Review of the New Zealand IP system released

By Shaun Hendy 03/05/2010

The Ministry of Economic Development released a report on the state of New Zealand’s IP system last month.  The report, written for MED by Auckland Uniservices, was based on a number of stakeholder surveys conducted last year.  The aim of the review was described in MED’s request for proposals as:

… to ensure government policies and practices, in respect of intellectual property, are well aligned to support [the goal of lifting New Zealand’s level of productivity].  The focus of this work is on improving productivity and to identify areas which have the potential to support this goal.  The report is to assess how well New Zealand businesses understand and use intellectual property and where opportunities exist to improve the intellectual property rights system.

Based on the survey, the report makes a number of recommendations:

  1. Government agencies need to raise awareness and understanding of IP within the business community;
  2. The government should consider reinstatement of R&D tax credits, and review the tax treatment of earnings from off-shore royalties;
  3. A single, comprehensive IP policy should be developed;
  4. Further research is needed.

The report itself goes beyond the results of these surveys and takes a wider view of the IP system.  For instance, the report’s review of the literature on the benefits of an IP system is relevant to a previous discussion on this blog about the value of patents:

… a recent emerging literature, which focuses on the private returns to patent protection, suggests that where firms prefer patenting to other mechanisms of appropriation, the benefit is significant, in the order of 50% on average of invention value.

(my emphasis).  While private returns may be significant, other literature suggests that patent disclosure itself may be less important for the diffusion of knowledge between firms than other mechanisms.  For example, the protection that a patent provides encourages firms to share details with investors and downstream commercial partners:

Therefore, without a patent, inventors may be unable to license their inventions to third parties or to raise capital.  On this basis, it is sometimes argued that patents are particularly important to small firms, who, on account of their scale, require financial, development, or distribution partners to bring their innovations to market.

I was also interviewed last year by the report’s authors about our network analysis of an OECD patent database.  It is pleasing that there is some discussion of our findings and the authors suggest that:

The ability to form networks might be affected by New Zealand’s geographic isolation and industry characteristics, there would appear to be potential for exploring possibilities for networks based on the CER arrangements with Australia.

This is also going to come up as we get further into Philip McCann’s paper on New Zealand’s economic geography.

0 Responses to “Review of the New Zealand IP system released”

  • This report was released three weeks after the Patents Bill was referred back to Parliament by a select committee who had considered public comments. The overiding philosophy behind the Patents Bill in the policy development was that 90%+ of NZ patents are granted to non-residents, the benefits of these may flow overseas, so let’s make it as difficult as possible for anyone to get a patent and as easy as possible to challenge the patents of others. It seems the patent policy wing of MED operates in a different policy silo from the innovation policy wing who commissioned the report. For more on this see …
    It is time to send the bill back to a select committee with the instruction that it should be aligned with the innovartion policy direction of the government of enhancing the migration of science to the market place.