INTELLECTUAL PROPERTY AND INNOVATION:

TECHNOLOGY TRANSFER CASE STUDIES AND "LESSONS LEARNED"

COMMUNICATION FROM AUSTRALIA; THE EUROPEAN UNION; ISRAEL; JAPAN; KOREA, REPUBLIC OF; NEW ZEALAND; SINGAPORE; SWITZERLAND; THE SEPARATE CUSTOMS TERRITORY OF TAIWAN, PENGHU, KINMEN AND MATSU; THE UNITED KINGDOM AND THE UNITED STATES OF AMERICA

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1  INTRODUCTION

1.  Technology can improve productivity, enhance competitiveness, promote growth, and contribute to a country's development objectives.[1] Many countries are therefore motivated to create a marketplace framework that attracts the voluntary transfer of technology and investment in technological innovation.  At the WTO, this motivation has yielded papers, interventions, thematic sessions, and other discussions focused on the relationship between trade and technology. A previous discussion paper, WTO document _IP/C/W/717, suggested that these endeavors would be complemented by a discussion of efforts that have been made to attract investment and technology and what factors made those efforts successful or unsuccessful, as well as how to ensure an adequate enabling environment (human capital, infrastructure, legal framework, macroeconomic conditions) for technology transfer in the host countries. The paper further noted that it would be helpful to gather Members' insights on how proposed solutions could replicate specific successes and address specific failures.

2.  Specifically, the previous paper solicited case studies on the voluntary transfer of patent-protected or trade secret technology from one WTO Member to another and reflected on the importance of improving absorption capacities of beneficiary countries by means of appropriate domestic policies and capacity building. The guiding questions provided in that document looked to discover what made specific technology transfer projects attractive and successful in order to guide WTO Council for TRIPS discussions on how Members can better encourage and incentivize voluntary technology transfer on mutually agreed terms to address global challenges.

3.  This subsequent paper seeks to tie together the discussions that took place over the course of the year, reflecting on some of the "lessons learned," themes, takeaways, and other relevant observations from Members' presentations, to further highlight the factors that make technology transfer successful.

2  CRITERIA FOR SUCCESSFUL TECHNOLOGY TRANSFER

4.  Technology transfer, the way technology diffuses between countries and how Members can best contribute to such diffusion, has been the subject of many debates both within and outside the Council for TRIPS. A 2002 WTO Secretariat note (document _WT/WGTTT/W/1) surveyed the overall landscape on technology transfer. This note identified two main channels of technology transfer:

a._         Through the use of advanced intermediate goods developed abroad.

b._         By learning from foreign technologies via three channels:

1._        Blueprints – copying and adapting codified knowledge.

2._        Communication – sharing tacit knowledge, including learning-by-doing.

3._        Firm interaction – collaboration between domestic and foreign companies.

5.  The ability to successfully transfer technology through these channels depends on several interrelated criteria. First and foremost is absorptive capacity, which refers to a recipient's ability to understand, assimilate, and apply foreign technologies. This capacity is shaped by the level and quality of human capital, particularly the education and skills of the workforce.  A well-educated population is better equipped to use advanced imported goods, replicate foreign technologies, and benefit from learning-by-doing.

6.  Complementing this is the presence of domestic R&D activity, which not only supports innovation but also enhances the ability to adapt and internalize foreign technologies.  A dynamic entrepreneurial environment is also crucial, as it provides the incentives and infrastructure for firms to invest in imitation, adaptation, and commercialization of new technologies.

7.  Labor mobility plays a key role in spreading knowledge gained through training in multinational enterprises (MNEs) to the broader economy.  When trained workers move from foreign affiliates to domestic firms, they carry valuable expertise that can raise productivity across sectors.

8.  The strength and design of a country's intellectual property (IP) regime influence both the inflow and internal diffusion of technology. A robust IP system can attract high-tech foreign investment while still allowing local firms to learn and innovate.

9.  The type and composition of foreign direct investment (FDI) also matter.  Horizontal FDI, which targets local markets, tends to have stronger spillover effects than vertical FDI, which is often limited to low-tech, export-oriented activities. FDI that is technologically intensive and well-integrated with the local economy offers greater potential for knowledge transfer.

10.  Trade composition is another factor—imports of technologically advanced intermediate and capital goods from innovation-rich countries carry higher potential for spillovers.  However, the benefits depend on the importing country's ability to use and learn from these goods.

11.  Effective communication channels are essential for transferring tacit knowledge, which cannot be codified or reverse-engineered. Person-to-person contact, training, and expert services help bridge this gap.

12.  Finally, partnership agreements, such as licensing, franchising, and joint ventures, can be powerful mechanisms for technology transfer. These arrangements often involve direct sharing of know-how and training, and their success depends on the absorptive capacity of the local partner and the legal environment that governs IP.

3  TECHNOLOGY TRANSFER—"LESSONS LEARNED"

13.  Over the course of the year, the Members of the WTO Council for TRIPS have shared practical examples, with a strong focus on IP, in order to gain a better understanding of how voluntary technology transfer happens. The case studies yielded some important "lessons learned" that may be helpful to both providers and recipients of such technology transfer in the future. Factors that contributed to successful transfers included:

1._         Willingness to tailor the technology transfer to the local environment, and for a deep understanding of the local context from entities transferring the technology.

2._         An evaluation of readiness of the recipient of the technology transfer, including the possibility of a gap assessment, with respect to current capabilities, scientific and technical expertise, infrastructure, human resources, procedures and operations, documentation, record keeping, and in-person support.  This would likewise include evaluation of the need for any specialized experience and capability, such as complex and sterile manufacturing, as applicable. This could also include action by the recipient country in response to a gap assessment, including by building infrastructure, training and hiring staff, and otherwise preparing to more effectively absorb the technology.

3._         Clear identification of the technology involved, as well as any IP rights associated with it that may need to be licensed. In addition, ensuring appropriate enforcement of IP rights and enhancement of systems for combatting counterfeit products resulting from the technology transfer.

4._         Advance consideration of what would be required for long-term sustainability of the proposed technology transferred, including through robust governance and policy frameworks for IP rights, sustainable market demand, and the availability of robust infrastructure and a skilled workforce.

5._         Funding streams, ideally from multiple sources, and budget processes.

6._         Adequate supply chain capacity for the technology transfer and future sustainability.

7._         Voluntary collaboration in order to facilitate open communication between the technology owner and recipients, leading to successful partnerships.

8._         For the recipient country, the importance of a sound investment climate for technology transfer, and confidence in regulatory, legal, and other policy frameworks.

9._         Clearly defined objectives, outcomes, and measurable indicators of success for the technology transfer.

4  GUIDING QUESTIONS

14.  The discussions of technology transfer in the Council for TRIPS have demonstrated real-life examples of how voluntary technology transfer works in the real world.

15.  Are there additional successful technology transfer projects to or from companies, government authorities, or other entities in your territory that you can share with the Members of the Council for TRIPS? 

16.  If so, for these projects, please provide the information suggested in the Guiding Questions found in WTO document _IP/C/W/717 regarding technology involved in the transfer, the parties and factors involved, the IP involved, and the results, successes, and challenges.

17.  To the extent that you have already shared the details of technology transfer projects, are there lessons learned, takeaways, or particular factors that made those projects successful?

18.  Based on our discussions in the Council for TRIPS, other WTO bodies, and any other experiences, please share your insights or expertise regarding the following questions:

·_              What are some recommendations for those entities seeking to transfer technology to a recipient partner?

·_              What are some recommendations for those entities seeking to receive technology?

·_              Are there particular policy measures a recipient country can pursue that can lead to more effective technology transfer?

·_              What is the importance of IP in technology transfer?

·_              What factors can help create an "enabling environment" for effective absorption of technology?

·_              What are some of the benefits of technology transfer for both transferor and transferee?

·_              What can Members learn from our discussions to better encourage and incentivize technology transfer to address the challenges facing the world today and in the future?

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