New Knowledge Creation Regimes

Beim "Global Economic Symposium 2009", organisiert vom Institut für Weltwirtschaft, ging es in einer der Sessions um die Anreize, mit denen man Erfindungen und Innovationen fördern kann. Aus den Beiträgen verschiedener Experten in der Session wurden die folgenden Lösungsvorschläge subsumiert (mit Claus-Friedrich Laaser):

The Challenge

The current developments of intellectual property right (IPR) systems seem paradoxically: The ‘rules of the game’ are becoming ever stronger, emphasising enforcement and excludability, whereas the standards of the ‘play of the game’ are loosening – open source technology and non-proprietary IP systems being wildly used by firms. Furthermore the technological revolution theoretically facilitates the share of knowledge – but this is opposed by regulations and thus made costly for the firms. The design of the most appropriate intellectual property right systems turns out to be difficult. Where the optimal system is supposed to create incentives and restrict rent-seeking it often seems to create incentives for rent-seeking. It is the role of policymakers to prevent this behaviour and align incentives with a socially beneficial outcome. The international integration of markets does not facilitate the situation: National rights often do not pose incentives large enough to stimulate investments, and thus governments seek to ‘protect’ investments of national firms abroad – for instance in form of agreements manifesting the principal of national treatment. In the home market however, governments aim for weaker rights, enabling fiercer price competition in the home market which benefits the consumer.

How can an intellectual property rights system effectively align the incentives of innovators, knowledge partners and funders so to induce a socially beneficial outcome? How can incentives be shaped to not only be in accordance on the national level, but also to be appropriate for innovators to receive a sufficient level of protection on global markets without locking up patents for too long?

GESolution 1

The framework for international property rights should be renegotiated to become less restrictive and more flexible. Allow different industries to operate under different rules.

There is a need for global negotiations to focus on the scope of the public domain as well as the scope of private intellectual property rights. The reason is that there has been an 'arms race' between nations in for example TRIPS negotiations in the WTO whereby the nation state basis of discussions leads to a continual ratcheting up of the protection for private IP, copyrights and patents. This race has led to an absence of emphasis on incentives for creating global public goods and a trial area such as a specific public health issue should be selected as the first area of international negotiation on public domain as well as private intellectual property.

As the ‘play of the game’ shows, the currently used IPR system is not always appropriate: Firms use more and more informal non-proprietary systems, especially small and medium sized enterprises. Belief systems, which suggest that only strong IPR protection provide sufficient incentives for innovators, do not take into account this ‘play of the game’ by innovators and funders. Obviously, the mutual access to innovations at low costs and positive network effects provide incentives for a non-proprietary intellectual property right system.

IPRs should build on concerted international regulations with enough room for country-specific and sector-specific solutions. The important difference between knowledge creation and commercialisation with their different underlying motivation should find explicit access into the setting up of new rules.

GESolution 2

Design new institutions that automatically determine the optimal duration and width of patents on a case-by-case basis.

In a fully non-proprietary open source system, where no rights are granted to the innovator it might appear that incentives are lacking, when network effects are not large enough. However, granting property rights as those currently used in patent law locks up patents for 20 years. Finding solutions that grant property rights for shorter durations should be in the focus of policy makers.

To determine the duration and width of each and every individual patent on a case-by-case basis is costly and policy makers often lack information to determine appropriate rewards needed by innovators to develop an invention. Thus an institution doing this determination process on its own would be beneficial. The “Embedded LINUX” case and further cases existing throughout biology show that it is possible to share core elements of research ensuring essential results. In particular, there should be applied an open-source approach to sharing core elements of commercial biology/synthetic biology research in order to ensure results essential to human health are kept in the public domain and widely used as the basis for further products and innovations.

Given the reluctance of innovators and knowledge providers to submit themselves to new rules, demonstration projects limited in scope and time should be offered by governments as a “training field “ for wider all encompassing rules. Rather than seeking a global, ambitious solution which will be hard to deliver, the aim is – for the moment – to find incremental improvements in practice. Such demonstration projects can be used to test which legal framework fits best to which industry. For instance, e-learning in the education sector and e-diagnostics in the health sector stand for such tests.

GESolution 3

Strengthen the legal base for intermediate regimes between proprietary and non-proprietary systems, such as general public licenses, soft patents, public-private partnerships and private philanthropy.

A less restrictive system can thus efficiently reduce the costs for innovators and funders and stimulate the flow of information. The legal base for intermediate institutional regimes between the antipodes of proprietary and non-proprietary systems, such as general public licenses, soft patents, public private partnership and private philanthropy, should be improved.

GESolution 4

Restrict public funding of research and development to projects going into the public domain, supported internationally by reciprocal concessions.

Public funding is an important source of funding in many research projects. It simulates innovative engagement and reduces the costs to consumers. However, the international integration of trade and markets poses the threat that publicly funded research projects are perceived as a gift to the rest of the world.

Therefore it may be desirable to fund only those projects of which the research results go back into the public domain. Such a selective process can achieve to sustain a viable pool of public knowledge, without being too costly for the taxpayer. The approach can be backboned by international reciprocal concessions that prevent from wasting one-sided gifts on other countries.

GESolution 5

Enable the World Intellectual Property Organization (WIPO) to create an effective legal framework for intellectual property rights (IPR).

So far IPR in international negotiations are seen primarily under the perspectives of trade policy, but should be treated as an issue on itself. At present, the IPR discussion is more about rent-seeking than about setting the right incentives. International negotiations should focus on reciprocal concessions towards a regulatory disarmament, where trade negotiations on tariffs and quotas might serve as a blueprint.

A stronger WIPO could have the ability to come up with an effective legal framework for IPR. In particular, this framework could support the development of the digital world, where markets for connected products are booming, but the appropriate regulatory regime is lagging behind.

The TRIPS agreement (Trade-Related Aspects of Intellectual Property Rights) which exists since 1995 can only be seen as a starting point of negotiating an international framework to the IPR system, providing incentives for the creation of global public goods.

GESolution 6

Governments should promote knowledge-creation networks as partnerships between government and private sector, particularly in developing countries, on health, environmental and poverty issues.

The need to create knowledge-creation networks as partnerships between government and private sector companies in specific countries or localities, particularly in developing countries, in areas of research such as health and education. The aim is to use these as concrete demonstrations of deliverables in socially important areas, such as those targeted by the Millennium Development Goals. Rather than seeking a global, ambitious solution which will be hard to deliver, the aim is to find incremental improvements in practice.

An improved interaction of the various actors engaged in creating knowledge, can efficiently reduce operation costs, and extract more value of business projects, lead to more competitive companies and more new products. It is the role of the government – especially in developing countries – to enhance and facilitate this interaction process by adapting the infrastructure and the functioning of the IPR system to new business models, even by taking part in it in public-private-partnerships.

So-called ‘knowledge groups’ which emerge out of this process of enhanced interaction facilitate the dissimilation and transfer of knowledge. By allowing for the contribution of various people and their collaborative development, the innovation process in socially important areas such as education, environment and health can become more dynamic, efficient and hence profitable. However, the rules should be defined in such a way as to prevent for excessive closed-shop situations in the value-added chain.