Had an interesting conversation yesterday about what a global market for intellectual property would look like, how quickly it will develop, and what it would mean for Ireland and beyond.  An array of global factors are driving the adoption of a fluid IP marketplace, which demands the creation of new and innovative business models. 

Drivers
Harmonization
A single international PCT application now enables an inventor to seek patent protection in 124 signatory countries.  By extending the deadline for country filing by 18 months, inventors can pursue further technical development, feasibility studies, manufacturing licenses or financing.  Going forward, WIPO is expanding its platform so it can meet the demands of an increasingly globalized world. 

Awareness
Forrester reports that over 75% of CEOs, across multiple industries now view external collaboration as a key driver of corporate innovation and competitiveness .  In the same article Forrester reports that the media, telecommunications and petroleum industries already source over 50% of their new product and service ideas from external inventors such as partners, customers, academic institutions and contract labs.

Ubiquitous Information Access
Emerging markets have fewer legacy restrictions and dominant designs which when coupled with nearly instantaneous access to international trends, enables technology leap frogging.  While China may not be able to compete with Western economies in terms of pure innovation capacity, they are able to quickly learn from the mistakes of industrialized nations and commercialize products at a breathtaking pace. 

Return of the Middle Kingdom
The rise of China as an economic powerhouse is not an “emergence” but a “return” to greatness; China’s early contributions to society were monumental.  Many leaders within the country view innovation as a key tool to compete globally and are allocating significant amounts of capital to foster early-stage innovation and the creation of an “Easternized” Silicon Valley. 

Positive Factor Conditions
The low cost basis of APAC labor coupled with increasing educational standards is accelerating the regional transformation from a simple low-cost manufacturing base to a center of high value research and development offerings.  This same shift is happening in MENA as well, although the transformation is from an oil-driven economy rather than manufacturing.


Restraints
Regulatory
Recent Supreme Court decisions (KSR v. Teleflex & eBay v. MercExchange) hold the potential to radically redefine the competitive landscape, by raising the bar for patent aggregators pursuing legal proceedings against accused infringers.  With nearly 75% of corporate value tied up in intangible assets and IP, there is a great deal of substance behind the push for legislative reform that may render some business models unsustainable. 

Cultural
Cultural differences and expectations are a key restraint holding back the adoption of a global IP marketplace.  Furthermore their existence necessitates regional adaptation strategies to ensure that product and service offers are acceptable for local market conditions. 

Model Confusion
The evolving IP marketplace is experiencing a great deal of foment, both technical and geographic.  The fact that not a single company has captured the market to any measurable extent is a testament to the difficulty surrounding IP liquidity.  Complicating the market is the fact that while one model may be perfectly suited to the US or European market, it may not be appropriate for adoption in Eastern or MENA economies.  Despite the confusion, the potential market is vast hence the reason there are so many different companies experimenting in the space. 

Quality
While the number of worldwide patent applications is skyrocketing, especially in the APAC region, overall patent quality has been called into question.  Misaligned incentive structures in both corporate and academic environments can encourage the submission of inferior patents.  While some automatic assessment tools have been developed to measure the “quality” of a patent, the field is still more art than science. 

Regionalization

Despite rapid globalization, the signs of increasing regionalization are emerging.  Rising geopolitical tensions, risk reawakening cold-war era feelings of fear and mistrust.  In response increasing regionalization and dependence on like-minded neighbors may hinder the further development of a global IP marketplace. 

It is impossible to predict when a fluid and efficient global market for IP will emerge, but it is safe to say that only those economies who are able to efficiently leverage regulatory frameworks, tax incentives and collaborative ecosystems will be winners when it does emerge.  For that reason it is disappointing to see that Ireland’s 2011 Budget (KPMG Report-PDF) abolishes the tax incentive scheme for patent royalties.  

Related articles

• China Is Not About to Out-Innovate the U.S. (blogs.hbr.org)
• Unshackle Inventors from University Licensing Offices, to Meet President Obama’s Challenge to ‘Encourage American Innovation,’ Says IP Advocate Founder Dr. Renee Kaswan (eon.businesswire.com)