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Characteristics of IP policies relative to other innovation policies
IP policies are a type of policy tool within the set of alternative and complementary innovation policies (see overview of instruments for innovation in public policy and governance module). It is important to emphasise their key characteristics to better understand how they can best serve in support of innovation.
Funding for the inventor is provided by customers, not by government resources. The fact that the reward is not paid by taxpayers money allows the IP system to operate at a much larger scale than most other types of innovation policies. R&D tax credits and policies aimed at generating adequate framework conditions such as competition policy are similar in that respect. However, an important caveat to this statement is the fact that the IP system will not be equally accessible to all users, particularly small entities. This might bias the support for innovation provided by the IP system, unless, as discussed in the previous section, it is done in conjunction with complementary policies. These policies, however, involve frequently public funding and thus cannot operate at as large a scale as the IP system.
It is applied research that will mostly be supported by the IP system which rewards commercialisation. One of the criteria for patent grants is industrial applicability, thus, complementary policies will be needed to support more basic research. In addition, because successful commercialisation leads to rewards, the IP system should provide businesses with incentives to develop innovations rather than simply develop inventions. This recommendation also holds for other types of IP, but it will only be the case if market conditions allow for fair competition among firms, if the IP system provides for legal quality and if, in the case of universities and public research institutes, conditions for the commercialisation of IP are provided.
Economic and technical decisions are taken by companies or research institutions and not by governments. Local or state authorities might not be in the best position to decide optimally on how to go about generating inventions. If the inventor can obtain returns from IP, then incentives should be set so that inventors will optimise investments. From that perspective, such a system can enhance efficiency and reduce costly control mechanisms for other types of initiatives. However, this is based on the assumption that companies are well equipped to take those decisions and face an environment allowing them to operate optimally.
Patents and other types of IP have exclusionary effects. The potential return on patents comes at no small price: the cost of access to the innovation goes up because of the need to privatize the invention. The exclusionary effect is highest for those at the lower end. This dilemma raises issues of inequalities for end users and for businesses. With highly unequal business structures, gaps in industrial performance may be pushed wider apart. The exclusionary effect can also perpetuate inequalities in opportunities and welfare. The factors that will be critical are measures that help ensure a level-playing field not only in principle but also in practice (implying that also unfavourable conditions are adjusted). This challenge also arises for most other types of IP including design right, copyright and PVP.
- Guellec, D. and B. van Pottelsberghe (2007), The Economics of the European Patent System: IP Policy for Innovation and Competition, Oxford University Press, UK.

Country Reports

- General incentives for investments in the Netherlands (Innovation, Agricultural Productivity and Sustainability in the Netherlands), 2015
- Malaysia's socio-economic and innovation context (Boosting Malaysia's National Intellectual Property System for Innovation), 2015
- United States (SMEs, Entrepreneurship and Innovation), 2010
Thematic Reports

- Executive summary (National Intellectual Property Systems, Innovation and Economic Development: With perspectives on Colombia and Indonesia), 2014
- Taxation and knowledge-based capital (Supporting Investment in Knowledge Capital, Growth and Innovation), 2013
- Executive Summary (Commercialising Public Research: New Trends and Strategies), 2013
What Countries are Doing
- Processes and contributions of IP systems to innovation
- Metrics and evaluation for IPR
- Aspects and availability of patent data
- Patent data - Characteristics of innovative activities
- Patent data - The performance of firms, regions and countries
- Patent data - Emerging technologies
- Patent data - The role of universities in technological development
- Patent data - The performance and mobility of researchers
- Patent data - The geography of invention
- Patent data - Knowledge diffusion and technological change
- Patent data - Globalisation of research
- Patent data - Patenting strategies of firms
- Patent data - Patent valuation methods
- Metrics - IP standards, regulations and legal systems
- IP users
- IP, markets and diffusion
- Fields of IP use
- Organisation of IP systems
- Connecting IP to innovation policies