PH losing out on IP revenues

By Max V. de Leon, Business Mirror

Posted at Jul 12 2011 08:03 AM | Updated as of Jul 12 2011 04:04 PM

MANILA, Philippines - The Philippines is losing huge revenue opportunities because of the failure of local firms to put value and commercialize their intangible property, and had to pay $382 million in royalty to other countries while receiving nothing in 2009.

Alan Lewis, president of the Licensing Executive Society (LES) International, said these commercializing researches, innovations and inventions are something the Philippines should work on, as other countries have been benefiting immensely from these intellectual-property (IP) assets.

He said that based on the reports of the World Bank and International Monetary Fund on the balance of payment on the royalty account of different countries, the United States recorded the highest surplus, paying $26 billion, while receiving $92 billion. Singapore paid $9.1 billion and received $840 million.

“IP has been a major component of the economy of other countries. It is an easily transportable asset that can be used more outside of the country than within the country,” Lewis said at a forum on IP Valuation organized by the Intellectual Property Philippines, LES and the Department of Science and Technology (DOST).

The Philippines remains without clear guidelines on putting value to IP assets, such as trademarks, patents and copyrights, despite the passage of the Technology Transfer Act of 2009 (Republic Act 10055).

Merle Opena, head of DOST’s Research, Information, Communication and Utilization Division, said they are still consulting with the different stakeholders for the crafting of IP valuation and commercialization guidelines based on cost, market and future income.

She said the law gives incentives to innovators and research institutions to commercialize and protect their works as they have specific shares in the income.

RA 10055, or the Philippine Technology Transfer Act of 2009, signed into law on March 23, 2010, seeks to commercialize technologies generated by government-funded researches.

A DOST document said the initiative “was deemed necessary because the current system of technology transfer is characterized by a lack of well-defined and unifying policy on technology transfer; insufficient investment in technology transfer and commercialization; weak private-public collaboration in R&D [research and development] and commercialization; and lack of well-defined IP regimes in R&D institutions.”

The document said such conditions have resulted in a low rate of patent application in the country. Despite the enactment of the IP Code in 1998, research and development institutes (RDIs) still lack well-defined IP policies and support systems for protecting and utilizing their IPs.

The DOST document said the number of technologies developed by local researchers and protected under the patent system is alarmingly low.

The document cited an IP Philippines data that showed that of the 2,972 total patent applications in 2005, only 210 were by local researchers. From this number, only 15 local patents were granted, and only one patent was granted for an RDI.

In 2006, of the 1,215 patents granted, only 24 were local patents, with only one patent from RDIs on the sambong herb of the DOST. The same trend was seen in 2007, wherein of 1,814 patents granted, 28 were made by local researcher-applicants, with only one from an RDI of the DOST.

This situation resulted in a relatively slow pace of introduction of locally developed innovations to the market, the document said, as seen in the 2009-10 results of the Global Competitiveness Surveys, where the Philippines ranked the lowest at 87 compared with Singapore (3), Malaysia (24), Thailand (36), Indonesia (54) and Vietnam (75) in the global competitiveness ranking.

The Technology Transfer Act was a brainchild of former Science Secretary Estrella Alabastro, who expressed optimism on its merit in taking technologies to the market, as well as preventing brain drain and out-migration of science and technology professionals, and encouraging students to pursue R&D studies.

But to ensure the worthiness of R&D projects, Opena said in the forum on Monday the direction should be market-to-research and not research-to-market.

“The research community should know what the market needs and that is what they will do so technology uptake can be quicker,” she said.

Lewis said while research, development, application and testing, and coming up with a pilot product would entail a lot of investment, companies will start seeing positive cash flow once the product has been commercialized and valuations are made on its intangible aspects.

For instance, he said Coca-Cola has valued its IP assets at $70 billion. Nortel’s patents, on the other hand, were bought recently at $4.5 billion.