Intellectual Property: Emerging economies lay out their stalls

Intellectual property is the currency of the knowledge economy, and underlining the strength of the IP regime is an essential ingredient of any country’s attempt to attract inward investment and build its biosciences sector. Painting his vision for building India’s biosciences sector Kapil Sibal, minister of state for science and technology, described measures to strengthen the IPR regime, following on from the reform of the patent law in 2003.

“We have put in place a very progressive IPR regime that gives product protection. Our patent offices have recruited and trained 300 new patent examiners, and there are thirty new trademark examiners,” he told delegates at BIO.

A network linking patent offices in the four largest cities is complete and it is now possible to verify the status of a patent application over the Internet. At the same time an Appeals Board has been established to handle disputes. A counterpart Copyright Board has been established also.

Five years ago there were 4,800 patent applications a year in the country; in 2005 there were 18,000, of which 80 per cent were from outside India.

“This gives you a flavour of the kind of confidence people have in India,” said Sibal. “The IP laws are world class and this gives the global community confidence to invest.”

Similarly, Jamaludin Jarjis, Minister of Science, Technology and Innovation, Malaysia, told delegates his country was trying to “catch up on the knowledge-based trend”.

Jarjis put partnering and technology sharing at the heart of plans for the country to become a destination for clinical trials, leverage manufacturing skills into diagnostics and bioprocessing, and become a leader in research in tropical diseases.

“We are rolling out the IP law and will do enforcement,” he promised. This will include putting a system of grants in place for companies to set against insurance premiums paid to protect IP. “In other words we will not just have separate courts [for hearing patent infringement cases], but also financial protection.”

Nor was it only Asian countries that were keen to stress their commitment to IP protection. Italy, with one of the least-developed biotech sectors in Europe was plying its wares at BIO. Giampaolo Russo, Head of Innovation and Investment at Invest in Italy, the country’s inward investment arm cited recent changes to the IP regime as the centrepiece of the “modern business environment” that makes Italy one of the most cost effective places to do research and development. According to figures compiled by consultants KPMG Italy is the second cheapest of all the developed countries, after Canada, in which to conduct research.

Meanwhile, speakers in a session on the legal aspects of doing business in Russia were agreed that while the IP laws are perfectly serviceable, the lack of enforcement can create a disincentive to investing.  

Demitri Kulish of Intel Capital has spent the past three years pioneering the development of a VC sector in the region. Despite making some progress, setting up six VC-funded IT start-ups, Intel Capital is yet to finance any biotech start-ups. Kulish attributed this to the “Jekyll and Hyde” nature of Russian biotech. “There are many good things on the Dr Jekyll side, in particular the R&D is excellent.”

“But when you dive in you see many Mr Hydes: scientists are not managers, Russian IP and tax laws are prohibitive for VCs, and the state’s support of healthcare is still insufficient – meaning there is no domestic turf to grow nascent ventures,” said Kulish.

“There are good reasons to do Russian biotech investments, but be aware you may have problems,” concluded Kulish.

Arthur George, a lawyer at Baker and McKenzie in Chicago who specialises in drawing up legal agreements between US and Russian companies, agreed, saying the Russian legal system “can be a challenge, but it can be negotiated”.

While there are widespread infringement problems with the copying of consumer products, it is possible to draw up bilateral agreements between partners that will be respected.

One elephant trap, though, is Russia’s recently enacted trade secrets legislation. “You must ensure that you comply with this legislation, because if you don’t your IP won’t be protected,” said George. “And vice versa, if you license IP from Russia make sure your partner has the regime in place, or you may find someone else is developing the IP.”

And it remains difficult to in-license technology from Russia’s public research institutes. All IP belongs to the state, and permission is needed from the Minister of State.

The advice given was to get the piece of paper signed by the Minister, transfer the IP to the Cayman Islands – and then forget about the Russian market.