Better intellectual property legislation could boost innovation

As economic growth opens up new possibilities for innovation, authorities are working to make the regulatory framework for intellectual property (IP) more expedient for Colombian companies and research centres. Encouraging entrepreneurs and small businesses to file for patent and trademark registration has long been a challenge in Colombia. Now, however, a round of regulatory changes looks set to boost demand for IP instruments in a country where patent filings have typically been a low priority.

Going International

The evolution of IP law has been shaped by a series of international agreements. Through the World Trade Organisation, the country has enacted specifications included in the Agreement on Trade-Related Intellectual Property Rights (TRIPS), of which it is a signatory. The Andean Community, a Customs union of which Colombia is a member, enforces IP legislation that is in some ways even more stringent than the TRIPS agreement. Many reforms are also being pushed as a result of its free-trade agreement with the US, which has been in force since May 2012, and from the ongoing process of accession to the OECD. The openness to foreign business enshrined in these agreements require that IP laws continue to evolve accordingly.

Patents

In 2013, a record 2075 patents were granted, out of 4200 filed with the Superintendence for Industry and Commerce (Superindendencia de Industria y Comercio, SIC). Foreign firms account for most of these: only 143 patents went to Colombian nationals, out of 220 requested. Patent requests by locals are also much fewer than in neighbouring countries. According to the World Intellectual Property Organisation, the number of patent applications by domestic residents in 2012 was 213, far lower than in Brazil (4798), Mexico (1294) and Argentina (753). In 2011, the OECD ranked Colombia 58th out of 105 countries for the efficiency of its IP offices.

The main reasons for such low figures have been high costs, lack of awareness and length of process. Since a large majority of Colombian companies are small and medium-sized enterprises (SMEs), many businesses simply do not have the funding to engage in the patent application process. “There are formal and informal means that companies can use to protect their ideas,” Nélson Fabián Villarreal, research coordinator on innovation and competitiveness at the Colombian Observatory for Science and Technology, told OBG. “SMEs are generally going towards informal means of IP protection.” These usually take the form of confidentiality agreements with other companies, or the inclusion of certain design complexities to prevent easy replication.

Three Authorities

Another challenge comes from the dispersed nature of Colombia’s IP regulators. There are three institutions that can grant IP rights to firms operating in the country, each coming from a different branch of government. Most patent grants fall under the SIC. Those relating to plant variety protection, however, fall under the Colombian Agricultural Institute, and a third category, copyright issues, falls under the copyright office. To facilitate communication between the three, authorities have created a new agency, the Inter-sec- Many measures have been taken to streamline patent applications and IP disputes. One important change is coming through the recent granting of legal powers to the agencies that deal with IP. Over the years, a shortage of judges prepared to deal with IP cases, and a general clogging of the judicial system, have been a big factor in making IP cases burdensome and time-consuming. By giving the IP institutions a role in resolving cases, a parallel system is In another initiative, the SIC is currently digitising all information related to patents, so as to facilitate the search of documentation. This could be an important step toward eventual online IP applications. According to the OECD, Colombian companies have already used the web to reduce costs for trademarks and copyright. This move could help lead to decentralisation of registration procedures for companies The SIC has also been collaborating with foreign patent offices to ease registration of Colombian IP in overseas markets. Agreements signed with the US Patent and Trademark Office in 2012, and with the Spanish Oficina Española de Patentes y Marcas in 2013, aim to speed up Colombian processes by allowing firms to request that these foreign offices use documents previously prepared for the SIC. Faster procedures will help avoid double-registration.

Trademark Registration

To reduce the obstacle of cost, the SIC has slashed registration fees – a change that took effect in 2013. The discounts were directed at benefitting small businesses and regional producers. As a result, micro-companies are now eligible for a 40% price reduction when registering trademarks. Much of the drive to trim IP costs has been aimed at sectors that form key livelihoods in the regions. Artisans and regional agricultural producers, for example, can now claim a 50% reduction on trademark registration fees. The biggest cuts went to small-scale artisans, who can claim 90% off of such fees. Besides boosting competitiveness, easing access to formal IP should spur small family- Nonetheless, fee reductions can only do so much. Due to insufficient knowledge about procedures, costs and advantages, some businesses that have the capacity to innovate fail to see the importance of IP as a necessary investment. This can be improved with additional support programmes for IP applicants, and by establishing IP support bureaux in the regions, which the government plans to do in 2014.

Encouraging Spin-Offs

Positive steps coming from more agile resolution of IP disputes and reduced fees will promote registration. However, these measures will have sufficient impact only if combined with a stronger encouragement of innovation. A clear example of this is the current limitations on the creation of spin-offs coming from universities. Because researchers working for the public sector cannot claim any other income besides their salary, it is impossible for them to turn research into innovation with commercial potential, even though universities and public research institutes typically account for the bulk of innovation and new ideas. According to a recent report from the OECD called “National Intellectual Property Systems, Innovation and Economic Development”, which also gives views on Colombia and Indonesia, “Currently, researchers in universities and public research institutes receive much larger returns for publication than for IP titles and their commercialisation.” This means that a lot of Colombia’s research and innovation potential is not well placed to be transformed into commercial inventions or new products.

A Way Forward

To remedy this, one option might be to pass measures similar to those enacted by Mexico in its 2014 IP bill. Based on the US Bayh-Dole Act of 1980, this reform allows Mexican research institutes and universities to claim the economic benefits of any patents that were attributed as a result of publicly funded research. A similar policy in Colombia would spur the growth of innovation and promote new firms. The existing barriers to spin-off creation are also a problem for private universities: Colombian law prohibits any non-profit organisation from engaging in commercial activities.

Colombia’s efforts to improve IP legislation will affect the economy in many ways. Aligning its legal framework with international best practices for IP sends an attractive message to foreign companies wishing to operate in the country, and the state is taking steps to underline the importance of IP as a means of supporting innovation. To reap the benefits of more competitive IP registration rules, however, authorities would do well to include IP within a general strategic framework that firmly pushes innovation across the private and public sectors.