Intellectual Property Rights Regulations in Russia: Case of Government-Supported R&D

1. Intellectual Property Rights Regulations in Russia: Case of Government-Supported R&D Irina Dezhina Leading Researcher, Ph.D. Institute for the Economy in Transition Moscow, Russia degina@iet.ru

2. CONTENTS • Why the focus is on government-financed results of R&D? • Development of legislation during 1992-2005 • Unresolved problems • Indicators of patenting • New instruments for commercialization of IP: technology transfer offices • Possible options

3. IPR Created Under Budgetary Expense: the Scope • 90% of all IP in Russia was created under budgetary expense • The share of government financing of R&D is about 60% of the total expenditures from all sources In particular: • In academic institutes – over 80% • In universities –62% (data for 2003)

4. Development of Legal Basis in 1992-2003 • Patent Law of the Russian Federation (1992) and six basic laws in the area of IP: Acceptance of international practice • Government Decrees of 1998-1999: Strengthening the power of the State • Government Order of 2001: An attempt to find balance of interests (government – organization-inventor) • Corrected Patent Law (2003): Clarification of terms for government contractual agreements

5. Recent Developments in Legislation Government Regulations (November, 2005): • In case of government contracts IP may belong to: • The State • Organization where IP was created • Both • IP belongs to the state if results are restricted in use or government is ready to take responsibility for commercialization. • Both state and R&D organization (university) own IP in case of defense-related results or if results are related to implementation of government functions (health protection).

6. Unresolved Problems in Recent Legislation • What are criteria for identification of R&D results that government is ready to commercialize by itself? • What are the responsibilities of organization that receives ownership? • How should the amount of payments that organization-owner of IP will pay to the federal budget be calculated? • The case of mixed financing from a number of sources is not resolved.

7. Other Problems • Contradictions between legal and sublegislative (level of ministries) documents. • Results received under government contractual agreements should be published. This may contradict to the intention of organization to patent. • Undeveloped methods to calculate the cost of IP. Usually it is calculated as expenditures on R&D. • Problems related to amortization of IP. • Mistrust towards Russian patent system among researchers. Patenting abroad is expensive. Result: low level of patenting. Preference is given to know-how.

8. Some Indicators of Patenting in Russia • Only 0.4% of R&D results are in economic turnover. For developed countries this indicator is 70%. • Patenting in Russia is often used to secure priority in R&D, and not as a step towards commercialization. From the total number of registered patents only 35% are patents in force. Usually patent maintenance lasts 4-5 years. (data from the Russian Federal Service for Intellectual Property, Patents and Trademarks)

9. Patent Applications Granted by USPTO / Million population(2003-2004)

10. Technology Transfer Offices in Russia • First TTO were established in 2003. Two models are developing simultaneously. • First model: TTO are independent legal entities aimed for economic development of the region. This model is supported from the federal budget. Total number of TTO created to the date – 68. • Second model: TTO are subdivisions of universities. One of their major functions is educational. This model is supported on matching basis from the federal budget and foreign (U.S.) sources. Number of TTO - 4.

11. Government Financing of TTO

12. Achievements of TTO • Some TTO managed to establish transparent internal structure, conducted partner search, technology audits and market assessment studies. These TTO proceed with commercialization in three directions: • Patenting / licensing; • Establishment of small (spin-off) companies; • R&D contracts with industrial enterprises • TTO became places for training and retraining of innovation managers. • Expert estimation for the number of successful TTOs – 10% from the total.

13. TTO- Second Model: Results to Date • No royalty income • 29 new licenses negotiated • 30 new enterprises launched • 400+ company contacts made • Training of other university personnel • Research contracts for host universities

14. Problems (1) • Need in TTO is not widely accepted in research community. Researchers think they may commercialize their developments by their own. • In some TTO leadership sees TTO only as a patent office or as training division. • In many cases industrial enterprises prefer outsource R&D to teams of researchers without contacting TTO or organization (university). • The R&D results are usually not ready for commercialization. • Lack of information about developments in organizations other then the one that hosts the TTO.

15. Problems (2) • Government financing of TTO is guaranteed for 1 year. Support is provided only for R&D. • Legal basis for contractual agreements between organization and employee is underdeveloped. Employees do not have obligation to report about their R&D results and potential commercial value of these results to employer. • Legislation in many cases hampers innovation activity rather then encourages it. Example: regulations concerning SME.

16. Possible Actions • Improvement of government regulations, including the one concerning innovative SME, in order to create environment friendly to innovations. • Introduction of the analogous of the US Bayh-Dole Act of 1980 with detailed clarification of all terms and conditions. • Support of public-private partnerships in innovation: joint R&D projects, outsourcing of R&D. • Establishment of coordination among government agencies in order to make innovation policy more consistent.