, development and engineering (RDE), (f) resources for RDE, (g) linkages and

(h) policy implementation, monitoring, and review. The draft technology policy was

widely circulated during 1993-94.

However, the final version of the policy statement has yet to appear. The

Research and Development Cess Act (1986) was promulgated to establish a fund for the

import of technologies, to finance development of indigenous technologies, and to make

imported technologies indigenous. Simultaneously, as follow-ups the 1983 Technology

Policy Statement, the Technology Information Forecasting& Assessment Council


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(TIFAC), an autonomous body fully owned by the government of India, was formed

under the Department of Science and Technology during 1988. In addition to its other

activities, TIFAC provides some financing and facilitates development and

commercialization of technologies under the Homegrown Technology scheme. Venture

capital funds and a few other schemes were also promoted during the 1980s to support

similar activities. The Technology Development Board Act (1995) was another major

policy initiative of the government in this direction. Table 1 lists various special schemes

and funding mechanisms that have been commissioned to finance new technology

commercialization.

INTELLECTUAL PROPERTY RIGHTS IN ASEAN COUNTRIES

There is a stark contrast in the intellectual property infrastructure and respect for

intellectual property rights among the three groups of ASEAN countries. For the first

group, the most pressing issue is the implementation of national legislation regarding

intellectual property rights. For the most part, the intellectual property laws in place are

obsolete or are nonexistent. Cambodia and Myanmar are WTO member countries, but, as

they are classified as least developed countries, they are under no obligation to institute

TRIPS-compliant intellectual property rights until 2016. When appropriate legislation is

passed, they will need to devote significant resources to their intellectual property

administrative bodies of (i.e., patent offices) as these are currently grossly inadequate

Year of Signature

Table 3-1: Participation in International IP Treaties by ASEAN Countries

Year of signature

Group - 1 Group - 2 Group -3 Treaty

CAM LAOS MYA INDO MAL PHI THA VIET SING

Wipo* 1995 1995 2001 1979 1989 1980 1989 1976 1980

Paris 1998 1998 1950 1989 1965 1949 1995

Berne 1997 1990 1984 1931 2004 1998

WCT 2002 2002 2005

WPPT 2005 2002 2005

PCT 2006 1997 2006 2001 1993 1995

Trips 2001 1995 1995 1995 1995 1995 2006 1995

* Denotes signatory to the WIPO convention and thus a member state of the organization

Although intellectual property infrastructure in the second group is more

developed than the first, it is still in much need of improvement. These countries have


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generally been participants in the primary international intellectual property treaties, and

for a longer period of time, than the countries of group one. The most notable exception

to this Thailand, which is not yet party to the Paris Convention or the PCT. The national

legislation on intellectual property in this group generally adheres to the standards set out

in the international treaties to which they subscribe. All group two countries have

intellectual property offices responsible for the administration of patents, trademarks, and

industrial designs. While intellectual property laws and administration structures are in

place in group two countries, their ability to enforce their intellectual property laws

remains insufficient. Enforcement of intellectual property rights does not seem to be a

political priority in most of these countries.

To the contrary, it seems that many policymakers in these countries believe that,

for the short term, allowing local firms to engage in piracy and counterfeiting is more

beneficial to their economy than enforcement of intellectual property laws. Furthermore,

courts capable of adjudicating intellectual property cases do not exist or don’t have staff

with adequate training and experience to handle intellectual property cases. Meaning a

holder of intellectual property rights in these countries would likely not be able to

effectively bring suit and enforce his/her rights through litigation. On the other hand,

Singapore has modern intellectual laws in place, a well functioning intellectual property

administration, and effective enforcement of intellectual property rights. Singapore is

able to do so due to a strong legal system.

PATENTS AND PATENT ADMINISTRATION IN ASEAN

The total number of patent applications received by ASEAN member countries in

2004 was27, 077. Of these applications, only5-10% of the applications each country

received was filed by residents, with the remainder filed by foreign entities. The total

number of applications filed by ASEAN residents is around 3,000 per year. Most of the

foreign applications are coming from the United States, Europe and Japan, and are

relatively equally distributed among these countries. Applications in the field of

chemistry and pharmaceuticals represent around 60% of all applications filed in ASEAN.

ASEAN members that are party to the PCT receive most of their foreign

applications through the PCT.ASEAN patent offices offer applicants two different patent


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rights: the triple test patent and utility models (e.g., petty patents). The triple test patent is

the type of patent described earlier in this report, with the three requisite criteria of

novelty, inventive step and industrial application. The utility model shares the

requirements of novelty and industrial application, but lacks the third criterion of

inventive step. In this way, utility models are designed to encourage incremental

innovation, as opposed to the significant leaps within a technological field promoted by

triple test patents.

It appears that the vast majority of utility model applications come from ASEAN

residents. Further, utility models are not sought as often as triple test patents, as they

amount to only around 10% of each country’s total patent applications. The search tools

being employed by ASEAN patent offices include patent data collections on CD from

other patent offices, and the internet search tools provided by the largest patent offices

(i.e., the EPO’s Spacemen).Efficiently accessing these resources is difficult, however, as

computer resources are generally inadequate, and the available internet bandwidth is

often very small. It should be noted that the EPO has recently made available a newly

developed database containing patent bibliographic data for ASEAN countries.

Chart 3-Patent Applications in ASEAN Countries - 2005

Indonesia, 4303

Malaysia, 6286

Singapore, 9177

Thailand, 6340

Philippines, 2431

Vietnam, 1624

INDIA 23,000

(ASEANPAT). Additionally, most of the information systems used to manage the

patent Procedure – PAMs – need considerable improvement. Effective PAMs are

essential for knowing the precise status of each application and for building a register of

all of the applications. Group one countries are not currently enforcing patent laws, and

so do not have any existing patent applications or modern patent administrations.

The patent offices of group two countries suffer from significant resource

shortages –lack of trained/experienced patent examiners, appropriate technological

infrastructure, access to prior art databases and effective PAMs. These shortages have

resulted in overly long pendency rates for patent applications, significant backlogs of


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unexamined applications and poor quality in the patents issued. Users of the patent

systems of these countries have expressed frustration over such problems. For instance,

one user commented that once you file a patent application in some of these countries, it

is “like going into a black hole” – no information concerning the application is provided

until it is issued.

Singapore is the only country in the region to issue quality patents in a timely

manner. However, Singapore achieves this end in a rather novel manner. Instead of

maintaining a patent office staffed with patent examiners and equipped with the

necessary technological capabilities, the Intellectual Property Office of Singapore (IPOS)

either accepts the examination results of certain major patent offices, or outsources the

patent examination function for domestically filed patent applications to the patent

offices of Australia, Austria and Denmark to conduct patent examinations.

PLAN OF ACTION

It is clear that building and maintaining an intellectual property infrastructure –

particularly in the realm of patents – has been struggle for most ASEAN member

countries. While some ASEAN countries do maintain patent offices, most are

understaffed and ill-equipped to address the huge backlogs they currently have. Still,

other ASEAN countries have yet to even implement laws creating patent rights. The lack

of patent rights and poor patent administration may have dire consequences for the ability

of ASEAN countries to attract technology investments by both local and foreign entities,

thereby impacting their ability to successfully compete in the growing world knowledge

economy. While a ubiquitous lack of political will to improve the intellectual property

infrastructure in ASEAN countries is partly responsible for this situation, another

obstacle is the inherent difficulty in securing the resources necessary to create and/or

improve patent offices of the region.

As outlined above, maintaining an intellectual property infrastructure – and in

particular a patent office – is a resource intensive enterprise. If the existing patent offices

of the region are to be improved in any meaningful way and those countries with out

patent laws or patent offices are to catch up with their peers, substantial technical

assistance and funding by international aid agencies will be required. International aid


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devoted to this endeavor should be judiciously spent in a comprehensive strategy that

recognizes the strengths and shortcomings of each ASEAN member country. Training for

new patent examiners in the ASEAN countries is available through the EPO and USPTO.

It inessential to have adequate infrastructure and trained examiners for the patent offices,

but its equally important to have adequate law and procedures for patent enforcement as

well to encourage patent filing. To inform such an endeavor, we offer the following plan

of action that breaks down improvement priorities to short-term and long-term

interventions.

SHORT TERM INTERVENTIONS

The approach to short-term interventions is to provide technical assistance to

ASEAN Members on an individual basis. Each office would be treated independently

and the Assistance provided would be tailored to each country’s specific needs.

However, the \assistance provide to each country would focus on five major areas:

Update and Harmonize PAM Systems: This is certainly the most urgent and important

need that could be easily and rapidly implemented. Not only will this provide needed

transparency to the patent process, but it will also reduce the threat of an uncontrolled

backlog situation.

The Japanese International Cooperation Agency (JICA) has implemented a

system called the Patent Administration Computerized System (PACSYS)in Philippines

and Vietnam. Vietnam, however, is the sole country that seems satisfied .The drawbacks

of using this system should be addressed Alternatively, the EPO has progressed with the

tool box concept and now has employed a set of modules called EPTOS covering all

aspects of procedures (online filing, patent management database, Phoenix, Registry,

online file inspection, and online publication).

The EPO is currently installing EPTOS in Malaysia. It might be worth exploring a

possible framework for cooperation (bilateral or multilateral) in order to implement

EPTOS in the other ASEAN countries. Further, such cooperation could help in

developing ways to share information on the best practices. It is important to realize,

though, since each office works independently and are at different stages of development,

they will not be ready to work together on the same project.


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Review of the patent procedure flow chart: Patent offices in the region often

employ complicated procedures that result in time consuming delays and duplication of

work. A Simplification of the patent procedure flow should increase the number of files

handled by each examiner per year, while at the same time reduce the backlog and

decrease the Tendency time in many patent offices.

Information Technology Infrastructure: In most offices the basic information

technology infrastructure needs improvement. Computer equipment, LAN capacity,

internet capacity, and level of technological expertise of staff do not meet the needs of a

modern patent office. Cooperation and modernization programs to address these

insufficiencies are urgently needed.

Training: Programs should be designed and implemented to train formality

officers (especially for the PCT procedures), examiners (for search and substantive

examination, online searching, inventive step assessment, quality control, etc.),

information technology experts, lawyers, judges and customs officials. Legal training for

lawyers in the fields of trademarks, patents, utility models, and industrial designs are

needed. Training in the drafting of intellectual property legislation should be designed

and delivered for the countries where the intellectual property infrastructure is less

developed.

Reorganization of IP Policy Making Bodies: Countries that have spread

intellectual property policy making authority among several different ministries should be

encouraged to either consolidate such authority into one or improve coordination

mechanisms that will lead to a unified policy on intellectual property matters at the

national level. Legislative Drafting: ASEAN countries in group three require assistance

developing basic legislation that provides a modern intellectual property legal system.

The intellectual property legislation that is developed should take into consideration the

requirements of the TRIPS Agreement and WIPO treaties, but should also be harmonized

to the extent possible with other ASEAN member countries. Implementing these short-

term interventions is both feasible and necessary. Such an approach would lead to certain

improvements of a limited nature for each existing patent offices, most notably in

improving tendency, transparency and professionalism


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LONG TERM INTERVENTIONS

While the short-term interventions will produce incremental improvements to

patent Administration among ASEAN countries, it is unrealistic that technical assistance

for each office would solve the primary underlying problem – that is, the long-term lack

of adequate resources to perform the full patent examination function. As an interim

solution, however, using patent searches from the PCT, USPTO, EPO and JPO may

enable applicants to amend local claims to granted claims in another country while

maintaining the local country’s sovereignty. Resources include access to and

maintenance of appropriate search tools, continued training and retention of patent

examiners, and maintenance of technical infrastructure that is built through short-term

interventions. There are three main options to solve this problem of inadequate resources.

EACH COUNTRY STRENGTHENS NATIONAL PATENT OFFICE

CAPACITY

First, ASEAN policy makers may find the arguments for effective patent

administration championed in this report persuasive enough that they begin to dedicate

the necessary resources needed to field a well functioning patent office and overall

intellectual property infrastructure. This certainly is not out of the realm of possibility,

given the examples of other countries in the region, most notably China. While China

continues to be the top world producer of counterfeit and pirated goods (e.g., apparel,

optical discs), it is also becoming a world leader in technology development. Hence,

policymakers have made conscious effort to strengthen patent administration by

dedicating substantial resources to the State Intellectual Property Office (SIPO).

For more information, see China Country Report. Already, SIPO is vastly larger

and has more resources than all the ASEAN countries put together. Their office receives

about 170,000 patent applications a year, 50%of which come from abroad. SIPO employs

over 1,000 patent examiners, has a modern technological infrastructure, provides

examiners with modern prior art search tools, and myriad prior art databases. For more

information, please refer to the China country report. China’s example of building up its

patent administration can serve as a model for other countries in the region and provide


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the political cover policymakers may need to divert resources to build up their countries’

patent administration capabilities

COUNTRIES IMPLEMENT A CERTIFICATION SYSTEM

A second solution is for ASEAN patent offices to follow the example on the

patent examination results of other countries. To recap, the majority of patent

applications filed in Singapore are filed by international applicants, either through the

PCT or Paris Convention. In either case, applicants may submit proof of an issued patent

for a corresponding application in one of a handful of other patent offices (i.e., USPTO,

EPO, JPO, SIPO, etc). With such proof, the Intellectual Property Office of Singapore

(IPOS) certifies the patent application it is holding as valid and thus grants the patent. For

domestic applications not following a PCT route, substantive patent examination is

outsourced to other patent offices that do maintain sophisticated patent administrative

capabilities.

This process is widely used by the IPOS and eliminates the need for the IPOS to

maintain a large patent examination capacity. Some users of ASEAN patent systems

favor this approach, mainly because it is easy to implement and easy to receive a patent

grant, however they also point out that this approach is not without its drawbacks.

Though a patent grant is based on a corresponding patent application that presumably

undergoes a quality substantive examination, such examination is based on the laws and

rules of another country. For patents issued through a certification process as in

Singapore, the first and only test for validity in Singapore is through litigation. However,

as discussed above, intellectual property right holders are constantly struggling with the

limited and ineffective means they have to enforce their rights in the region. What

litigation there is, usually centers on questions related to copyright or trademark law – not

on patents. So, right holders are leery of having to rely on enforcement mechanisms to

prove their patents are valid.

Another drawback to the certification method is that countries tend to guard their

sovereign rights. Relying entirely on another country’s patent administration to

essentially determine what is patent able in ASEAN countries may not be palatable to

policy makers. This may be especially true for certain areas of patent law that are not yet


42

completely internationally harmonized, as in the case of whether software is patentable

subject mater. This of course could be addressed by maintaining some capacity in local

patent offices to review patent applications under local standards during formal

examination and/or during the certification process. Regardless of whether ASEAN

member countries elect to implement certification systems, intellectual property

enforcement throughout the region must be improved.

However, as discussed above, it is especially important that countries

implementing a certification system are able to effectively adjudicate patent cases in

order to help preserve the reliability of the patents they issue. This means that the laws

should give patent holders the right to private action, that courts and/or administrative

bodies have the capacity to properly decide patent cases and the authority to implement

their decisions, and that the remedies provided fairly compensate the right holder and are

sufficient to infringer. This of course will pose a challenge in itself and will require both

legislative changes, political will to enforce intellectual property rights and substantial

training of enforcement bodies and local attorneys. Thus, to effectively implement a

certification system will require more than just changes in law – it will require substantial

resources in training and strengthening enforcement mechanisms

CREATION OF A REGIONAL SEARCH CENTER/PATENT

OFFICE

The third long-term intervention would be to create an ASEAN regional patent

office, which would initially be responsible for carrying out prior art searchers but

eventually also able to conduct substantive examinations and grant patents for the region.

Such a solution is by far the most difficult to implement, but at the same time it is the

solution that will provide the most benefit. A regional patent office would allow ASEAN

members to share the costs for maintaining a modern patent administration that could

then presumably issue reliable patents. A regional patent office would also allow ASEAN

members to discontinue much of the redundancies of current patent office operations,

provide patent administration capabilities to ASEAN member countries that currently

have none, and make it easier to receive patent protection in multiple countries within the

region.


43

The execution of such an endeavor would no doubt take many years and would

require phased implementation. A good model for this would be the path Europe took to

create the EPO. The foundations of the EPO began with the creation of the Institute

International desBrevets (IIB, or in English, the International Patent Institute). The IIB

served as a shared prior art search facility initially for France, Belgium, The Netherlands,

and Luxemburg, but eventually grew to service many other European countries. When

the EPO was created, the IIB was incorporated into the EPO and continued its critical

function of carrying out prior art searches.

Following the European experience, the first phase in creating an ASEAN

regional patent

office would be to create a common prior art search center. The prior art search

center will require sufficient and qualified technical staff in the different technical fields,

able to access the most modern search tools and equipped with appropriate information

technology resources. Initial capitalization for this endeavor will likely be substantial and

may require aid from outside ASEAN countries. Over time, search fees, if set

appropriately, can be used to maintain the center’s functions.

The main function of the prior art search center will be to deliver comprehensive

search reports on which national patent offices may rely on in the examination of patent

applications. This necessarily means that ASEAN countries will still need to maintain

national patent offices at this stage. However, to further assist national offices in the

performance of their functions, the search center could provide advisory written opinions

on the patentability of applications that could aid in their patentability determinations.

Providing advisory opinions would also give staff the opportunity to hone their

examination skills.

Implementation of a regional search center would not require all ASEAN

members to participate and indeed, it may be best that not all ASEAN members

participate in its creation. As the European experience demonstrates, it is possible to

initiate the creation of a regional search center among just a handful of the eventual users

of such a system. Limiting initial participation in the search center to a small number of

ASEAN members (e.g., 2-4 countries), would give the implementing countries an

opportunity to work out problems that will invariably arise as the search center is


44

founded, begins to operate and interacts with national patent offices. As the search center

becomes competent in fulfill ignites duties, additional ASEAN members may be asked to

join or otherwise added to the search center’s clientele.

The second phase would be to empower the regional search center with the

authority to grant patent rights, and thus turn the search center into a regional patent

office. It should be stressed that ASEAN members need not surrender their authority to

grant patents to the regional patent office. If they so choose, the system should be flexible

enough to allow ASEAN members to maintain independent national patent offices and

just rely on the regional patent office to continue to perform search functions only. Of

course, the logical course of action would be for ASEAN members to allow the regional

patent office to perform all patent administration functions, thereby eliminating the need

to maintain a national patent office. Nevertheless, allowing countries to choose whether

to surrender patent granting authority to a regional patent office will help guard against

critics who may challenge the creation of the regional patent office on grounds that it

strips countries of their sovereign rights.

At first glance, the ASEAN region seems like an ideal candidate for the

development of a regional patent office similar to the EPO. After all, ASEAN itself

provides a framework in which a regional office can reside. In December 1995, ASEAN

members entered into a Framework Agreement, wherein they agreed to “explore the

possibility of setting up an ASEAN patent system, including an ASEAN Patent Office, if

feasible, to promote region wide protection of patents bearing in mind developments

regarding regional and international protections.”12 However, despite arguments

favoring the development of an ASEAN regional patent office, existing underlying

circumstances are significant obstacles to such an endeavor.

First, the disparate languages among ASEAN countries could be a significant

barrier to a regional patent office. Each ASEAN member country has a different national

language which is employed in their patent offices and patent records. Further, most non-

patent prior art databases are in yet other languages, such as English, Japanese and

German. Such language differences among ASEAN countries and between ASEAN

countries and available prior art resources, pose considerable difficulties in adequately

staffing a regional office. While the language barrier is not insurmountable, as evidenced


45

by the success of the EPO, it will require significant political will – and compromise – on

the part of ASEAN countries.

Another impediment to the creation of a regional office is that there remains a

wide variation in patent laws, administrative procedures and information management

between ASEAN countries. Assuming that the short-term interventions are successfully

carried, some harmonization will take place by utilizing a common PAMS. When users

of the ASEAN patent systems were asked whether a regional patent office would be

advisable, many thought the idea had merit. However, most were quick to caution that

patent rights could be harmed as much as helped in the process. Specifically, it was

pointed out that substantive changes to intellectual property laws adverse to users of the

system could creep in during the harmonization process. Thus, care must be given to

ensure that harmonization efforts complied with international standards embodied in

TRIPS and the Paris Convention.

Given such impediments, the wisdom of initiating this project with only a few

countries is clear. Identification of the best candidate countries among ASEAN members

will require further study, though they would likely be group two countries. A feasibility

study looking into the best course of implementation should be commissioned. Such a

feasibility study would look at whether a regional search system should be built from

scratch, built upon an existing ASEAN patent office, or whether the capacity of a non-

ASEAN patent office (i.e., China or Australia) in the region could be relied upon. The

study would also look into the resources the search center will need initially and where

personnel for the search center will be recruited from.

CONCLUSION

It is clear that there are myriad problems that need to be addressed with the patent

administration of ASEAN member countries including INDIA. The solution of these

problems will ultimately assist these countries in attracting greater investment in R&D

and high technology sectors, either through local investment or through FDI. The section

immediately preceding this provides a useful roadmap for solving these ASEAN patent

administration problems.


46

The short-term interventions listed are all very much possible. Completion of

these interventions could occur in as little as 2-3 years provided that efforts are fully

funded and cooperation with ASEAN members is secured. Further, implementation of

these interventions can be staggered and executed piecemeal among ASEAN members

(though if implemented piecemeal, completion may take longer than 2-3 years). The

more challenging aspect to our Plan of Action is the long-term solutions

To implement one of the long-term solutions proposed will require agreement

among at least a few of the ASEAN countries. Thus, the next step should be to convene a

meeting of intellectual property policy makers to discuss the options and weigh the value

and drawbacks of each. Thus some form of diplomatic or otherwise official conference

will be required, preferably under the auspices of ASEAN, to get the ball rolling.

However, realistically, a decision on which course of action will take some time.

Thus, efforts to develop a consensus on the course of action should be initiated at the

same short-term interventions are underway. Ideally, a decision will be reached by the

time short-term interventions are completed.

REFERENCES;

• See generally, Elhanan Helpman, The Mystery of Economic Growth (2004).

• Id. Also see Dominique Guellec and Bruno van Pottelsberghe de la Potterie, R&D

and Productivity Growth:

• Panel Data Analysis of 16 OECD Countries, Organisation for Economic Co-

operation and Development,

• Directorate for Science, Technology and Industry Working Papers 2001/3, June

14, 2001 (hereinafter, “OECD Study”). This study found on average that an

increase of 1% in business R&D generates 0.13% in Productivity growth while an

increase of 1% in public R&D generates 0.17% in productivity growth.

• Daniel Lederman and William F. Maloney, R&D and Development, Office of the

Chief Economist, Latin America and Caribbean, the World Bank, May 1, 2003.

• Sunil Kanwar and Robert Evenson, Does Intellectual Property Protection Spur

Technical Change, Economic Growth Center, Yale University, Discussion Paper

No. 831, June 2001.


47

• Edwin Mansfield, Intellectual Property Protection, Foreign Direct Investment

and Technology Transfer, Discussion Paper 19, International Finance Corporation

(1994). Keith E. Maskus, The Role of Intellectual Property Rights in Encouraging

Foreign Direct Investment and Technology Transfer, in Intellectual Property and

Development – Lessons from Recent Economic Research (Carsten Fink & Keith

Maskus, eds, 2005).

• Walter Park & Douglas Lippoldt, International Licencins and the Strengthening

of Intellectual Property Rights in Developing Countries, OECD Economics

Studies (2005).

• OECD Study, supra note 4. This study also found that a 1% increase in foreign

R&D generates 0.44% in productivity growth, or in other words foreign supported

R&D has 2-3 times the impact upon productivity that locally supported R&D has.

• Maskus, supra note 7.

• ASEAN Framework Agreement on Intellectual Property Cooperation, Bangkok,

Thailand (December 15, 1995), available at http://www.aseansec.org/6414.htm.

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