BOOSTING KAZAKHSTAN'S NATIONAL INTELLECTUAL PROPERTY SYSTEM FOR INNOVATION

Science and Technology Policy DivisionOECD Directorate for Science, Technology and Innovation

National Intellectual Property Systems, Innovation and Economic Development

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Project background Kazakhstan’s socio-economic conditions and innovation potentialOrganisation of Kazakhstan’s intellectual property (IP) system Different IP user groups in Kazakhstan Creating the conditions for IP marketsPolicy recommendations

Overview

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Project background Kazakhstan’s socio-economic conditions and innovation potentialOrganisation of Kazakhstan’s intellectual property (IP) system Different IP user groups in Kazakhstan Creating the conditions for IP marketsPolicy recommendations

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Overview

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Intellectual property rights serve innovationin multiple ways

IP Rights

Shape incentives to invent, to transfer knowledge and to implement new technologies

Facilitate access to knowledge and inventions

Resolve information asymmetries

Facilitate international trade

Enhance access to finance for innovation

Project background 1

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... hence IP policies can have an impact on socio-economic development

IP policies are complementaryto other innovation policies

Project background 1

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Context and objective of the project

Context• Decisive role of innovation

in developing and emerging countries

• Importance of IP rights and related policies for innovation

• Need to incorporate the development dimension into discussions of IP

Objective• Support countries in strengthening the contributions of their national IP systems to innovation

–Identify strengths and weaknesses in IP systems

–Provide policy recommendations

For more information, go to project website !

Project background 1

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The project has two main phases: development of framework and implementation

Conceptualframework Implementation

Map actors, conditions, policies and relations of IP systems:1. Organisation of IP

systems and policy design

2. Universe of active and potential IP users: • SMEs • large companies• research

institutes/universities,• traditional sectors

3. IP markets and diffusion4. IP policies for

innovation

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IP reviews based on conceptual framework:• Colombia (2014)• Indonesia (2014)• Malaysia (2015)• Kazakhstan (2016)

Project background 1

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• Stakeholder interviews with 22 institutions in Kazakhstan

• Collection and analysis of country information (evidence & statistics)

• Feedback and consultation with Kazakh stakeholders

Current report evaluates Kazakhstan IP system …

Implementation

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… and defines 4 key priorities and 22 detailed recommendations

For overall assessment and full list of policy recommendations, see Chapter 1 of the report. !

Facilitate SMEs’ and traditional sectors’ use of trademarks, industrial designs and utility models – in addition to patents – in support of developing an innovative private sector and fostering their access to relevant IP (including from abroad).

Adapt IP policies currently targeted to universities and public research institutions (PRIs) to enhance their contributions to private sector development.

Improve intra-governmental co-ordination in IP policy design and implementation.

4 priorities:

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Project background 1

Adopt a sectoral focus in IP policies, to strengthen their effects on innovation (i.e. start by fostering IP use and strengthening IP commercialisation expertise in specific priority sectors, such as the agricultural and textile sectors).

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Kazakhstan’s IP review also contributes to other projects

OECD Reviews of Innovation Policy

• Comprehensive assessment of the innovation system of different countries

• The Review of Innovation Policy of Kazakhstan is to be released soon

• See project’s website

OECD Innovation for Inclusive Growth project

• This project analyses the impact of innovation and related policies on inclusive growth.

• See project’s website

Project background 1

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Project backgroundKazakhstan’s socio-economic conditions and innovation potentialOrganisation of Kazakhstan’s intellectual property (IP) system Different IP user groups in Kazakhstan Creating the conditions for IP marketsPolicy recommendations

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Overview

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Kazakhstan has experienced substantial economic progress since its independence

For full analysis of the socio-economic conditions and innovation potential, see Chapter 2 of the report

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Transition to a market system

1991

Upper-middle-income country

TodayHeavy reliance on

extractive industries, with diversification efforts

• Services (55% GDP, 2014)• Oil and gas industry (25% of

GDP, 1% of employment)• Mining and metallurgy

industries (9% of GDP, 5% of employment)

• Agriculture (4.5% of GDP, 26% of employment)

Goal to become among the top 30 global economies

by 2050

Kazakhstan’s socio-economic conditions and innovation potential2

Figure 1. GDP growth in Kazakhstan, 1991-2014 (annual %)

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But Kazakhstan’s innovation performance is still weak

Kazakhstan’s socio-economic conditions and innovation potential2

• State-owned companies (SOEs) dominate most industries: they import ready-to-use equipment and technologies from abroad

• Small and medium-sized enterprises (SMEs) have a low contribution to the national economy (26.2% of GDP and 33% of employment in 2014) and engage little in innovation.

• Inward foreign direct investment (FDI) is concentrated mainly in the extractive industries lack of investment in R&D-related facilities.

• Innovation capacities are concentrated in universities and public research institutes (PRIs): they account for over 50% of the country’s R&D expenditure.

• Low relevance of university research to industry.

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Innovation is now viewed as key for development…yet challenges persist

Obstacles to innovation

• Gross expenditure in R&D (GERD) remains very low

• Scarcity of skilled human capital • Lack of science-industry

linkages • Low relevance of university

research to industry• Lack of finance for innovators• Bureaucratic barriers to doing

business

Figure 2. Gross expenditure on R&D in Kazakhstan and selected countries

(% of GDP)

Source: World Bank, 2016. World Development Indicators

• Increased policy support for innovation with the objective to build a diversified, knowledge-based economy (“2050 Strategy”)

• ICT infrastructure has improved over the past decade

Context for innovation

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Project background Kazakhstan’s socio-economic conditions and innovation potentialOrganisation of Kazakhstan’s intellectual property (IP) system Different IP user groups in Kazakhstan Creating the conditions for IP marketsPolicy recommendations

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Overview

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• IP legal framework and institutions have improved over the past years.

• International conventions and regional and bilateral treaties for IP protection have been signed (incl. Patent Cooperation Treaty and the Eurasian Patent Convention).

• Satisfying IP processing performance (according to interview feedbacks).

Kazakhstan has good formal conditions for a well-functioning IP system

Kazakhstan IP system

For full analysis of the organisation of Kazakhstan’s IP system, see Chapter 3 of the report!

Organisation of Kazakhstan’s IP system3

Table 1. Procedures for obtaining invention patent rights in Kazakhstan

As member of WTO since 2015, Kazakhstan has adopted the Agreement on Trade-Related Intellectual Property

Rights (TRIPS)

Procedure type

National procedure

Eurasian procedure PCT procedure

Governing laws

National Patent Law

Eurasian Patent

Convention

PCT national phase or the

regional (Eurasian) phase’s

corresponding regulations

Substantive examination Yes Yes Yes

Conversions To utility model

To national application  

Language Kazakh and Russian Russian Kazakh and

Russian

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Court system,police and customs

But the governance of the national IP system is complex

Committee of Science Technology

Commercialization Centre LLP

(TCC)

Ministry of Education and Science

Department of International Economic Integration

Ministry of the National Economy

State Inspection for Pedigree Breeds and the State Commission for Crop

Variety Testing

Ministry of Agriculture

Granting of IP and enforcement

IP for innovation

Foreign Investors’ Council

IP for FDIand trade

IP users

Organisation of Kazakhstan’s IP system3

Department for Intellectual

Property Rights

National Institute of Intellectual

Property (NIIP)

Ministry of Justice

National Agency for Technological

Development (NATD)

Ministry of Investment and Development

Small and medium sized enterprises

(SMEs)

State-owned enterprises

(SOEs)Foreign firms

Traditional sectors

Universities, PRIs & individual inventors

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Improving intra-governmental co-ordination in IP policy design and implementation is key

Organisation of Kazakhstan’s IP system3

Aspect Challenges faced by Kazakhstan’s IP system

Institutional • Co-ordinating inter-ministry efforts to address IP issues that affect national innovation performance

Policy related

• Proposing and revising IP-related laws and regulations to further promote innovation

• Optimising and linking IP-related policies on public research funded by different ministries

• Promoting the use of IP in targeted agriculture and industrial sectors

Operational

• Building/upgrading intellectual property infrastructure, including a free, open and user-friendly information portal of intellectual property, an e-platform of IP market

• Raising general IP awareness• Exploring the provision of IP valuation services in the country

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Project background Kazakhstan’s socio-economic conditions and innovation potentialOrganisation of Kazakhstan’s intellectual property (IP) system Different IP user groups in Kazakhstan Creating the conditions for IP marketsPolicy recommendations

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Overview

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Kazakh residents use IP little by international standards

Figure 3. Resident patent applications and gross domestic expenditure on R&D (GERD), five-year average, 2009-2013

Different IP user groups in Kazakhstan 4

For full analysis of the characteristics and statistics of IP use, see Chapter 4 of the report!

Notes: 1. A resident application is an application filed with an IP office by an applicant residing in the country/region in which that office has jurisdiction. 2. A ranking of “a resident patent applications-per-GERD” out of 55 offices for which data are available is displayed in parentheses.

Sources: OECD calculations based on WIPO (2015), WIPO Statistics (database), www.wipo.int/ipstats/en#data; OECD (2015), Main Science and Technology Indicators (database), http://stats.oecd.org/Index.aspx?QueryId=33210; UNESCO (2015), UIS.Stat (database), http://stats.uis.unesco.org; NIIP (2013),Annual Report 2013, http://kazpatent.kz/2013_annual_report for 2012 resident patent applications data.

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… and there are limited signs of increasing IP use over the past decade

Resident patent & trademark applications have

remained stable IP imports have increased

Different IP user groups in Kazakhstan 4

Figure 3. Evolution of resident patent applications in Kazakhstan and selected countries (2004 = 100)

Figure 4. Evolution of royalties and licensing fee payments in Kazakhstan and selected countries (2005 = 100)

Source: WIPO, 2015 Source: World Bank, 2015

2005 2006 2007 2008 2009 2010 2011 2012 20130

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Belarus Kazakhstan KyrgyzstanRussia Hungary MalaysiaPoland Thailand Ukraine

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 20140

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Belarus Kazakhstan RussiaMalaysia Poland ThailandUkraine Hungary

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The use of utility models and industrial designs is low

• Resident patent applications per million population have been at around 100 per year for 2004-14 (Russia is 167 in 2014).

• Patent filings in foreign offices by Kazakh residents have been almost negligible.

• Trademark applications by Kazakh residents have remained relatively stable since 2000 (nearly 150 per million population in 2014).

• Utility models and industrial designs are not used much.

• 37 geographical indications (GI) registered (as of Dec. 2015): most of them correspond to foreign products (only 5 correspond to Kazakh products)

Different IP user groups in Kazakhstan 4

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• Universities and public research institutes

Accounted for 54% of granted patents in 2015

Concentrated among a few institutions

• SMEs• Traditional and informal

sectors• State-owned enterprises

(SOEs)

Not all user groups are equally active

Most active users Least active users+ -

Different IP user groups in Kazakhstan 4

Rank Name of institution Number of patents

1 Satpaev Kazakh National Technical University 69

2 Al-Farabi Kazakh National University 33

3 Gumilyov Eurasian National University 31

4 Bekturov Institute for Chemical Sciences 31

5 Asfendiyarov Kazakh National Medical University 13

Figure 5. Top 5 Kazakh institutions by number of patents granted by the national patent office, 2014

Source: Information provided to the OECD by the National Center for Scientific and Technological Information (NCSTI).

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Recent initiatives aimed at increasing IP users and fostering innovation (1/2)

Law on Commercialization of Scientific Activities (2015)Main objectives of the law: • Increase transparency among participants in processes of

commercialisation• Guarantee the rights of researchers involved in invention processes• Provide economic incentives for the commercialisation of scientific

activities in the priority sectors of the economy• Increase the integration of education, science, industry and

institutions engaged in innovative development

To ensure its successful implementation, it will be critical to provide: Technical support to facilitate implementation in universities and

PRIs Guidelines & model contracts covering options for IP

commercialisation Guidelines for assessing the value of IP Effective incentives for researchers to collaborate with industry More flexibility to researchers to engage in spin-offs

Different IP user groups in Kazakhstan 4

For more detailed analysis, see Chapter 5 (section 5.1.2) of the report!

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Recent initiatives aimed at increasing IP users and fostering innovation (2/2)

More R&D investments, grants for commercialisation, IP registration fee reductions and training courses

• The Samruk-Kazyna sovereign wealth fund – the manager of most SOEs – is required by law to invest at least 10% of its net profit in R&D.

• 2012 amendments to mineral legislation require firms active in the subsoil sector to invest at least 1% of total revenue in R&D activities in Kazakhstan

• 20% discount on IP registration fees for SMEs

• Increasing number of grants for technology commercialisation (7 grants awarded in 2011, 10 in 2012, 19 in 2013, 29 in 2014)

• Free training courses on IP offered to entrepreneurs and SMEs by different institutions

Different IP user groups in Kazakhstan 4

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Project background Kazakhstan’s socio-economic conditions and innovation potentialOrganisation of Kazakhstan’s intellectual property (IP) system Different IP user groups in Kazakhstan Creating the conditions for IP marketsPolicy recommendations

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Overview

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Initiatives: • Creation of technology transfer offices

(TTOs) & agencies to provide advice to potential IP buyers

• Provision of knowledge broker services by NCSTI

• Online technology platform by NCSTI showcasting results of public research and patents registered in Kazakhstan (but no longer updated)

• Creation of a catalogue of marketable technologies in the country by the TCC

There have been early efforts to create infrastructure and establish the legal and administrative conditions to enable IP markets

Creating the conditions for IP markets5

For full analysis of conditions and challenges for creating IP markets in Kazakhstan, see Chapter 6 of the report

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To date however there have been few success stories

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• Low quality of research for commercialisation• Low demand for technology by the business sector,

partly due to limited capacities to commercialize IP • Excessive bureaucracy, restrictions and absence

of incentives for researchers to partner with industry

• Low managerial and entrepreneurial capacities of universities

• High costs in finding sellers and buyers• Lack of legal rules or guidelines on IP valuation

But there are still challenges to the creation of dynamic IP markets in Kazakhstan

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Policy needs to initially focus on connecting potential IP suppliers and buyers

Facilitate connection between potential

suppliers and buyers

Facilitate IP valuation

ObjectivesExamples of suggested

measures

• Provide advice on valuation approach to follow

• Establish a system to record IP transactions

• Develop local skills base for IP valuation• Use IP guidelines developed abroad and

adjust to national needs

Facilitate IP financing

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In the long term• Set up an adequate legal framework• Focus on collateralisation or

securitisation of licensed patents or copyrights

• Provide government support for IP financing (e.g. subsidize interests, provide guarantees)

• Create an online information platform on all types of IP for license or sale (also connected to international platforms)

• Provide specialised brokerage services

Once linkages are established

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Project backgroundKazakhstan’s socio-economic conditions and innovation potentialOrganisation of Kazakhstan’s intellectual property (IP) system Different IP user groups in Kazakhstan Creating the conditions for IP marketsPolicy recommendations

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Overview

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Improvement of IP governance and private sector access to IP

Policy recommendations6

Priorities Recommendations*

IP policy co-ordination

Improve intra-governmental co-ordination of IP policy design and implementation (r.2) 

Define IP policy responsibilities of institutions engaged in IP system (r.3)

Private sector access to IP (beyond patents)

Provide IP training and technical support to SMEs (r.14)  Support the creation of trademarks for food products

and traditional handcrafts (r.16) Support policies focused on SMEs and traditional

sectors (r. 13) Create a new prize for innovative SMEs actively using IP

(r. 15) Foster the use of franchises in the food and textile

sectors (r. 21) Promote sourcing of Kazakh technologies by state-

owned enterprises (r. 17)

For full list of policy recommendations, see

sections 1.2 and 1.3 of the report!

* The numbers following each recommendation stand for the number of the corresponding recommendation as listed in the report.

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Adapt IP policies currently targeted at universities and PRIs to enhance their contribution to private sector development

Priorities Recommendations*

Commercialisation of public research and private sector development

Develop guidelines and tools to facilitate commercialisation (r.9)

Reform researchers’ rewards system to incentivise research commercialisation (r.11)

Introduce new performance measures for university funding (r.10)

Empower a central agency to promote IP commercialisation (r.8)

Support spin-off creation conditional on quality (r.12) Strengthen the quality of technology transfer office

services (r.7) Promote sourcing of Kazakh technologies by state-owned

enterprises (r.17) Expand the technology screening activities of the

National Agency for Technological Development (r.18) Connect with global technology markets (r.19) * The numbers following each recommendation stand for the number of the corresponding recommendation as

listed in the report.

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Sectoral approach to IP, more transparency in IP processing and beyond

Policy recommendations6

* The numbers following each recommendation stand for the number of the corresponding recommendation as listed in the report.

Priorities Recommendations*

Sectoral approach to IP policies

Empower central agency to promote IP commercialisation, building expertise in specific sectors (r.8)

Foster the use of franchises in the food and textile sectors (r.21)

IP processing

Provide free, open access to information on IP registered and applied for in Kazakhstan (r. 4)

Publish information on NIIP’s processing procedures and pendency statistics (r.5)

Improve the information system on IP transactions to facilitate the future development of markets for technology (r.6)

Beyond IP policy Implementation of complementary innovation policies

(r.1) Use the improvements in IP system to attract R&D

related FDI (r.20)

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Executive summary

Chapter 1. Overall assessment and recommendations- Overview of Kazakhstan’s IP system- Identification of IP policy priorities for Kazakhstan- Detailed recommendations for Kazakhstan

Chapter 2. Kazakhstan’s socio-economic conditions and innovation potential - Kazakhstan´s socio-economic development, industry structure, trade patterns,

FDI- Conditions for innovation: human capital, access to finance and infrastructure- Kazakhstan’s national innovation system- Policy and governance of science, technology and innovation

Chapter 3. Organisation of Kazakhstan’s intellectual property system- Overview of IP laws and regulations- Governmental stakeholders and co-ordination mechanisms- IP operations and procedures- Challenges for Kazakhstan’s IP system

Publication content details (1/2)

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Chapter 4. Intellectual property use in Kazakhstan: Statistics- Statistics on patents, utility models, trademarks, industrial design,

geographical indications, copyright, royalties and licensing fees.

Chapter 5. Opportunities and challenges of Kazakhstan’s IP system for different user groups

- Public research institutes and universities- Traditional and informal sectors- “Catching-up” businesses: SMEs and young companies- Leading “frontier” businesses

Chapter 6. Developing IP markets in Kazakhstan- Enabling commercialisation of public research- Addressing IP valuation in the future- IP financing: preconditions and steps to be undertaken

Publication content details (2/2)

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Project website: http://oe.cd/ip-studies

Innovation policy reviews:http://www.oecd.org/sti/inno/oecdreviewsofinnovationpolicy.htm

Contact: Caroline Paunov (caroline.paunov@oecd.org)

Further information