 Ladies and gentlemen thank you very much for coming this morning hand over the floor to Director General Francis Scurry for a few opening remarks as well as our Chief Economist Carsten Fink and then we're happy to take your questions. Thank you. Thank you very much Samma. Ladies and gentlemen a very good morning to you all and thank you very much for coming this morning I'm sorry we're starting slightly late. You have I think been given a rather voluminous report which is well it's not so long but it's quite intense. Let me make just a couple of remarks and then Carsten Fink our Chief Economist will expand on those and will be available for questions that you might have. I would like to point out that this is the first time that we have produced as it were an annual report as an organisation. We produce an annual statistical report the World Intellectual Property Indicators. It's the first analytical report that we have produced and so let me record my thanks to the Chief Economist Carsten Fink and his team who have worked on this. What have we done it on? We've done it on innovation. Why on innovation? Because innovation is the source the major source of improvements in productivity which in turn are the major component of increasing economic growth. It's the source of not only new employment but better forms of employment. It is the principle characteristic of competitiveness at the level of the firm, the level of the industry, the level of the country and it is also the way in which we will as a society and an economy address the pressing problems that for which we require solutions such as climate change, health and the necessity to improve agricultural productivity by about 70% by the year 2050 in order to feed a population of 9 billion. So this report looks first of all at the changing landscape of innovation and it notes the historically unprecedented amount of investment that there is in the generation of new knowledge or more broadly in intangible assets first of all. Secondly it notes that innovation is more multi-polar than it used to be or it is multi-polar whereas it used not to be and the technological gap between richer and poorer countries is it narrowing and it notes the importance of incremental and local forms of innovation as much as world class pioneering research. Thirdly in the changing landscape it notes the increasingly international character of collaboration that takes place in relation to innovation and finally it shows the importance of knowledge markets and the development of knowledge markets even though it makes the qualification that these are still at an embryonic relatively speaking embryonic stage but if you measure the value of trade international trade in intangibles by reference simply to royalties and licensing you find that 40 years ago in 1970 the value of that royalties and licensing was 2.8 billion dollars. 20 years later by 1990 it had become 27 billion dollars and a further 20 years later 2009 it had become 180 billion dollars. So this is a significant indication of the importance of knowledge markets, technology markets. The reports of course from our point of view looks at the role of intellectual property in all of this and notes that that role has changed because intellectual property first has gone from being a technical specialty to now a matter of economic centrality or centrality to to the economy and secondly that this central position has provoked of course an enormous demand for intellectual property rights and we mentioned in the report for example that some there are some 5.17 million unprocessed patent applications around the world. I am going to finish my remarks at that point I simply want to say that why are we doing all of this we are doing it in order to establish as much as possible the evidence to be able to have informed policy discussions on the appropriateness of our current intellectual property system and the design of the current intellectual property system for those circumstances which the evidence reveals are present and to ask whether the current design of the intellectual property system needs modification in any respect to address some of the developments that are outlined in the report and I have given only a very cursory indication of really chapter one mainly of the report I'll hand over to Carsten who will give you a few further details and then perhaps you have some questions. Thank you very much Director General and the report itself is divided into two different parts in the first part we review global innovation trends especially those concerning intellectual property and try to come up with a dispassionate assessment of the extent to which innovation really has changed over the past decade. In the second part of the report we look at evidence on how IP protection affects innovative behavior and especially what this evidence implies for the design of IP policy as well as innovation policy more broadly. Let me maybe just highlight a few things that you would find in the report. One first natural step to assess how innovation is changing globally is to look at trends in research and development expenditure and there we see that global R&D expenditure have almost doubled between 1993 to 2009 it is still the case that 70% of worldwide R&D expenditure is accounted for by high-income countries but the share of middle income countries in particular is increasing it has increased by 13% from 1993 to 2009. Interestingly about 10 percentage points of those 13% are due to China and that has propelled China to be the second largest spender on research and development in 2009. Now innovation goes beyond narrow spending on research and development we also review evidence that exist on broader investment by firms and intangible assets where those data exist they uniformly suggest that investments in intangible assets have grown faster than investments intangible assets and in fact there are a number of countries where firms invest more in intangible assets than they do intangible assets. When it comes to intellectual property rights there's every indication that IP ownership has become more central to the strategies of innovating firms. If one looks at the evolution of demand for patents one sees that the number of patent applications worldwide has risen from about 800,000 applications per year in the early 1990s to 1.8 million applications in 2009. This increase has come in different waves with Japan accounting for the first wave followed by the United States and Europe and most recently the Republic of Korea and especially China. There are many causes behind this trend. Two key forces are that on the one hand there are more inventions that are being presented to patent offices but also inventions are filed in a greater number of countries and if one quantifies what is responsible for the increase in patenting over the last 15 years one finds that it is both first filings inventions that are presented for the first time to patent office as well as subsequent filings mostly in foreign jurisdictions that account for the increase. The Director General already mentioned the increasing importance of knowledge markets that are best traced at the international level because international transactions on IP leave their mark in balance of payments but we also review evidence at the domestic level as it emerges from company reports and the message here is very much that these knowledge markets are on the rise but they are still relatively naced. This also brings me to the second part of the report which focuses on what we know about IP protection and how it affects economic behavior. There are a number of long established insights that probably still apply today but there are a number of things that are new where economists have come up with new evidence with new insights. One of them is that patents increasingly play an important role in helping firms to specialize in the innovation process. If you think of a company that is particularly good at extending the life of batteries it may not be good at developing you know the products that go into the various commercial appliances however it can seek out patents and license those patents and what research has shown is that specialization has occurred in a number of technology fields and really has been facilitated by knowledge based by knowledge markets based on patents. The second new area of thinking concerns the rise of patenting in so-called complex technologies. Economists define complex technologies as those technologies with many separately patentable elements and where patent ownership is often quite widespread and that is in contrast to discrete technologies where you often have you know a limited number of separately patentable inventions and where IP ownership is quite concentrated. One has seen rapid growth of patenting in these complex technologies that to a good extent reflects the nature of technological progress. Complex technologies include many information and communication technologies that we know have seen rapid advances. At the same time studies have also shown that there has been a shift in companies use of the patent system that in some industries the number of patents per dollar invested in research and development has increased markedly and that companies have strategically built up patent portfolio partly to ensure their freedom to operate to preempt litigation but also to use their bargain power to cross license technologies that they need for commercializing their products and technologies. There are a number of concerns that have been expressed you know that this might be problematic for innovation in a sense that entrepreneurs that face these crowded patent landscapes may decide to forego certain innovative activities. The number of answers to this concern private collaborative practices is one such answer and the report goes in some detail in for example discussing the role of patent pools and demonstrates how patent pools have researched over the last 20 years especially in the IT industry. The report also points to the crucial role that sound patent institutions play in well-functioning innovation systems. Patent institutions perform the essential tasks of ensuring the quality of patents granted and providing balanced dispute resolution and as the director general mentioned the unprecedented growth in patenting has put many of these institutions under considerable pressure and there are large backlogs existing in many patent offices not only in the large offices in the United States at the European Patent Offices in Japan but also in many many middle-income countries especially if one compares the number of unprocessed patent applications to annual application flows that these middle-income officers receive. Maybe as a final point the report looks at collaboration between public research institutions and the commercial sector. We ask how to best harness public research for innovation and as you probably all know public research organizations and universities play prominent roles in national university in national innovation systems especially so in low and middle income countries where often the innovative capacity of the private sector is more limited. Now what you have seen over the past decade is dedicated policy initiatives to incentivize patenting by these public research institutions and the subsequent commercial development of their inventions facilitated by so-called technology transfer offices. We demonstrate how this has prompted an increase in patenting by these type of institutions for example under the Patent Corporation Treaty System we see that patenting by universities and public research organization has grown from virtually nowhere in the early 1980s to accounting for about 10% of all PCT patents in 2010 and that has occurred during the time where the PCT system itself has experienced rapid growth. One also sees significant levels of patenting by universities especially in China and patenting by public research organizations in India. In India PROs account for about 22% of national patent applications. What are the effects of policies that incentivize patenting and subsequent commercial development of university inventions? Well they are multifaceted effects on research institutions and firms but also more broadly on the science system and the economy. The report points to a number of emerging lessons in that regard. It also points to a number of concerns that exist for example about reduced knowledge sharing among scientists and suggests the institution of adequate safeguards so that possible downsides to this effect are limited. As the director general mentioned it is a thick report and there are many nuances in the report to what I could say in the 10 minutes here. There are additional topics that are covered that I did not mention so I would encourage all of you to have a look at it but I would also be happy to answer any questions that you may have. Thank you very much. Isabel Sacco with the Spanish news agency. I would like to know you mentioned the trend in the increase of research and development expenditure. You mentioned that it doubled between IT history and 2009. Could you concretely say which are the areas of preference where the countries are spending more in research and development? And secondly I would like to know you mentioned also the preference for intangible assets comparing with tangible assets. Could you give us examples of intangible assets comparing with tangible? I think on your first question we don't in the report have the detailed breakdown of R&D expenditure partly also because you know these are not our data these are data that come from the UNESCO Statistical Institute you know they have been extensively discussed in their publications so you know our value added here is relatively limited. Certainly you know what has driven growth in R&D expenditure differs quite a bit across countries you know countries have different areas of specialization I think if there's one common trend and that is not surprising certainly there has been a marked increase in R&D expenditures in the information and communication and technology industries. On your questions on intangible, sure please. If I may just add to what Kastner said look I don't have the figures on me but if you were I'm just trying to think of the source I think you'll find that that the health sector, life sciences and health sector account for a very considerable portion of R&D expenditure worldwide. I'm trying to think of the report in which this is I think you'll find it in Thompson Thomson Reuters actually. There is a report that's been done on the pharmaceutical industry in particular and you and you'll see that it is a major spender. It's amongst the biggest spenders in all sectors, sorry Captain. Right. Thank you and just quickly on your second question what is included under intangible assets? Intangible assets you know certainly capture investments in intangible assets capture what is captured by research and development which are investments mainly geared at new technologies and new products but it's a broader concept. It also includes investments in design, investments in branding, investments in training workers and so on and in fact what these data show is that often research and development accounts for a minority share of investments in overall intangible assets. I recall for example data for the United Kingdom that shows that firms spent more on investments in design than they do on formal research and development. Again these data are only available for a limited number of high income countries but I think they are quite revealing in making clear that investments in innovation go far beyond narrowly defined R&D expenditure. Usually the focus is on R&D expenditure simply because we have the most data for this variable you know for the largest number of countries and we have it in the form of a long time series but I think it is important to look at these broader indicators of investment in intangible assets. Thanks. So you're on the one you're talking about a boom in R&D and mainly in China and Asian nations but then you talk about a boom in university research patent applications in China, Brazil, India, South Africa. I mean I just want to make sure I'm not conflating two different trends. Are you basically saying that the I mean you're saying France, Germany, Japan, Britain and the US are filing the most patent requests but that the geography of innovation is shifting as you say due to what the rise in R&D in China and other Asian countries or due to the university research increase in China, Brazil, India and South Africa. Well I think the first thing to recognize is that you know what we see in patenting trends you know is very much reflected in underlying R&D expenditure you know the the reason one of the reasons that patenting by Chinese resident has grown so strongly is that there have been there has been rapid growth real growth in R&D investments in China and you know that really has transformed the picture at the global level and you know in December we are going to launch our world intellectual property indicators and there you will see you know the latest numbers on national patenting and you would you will see that you know China's share in global patenting is certainly rising. I think that the trend on university patenting is a trend you know that originated in in high income countries and still today and and we can say this with some confidence under the PCT system universities and public research organizations from high income countries account for most of the patents under the PCT most of the patents by universities and public research organizations. Then again there also is growth in patenting by these types of institutions in middle income countries and especially in China and in the case of India in the case of China more university in the case of India it is more the public research organizations. So the two trends are not are not inconsistent in that way. Pamela Taylor the global journal I just recently came from the entrepreneurship week conference where US Ambassador Betty came talked about the important link between innovation and entrepreneurship and you said something similar and a brief reading of this and I certainly haven't got into it in depth because I frankly find your whole organization incredibly intimidating and complex and it's giving me enormous understanding as to how you've occupied so much real estate in Geneva. But how what would you say to a young entrepreneur attending this conference here who would see that you're saying that there's such a backlog in patents and that it's become increasingly complex as far as international filings of patents and what is a young individual entrepreneur what encouragement could you give him. Look I would take one step back from this and I would say that the what everyone where everyone is trying to compete the space where everyone is trying to compete is the space of value added. What can you add to raw materials raw labor and raw inputs of physical resources and you can add various things about innovation is of course the most significant way in which you add value whether it's organizational innovation or marketing innovation or technological innovation. So it's normal I think for a young entrepreneur to be looking for the new ideas in that space and that is the space which is protected by intellectual property. What intellectual property will do for the young entrepreneur is say if you can add value in that space which distinguishes you from every other actor in the economy then intellectual property will give you a means of capturing that value and of protecting it and therefore giving you give you a means to build the basis of your enterprise and your entrepreneurship. Now we take that basic idea which I think has been around for some time except that everyone now recognizes much more clearly this space of value added and we take that and we put it into the context of what's how's that playing out in the world in general and we see it's playing out in the world in general in a number of ways which have implications and I've mentioned some customs mentioned some you know there are new actors coming in there are new ways in which enterprises cooperate. There are concentrations of patenting in certain areas everyone you know is aware of the value of this space and so they're they're looking for rights. So there are a whole lot of if you like changes that are occurring in the in the landscape and what we as a public policy institution need to do is to think well is this system of intellectual property that's there to protect your young entrepreneurs novelties and new additions is it working well or are there some complications that are impeding its effectiveness that's the purpose of this report. So I'm sorry does that get to... So basically you're asking the question you're not proposing an answer. Well we're doing a slightly more than asking the question I mean I think first of all we're presenting the evidence you know and and then on the basis of the evidence such as it exists we're asking a number of questions and some of the questions have partial answers some of them don't have answers you know because policy needs to develop the answers. Well if I maybe can expand on this in chapter two of the report we discuss the evidence that exists on the role that patents play in supporting entrepreneurs and there are a number of firm surveys that have been conducted in that regard and what they universally show is that patents are especially useful for young firms mainly because they provide signals to financial markets in a sense that if you're a young entrepreneur and you know you come up with a bright idea and you need to attract investors to further develop the idea you know if you can show that you know you have been granted a patent that is actually quite helpful because it does provide you first of all you know with an independent certification that your invention you know meets the criteria of novelty, non-obviousness and industrial applicability but it also ensures investors in a sense that you have exclusive rights on the inventions and I think you know this has been fairly well established in the literature. But you were the one I think who said that this could be quite discouraging this complex process I mean so that I guess when my question is what is your recommendation that a young entrepreneur should do he should go to one of these patent what was it the pro public research organization is that the procedure for a young person he doesn't go directly to you. Yeah no what a young entrepreneur would typically do you know is get some advice and the advice would would say hey you know you need to protect first of all your identity in the marketplace your brand your trademark and you go to a patent office and you register you know a trademark application and we facilitate that internationally through one of our agreements so instead of having to file 90 applications in 90 different countries you file one through us. Okay then the entrepreneur might have a distinctive design. Steve Jobs filed 300 or 330 you know patents and designs in the United States of America and that's one of the ways in which you know he was able to distinguish his products so if you have a design which is which is special you know in the presentation he transformed the way in which computers looked first computers and then well completely the way they looked and so designs is is another important thing or it might be the internal functioning you know which is patents and then but in each case you're going along to a patent office and then instead of going along to 180 you come along to eventually to WIPO which will facilitate the way in which you can protect this. If she has finished I think she still has a question. Actually following from her questions and as well as the director general and Mr. Carlson's answers and still puzzled by you know the happenings and the workings of the real market which are far more imperfect I think the assumptions on which you have been basing yourself namely novelty and obviousness and how credit will be available I think in the real market imperfect market conditions exist and in imperfect market normal entrepreneur you know a basic amateurish entrepreneur not a university or a public institute doesn't have that access to credit doesn't have the access to IPRs which are basically based on monopoly conditions I mean the fact that IPR is a monopoly right and kind of royalty for whatever innovation that had come about are you actually giving us the real picture that entrepreneur on the street benefits as you put out in this report. I mean what I would reply is that you know certainly I don't want to overplay the role of intellectual property you know certainly if and you know the report also discusses that quite frankly you know if you talk about markets you know where financial markets financial systems work imperfectly yes you know the IP system will have its limits in promoting innovation I think what the evidence suggests is that the IP system works particularly well you know when firms are in a position to finance investments either directly or all through financial markets it also works better when you talk about technological problems where solutions are inside and also when you talk about you know when there's sort of a match between technological needs of societies and the incentives given given by markets so certainly you know the IP system can't solve all the innovation problems that exist in the world then again you know you do have countries where you do have venture capital markets where you do have venture capital financing where you have regular financing through the banking system where you know in other innovators can have access to finance and all the evidence suggests you know that the patent system does play does make a difference so yes I don't want to overplay you know the role of intellectual property here but you know if you sort of have a dispassionate look at you know what emerges from the evidence it does play a supporting role to ask you on China you know there has been just a piece which I've just read today in economics on state capitalists the rise of state capitalism and particularly this particular state capitalist body which controls about 3.4 trillion assets in companies now are you suggesting that most of the research I mean of course you said repeatedly that it comes from the universities can you tell us through light on what exactly would be the contribution of state capitalist firms to research and development we haven't got I think as Carsten said disaggregated figures on the source of the R&D funding but you can explore that I mean you can in the literature explore that to a greater extent it's not in our we're looking at a global picture and and the behaviour of important components in that now when you go down to analyse within a component such as China I think you can get quite a lot of information as to where that research and development is coming from right and just to clarify we're not saying that most of the pattern applications in China are from universities you know the information that we have is that 14 percent of patterned applications that are filed with the Chinese patent office come from universities you know and that means that 86 percent come from companies although I think that excludes I think if you also include public research organisation the company share is somewhat lower but still the great majority of patents in China are accounted for by companies that may well be state companies you know that distinction we don't make in patent applications but you know still the overwhelming share is from the commercial sector yeah two questions one is your agency is 44 years old yes and no but this is but this is your first latest incarnation you know it comes from 1970 but its origins it was a successor organisation to an organisation that was established in the 1880s but so but this is the first annual report well we have done of course annual reports in in the sense of giving you you know the organisation did this ABCD and so on and so on but an annual report in taking a theme which is fundamental to the organisation and trying to make a contribution to the analysis of the economic literature yes it's the first such why is it because we didn't allow economists through the door until we established three years ago in office of chief economist and we are building up expertise in the economic analysis of this area just follow up on some other themes on the one hand there's thousands of app of patents that go into the making of and the globalization of of the the parts that go into making you know all these smartphones and lots of other devices on the other hand you'd argue that that the patent system is working which which is winning out do you think the patent application process or litigation well I don't see the two is as necessarily in competition with each other I mean litigation is a normal part of the compliance mechanism of any area of policy whatever it is whether it's cows on the road or or patents you have to have a court system which is there to serve certain functions and one of those functions is is providing a definitive resolution of a dispute in this instance in relation to property rights or the possible infringement of property rights are people using the patent system in such a way that they are focusing not perhaps on manufacturing under a patent but on using the pattern as an instrumentality in a financial market in a technology market to license or to prevent others from manufacturing that is a certain amount of evidence that's put forward in the report concerning this and the behavior of so-called non-practicing entities and non-practicing entities are they then able to use a litigation system to their own advantage and to the disadvantage of innovation well there's a certain amount of evidence although you know it's imperfect in relation to that question and one of the reasons why we produce the report is to shed some light on that form of behavior and to raise that sort of a question and say so what sort of a public policy is appropriate in this area I wanted to ask two questions Daniel Prusin with BNA first of all on the licensing issue could you elaborate a little bit on that it's a huge increase in the dollar figure talking about wondering who who's paying that and who's receiving that and are we seeing as a result of this increase in licensing a greater concentration of patent rights amongst the big companies who can pay for it and I was also wondering as well about the backlog of patents you've been complaining about that for years now I'm wondering if you're seeing any improvement whatsoever or is the situation degrading and who are those middle-income countries where the backlog is worst thanks on your first question about royalty flaws you know we present figures on royalty flaws based on countries balance of payments in the report and I think you know the the good things good thing with balance of payments is that you know this is the one place where in some sense these licensing transactions leave a trace and you can actually put a figure to it and as you mentioned there has been you know a huge increase in these international transactions we also look at national evidence and that primarily for the United States where we go into company annual reports and you know see what share of their revenue is based on on licensing income and you know there is there's obviously great variation it depends you know very much on the business model of companies you know you for example have a company like IBM for which licensing income has risen to more than 1.1 billion in 2010 you know for other companies it may be less I think if you look at you know the share of licensing revenue you know overall revenue in the case of US companies you know it is still still relatively limited but you know it is certainly growing on your second question who are the middle income countries and you know I would refer you to our forthcoming world IP report you know which provides you the exact list but I can tell you that or what you see in this report if you look at the number of unprocessed pattern application divided by annual application flows you would see that you know this sort of relative measure of bat lock is highest in the case of Chile it is also high in the case of Vietnam in the case of Brazil in the case of Peru and you know this ratio is in fact larger in those middle income country offices than it is for a number of the high income country offices quick follow-up you don't actually have a breakdown of who's receiving license things and who's paying that out if I understood you correctly right you just have balance of payment figures and right from the US market you wouldn't find it in the report in most countries you would not have this breakdown for a number of countries you would have this breakdown especially for the United States and some European countries then again one has to be careful also how to interpret these data because often they're quite affected by intra company royalty transactions that often you know serve to transfer money from one jurisdictions to another for tax purposes so you would fire for example find Ireland to feature in prominently in prominently in that list so these data have to be taken with a with a grain of salt but you know they do exist and I think you know I'm saying this but at the same time I do want to point out that the trend that we see at the global level you know is perfectly also consistent with what we are seeing at the company level the backlog well are there signs of improvement the the all I could say on that is that in the United States of America the backlog is coming down and on there and Japan also on their website they publish a dashboard of indicators and you can see it's down to about 700,000 now I think so there is science of some improvement but it's that all the time you have a growing demand so it's a it's a problem to be managed I hear my here are my girl from a Sushiman Geneva a Japanese newspaper I'm I have a question one questions on reference to your reference to the the patent polls and the I'm a little puzzled because I'm I'm are you suggesting that the whiteboard should play a role in maybe creating a patent poll or hiring more experts to sort of this credit landscape who or trying to suggest some solution or I just giving you some analysis thank you well it's it's it's we're not suggesting that they should be in role for WIPO we're noticing that one policy or one instrument one practical instrument that has been used to deal with the problem of of concentration of pack patents in particular areas or patent tickets if you like has been the the patent pool and that historically patent pools have enjoyed greater or lesser popularity depending on the policy choices taken by regulators in relation to competition law and intellectual property and that therefore this is an area that deserves attention on the part of policy makers yes good afternoon nice to see that you've done the numbers that we've been asking for years we've been waiting for your question yeah yeah I've got a question have you also done the number crunching for the estimated income foregone through abuse of patents or licensing arrangements no the short answer is is no and you know I wouldn't even begin to imagine how one calculates that but the short answer is no we haven't industry associations that have done estimates that you yourself and your organization have queried on the methodologies the way they've crunched the numbers on various areas of IP concerning abuse but I think through other instruments like counterfeit products right but I think you know this is sort of a different subject area I think you know this report really doesn't go into you know the debate on counterfeiting and piracy you know I thought when you mentioned this it is more you know the numbers behind some of the patent litigation that is specially going on Samsung versus right Apple I'm sorry right yeah yeah how do you and in terms of a PRO and university applications how do you separate out to PROs from universities in countries like China Russia even Mexico where most of the universities of state institutions or is there well if you look at the annex of chapter 4 that describes you in detail the methodology that we used to identify universities and public research organizations and we literally you know worked with different lists that you know we had research assistants helping essentially country by country for the major countries trying to identify what are the universities and what are the public research organizations you know they are without doubt you know there are some cases where it's not entirely clear is that a public research organization or a university you know in those cases you know we had to you know make some decisions but I would say that you know these cases are a minority I think in most cases it's fairly clear you know certainly I mean we are talking about millions of patent applications you know these are estimates you know we're doing our best job here you know there are big issues for example the way that you know certain universities are spelled in patent applications are you capturing all of them you know we spent a lot of time and resources trying to get this right and I think that the numbers that you would find you know make make sense to us but you know certainly you know this is not perfect and I would say essentially a university has students and a teaching vocation as well as a research vocation and essentially a PRO has a research vocation thanks actually don't know how to ask this question without being personal for a moment my father was a physicist or an information scientist who was a became a pioneer of information science and would really enjoy being here grilling you at this point but he can't be it's no longer around but he used to call himself a generalist someone who knows nothing about everything versus the specialists who know everything about nothing I was wondering because of so much of this is about R&D development and spending particularly in China and the Asian countries if you can say from this report if you see any trends related to that in terms of is this boom in in R&D and university research a function of more generalization or more specialization or you know can you can you generalize in that regard as far as what's going on as you talk about the shift in geography it's I think it's you know we're dealing on a very general level but I would say the most general level is that the technological basis of the economy has become more sophisticated so if you want to be whatever you want to just compare the way in which we live now to the way in which people lived in in the year in 1900 and you'll have an explanation for why there are more patent applications now than in 1900 information technology didn't exist in 1900 you know nano technology didn't exist most of the life sciences didn't exist in the way in which they exist now so the accumulate steady accumulation of the knowledge base basis look at the talent amount of time that it takes for one generation to pass its knowledge on to the next generation otherwise termed education you know people are go through education these days and increasingly master's degrees are required of young graduates so increasingly the time of passage from knowledge from one existing knowledge from one generation to the next is is expanding out to 25 years or 26 years or whatever it may be compared to how it was so that general accumulation of the knowledge base and technology base of the economy I think is an explanation for why as a general matter why we are getting more and more investment in it because you have to advance on a much broader basis I mean I that's what I would say as a generalization yeah sorry can I come back to following this question namely what would be the magnitude of patents in the so-called IT related financialization which have now greatly contributed to the collapse of the financial industry has this problem been addressed namely the innovation that had taken place in the IT a lot of algorithms and which have been largely responsible for financialization of the world economy yeah and how they have brought it down thanks to these innovation well let's just assume that what you say is correct I think that yeah let's just assume that what you say is correct that that that financial innovation if you like was in some way responsible for for the financial crisis the pertinent question for us because we're not the IMF or the World Bank or the pertinent question for us is to what extent that financial innovation was the subject of intellectual property protection and then to what extent the incentive provided by intellectual property protection influence behavior to cause that those innovations to come about which they because they may have come about even if there'd be no intellectual property protection I mean so I think we're in a territory in which we haven't done any research in this area but right I think you know I haven't seen any study you know that you know sort of even try to establish you know causality between some of the financial innovation you know that you have seen in the lead-up to the crisis and whether that has connected to patenting but I would argue that from a pure policy point of view you know I think it is a matter of financial regulators you know to make sure that any new financial innovation that is introduced you know is compatible with and financial stability and I think you know this is a question that you know in principle the patent system you know is not responsible for and I think you could take this to other fields you know the patent system you know does provide incentives for the development of pharmaceutical products but obviously it's the job of you know regulators to make sure that only those pharmaceutical products are brought onto the market you know that are beneficial to society. I think we'll take John and then I think we will earn the lunch here. Yes I'd like to follow through on Ravi's question and Karsten's response on the regulator ensuring that a new product that is patented complies with financial stability in a globalized financial system where you're trading in three or four time zones how do you guarantee that it's not possible secondly some of the products introduced can summarize a trading in the market in two minutes and if you don't have that product you're on a handicap. Yeah look a patent doesn't authorize you to do anything. What a patent does is it enables you to stop other people from doing something that's the essential nature of a patent so it gives you an exclusive right but it doesn't give you any right to do anything you can get a patent arguably you could get a patent in certain areas although there is a ground of patentability which relates to public policy but arguably you can get a patent that doesn't enable you to use a pesticide or a pharmaceutical as Karsten has mentioned or anything else unless you get the appropriate regulatory authority for your product or service. Sorry I've been a bit biased to this side of the room if we can go to this side and take maybe two questions. Hi I'm Rachel here today with IP watch just a question regarding the word innovation and maybe WIPO's role as a policymaking institution in terms of innovation there's been a number of initiatives that WIPO supporting regarding innovation and I suppose this report could have been on many other topics so I guess what is WIPO's role to support or advance innovation is this major priority. Well we have a role to promote the protection of intellectual property in the formal terms in which it is expressed in our enabling convention but why do you have why does intellectual property exist and the reason why it exists essentially is innovation I mean it's also cultural creativity in the copyright area but that is the reason that's the underlying social objectives that's being pursued by an intellectual property system and so it's I think a perfectly legitimate question to ask whether the intellectual property instrument is actually serving that purpose or what's happening in that space which can influence the nature of intellectual property policies. Right I maybe should also say you know this is our first world intellectual property report we dearly hope this is not the last one you know this is intended to be serious and you know we picked that the theme of the changing face of innovation as the theme for the first report and you know we had to start somewhere probably also you know we were pragmatic in a sense you know that in this field we know we have quite a bit of data to draw on you know there are a number of studies to draw from that we could use for the purposes of this report but you know as the forward by the director general says you know we hope to address other IP themes in the future including you know the role of copyright and the creative industries including trademarks and branding and so stay tuned name is Hans Mares from German National Public Radio ARD I wonder if you have come across in the last 12 months or so by well with a invention by an individual by an inventor that you thought was really brilliant or exotic or strange or just unique or just great that you were was breathtaking and the second question how serious is intellectual property theft through the internet in innovative ways through like Jossians and the worms how how do you do you watch this development at all do you think it is a serious threat to contribute to erosion of intellectual property rights thank you I mean the first questions are very interesting one because how do you assess the impact of particular inventions and the reality is that what the patent system does is it says you know of all of the information that's out there this class of information we are going to reward with a property title and this class is it's got to be new you know it's got to not be obvious and it's got to be capable of an application and they're fairly you might say fundamental requirements but they're not bad requirements and then when you get through that then I think the only evaluator that we have out there for determining whether something is is going to have an impact is the market and it's the market that that is going to take up certain areas or not take up certain areas and whether or not the market does usually determines whether it's going to have an impact on our lives of course it can be the case that that reaction can be very delayed in the case of television for example it was revealed or the jet or jet engine they were both revealed in patent applications well before they were commercialised commercialised decades later actually so there can be a delayed reaction that's the imperfection of the market mechanism I suppose so we can't really say we're not in a position to say oh this one is going to have a big impact and that one is not although there are people that watch that and for example when the first iPhone came out it was actually published as a patent application about two months before the iPhone hit the market and there was a certain amount of speculation out there what's Apple going to do here it's going to publish a new phone a new variety of phone and here's what the patent application says so it can give you some information and some people can evaluate that information now I'm sorry I've forgotten the second part of the question which was well look as you no doubt know there's been a report published recently on this in the United States of America which attempts to quantify or say something about the extent to which there is the illicit collection of information through the internet and through computer networks and it is what it is but we don't have any position on that we don't have a it's not an area that we are have any active programming why not well we have a regulatory framework which deals with it the Paris Convention has a requirement that countries adopt an unfair competition law and a normal feature of an unfair competition law is that you cannot steal the trade secrets or confidential information of a competitor so that is part of the regulatory framework that is required of any member state of the or any contracting party to the Paris Convention as well as of course to the TRIPS agreement in respect of undisclosed information but these are the establishment of the regulatory framework and norms a different question is the one I think that you asked which is are we monitoring this and to have any role in monitoring the compliance with legislative norms is a major step for an international organization and and you will notice that in general the international community has over the last 60 years been very fertile at developing norms new norms but has rather greater difficulty in developing agreement on compliance mechanisms for those whatever the field whether human rights or or intellectual property so the I think the answer to that is we have a program on respect for intellectual property building respect for intellectual property but there's no consensus amongst member states as to the extent to which we should go in that direction sorry coming back to your report again a bit of a theoretical dilemma namely you know patenting for the real economy versus patenting for casino economy casino economy here I mean the financial industry so it in a battle between one versus 99 so whom does WIPO I mean this is just a kind of puzzle dilemma whom does whom do you serve I mean you know where patents are largely for casino economy is it good for your organization to sort of you know well look I don't know where you how you arrive at the conclusion that we patents for the casino economy you know that's I think something that needs to be actually established and I would point to all of the positive advances that there are I mean the way the system works is that the intellectual property system notably the patent system is there amongst other things because this report shows a number of changing perceptions but amongst other things it's there to incentivize or to encourage investment in the development of new knowledge okay then once that new knowledge is put out there and commercialized in one way or another there are a whole range of market mechanisms which will determine whether those those that new knowledge is taken up and used by society and and not just market mechanisms I mean there are other in evaluators that are out there for for saying whether some new knowledge is socially new useful or not and so I don't I don't see where it is that in what your question is directed at between one versus 99 where 99 being the 99% of the people who are failing to get the benefits of the innovation and the one person who is sort of hogging off these benefits and this one person benefiting out of the so-called financial innovation and the you know related sort of spin-offs that are taking place is it time to have a look into patents in terms of yeah well I again I don't know where you get the 99% and the 1% but I would say that that the the essence of the intellectual property system is to establish a balance and it's a balance between on the one hand the creation of new knowledge and on the other hand the diffusion of the social benefit of that new knowledge and that is a complex operation establishing that balance if you go too far in respect of of encouraging the creation of new knowledge you might have you might have developed a lot of new knowledge but social benefit is not necessarily shared and if you go too far on the side of the diffusion of the new knowledge you might be able to share a lot more of less because there's less that's created so the balancing mechanism it's a complex mechanism that's what the whole subject I think of intellectual property is about and if you take the health field that's it's where it's at its most dramatic of course because enormous investment is required in order to enable us to be more innovative than the microbes and if we're not we're in trouble you know especially in a densely populated world and that requires enormous investment but on the other hand if you don't actually if what is produced by that investment is not shared and not used by a substantial population then there's relatively little benefit from the investment so the balance is is I think what what it's all about and what and here this report talks about you know different areas where the balance is affected by concentration of patenting what some sort of mechanisms can be used in this way or that way who is investing you know who is in that the changing players how they're doing it how that so I think that's what we're talking about looking at the report the one area of the the world which seems to play absolutely no role whatsoever apart from Africa is is Arab Middle East and Iran is there any indication that there there is any growing effort in those countries to to invest in in R&D and particularly in terms of producing fine and patent applications yes there is it's it's more anecdotal I can't give you and maybe castan can but I can't give you a scientific answer that question but if you take a country like Qatar a enormous investment has been made in in the establishment of a science park and the ancillary institutions that are required to take the developments produced in the science park through to the market stage that's one example but I think there is a consciousness or in many of the Arab countries of the need to address this this area and we see that in in our capacity building programs