In Search of an Innovative Environment - the new Brazilian Innovation Law
Maria Beatriz Amorim Páscoa1, Director of Institutional Partnerships and Technological Information, INPI
On July 5, 2004, the House of Representatives of the Brazilian Congress approved an Innovation Law which is meant to provide incentives to increase innovative activities, as well as to facilitate scientific and technological research by private companies, especially by Small and Medium-sized Enterprises (SMEs).
In order to improve its innovative capacity, Brazil needs to create adequate conditions to encourage a greater number of firms to invest and become involved in technological developments. It is generally believed that the “locus”of innovative developments is the firm. In Brazil, however, the Ministry of Science and Technology estimates that 70% of R&D expenses are financed with public resources. In addition, 80% of Brazilian researchers carry out their activities within public institutions (universities or research centers), concentrating on the production of scientific papers. As a result, the country has managed to consolidate strong scientific capabilities and produce a considerable volume of scientific publications, which represent 1.5% of the worldwide total in scientific fields. This percentage is similar to the rate achieved by Korea. In contrast, technological performance measured by the number of patents suggests a different scenario. In 1980, the USPTO awarded 33 patents to Brazilian inventors. In 2000, this number rose to 113. However, Korea managed to increase the number of patents registered from 30 in 1980 to 3472 in 2000, an increase that places the country among the most important innovators.
The Innovation Law is expected to provide the legal framework needed to improve the country’s capacity to generate and commercialize technology. The Law deals with incentives to increase the establishment of cooperative links between public scientific and technological institutions (STI) and enterprises. It also regulates the use and the negotiation of IP generated from collaborative activities between STIs and firms.
Public STIs have long struggled to formalize activities involving collaboration with enterprises. The current legal framework regulating STIs compels them, among other things, to undertake a public bidding process for the licensing of technologies. According to the new Innovation Law, STIs will only be requested to publish a previous “request for licencees” for the purposes of transferring or licensing their technologies. With this new regulation, STIs are able to accelerate the process of licensing and selecting the best partners.
In addition, the Law allows STIs to negotiate the use of their laboratories with SMEs. This possibility will certainly facilitate higher degrees of R&D among small companies that otherwise would not have the conditions (equipment, tools, lab materials, etc.) to develop and implement innovative projects.
For the majority of Brazilian researchers who are affiliated with or employed by public institutions, the new innovation Law will serve as an incentive to establish partnerships aiming at developing new technologies. Researchers will have the possibility to work in other STIs for the time necessary to conclude joint-projects and will continue to receive their regular salaries. Researchers will also be able to request special leave without pay if they decide to become involved with a “start-up” company in order to further develop their new technologies. In both cases, benefits from the commercialization of intellectual property are expected to be shared among researchers, STIs, and private firms. This more flexible scenario will expand and deepen the experience and know-how already present in public STIs, stimulating the links between academic institutions and industry.
It is important to mention that the Innovation Law requires STIs to create “Offices of Technological Innovation” (Núcleos de Inovação Tecnológica) which, among other duties, will be responsible for the management of the technology generated by researchers, with special attention to decisions regarding intellectual property and licensing. This will certainly facilitate the introduction of professional practices in an area that is sometimes not highly regarded by resistant academic institutions with deeply ingrained R&D practices. In this sense, the interaction between STIs and partners from the private sector will be mediated by a unit whose “modus operandi” is more similar to private organizations.
Chapter IV of the Innovation Law also introduces important new incentives to promote innovative activities within enterprises. For example, by recognizing the role of the private sector in the development of new technologies, the law makes it possible for public funding agencies to transfer non-refundable resources to private companies, which is currently prohibited. It is worth noting that the allocation of public funds is contingent upon the firm investing a determined amount of its own resources in the research project.
In addition, there is a special requirement for funding agencies to promote specific programs to stimulate innovative projects in micro and small enterprises.
Finally, the law includes a chapter that specifically regulates the acquisition of intellectual property by STIs from independent inventors In this case, the Offices of Technological Innovation will negotiate a share of the benefits resulting from the commercialization of the invention.
There is a great expectation that the law will provide the impetus to increase the number of collaborative activities between the successful academic institutions and the potentially innovative Brazilian enterprises. At the same time, the Law will facilitate : 1 - the use of the already established competence of public STIs, and 2 – a growing involvement of the private sector in innovative projects. In other words, it recognizes the Brazilian reality of a strong and concentrated public R&D structure, while creating conditions to transform the scenario through a substantial increase in private sector participation.
In this context, intellectual property is a crucial instrument in the innovation process. The challenge is to increase the percentage of Brazilian patent applications in the Brazilian National Institute of Industrial Property from 30 percent to a figure that reflects the importance of technology and the competitiveness of Brazilian industry.
Such a transformation clearly depends on much more than legal frameworks and institutions. Significant changes will only occur in the context of strong political and economic policies. Nevertheless, the most important objectives of the Innovation Law are to bring about new practices, demonstrate strong political will, and recognize that science and technology are at the center of economic development and social transformation.
1 The views expressed in this article are those of the author and do not necessarily represent those of INPI or WIPO.