Economics of IP and

Technology Transfer

Gabriel Muzah
Objectives
● To provide exposure of members to issues
related to economics of Intellectual Property
(IP) and Technology Transfer.
● To discuss approaches to dealing with
Intellectual Property Rights (IPRs) in the
context of technology transfer.
● To enhance understanding of highlighted
issues through case studies
 1. Introduction
The Global Economy has transformed into a
Knowledge Based Economy where Ideas have
become a medium of exchange.

➔ Ideas are typically non excludable

It is not possible to prevent others from
applying new knowledge even without the
authorisation of its creator

➔ Value of Ideas
Ideas only become valuable iwhen
recognised, protected and transferable
through intellectual property mechanisms
Intellectual Property Rights (IPRs)
encourage innovation by granting
successful inventors temporary
monopoly power over their Open Access

innovations Although a policy of free

access will yield benefits
in the short run, it will
severely damage the
incentive for further
innovation.
Zimbabwe Agric Based IP
(International) Technology Transfer
derived from the belief that technological
progress is the engine of economic growth
and high income countries tend to be
technologically more advanced than
developing countries. In turn, however,
countries behind the technical frontier can
accelerate their growth by acquiring
technology from more advanced countries.
 2. Underlying
Economic Theory
The standard model of economic growth predicts that
while a country at the frontier can only grow (at a
steady pace) at the rate of technical advance,
countries behind the frontier (also called developing
countries) should catch up – converge towards the
high income countries in per capita income. Even
more sophisticated models (e.g. Romer, 1990) in
which technical progress requires investment in
research and development, have similar implication,
Challenges in “Catching up”
• misguided policies followed by the countries
themselves, corruption ,weak institutions,
assumption that technology transfer is easily
accomplished and the absorptive capacity of
the recipient – the ability of the receiving
country to evaluate and effectively use the
technology
It is recognized that for
understanding technology transfer,
the conceptualization of technology
as ideas is inadequate.
More precisely, it is inadequate to
think of technology as merely
blueprints and formulas.
Neither is it adequate to think of
technology as merely new and
advanced equipment.
The latter, especially, are
easy to move from place to
place. Yet, by themselves,
blueprints and even
machinery have proved
inadequate to replicate the
miracle of sustained
economic growth, driven by
advances in knowledge
and its application for
economic ends.
A richer conceptualization of Tacit knowledge is costly
to transfer and

technology includes contracting for tacit

knowledge is potentially
subject to even greater

materials and knowledge contractual difficulties

than for codified
technology, which, in any

codified in patents, event, is also believed to

be difficult to contract
over.

blueprints and manuals. It

also includes know-how,
much of it not codified and
held as tacit knowledge.
Dealing with IPR in the
context of Technology
Transfer
There are two broad approaches to dealing
with IPRs. The first one involves a regulatory
approach , while the second one involves
promoting market based approach to IPRs
The regulatory approach which, while preserving the essential
characteristics of intellectual property rights, seeks to
intervene in the market for technology so as to rectify
perceived inequalities in that market as between the
technology owner and the technology recipient.
Regulatory intervention in technology transfer
transactions may involve the outlawing provisions in
technology transfer transactions that unduly favor the
technology owner. Such measures are backed by
performance requirements on the part of the technology
owner as a pre-condition for transfer related transactions.
(WIPO, 2011).
Regulatory Instruments
➔ Compulsory Licenses under TRIPS
Agreement

➔ Use of other TRIPS flexibilities including

exemption of patentatability

➔ Technology pooling

➔ Pararell importation, exemption and

competititve behavioer

➔ Rigourous criteria to assess novelty and

inventive steps
A second track views transfer of
technology as best undertaken
through the market based operations.
The emphasis is neither on regulation
or intervention in the technology
transfer process, but on creating
conditions to enable free market
transfer of technology.
Market Based Instruments
➔ Market making functions: linking appropriate
buyer to appropriate seller

➔ Second order price discrimination through

Public Institutions

➔ Finance development of Information/ data

base on Technology failure risks to alert
research communities to focus their resources
on R&D activities that minimize risks.

➔ Provide avenues of support to technoprenuers

Case Studies
India: Ericsson- American Patent Zimbabwe
Policy, Compulsory
Micromax Biotechnology, and Licensing
Source:
African Agriculture
http://www.hindustantimes.com/bu
siness-news/competition- Source: Source:
commission-to-probeericsson-on- http://www.rff.org/rff/Documents https://www.wipo.int/edocs/mdoc
micromax-complaint/article1- /RFF-RPT-Patent-Ch4-7.pdf s/patent_policy/en/wipo_ip_dur_13
1156424.aspx /wipo_ip_dur_13_ref_t10c.pdf
India: Ericsson and Micromax
• The Competition Commission of India (CCI) ordered
investigation after finding prima facie evidence of
Telefonaktiebolaget LM Ericsson indulging in unfair
trade practices in November 2013. Handset maker
Micromax had complained that Sweden-based Ericsson
was demanding unfair, discriminatory and exorbitant
royalty for its GSM technology-related patents. This is a
clear example of where restrictive licensing practices
such as high royalty rates, which stem from patent
ownership can pose a barrier for a local enterprise to
make use of certain technology.
American Patent Policy, Biotechnology,
and African Agriculture
• The case assesses how U.S.-issued patents have enveloped
agricultural biotechnology and how U.S. patent policy addresses
access to patented technologies domestically and attempts to shape
patent practices internationally. In brief, U.S. patent policy has
resulted in a patent thicket surrounding biotechnology, most of the
policy tools that are potentially available to promote broad
dissemination and use of patented biotechnologies have not been
applied, and the United States is promoting policies internationally
that would reduce the flexibility of developing countries to adopt
patent systems tailored to their local innovation and development
needs.
 Zimbabwe Compulsory Licensing
➔ Varichem Pharmaceuticals was commissioned to produce ARVs or HIV/AIDS related
drugs and were to supply three quarters of their product to state owned health
institutions.

➔ In 2003 Varichem’s first generic ARV Varivar was launched. Accordingly, the price of
AZT/3TC comes down from US$30 per month to less than US$15 a month

➔ High duty and VAT charged on raw materials used to manufacture ARV tend to
increase the cost of production and of the end product

➔ Lack of market access as donors then preferred to import

Thank You!!!