KEYNOTE SPEECH OF SECRETARY RAMON M. LOPEZ
LAUNCH OF GENEVA NETWORK REPORT ON IPR
24 September 2019, Holiday Inn Hotel, Makati City
 |
[Acknowledgements]
Thank you, Nonoy. And good afternoon everyone. I would say that that’s the best introduction and welcome remarks I’ve ever had. Very substantive and unique introduction. I didn’t know I was being monitored by CIA. But thank you, my partner and boss, Nonoy Oplas. Always a maverick—we got so close because we usually interact in our Viber. Sometimes we differ in policies, but that’s really a healthy discussion and those things are really welcome.
A pleasant day to you all, Mr. Phillip Stevens, the Executive Director of the Geneva Network; our Director General in IPO Philippines, DG Josephine Santiago, accompanied by Deputy Director General Ted Pascua. He used to be our Undersecretary at the Department of Trade and Industry. Director Jess Varela, a partner from the PCCI, IPR Committee Head. I’ll be waiting for his talk later. Atty. Kristine Alcantara from the Foundation of Economic Freedom.
Specifically, going back to the introduction of Nonoy, I found it interesting and engaging. Rule of law have high correlation with growth and income. I take exception to the lack of rule of law in the Philippines. I think it’s getting better. Because President Duterte is strict on many things, as we all know. And that improvement in the rule of law is a positive development as we improve also on issues like IPR.
Greater protection of rights leads to greater investment and higher innovation. These bring high potential for growth and have high correlation with high income countries. So I’m taking notes while you are doing your introduction, partner. I’ll take this with me and also a copy of your presentation.
Opportunities and challenges of Industry 4.0
The worldwide focus on the Fourth Industrial Revolution or Industry 4.0 has broadened talks on the raft of opportunities and risks and opportunities this period presents to various countries. With opportunities, Industry 4.0 is producing prosperity at an unprecedented level and pace compared to the industrial revolutions that came before. From 1980 to 2016, incomes have increased two to six times for Vietnam, and seven times for Singapore. On risks, it is widely feared that those who fail to adapt with the rapid advancements will be left behind to watch their economies stagnate and eventually crumble.
As such, Industry 4.0 is challenging our traditional formula of what makes nations thrive. It compels us to expand our sights to a borderless world of trade and commerce that is inclusive of the participation of Micro, Small, and Medium Enterprises (MSMEs). Particularly, it puts focus on intangible assets, which has been proving to capture more value than tangibles.
In 2017, the World Intellectual Property Organization (WIPO) published a report entitled “Intangible Capital in Global Value Chains.” This report showed the contribution of intangibles in the total value-added averaged 30.4% for all products manufactured and sold worldwide from 2000 to 2014.
Overall income from intangibles in 19 manufacturing industries increased by 75% from 2000 to 2014 in real terms. Totaling US$5.9 trillion in 2014, intangible capital was almost twice as much as buildings, machinery, and other forms of tangible capital to the total value of manufactured goods.
The WIPO report noted that intangibles’ share is especially high, more than double the tangibles share, particularly for pharmaceutical, chemical, and petroleum products. It is also relatively high for food products as well as computer, electronics, and optical products. In terms of absolute returns, the three largest product groups—food products, motor vehicles, and textiles—account for close to 50% of the total income generated by intangible capital.
With the intangible capital generating roughly one-third of the total value-added, industries can deepen its participation in global value chains by building or strengthening its intangibles, such as their intellectual property or IP assets.
IP Rights and Innovation
As Industry 4.0 drastically redefines the global landscape, IP rights protection emerges as a key strategy for any country aiming to set itself at an advantageous footing in the innovation race. An effective and balanced IP system is critical to encourage and incentivize the development of innovations, as well as to attract foreign direct investments (FDIs).
We see the promotion and protection of the IP system high on the Philippine Development Plan 2017-2022 as it ties the use of the IP system closely with innovation. The fastest-growing sub-sector in the Philippine economy over the past 5 and a half years, through the first half of 2019, is intellectual property products under Capital Formation, or private investments. This was growing at 28% every year, with capital formation at 14%, and GDP at 6.3%.
The Department of Trade and Industry’s (DTI) flagship program for innovation is our Inclusive Innovation-led Industrial Strategy (i³S). This strategy seeks to attract businesses and investments to the country, focusing on priority sectors, namely: manufacturing, agriculture, and services. It also aims to see Filipinos’ ideas and innovations contribute to high value-added activities in regional and global value chains. Moreover, i³S recognizes IP as a key element in creating and enabling an inclusive innovation and entrepreneurship ecosystem.
Under i³S, we’ve come up with an Inclusive Filipinnovation and Entrepreneurship Roadmap, which strives to increase the country’s ability to innovate. With innovation at the core of the country’s strategic industry development policies and programs, we are working towards establishing an inclusive innovation and entrepreneurship ecosystem in the country.
We are also building Regional Inclusive Innovation Centers (RIICs) in different parts of the country under the i³S. The basic mission of the RIIC is to integrate the stakeholders from different regions. The key thing here is we want to link the industries with the academe as their support system. For companies to inject more R&D in their system, they have to make use of SUCs. And in doing that, it creates an innovation culture.
On the other hand, there are the kinds of industry problems we are challenging the academe to solve. So the research works they are doing become more relevant and really become solutions to industry problems. So it’s not SUCs and research institutions doing research for research’s sake of publication. But making sure that the research they will produce will be answers to industry problems.
There are a lot of examples like aerospace, chemicals, like for examples, how can we prolong the shelf life of a product. Common industry challenges wherein SUCs are being tapped. Even MSMEs, we are telling them to make use of these technology. Your products can be a cut above the rest. Research can be your source of differentiation.
We’ve also included a new category called “Innovation Drivers” among the list of Preferred Activities that may avail of incentives under the Board of Investment’s (BOI) Investment Priorities Plan (IPP). The use of new technologies as well as the shift to Industry 4.0 technologies are among the criteria proposed in selecting industries and activities to be included under the Strategic Investment Priority Plan (SIPP). When we enter the new tax regime, there will be a strategic IPP, and we included technology and innovations in these IPPs.
Of course, DTI’s programs are just part of the whole-of-government approach to scale up the country’s innovation ecosystem. For this reason, programs and initiatives to further enhance our IP system remains a critical element in the government’s strategy in building the Philippine innovation and entrepreneurship ecosystem.
Promoting IPR to Filipinos
The foundation of an effective IP system is education. Thus, we have been very aggressive with our awareness campaign, as the success of our efforts is greatly hinged on generating greater knowledge of IP rights for businesses—especially MSMEs. The Intellectual Property Office of the Philippines (IPOPHL) works round the clock in mainstreaming IP. They strive to make every Filipino—whether inventor, practitioner, industry expert, or ordinary content creator—know and understand the role that IP plays in our lives.
In fact it has also generated interest as we promote the importance of IP in business-in protecting the rights of the brands, trademarks, and inventions. In the early stages of startups and MSMEs, we try to inject in their mindset the importance of these and the value that these brands and trademarks create.
A common example is when we talk to the about mergers and acquisitions. One would readily realize is that value of a company is with its brands. The brands are really the ones registered. They would look for all this trademark registration where one can really exact greater value. The value can go up to millions. But when you look at the physical assets, are in fact depreciating. You would have a lower value if you just look at the physical assets. The intangibles are real. And we give them as a real example in many of these M&As.
Micro SMEs, to educate them on IPs. Our challenge is that sometimes few people can understand what IPO is. They popularized it, they launched this program, “Juana Make a Mark.” Juana is term for Filipinas and is slang for “want to.” Juana Make a Mark is a trademark registration incentive program. I think you were giving these for free, first 1,000 is it? Then a discounted rate. Now there’s a second and third run. Every year.
In fact, I remember when we launched this, 1,000 qualified MSMEs, then you went up to 2,000 qualified MSMEs and beyond that. You keep on reorienting. And I heard from the DG that you will be expanding this to Juana Invent and Juana Design. Excellent programs that will really popularize our IP.
With the establishment of the IP Academy, IPOPHL’s efforts have further gained recognition. They’ve built partnerships with the Technical Education and Skills Development Authority (TESDA) and the Commission on Higher Education (CHED) respectively for capacity-building and eventual inclusion of IP in the curriculum. Other critical government agencies, as well as public and private institutions, have also expressed keen interest in collaborating with IPOPHL on IP education.
We have likewise established Innovation and Technology Support Offices (ITSOs) in higher education and research development institutions. This will bring patent services closer to the generators of technologies and its local communities. As of now, there are already 94 ITSOs nationwide, 80 of which are in academic institutions.
Recognizing the need to stimulate innovative activities in the rural areas and to enhance utilization of IP as a competitive tool of enterprises, IPOPHL established 14 Intellectual Property Satellite Office (IPSOs) in strategic areas of the country. This is consistent with the policy objective of building an inclusive economy where rural communities participate and benefit from innovation-driven business activities. The IPSOs fill the structural gap in integrating and scaling up activities of rural enterprises in the regional and global markets.
As a whole-of-government approach, we also have the regular grant-in-aid program of the Department of Science and Technology (DOST). This program provides funds to Filipinos with technologies or research studies that can improve our quality of life. Further, the Department of Information and Communications Technology (DICT) is moving to strengthen our ICT infrastructure to enable business growth. In fact, the government itself is moving towards full digitization to further ease doing business in the Philippines and spur economic growth.
In DTI alone, we are working on all permits to be digitalized and automated so that anyone can register. Our business registration system is already online. Along with the e-payment system. That’s fairly automatic. And in the whole-of-government approach, it is a pain point right now. Like starting a business can run for over 10 days. We’re trying to shift to mobile phone registration of business. Hopefully, give us a few months filling up some forms online. All in one sitting you’ll be able to register—up to assessment and payment. So that’s one innovation we’re working on for ease of doing business.
It comes as no surprise that the Philippines’ filings for IP protection, which provides a picture of the country’s degree of regard for the IP system, increases every year. In 2018, applications for patent grew 28% year-on-year to 3,962; utility models surged 54% to 2,131; industrial design rose 9% to 1,522; and trademarks climbed 18% to 35,666.
We also recognize that one of the frontrunners for innovation is the pharmaceutical industry. Core to the business strategy of pharmaceuticals is to ensure protection and exclusivity of innovations. It is no surprise that the pharmaceutical field is the top filer for patents in the Philippines. In the five years through 2018, filings from the pharma industry averaged 75%.
IP and Innovation Rankings Improving
These gains in IP protection filings are big enough that they are being noticed worldwide, most prominently in the rankings of WIPO’s 2019 Global Innovation Index (GII). The index reported the Philippines leapt by 19 places to 54th from 73rd, one of the country’s feats this year in terms of international index rankings.
The GII 2019 noted that the Philippines improved in almost all the indicators related to innovation linkages and climbed the ranks in high-tech imports and research talent. In knowledge and technology outputs, the data for high tech net exports became available this year and the country ranks first. Moreover, the Philippines ranked in the top 10 in 4 other indicators: firms offering formal training, productivity growth, ICT services exports, and creative goods exports.
Right now the size of our creative services sectors is one half of our total exports. Down the road, I can expect it to be even at the same level as exports. That means creative industries vis a vis exports.
However, the index mentioned areas where the Philippines needs to improve. These are in the following areas: ease of starting a business; ease of getting credit—but I assure you that this will improve this year because there was just an error last year. And I’ve explained this is several fora. The World Bank will correct this as they correct rating for Philippines for Getting Credit this year. So you can expect an improved rating for the Philippines this year.
Expenditure on education is another index that needs to improve, by the way, this is a top sector in the budget. Definitely, we are spending much for education. Everybody supports this. And then global R&D companies; scientific and technical articles; and new businesses. Those are the areas that needs improvement.
A deeper analysis shows that these areas for improvement are mostly concentrated on the innovation input side, which covers resources such as infrastructure and funding. But despite this, the country broke into the status of innovation achievers for producing creatives, inventions, and innovations. This was much more than we were expected, given the relatively fewer resources we have.
Efforts to Promote IP & Innovation
This motivates us to further push our country’s progress and fill in the gaps. The government has been going the extra mile to do just that, most notable being President Rodrigo Duterte’s signing into law the Philippine Innovation Act or Republic Act (RA) No. 11293, and the Innovative Startup Act, or RA No. 11337.
These laws will surely accelerate our progress as it will concentrate the efforts of government agencies to link academe with the industry and provide startups with easy access to funding and other services. They will also capacitate our MSMEs to penetrate and operate competitively in large international markets. And in the innovation act, there will be a PHP 1 billion innovation fund.
What’s more, we still have a number of measures in the legislative pipeline. We’re liberalizing a lot, as illustrated in the introduction earlier. The liberalization of the Public Service Act, the Retail Trade Law, the Foreign Investment Act and many things that can really liberalize and welcome more investments in the country.
Meanwhile, to strengthen safeguards on the rights of IP owners, IPOPHL is proposing amendments to the current IP Code. This is actually one of the priority legislative measures of DTI for the 18th Congress.
The proposed New Intellectual Property Act aims to create a more robust, effective, modern, and forward-looking IP system while strengthening the IPR enforcement in the country.
With these realities in mind, our proposed amendments include:
(1) institutionalizing the National Committee on Intellectual Property Rights (NCIPR) to eventually include other agencies like the bureaus of Internal Revenue (BIR) and Immigration (BI), and the DICT;
(2) allowing taking down and blocking online platforms that offer counterfeit or pirated materials/products;
(3) increasing penalties for counterfeit or pirated products that pose danger to life and health;
(4) facilitating the protection of inventions by allowing parallel filing, or patent and utility model applications and provisional patent application;
(5) recognizing non-visible marks; and
(6) expanding the jurisdiction of IPOPHL to help MSMEs seek administrative remedies, among others.
Pending this legislation, we intend to institutionalize additional enforcement measures. That’s why tomorrow, Sept. 25, the 12-member NCIPR will have a high-level meeting to discuss strategies on enforcing IP policies of the online markets. They will also tackle ensuring zero-use of unlicensed software among local government agencies, and formulating a holistic action plan for implementation next year through 2022, among others.
As chair of the NCIPR, I intend to go after more infringers and pirates. Stamping out infringement and piracy activities is crucial for businesses, inventors, innovators, and artists to reap the full benefits of their work.
Significantly, we see IP rights Enforcement as among the top priorities in the ASEAN’s 2025 Vision. In the last meeting of the ASEAN Working Group on Intellectual Property Cooperation held last July 2019, the ASEAN Secretariat reported that 65% of the 56 deliverables under the ASEAN IPR Action Plan 2016-2025 are either completed or ongoing. This number may even go higher as we will soon factor in other deliverables that are already being implemented.
Conclusion
To close, DTI and IPOPHL is committed to raising the consciousness of businesses on the value of IP, as well as on the need to safeguard their IP rights. MSMEs need to understand the source of the value and brand of their business, which may cost them billions if these are unprotected.
We are also determined to ensure that the institutions that guard IPs are in place and functioning properly. We want to remove constraints that would lessen investments and would discourage research and development (R&D) and innovation, like placing price controls on pharmaceutical products. DTI is a firm defender of consumer rights, but we must also balance the interests and welfare of all stakeholders
Our success in doing so will lead to greater innovation among businesses and MSMEs, which would generate more inclusive growth and shared prosperity for all. By working together, we can fully realize President Duterte’s promise of Tapang at Malasakit of a government responsive to the needs of its people even as it empowering them to create a better life for themselves.
Thank you at mabuhay tayong lahat!