Intellectual Property and Technological Development: Establishing University and
Industry Linkage
Suprapedi
Farah Purwaningrum
Introduction
The emergence of a knowledge based society amid the socio-economic setting has
been responded fruitfully by the renowned management specialists. Daniel Bell captured
the optimist view about the new society based on knowledge by asserting that the
‘development of new forecasting and “mapping” techniques makes possible a novel
phase in economic industry- the conscious, planned advance of technological change, and
therefore the reduction of indeterminacy about the economic future’. 1There are however
those who has been pessimistic, they looked at the impressive technological
developments of modernity, and then forecasted a world dominated by machines and a
world populated by intelligent machines and further increasing the likely chance of
unemployment.2
Peter F Drucker coined the term of knowledge society, to refer to the
presupposition of knowledge in the context of information effective in action,
information focused on results. 3 As the knowledge based society operates in various
setting such as the economic setting, thus, it would be imperative to see the result of this
knowledge based society in terms of its contribution in relation to the actors operating in
the economic performance. In other words, one is left with an unease question of the real
contribution of knowledge to foster economic growth and to increase the performance of
actors such as industry or multinational companies.
One of the prominent features of the knowledge based society is its increasing
regulation and transparency. 4 The recent advances in knowledge are attempted to be
mediated by regulation either at the international and national level. This may not be easy.
At the international level for example, there is currently a problem of tension between
1
Bell, Daniel (1999), The Coming of Post-Industrial Society (New York: Basic) page 60.
Rifkin (1995), The End of Work (New York:J.P. Tarcher/Putnam) page 50.
3
Drucker,P (1993), Post Capitalist Society (Oxford: Butterworth/Heinnemann), page 42.
4
Tsouka, Haridimos, (2005), Complex Knowledge, Studies in Organizational Epistemology, (New York:
Oxford University Press), page 33.
2
1
different treaties, such as the Convention on Biological Diversity and the WTO-Trade
Related Intellectual Property Rights (TRIPS) Agreement. 5Not to mention the issue of
trade-offs6, or the delicate issue of striking a balance between the IPR Property rights
(IPR) and the society’s interest. In the national level, for example Governments attempts
to provide an incentives and legal safeguard for the industries and research by providing
Intellectual property (IP) protection and securing investment through national legislation.
These national legislations intend to legally capture the fruits of recent advances in
research and development by enabling its equal enjoyment to both the owner of the right
and the consumer. Thus, this trend of increasing regulation depicts a deliberate effort to
stimulate further the recent advances in research and development, in the frame of
fostering economic growth.
Let us now turn to knowledge economy and IPR. In the knowledge economy, it is
the rules of IP that determine who has access to informational resources, the terms and
duration of that access and the price to be paid for the use of those resources. Thus, IP is
not a juridification of knowledge per se, due to its a fundamental and catalyzing role in a
knowledge economy7 and as it operates in a larger setting of socio-economic policies and
situations. More specifically, Peter Drahos argued, IP affects what kind of business
models entrepreneurs can develop to compete with existing models. 8 Thus, there is a
close tie among the usage of IPR with the business entrepreneurs.
The economic theory forged the thesis that a society that had no IP protection at
all would almost certainly not be allocating resources to invention and creation at an
optimal level.9 Yet, a society that went to extremes of protection would almost certainly
incur costs that exceeded the benefits. 10 Ensuring the benefit of the various forms of IPR
calls for a thoughtful understanding of the elements of IPR, such as prior art, novelty and
5
The text of the Convention on Biological Diversity is available at; http://www.cbd.int/
whilst the WTO-TRIPS agreement is available at; http://www.wto.org/english/docs_e/legal_e/27trips_01_e.htm.
6
Tilman, David, Causes, Consequences and Ethics of Biodiversity, Insight Overview, Nature, Vol 405, 11
May 2000.
7
Drahos, Peter (2005), Intellectual Property Rights in the Knowledge Economy, Intellectual Property
Rights in the Knowledge Economy, in D. Rooney, G. Hearn and A. Ninan (Editors), Handbook on the
Knowledge Economy, (Cheltenham: Edward Elgar) page 140.
8
Ibid, page 140.
9
Landes, William, M. and Richard A. Posner (2003), The Economic Structure of Intellectual Property Law.
(Belknap Press of Harvard University Press: Cambridge MA).
10
Drahos, Peter, Op.cit., page 141.
2
the economic value of the invention itself. In light of this consideration, it is vital for the
business sector and the research and development institutes to understand the importance
of IP protection at the national level.
This paper will focus on the practical area, namely establishing the linkage
between the business sector, in this case the industry, and the research and development
activity of the research institutes and universities in light of the knowledge based society
era. It would describe the current R & D condition in Indonesia, and the industrial
situation as well as the IP Business Development Services. The data and information are
collected and analyzed from the unpublished Incentive-Selective Program from the year
of 2001 to 2003. The program is an imperative indicator as the coverage is at the national
level in Indonesia. Some of the key findings of this Incentive-Selective Program are that
there is a mismatch between the industry and the public sector in this case the university
and research institute and that there is a lack of quality of the R&D output from the
government R&D institutions and universities. 11 Furthermore, this paper would provide
updates on the current initiatives that would or are being taken to address this mismatch.
It would not however review these initiatives, since the programme and policy are likely
to still be embryonic and ongoing. Lastly, recommendations will be provided at the end
of this paper.
The IP situation in Indonesia: Identification of the Mismatch
The preamble of the 1945 Indonesia’s National Constitution (third amendment)
emphasised the importance of knowledge to support the nation-state well being.12 In this
regard, various “mediating” legislations to support the innovation, to encourage
competitiveness rate, and the economic growth at the national level have been enacted.
From, the IPR point of view, the enactment of legislation relating to copyright, patent,
trademark, Plant variety protection, Industrial design, trade secrets to industrial circuits13
11
Suprapedi, Strengthening Public Private Linkage on IP in Indonesia, paper presented at the First Asian
Science and Technology Seminar, March 19th-21st 2006, Bangkok, Thailand.
12
This is reflected in the phrase of “Mencerdaskan kehidupan berbangsa…” at the preamble of 1945
National Constitution
13
The text of this Laws are downloadable from the Indonesia’ Directorate General of Intellectual Property
website, www.dgip.go.id.
3
indicates that there is a strong commitment at the Governmental level toward IP
protection.
The government of Indonesia realized the significance of the protection and the
urgency of encouraging the socialization of IPR in the frame of a wider strategy; the
economic, technological and innovation advancement at the global level. However, there
are several barriers, the lack of expertise in this field14 the low level of awareness of the
importance of IP protection in Indonesia which is attributable to a certain extent to the
industry, university and the government R&D institutes. 15 This barrier has a wider
implication, among others, the inclusion of Indonesia in the Watch List of the special
report 301- a unilateral report made by the U.S government to monitor among others the
IP protection in several countries. Thus, the partnership between university, government
R&D with the industry is imperative in the sense that this would promote economic
growth in Indonesia.
The discussion now will focus on the Incentive-Selective Programme from the
year of 2001 to 2003.16
TABLE 1
14
Suprapedi, Ibid.
Policy Paper for the Implementation and Management of IPR in the Department of Industry, Republic of
Indonesia, 2006.
16
The Incentive-Selective Program is a programme of Research and Science Ministry (RISTEK). It
processed more than a thousand proposal in year. From this program, a trend toward IPR and R&D can be
inferred.Suprapedi, Ibid.
15
4
As evident from the table I, the trend from of R& D output from is yet to be
significant in numbers. The R& D output that has a bearing toward the industrial sector
namely in the industrial application and the patent application indicators has shown a
decreasing trend. In patent for example, the total percentage is only 1,9. This insignificant
percentage indicates that in the supply domain, namely the R& D Institute and University
has yet to be fully aware of the IP. Furthermore, this is due to the fact that the research
are not based on the market needs and the element of prior art has yet to be taken into
account. Thus, at this point the researchers at R& D Institute and University should be
supported in terms of their information needs by the relevant IP centers.
The patent application proposal would be the next focus. The table 2 below would
capture the trend of patent application.
Table 2
Patent Application
5
The trend of increase of the number of domestic patent application is significant
since 2000. This is signified by the percentage of 30 of increase. It is likely that this
increase is attributable to the establishment of IP Centers in throughout Indonesia. Indeed,
IP Centers have a focal importance especially in promoting the awareness of IPR to other
sectors including the business/ industrial sector.
In Indonesia during the past five years, there have been more than 90 IP Centers,
Technology Licensing Office/Business development services at the R&D Institute,
University, Small and Medium Enterprises (UKM), and at the local Government level.
The working program of these IP centers in the beginning is emphasized both in the
socialization of the importance of IPR for advancement in R&D and in the frame of the
international trade agreements as facilitated through the WTO/GATT Agreements. The
campaign and socialization of IPR has yielded a positive result, as signified by the
growing number of patent applications since 1999. However, the increasing number of
patent application has yet to automatically trigger the diffusion of technologies or start-up
companies. This is attributable to the minimum capacity and capability of IP centers in
providing services to the stakeholders, in particular to the business sector.
Type of IP which retains the Business Development Service basically retains the
following characteristics:
(1) IP Audit;
(2) IP valuation for business negotiations and financing purposes;
(3) Financial and other incentives for R&D and commercialization;
(4) Technical and patent information services;
(5) Research and examination services for IP;
(6) Market studies and technical feasibility studies;
(7) Business plans and IP strategy;
(8) Patent drafting;
(9) Legal and/or technical assistance for negotiating licensing, joint venture or
technology transfer agreements, R&D agreements, contract research agreements;
(10) Finding sources of financing;
6
(11) Prototyping;
(12) Branding;
(13) Naming and trademark searching;
(14) Industry-specific R&D;
(15)
Patent/trademark/design
application
services
within
and
outside
inventor's/applicant's home base;
(16) Training e.g. for researchers, inventors, etc.;
(17) Commercialization issues of a general nature and/or of a specific nature
relating to a specific market in ASEAN;
(18) Sectoral/cluster research specialization;
(19) Competitive intelligence;
(20) Patent mapping.
In regard to the need assessment of IP Business Development Services (BDS),
there are four priorities that one should take into account. First, is IP Services for
Protecting Market Competitiveness in which the main purpose of this service is to protect
the invention and innovation, in this case services such as patent drafting and sectoral
research specialization are very crucial. Second, the need of IP Services for Supporting
Collaboration. The services might take the form of IP Valuation, business plan and
strategy or legal and technical assistantships. Third, for IP Services in regard to Essential
and Crucial for IP Development in Organization, in this area IP valuation, financial
incentive for R&D commercialization, and legal or technical assistantship also played a
key role. Fourth, the services such as IP valuation, market study, market and feasibility
study, business plan and IP strategic may potentially generate income for IP player.
Patent drafting, IP Valuation for business negotiation and financing purposes, Business
Plans and IP Strategy, Market studies and technical feasibility studies, Financial and
other incentives for R&D and Commercialization are the buzzwords for the prioritysetting for IP BDS.
In this study, the several problems faced by IP centers are also identified. They
are to name a few; first the issue that the services offered by IP BDS are not well
integrated, this service is even more complicated when it comes to providing the financial
and legal aspects. Moreover, currently there are no IP centers that are capable of
7
providing 20 types of Business Development Services. However, there are initiatives that
are being launched in which this will be discussed in later on in this paper.
The next issue that also calls for attention especially in the context of identifying
the aforesaid mismatch is the technology diffusion in Indonesia. In this research, a
survey to 98 industries was conducted. The objective of this survey is to attain a complete
picture on the industrial situation relating to the technological diffusion. In the research
the following elements were the key findings; first, most industries agreed on the
imperative for technological diffusion. This is evident in the 69% of respondents
perceived that the requisite technology is very important, leaving only 20% of
respondents to think that it is important. Second, the origin of the technology employed is
and has been mainly from foreign countries such as Japan, European Countries, USA and
Taiwan. The domestic technology adapted or absorbed is insignificant in percentage, only
8%. Third, the exploitation or the usage of product technology has been quite substantial,
with 74% claiming that they have adopted and absorbed the product technology of R& D
Institute and University. This trend is pictured in the first pie chart.
1st Pie-chart
Did you ever exploited the product technology
of
R&D Institute /
University
26
%
74
%
Ye
s
N
o
The second pie-chart however points out a different turn in the issue of exploiting R&D
for R & D Institute and University. This trend showed where the mismatch comes from.
It was derived chiefly from the supplier of the R&D namely the R&D Institutes and
Universities(60%). The other reason is the low linkage between supplier and user (21%)
and the user’s weakness itself is in this case of course is least the contributing factors
(19%) in the industrial sectors. There are various reasons from the supplier in response to
8
its low exploitation by the R & D Institute. To name a few, the reasons are as follows-all
of which are in a decreasing priority; unproven technology/non applicative/theoretically,
the “expiry” nature of the R & D, bureaucracy problems, the fact that their products are
not marketable, the untruthful element, the human resource problem, the policy and
infrastructure, unprofessional skill and the standardization problem.
The 2nd Pie-Chart
Supplier
Linkage
User
Thus, in this part, the authors have identified the restraints from the IP centers itself
especially in the context of Business Development Service, and also pointed out the
mismatch of linkage between the supply i.e., the R& D side and the user side namely the
industrial side. In the next part the focus would shift to the remedies and initiatives taken
by the Government to address the aforesaid problems.
Establishing the Linkage; Initiatives toward a Mutual Partnership among R& D Institute,
University and Industry
IPR is expected to foster economic growth; it is posed as an incentive toward
further innovation and creation. The incentive thesis in here has a bearing. This thesis
proposes that without robust enforcement of IPR against unauthorized imitation, producers
9
of intangible goods would have few practical defenses against third-party appropriation of
sale proceeds and, as a result, would rationally limit or cease investment in the development
and production of new items.17 However, the incentive-based justifications for IP are subject
to the factual preconditions that (1) there actually exist few or no effective extralegal means
for preventing or delaying imitation, and (2) IPR are effective at thwarting imitators. 18 In
here, one may infer an understanding that in order for the IPR as an incentive to work, the
industrial sector and the R& D Institute should not only gain a breadth of understanding
of what IPR is, but also that there should be an effective legal enforcement and a strategy
of providing disincentives toward the imitation.
This part will discuss the recent developments in the initiatives launched by the
government to stimulate linkage. First of all at the policy level, the national level of IPR
as advanced by the Directorate Generate of Intellectual Property Rights, Republic of
Indonesia provided a baseline for this linkage. The strategies that are relevant as a
baseline are as follows; promotion of commercial exploitation of IP-generation activities,
development of IP management capabilities, development of transaction infrastructure for
IP, protection of Indonesian IP interest, human resource development and public
awareness, and lastly promotion of FDI and technology transfer. These strategies are
indeed useful in terms of commitment at the policy level to build on the linkage between
Industrial sector and the R&D institute and University.
Second, the policy of implementation and management of IPR is currently
managed by the Department of Industry, Republic of Indonesia. This policy has several
objectives that are relevant to the linkage building process namely, to cultivate and
motivate the industrial sectors in regard to the imperative of implementation and usage of
IP to products they produced, so as to enable them to improve and developed their
business, to increase and motivate the legal protection of users and actors in IP. The other
element is to stimulate the creativity of the industrial entrepreneurs to produce creative
intellectual works in the field of technology, science, art and literature. In the Department
of Industry the approach is problem based solution toward IP issues, this approach is in
17
Barnett, Jonathan M, Shopping for Gucci on Canal Street: Reflections on Status Consumption,
Intellectual Property, and the Incentive Thesis, Virginia Law Review, Volume 91:1381. (2004) page 13811382.
18
Barnett, Jonathan. Ibid., see also, Jonathan M. Barnett, Private Protection of Patentable Goods, 25
Cardozo L. Rev. 1251, 1271 (2004) .
10
line of promoting the linkage between R &D Institute, University and the industry. The
database activity among others is
Lastly but also vitally requisite is the intermediary system. This system is
depicted in the subsequent flow charts.
National Network-An Intermediary Body
R&D Institute /
Universities
R&D Ministry
Industry
District Government/
Local R&D Institute
An Intermediary Body
/ National Innovation
Network
Department of
Industry
Financial Institution
IP (incl.IP
centers)
Department of Trade
11
This intermediary body proposed in here is basically a hybrid body that would
directly be involved in managing various stakeholders; from the Government R& D
institute, Universities, R&D Ministry of the Republic Indonesia, Industrial sector, District
Government/Local R&D Institute, Department of Industry of the Republic of Indonesia,
Financial institutions, IP( including IP centres), Department of Trade. At the moment this
body has yet to exist. This intermediary body could link the national policy level
commitment to the practical needs of the IP centres or other stakeholders. Furthermore
this intermediary body could facilitate that linkage between the needs of the industrial
sector with the research activity of the R&D Institute and University.
Recommendations
The following recommendations are posed not as a panacea but as a practical
solution to foster the linkage. First, a strategic effort that is imperative is the support of
access to information to IP and the formation of network and collaboration between the
IP centers (IP Bussiness development services / IP BDS Network) to enable them to
synergize and complement each other improve efficiency in providing services.
Second, the efforts that the stakeholders in this case specifically the R & D
Ministry, should embark upon is by providing incentives by selective means to the R & D
program, diffusion acceleration and the full yet fair exploitation of science and
technology, the improvement of science and technology capacity of the production
system.
12
Bibliography
Rifkin (1995), The End of Work (New York:J.P. Tarcher/Putnam)
Barnett, Jonathan M, Shopping for Gucci on Canal Street: Reflections on Status
Consumption, Intellectual Property, and the Incentive Thesis, Virginia Law Review,
Volume 91:1381. (2004) page 1381-1382.
Barnett, Jonathan M, Private Protection of Patentable Goods, 25 Cardozo L. Rev. 1251,
1271 (2004).
Bell, Daniel (1999), The Coming of Post-Industrial Society (New York: Basic).
Drahos, Peter, Intellectual Property Rights in the Knowledge Economy,
Drucker,P (1993), Post Capitalist Society (Oxford: Butterworth/Heinnemann).
Landes, William, M. and Richard A. Posner (2003), The Economic Structure of
Intellectual Property Law. (Belknap Press of Harvard University Press: Cambridge MA).
Policy Paper for the Implementation and Management of IPR in the Department of
Industry, Republic of Indonesia, 2006.
Suprapedi, Strengthening Public Private Linkage on IP in Indonesia, paper presented at
the First Asian Science and Technology Seminar, March 19th-21st 2006, Bangkok,
Thailand.
Tilman, David, Causes, Consequences and Ethics of Biodiversity, Insight Overview,
Nature , Vol 405, 11 May 2000
Tsouka, Haridimos, (2005), Complex Knowledge,
Epistemology, (New York: Oxford University Press)
Studies
in
Organizational
13
14