Development and Use of Indicators for Measuring Economic Impact of IP Assets Korea Institute of Intellectual Property Korean Intellectual Property Office

Development and Use of Indicators for Measuring Economic Impact of IP Assets

Korea Institute of Intellectual Property

Korean Intellectual Property Office

6th ANNUAL WIPO FORUM ON IP & SMEs

Sep. 10, 2008Dr. Han, Yoo-Jin


Table of Contents

Background for Developing Indicators1

Concepts & Frameworks3

Composite Indicator5

Long-term Plan for Indicator Development2

Individual Indicators4

2

Method of Collecting Data6

Analysis of Indicators and Implications 7


Background for Developing Indicators

□ Purpose for developing National IP Indicators

1. Development of indicator at a national level

- Diverse and meaningful policy analysis and deduction of implications - Development of a framework for objective-oriented indicator analysis - Measurement & comparisons of countries thru national-level IP indicators - Measurement & comparisons of nations’ scores

2. Continuous analysis of OECD 30 countries

- Comparison analysis of nation-wise IP competitiveness - Classification of nations according to the scale and efficiency of input & output

3. Improvement of the recognition thru international outreach

- Theoretical verification: consultation from domestic & foreign experts - Assurance of the recognition: presentation at international conferences & seminars

3


4

Infra. building for int’l utilizationInfra. building for int’l utilization

2006. 1 (Commence-

ment)

2007.12(2nd Yr.)

• Rationalization of the model & policy analysis• Diversification of policy analysis• Comparison analysis of OECD countries (cross-section)

Development of internationally acknowledgeable & applicable National IP Competitiveness IndicatorsDevelopment of internationally acknowledgeable & applicable National IP Competitiveness Indicators

• Development of world-class indicators• Link w/ int’l institute such as WIPO

Project Implimen-

ting Strategy

/ Roles of KIIP

Int’l recognitionInt’l recognitionPurpose

Model sophistication & analysisModel sophistication & analysis

ProjectName Development of National IP Competitiveness IndicatoDevelopment of National IP Competitiveness Indicatorsrs

- KIIP + Dom. & Int’l. experts- Int’l survey institute

- KIIP + Dom. & Int’l. experts- Int’l survey institute

- KIIP + Int’lly eminent research institute- Int’l survey institute + foreign patent office

- KIIP + Int’lly eminent research institute- Int’l survey institute + foreign patent office

KIPO(KIIP) + WIPOKIPO(KIIP) + WIPO

Development StageDevelopment Stage

Propagation StagePropagation Stage

Utilization StageUtilization Stage

2006.12(1st Yr.)

2008.12(3rd Yr.)

2009.12(4th Yr.)

2010.12(5th Yr.)

• Sophistication of the model & policy analysis• Int’l outreach & recognition• Comparison analysis of OECD 30 countries (Panel)

Long-term Plan for Indicator Development


5

Concepts & Frameworks

Nat’l Competitiveness

Nat’l IP Competitiveness

Input

Input Process

National Competitiveness

System

National IP Competitiveness

System

Out-put

Out-put

Process

Main concept : National Competitiveness productivity (Porter, 1990)≒

* Methodology: literature review, brainstorming of internal researchers, survey of outside researchers


6


Compe-tence<Crea-tion>

Basic Resource<Inside Input>

Performance<Interim Output>

Performance<Final

Output>

Compe-tence

<Manage-ment>

Compe-tence

<Utiliza-tion>Basic Resource

<Outside Input>

One nation’s IP competitiveness system

Environment<Physical Infra.>

Environment<Institutional Infra.>



7

Components Definition

Basic resourcesResources that should be basically inputted in order to increase a nation’s IP competitiveness

Inside inputCapital and intellectual resources that are basically inputted inside the system for the creation of IPs

Outside inputCapital and intellectual resources that are basically inputted outside the system for the creation of IPs

CompetencesAccumulated capability inside a nation’s system in order that IPs could be linked to economic performance based on inputted basic resources

CreationPotential and efficiency that could generate intellectual property from intellectual creation activities including R&D

Administration (Protection) Potential and efficiency that obtain, protect, and maintain legal rights of IPs

Utilization Potential and efficiency that yield economic performance through IPs

EnvironmentFundamental factors that support inputted basic resources can yield economic performance based on competences

Physical InfrastructureThe level of physical infrastructure that encompasses the creation, administration, and utilization of IPs

Institutional InfrastructureThe level of institutional infrastructure that surrounds the creation, administration, and utilization of IPs

PerformanceEconomic performance that one country produces based on the basic resources, competences, and environment

Interim OutputIntellectual property that is produced through creation and administration capabilities based on inputted capital and knowledge resources

Final Output Direct·indirect economic performance derived by utilizing interim output


8

[Reference] Indexes of Various Int’l Organizations/Institutes

Institution Project Name

OECDScience, Technology and Industry Scoreboard

Main Science and Technology Indicators

IMD World Competitiveness Yearbook

WEF Global Competitiveness Report

ECEuropean Report on Science & Technology Indicator

European Innovation Scoreboard

• Many international institutions such as the OECD, IMF, WEF and EC are conducting surveys and publicly announcing the results every year


9

Individual Indicators: Brainstorming Results

..

Operation• Efficiency in creation of firms• Efficiency in dissemination of knowledge• Venture capital investment in early stages divided by IPs in force• Value-added per IPs in force

Infrastructure• # of knowledge-based firms• # of knowledge-based firms divided by the tl. # of firms• # of TTOs• # of TTOs divided by # of public research institutes

Operation• IP registration ratio• IP examination period• # of IP infringement s • # of PCT applications

Infrastructure• # of patent attorneys• # of patent attorneys per IP application• # of patent examiners•# of patent examiners per IP application

Infrastructure• # of researchers• # of researchers per 10,000 persons• # of filing institutes• # of filing institutes over # of tl institutes

Absolute Scale• Private R&D invest.• Private R&D invest. per GDP

National IP Competitiveness

System of One CountryCompetence

Basic Resource

Operation• # of IP applications per researcher• Triadic Patent Families per researcher• # of IP applications per filing institute• Triadic Patent Families per filing institute

Creation Competence

Utilization Competence

Base Infrastructure• # of IP educational institutes• Degree of emphasizing scientific education• Ease of funding for technological development• Ratio of bachelors’ degree holders in science & engineering per bachelors’ degree holdersDiffusion Infrastructure• # of BB subscriber per 1,000 persons• DAI (Digital Access Index)• Degree of cooperation amongst firms• Tech cooperation b/w univs and firms

Physical Environment

Absolute Scale• # of IP applications by residents• # of IP registrations by residents• # of IPs in force

Relative Scale• # of IP applications by residents per 10,000 persons• # of IP registrations by residents 10,000 persons• # of IPs in force per 10,000 persons

Interim Output

Absolute Scaled Output• Royalties from technology export• Value-added in KBI

Relative Scaled Output• Royalties from technology export over those from technology import• Value-added in KBI over total value-added

Final Output

Performance

Domestic Support• Avg. cost of IP application, registration & maintenance• Degree of IP protection• Legal environment for supporting scientific research• Regulation on technological development

Institutional Environment

Environments

Administration Competence

International Relationship• The ratio of IP-related Int’l treaties joined out of all possible IP-related treaties• Contributions to WIPO• Whether or not its official lang is the PCT lang• Incentive systems for foreign investors

Inside Input

Outside Input

Relative Scale• IP stock• IP stock per 10,000 persons

Absolute Scale• Public R&D Iiest.• Public R&D invest. per gov. budget

Relative Scale• ISCI paper stock• SCI paper stock per 10,000 persons


10

Individual Indicators: Way of Approach

Final Output

Base vs Diffusion

Domestic Support vs Int’l Relation

Abs. vs Rel.Basic Resource

Competence

Environment

Performance

Inside Input

Outside Input

Creation

Maintenance

Utilization

Physical Infra

Institutional Infra

Interim Output

Infra. vs Operation

11stst level level 22ndnd level level 33rdrd level level


11

Way of approach: Absolute vs Relative

Absolute Scale

• Private R&D investment• IP stock

Relative Scale

• Private R&D investment per GDP• IP stock per 10,000 persons

Inside Input

Absolute Scale

• Public R&D investment• SCI paper stock

Relative Scale

• Public R&D invest. per gov. budget• SCI paper stock per 10,000 persons

Outside Input

Absolute Scale

• # of IP applications by residents• # of IP registrations by residents• # of IPs in force

Relative Scale

• # of IP applications by residents per 10,000 persons• # of IP registrations by residents 10,000 persons• # of IPs in force per 10,000 persons

Absolute Scale

• Royalties from technology export• Value-added in KBI

Relative Scale

• Royalties from technology export over those from technology import• Value-added in KBI over total value-addd

Interim Output

Final Output

Performance Performance


Basic Resource Basic Resource


12

Way of approach: Infra vs Operation

Competence: Creation Competence: Creation

I

• # of researchers• # of researchers per 10,000 persons• # of filing institutes• # of filing institutes over # of tl institutes

O

• # of IP applications per researcher• Triadic Patent Families per researcher• # of IP Applications per filing institute• Triadic Patent Families per filing institute

Competence: Administration Competence: Administration

I

• # of patent attorneys• # of patent attorneys per IP application• # of patent examiners•# of patent examiners per IP application

O

• IP registration ratio• IP examination period• # of IP infringement s • # of PCT applications

I

• # of knowledge-based firms• # of knowledge-based firms divided by the tl. # of firms• # of TTOs• # of TTOs divided by # of public research institutes

O

• Efficiency in creation of firms• Efficiency in dissemination of knowledge• Venture capital investment in early stages divided by IPs in force• Value-added per IPs in force


Competence: UtilizationCompetence: Utilization

* Note: I (Infrastructure), O (Operation)


13

Way of approach: Base vs Diffusion, Domestic Support vs Int’l Relation

Environment: Physical InfraEnvironment: Physical Infra

BI

• # of IP educational institutes• Degree of emphasizing scientific education• Ease of funding for technological development• Ratio of bachelors’ degree holders in science & engineering per bachelors’ degree holders

DI

•# of BB subscriber per 1,000 persons• DAI (Digital Access Index)• Degree of cooperation amongst firms• Tech cooperation b/w univs and firms

DS

• Avg. cost of IP application, registration & maintenance• Degree of IP protection• Legal environment for supporting scientific research• Regulation on technological development

IR

•The ratio of IP-related Int’l treaties joined out of all possible IP-related treaties• Contributions to WIPO• Whether or not its official lang is the PCT lang• Incentive systems for foreign investors


Environment: Institutional InfraEnvironment: Institutional Infra

* Note: BI (Base Infrastructure), DI (Diffusion Infrastructure) DS (Domestic Support), IR (International Relationship)


14

Composite Indicator

PerformancePerformanceCompetenceCompetenceBasic ResourceBasic Resource

National IP CompetitivenessNational IP Competitiveness

Outside Input

Inside Input

Crea-tion

Mana-gement

Utili-zation

EnvironmentEnvironment

PhysicalEnv.

Institu-tional Env.

InterimOutput

Final Output

Analytical Hierarchy Process


15

Composite Indicator

• Deductive approach according to which we deduce weights by giving objective-oriented meaning to each indicator• Representative decision-making method for solving complex problems in the real world: Grasp of each attribute’s weight by classifying various attributes hierarchically

• Basic principle: i) Hierarchical structuring ii) Weighting iii) Consistency

• Benefit: it is possible to deduce weights by collecting a few experts’ opinions

• Deductive approach according to which we deduce weights by giving objective-oriented meaning to each indicator• Representative decision-making method for solving complex problems in the real world: Grasp of each attribute’s weight by classifying various attributes hierarchically

• Basic principle: i) Hierarchical structuring ii) Weighting iii) Consistency

• Benefit: it is possible to deduce weights by collecting a few experts’ opinions

Explanation & Application of AHP Methodology

Experts group # of Surveyees # of Surveyees who answered Response Ratio

Researchers of a public institute 15 15 100%

Businessmen 10 9 90%

Patent attorneys 10 10 100%

Patent examiners 5 5 100%

Total 40 39 97.5%


16

[Reference] AHP Survey Example

We selected AHP in order to deduce weights since indicators are structured hierarchically and we need to grasp relative importance in a whole hierarchical structure.

Factor (A) A.I. V.I. I. S.I. E.I S.I. I. V.I. A.I. Factor (B)

Researchers⑨ ⑧ ⑦ ⑥ ⑤ ④ ③ ② ① ② ③ ④ ⑤ ⑥ ⑦ ⑧ ⑨ Researchers per

10,000 inhabitants( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( v) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( )

Researchers⑨ ⑧ ⑦ ⑥ ⑤ ④ ③ ② ① ② ③ ④ ⑤ ⑥ ⑦ ⑧ ⑨ # of IP application

institutes( ) ( ) ( ) ( ) ( ) ( ) ( v ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( )

Researchers

⑨ ⑧ ⑦ ⑥ ⑤ ④ ③ ② ① ② ③ ④ ⑤ ⑥ ⑦ ⑧ ⑨ # of filing institutes

over # of tl

institutes( ) ( ) ( ) ( ) ( ) ( ) ( v ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( ) ( )

<Exemplary>

* A.I.: Absolutely Important; V.I.: Very Important; I.: Important; S.I.: Slightly Important; E.I.: Equally Important


17

Composite Indicator

Basic Resource 0.20

Basic Resource 0.20

National IP CompetitivenessNational IP Competitiveness

Inside Input0.69

Outside Input0.31

Creation0.28

Admini-stration

0.17

Utiliza-tion0.55

Interim Onput0.38

Final Output

0.62

1) 0.33

Physical Infra0.50

Institutional Infra0.50

2) 0.143) 0.334) 0.20

5) 0.346) 0.177) 0.298) 0.20

9) 0.14

10) 0.1211) 0.1312) 0.1113) 0.1014) 0.0515) 0.1916) 0.16

17) 0.0818) 0.1619) 0.0820) 0.1821) 0.1322) 0.1223) 0.1124) 0.14

25) 0.1326) 0.1827) 0.0928) 0.1029) 0.1430) 0.1331) 0.0732) 0.16

33) 0.1134) 0.0835) 0.2036) 0.1137) 0.0638) 0.0739) 0.1940) 0.18

41) 0.0842) 0.1843) 0.1444) 0.1045) 0.1046) 0.1747) 0.0848) 0.15

49) 0.1050) 0.1351) 0.2752) 0.1053) 0.1454) 0.26

55) 0.1856) 0.2157) 0.3058) 0.31

Competence 0.35

Competence 0.35

Environment 0.15

Environment 0.15

Performance 0.30

Performance 0.30

Survey of 39 professionals: relative importance amongst indicators


18

Method of Collecting Data

• OECD data− Main Science & Technology Indicators− Structural & Demographic Business Statistics− STAN Database− STI Scoreboard

• IMD data− World Competitiveness Yearbook

• WEF data− Global Competitiveness Report

• WIPO data− IP Statistics

• UNESCO data− International Association of Universities: List of Universities

* # of filing institutes: internal database of KIPI* # of IP infringements: various newspapers and reports of a consulting company

• Request to foreign research institutes due to the volume of questionnaires: Evalueserve, TMR

- Collecting period: 10~11 (2 months)

- Collecting countries: 29 countries(except Korea)

- Number of questionnaires: 18

Hard Data Soft Data


19

Nation-wise analysis (OECD 30 countries, total score: 100): Ranking

1: US 68.16

2: Japan 47.11

3: Germany 44.06

4: France 43.22

5: UK 39.97

6: Finland 39.12

7: Switzerland 38.12

8: Sweden 37.46

9: Denmark 37.36

10: Korea 36.52

11: Iceland 36.23

12: Canada 36.15

15: Netherlands 31.12

OECD Average: 31.24

16: Belgium 30.33

17: Ireland 29.82

18: Austria 29.69

19: New Zealand 27.72

20: Italy 27.51

21: Spain 26.91

22: Norway 26.64

23: Hungary 25.02

24: Czechoslovakia 21.81

25: Mexico 19.16

26: Greece 16.66

27: Portugal 15.74

30: Turkey 12.52

13: Luxemburg 34.11

14: Australia 31.72

28: Slovakia 14.71

29: Poland 12.61

OECD Average: 31.24

US Korea Turkey

Ratio of the earned score to the average 2.2 1.2 0.4

Percentage attained compared to the country in the first place (%) 100 53 17

Analysis of Indicators & Implications


20


1: USA 68.16

2: Japan 47.11

3: Germany 44.06

4: France 43.22

5: UL 39.97

1: Finland 39.12

2: Switzerland 38.12

3: Sweden 37.46

4: Denmark 37.36

5: Iceland 36.23

7: Canada 36.157: Netherlands 31.12

8: Belgium 30.33

9: Iceland 29.82

10: Australia 29.69

11: New Zealand 27.72

9: Italy 27.51

10: Spain 26.91

12: Norway 26.64

13: Hungary 25.02

14: Czechoslovakia 21.81

11: Mexico 19.16

13: Turkey 12.52

6: Luxembourg 34.11

8: Australia 31.72

12: Poland 12.61

6: Korea 36.52

Average of countries over 20 million inhabitants: 34.28

15: Greece 16.66

16: Portugal 15.74

17: Slovak Republic 14.71

Average of countries under 20 million inhabitants: 26.12

US Korea Turkey

Ratio of the earned score to the average 2.0 1.1 0.4

Percentage attained compared to the country in the first place (%)

100 53 17

Finland Slovakia

Ratio of the earned score to the average 1.5 0.6

Percentage attained compared to the country in the first place (%)

100 38

Nation-wise analysis (OECD 30 countries, total score: 100): Ranking


21

▶▶ Classification of nations: Evaluation of the system’s scale & efficiency ▶▶

I. Group demanding Benchmarking

IV. Group demanding Output Enhancement

Scale indicator(Output+Input)

Efficiency indicator(Output/Input)

II. Group demanding Input Increment

III. Group demanding Output/Input Enhancement



22

Efficiency(Performance/

Basic Resource)

Scale(Basic Resource

+Performance)

TUR

POL

SVK

GREPOR

IRL

CVK

MEX

NOR

NZL

HUN

AUT

SPN

ITABEL NED

LUX

AUSCAN

FIN

ISL

SWI

SWE

DENUK

KOR

FRA

GER JPN

US

I. Group demanding Benchmarking (8 states)

IV. Group demanding Output Enhancement (7 states)

III. Group demanding Output/Input Enhancement (4 states)

II. Group demanding Input Increment (11 states)

Analysis of Indicators & Implications ▶▶ Classification of nations: Evaluation of the system’s scale & efficiency ▶

▶


23

Efficiency(Interim Output/

Basic Resource)

SVK

GRE

POL

POR

MEX

HUN

TUR

CVK

NOR

ITAAUT

BEL NED

SPNIRL

DEN

NZL

CAN

FIN

AUS

ISL

SWE

LUX

UKSWI

FRA

KORJPN

USGER



III. Group demanding Output/Input Enhancement (9 states)


▶▶ Country-wise comparison: Evaluation of the system’s scale & efficiency ▶▶


Scale(Basic Resource +Interim

Input)


24

Scale(Interim Output +Final

Output)

Efficiency(Final Output/

Interim Output)

TUR

POL

GRE

SVK

POR

IRL

NOR

AUT

CVK

SPN

ITA

NZL

MEX

FIN

BEL

SWE

ISL

NED

CANSWI

AUS

HUN

DEN

KOR

GER

UK

LUX

FRA

JPN

US



III. Group demanding Output /Input Enhancement

(5 states)


▶▶ Country-wise comparison: Evaluation of the system’s scale & efficiency ▶▶



25


▶▶ Implications to Business Field ▶▶

Contributions• Broad perspective to firms: this research does not seem directly apply to business field. However, the whole framework reflects a comprehensive process such as creation, administration and utilization of intellectual property(IP), thereby allowing us to incorporate and structuralize IP activities in one country

Limitations • Conceptual Limitation: the sectors may not fully reflect the process under which an IP is created, administered and utilized after basic resources are inputted, consequently producing final output.

• Methodological Limitation: the methodology used here (literature review, brainstorming of internal researchers, survey of outside researchers) may not be adequate enough to comprehensively encompass the whole process under which an IP is created, administered and utilized after basic resources are inputted, consequently producing final output.

Documents

Development and Use of Indicators for Measuring Economic Impact of IP Assets Korea Institute of Intellectual Property Korean Intellectual Property Office