SCHOOL OF SCIENCE & ENGINEERING

BACHELOR OF SCIENCE (BIOTECHNOLOGY) HONS

SEMESTER 5 / MEI 2017

INDIVIDUAL ASSINGMENT 2

Of

THE ROLE PLAYED BY INTELLECTUAL PROPERTY RIGHTS IN THE

ECONOMIC AND TECHNOLOGY DEVELOPMENT OF A COUNTRY

NAME : Mohammed Ridzuwan Bin Abdul Rahaman

MATRIC NUMBER : 1107151018

SUBJECT : IPR, Bioethics, Biosafety

SUBJECT CODE : SBB 3194

LECTURERS NAME : Prof. Dr Arokiaraj A/L Pappusamy & Mr. P. Kandiah

SUBMISSION DATE : 02 August 2017

 TABLE OF CONTENT

Contents Page

INTRODUCTION 1

CONTENT:
IPR IN ECONOMIC & TECHNOLOGY DEVELOPMENT 3

CONCLUSION 5

REFERENCES 6
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INTRODUCTION

In the present climate of increasing globalisation, biotech companies must seek to

acquire strong protection for their products and technologies in all the areas of the world
where they wish to operate. It has been projected that the sales worldwide from new
biotechnology alone could exceed 60 billion per annum by early this century. This will be
derived from a wide range of biotechnology-based products and processes, which have
evolved in most cases from many years of expensive research and development (European
Federation of Biotechnology, 1996). How can such biotechnology products and processes?
Often referred to as intellectual property (IP), be protected and the due financial profits
returned to the rightful inventors and industrial developers? Inventors in the area of
biotechnology can be protected by way of different titles of protection including patents for
invention, plant breeders rights and trade secrets. Intellectual property rights are designed to
allow new technologies to be available, so that the originating scientist or company receives a
reward for the initiative demonstrated. Intellectual property assets can be any codified
knowledge, innovation or anything of actual or potential economic value that has arisen from
basic research, analysis and manipulation of biological systems, biological property,
industrial application or commercial use (Smith, 2009). It is important to differentiate
between invention and innovation. Because an invention may not always involve the
commercialisation of a new idea, it follows that not all inventions result in innovation.
Innovation should be seen as an interactive process of effectively creating, managing and
leveraging an invention and successfully taking a new product through to the marketplace.
In the context of biotechnology, inventions can be in the form of products or processes.
Products: these can be considered either as living entities of natural or artificial origin, e.g.
animals, plants and microorganisms, cell lines, organelles, plasmids and DNA sequences, or
as naturally occurring substances primary or secondary derived from living systems
(Kahn, 2006). Processes: these can include those of isolation, cultivation, multiplication,
purification and bioconversion. Such processes can be involved in the isolation or the
creation of the above products, e.g. antibiotic production; for the production of substances
through bioconversion of products, e.g. enzymatic conversion of sugar to alcohol; or the use
of the products for any purpose, e.g. monoclonal antibodies used for analysis or diagnosis;
and of microbes for biocontrol of pathogens (Smith, 2007).
As far as Malaysian IP system is concerned, there are two main regimes which are
currently in force: patent law and plant variety protection law. Patent law in Malaysia refers
to the Patents Act 1983, supplemented by the Patents Regulations 1986, while plant variety
protection law in Malaysia is governed by the Protection of New Plant Varieties Act 2004
(PNPVA), supplemented by the Protection of New Plant Varieties Regulations 2008 (Suzi,
2011). The Malaysian biotechnology industry is dominated by small-to-medium sized
companies with a handful of larger players, such as those running plantations, which have
developed strong research and development (R&D) arms within their corporations. As far as
research activities are concerned, biotechnology research in Malaysia is mainly undertaken
by public sector institutions such as MARDI (The Malaysian Agricultural Research and
Development Institute), FRIM (The Forest Research Institute Malaysia), MPOB (The
Malaysian Palm Oil Board), MRB (The Malaysian Rubber Board) and MCB (The Malaysian
Cocoa Board). The private sectors involvement in agricultural biotechnology is primarily
focused inter alia on plant tissue and cell culture. This ranges from the production of
ornamental plants such as orchids and pitcher plants, herbal plants which have medicinal
uses, to mass-propagated top-of-the line plants (Sumah, 2011).

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Figure 1.1: Shows Flowchart of Patent Registration Procedure in Malaysia

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IPR IN ECONOMIC & TECHNOLOGY DEVELOPMENT

IPR is very important for biotechnology field in economical achievement, especially in

developing nations, are patents for biotechnological inventions and plant breeders rights. It
could be argued that patents generate strong and unwarranted protection in the biotechnology
industry, because such inventions may not embody a truly inventive step. However,
representatives of biotechnology firms claim that patents are required to encourage
investment in these risky technologies. There are significant concerns that providing
exclusive rights in seed varieties without significant limitations for farmers use and
competitive research could raise costs in agriculture and reduce biodiversity over time
(Maskus, 2000).
Patenting of a new effective drug allows the manufacturer to sell the drug at a good
profit for the duration of the patent without competition. Once the drug comes off patent it
can then be manufactured by others as a generic product and profit margins drop
dramatically. The clinical potential of double-stranded RNA molecules, which exist naturally
in the cells of many species, is sure to introduce a new complexity into patent laws! Recent
reports have shown that US academic institutions are better integrated with the commercial
sphere and more effectively bring ideas from the laboratory to the real world (European
Federation of Biotechnology, 1996). Europes main institutions are not achieving similar
commercialisation of their undoubted high level of skills, and a major part of Europes poor
performance can be attributed to the EUs disparate patent laws and costs. When small
centres attempt to patent their IP the cost of patenting an idea in the US is equivalent to 12
000, whereas in Europe it is 45 000 (Byrne, 1992). In many ways academia can be
considered as the real driver of innovation in biotechnology, while the industrial consortium
takes it through to the marketplace.
Realizing the issues and challenges in commercialization of biotechnological products,
the Malaysian Government has taken some pro-active strategies, inter alia, the establishment
of the National Biotechnology Directorate (NBD) in 1995 under the Ministry of Science,
Technology and the Environment. One of the NBD's goals is on commercializing
government-funded biotech research, other than strengthening research capability and
capacity in biotechnology, as well as facilitating the development of biotechnology-based
industry (Azmi & Ida Madieha, 2004). Other strategies which have been implemented by the
Malaysian government are by ways of grants aimed at translating research to
commercialization. The Intensification of Research in Priority Areas (IRPA) is one of the
biggest research funds, and the NBD also manages a research fund dedicated to
biotechnology. For example, under the Eighth Malaysia Plan, IRPA has an allocation of RM1
billion, RM310 millions of which is earmarked for the commercialization of biotech and
other projects through the Industrial Grant Scheme (IGS) and Commercialization of Research
and Development Fund (CRDF) (Tang, 2003).
All the five research institutes (RIs) and agencies in Malaysia have been
commercializing their research products via licensing. Therefore, licensing of patent rights is
the most popular and common commercialization pathway among the main research
institutions in Malaysia. After all, patent licensing is the most prudent method of generating
income from an invention that is via royalties. MPOB and MCB are in the forefront in terms
of patent licensing, as they even license their patents abroad. MARDI, MRB and FRIM have
yet to license their patent rights abroad (Suzi, 2011). Another method of commercialization
of MARDI research product is via assignment, which is by way of sale and transfer of
ownership of the patent by the assignor to the assignee. In fact, assignment is sometimes
preferable by MARDI researchers in commercializing their research products for the reason

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that such a permanent transfer of their patents to the assignee would release them from the
responsibility of monitoring the patented inventions in the event there is any patent
infringement (Innes, 2011).
As for MPOB, other than patent licensing, it also generates income from their research
inventions via lump sum sale payment or direct sale. The reason is to avoid the risk of
uncertain royalties with a licence; hence MPOB in certain research inventions prefers to
receive a once only lump sum payment, at the outset, receiving all the value of the patent on
one single occasion only. MCB is taking the same approach with MPOB in generating
income from their patented inventions. With regard to MRB, in order to boost
commercialization for its R&D products, MRB has gone to the extent of setting up certain
sub-companies to handle marketing strategies and matters related to commercialization of its
inventions. This is for the reason that its researchers are lacking in marketing skills and
strategies, hence experts in those areas would do a better job in promoting and
commercializing MRBs inventions (Vilasini & Umi Kalsom, 2007).
It is interesting to note that all the five RIs and bodies are unanimous in viewing that
the patent regime is the best method and most effective protection for their agricultural
biotechnological inventions, as compared to other alternative methods like trade secret or
contractual agreements. MPOB being the proponent of patent holds that patent is always
given priority to protect their R&D products. MRB and MCB concur on this view, with some
other additional reasoning, such as patent would enable the investors to recoup their
investment and make profits (Ministry of Agriculture [MOA], 2002). Ultimately, patent
would benefit the country to generate more income in the long run. On the other hand, most
of the research institutions and agencies are of the view that trade secret protection is too
complicated, risky and unreliable to protect their research products, whereas contractual
agreements are not favourable for the reason that such agreements are limited and only
enforceable between the contracting parties (Ministry of Natural Resources and Environment
[MNRE], 2012).
Intellectual property rights could play a significant role in encouraging innovation,
product development, and technical change. Developing countries tend to have IPR systems
that favour information diffusion through low-cost imitation of foreign technologies. This
policy stance suggests that prospects for domestic invention and innovation are insufficiently
developed to warrant protection. However, inadequate IPR could stifle technical change even
at low levels of economic development. This is because much invention and product
innovation are aimed at local markets and could benefit from domestic protection of patents,
utility models, and trade secrets. In the vast majority of cases, invention involves minor
adaptations of existing technologies and products. The cumulative impacts of these small
inventions can be critical for growth in knowledge and productive activity. To become
competitive, enterprises in developing countries typically must adopt new management and
organizational systems and techniques for quality control, which can markedly raise
productivity. Such investments are costly but tend to have high social returns because they
are crucial for raising productivity toward global norms (Evenson and Westphal, 1995).
An example of this process is that protection for utility models has been shown to
improve productivity in countries with lagging technologies. In Brazil, utility models helped
domestic producers gain a significant share of the farm-machinery market by encouraging
adaptation of foreign technologies to local conditions (Dahab, 1986). Utility models in the
Philippines encouraged successful adaptive invention of rice threshers (Mikkelsen, 1984).

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CONCLUSION

Economic theory demonstrates that IPRS could play either a positive or negative role in
fostering growth and development. The limited evidence available suggests that the
relationship is positive but dependent on other factors that help promote benefits from
intellectual property protection. In brief, IPRS could be effective and market-based
mechanisms for overcoming problems that exist in markets for information creation and
dissemination. However, their existence could pose problems in terms of their potential for
costs and anticompetitive abuse.
Accordingly, modern IPRS systems are not sufficient by themselves to encourage
effective technology transition. Instead, they must form part of a coherent and broad set of
complementary policies that maximize the potential for IPRS to raise dynamic competition.
Such policies include strengthening human capital and skill acquisition, promoting flexibility
in enterprise organization, ensuring a strong degree of competition on domestic markets, and
developing a transparent, non-discriminatory, and effective competition regime.

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REFERENCES

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