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International IP Index: Signs of progress

February 11, 2016

By Colin Mann

The 4th Edition of the International IP Index published by the US Chamber of Commerce has revealed that half of the 38 economies benchmarked recognised the benefits of intellectual property (IP) and strengthened their systems – in turn improving their overall scores from last year.

The index is based on 30 measurable criteria critical to innovation, including, patent, copyright and trademark protections, enforcement, and engagement in international treaties, among others. An additional eight economies were added this year. The 38 economies account for nearly 85 per cent of global gross domestic product (GDP). The United States again scored the highest.

According to Matt Harakal, Director, Communications, Global Intellectual Property Center (GIPC), for economies that are lagging, the Index can serve as a tool to improve their IP environment. Venezuela finished last out of the 38 economies studied. Coming in just ahead of Venezuela was India and then Thailand.

“The Chamber’s Index highlights the key criteria businesses look at when they are deciding where to invest their resources, which in turn leads to greater economic strength domestically for those economies. It’s a win-win, and there are infinite possibilities for economies around the world who seek to improve their IP regimes,” he noted.

“IP underpins innovation, so the upward momentum in the global IP system means new lifesaving medications, greater creative content, and more innovative brands. It’s too important not to continue,” he declared.

“The Chamber’s International IP Index ensures that economies around the world have a resource and a roadmap to continue the upward trend continues. Now we all have a responsibility to make sure that happens,” he concluded.

The Index maps the IP environment in 38 economies around the world, collectively accounting for nearly 85 per cent of global gross domestic product (GDP). Each economy’s score is based upon 30 indicators spread across six categories – Patents, Copyrights, Trademarks, Trade Secrets, Enforcement, and International Treaties. The 4th edition of the Index also includes an updated measure on physical counterfeiting to provide a more accurate estimate of the estimated level of counterfeiting in the economies benchmarked in the Index. An overall score approaching 30 is indicative of a highly robust IP system.

The 4th Edition of the Index not only measures the relative strengths of each economy’s IP environment, but also demonstrates the benefits associated with those strengths. The Index includes six new correlations on the relationship between strong IP rights and socio-economic benefits, as well as updated statistical information for 13 of the correlations from the 3rd edition of the Index. The new correlations include:

  • Access to finance: Economies with robust IP regimes are more likely to attract venture capital and private equity funding.
  • High-quality human capital: Economies with favourable IP protection possess on average 2.5 times more R&D-focused personnel within their workforces.
  • Foreign direct investment attractiveness: Economies with robust IP systems receive on average a 45 per cent higher Standard and Poor’s credit rating than economies whose IP systems lag behind.
  • Inventive activity: The top 10 economies in the Index exhibit patenting rates more than 30 times greater than the bottom 10 economies in the Index.
  • Advanced technology markets: People and firms in economies scoring above the median level of the Index are 30 per cent more likely to enjoy access to the most recent technological developments.
  • Streamlined and enhanced access to creative content: Advanced and easy-access delivery of streaming services is three times greater in economies scoring above the median level of the Index than in those scoring below the median. Access in the top five economies is up to 25 times greater than in the lowest five.

The Index includes many examples of positive momentum in economies that have recognised the infinite possibilities provided by robust IP protections and invested in a stronger innovation ecosystem:

  • The Canadian government extended the copyright term for sound recordings to 70 years and implemented ex officio authority for customs officials.
  • The Indonesian government introduced implementing regulations for the 2014 Copyright Act, which create an online notification system for rights holders to request action against alleged infringing websites.
  • In Israel, a new Index economy, 2014 reforms significantly enhanced the environment for patent protection. In particular, Israel has introduced patent restoration for biopharmaceuticals and regulatory data protection for submitted clinical data.
  • Malaysia’s IP environment has improved gradually over the last four years, resulting in a cumulative increase in the country’s score. As a TPP negotiating partner, the IP standards within the agreement—once ratified and implemented—will further strengthen Malaysia’s IP environment.
  • The UAE introduced a series of measures to deter TV piracy and combat the production and trafficking of counterfeit goods.
  • Other economies still have ample room to improve their IP environment in order to unleash the benefits of intellectual property:
  • Broadly, a number of economies, including Brazil, Russia, China, India, and Indonesia, introduced or maintained policies tying market access to sharing of IP and technology. Such forced-localisation policies tend to undermine the overall innovation ecosystem and deter investment from foreign IP-intensive entities.
  • Copyright protection remains a particular challenge for many high-income economies in Europe, including Italy, Poland, Switzerland, and Sweden, particularly due to the absence of policies to more effectively combat online piracy.
  • The Australian High Court reversed the earlier Federal Court ruling in D’Arcy v. Myriad Genetics, weakening the patentability of isolated-genetic material and biotechnology inventions.
  • In Ecuador, another new Index economy, the government continues to actively pursue an innovation policy that in large measure undermines or weakens the protection of IP, including the active use of compulsory licences for biopharmaceutical products.
  • While the United States excels at promoting IP-intensive industries in many ways, enforcement related to trade secrets theft and counterfeit seizures remains a relative weakness, causing the US to be ranked fifth in enforcement.

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