In the early era, the creations and inventions fell in a public domain, where anyone could copy these creations without any restriction, or payment. However, with the passage of time, the importance and value of these creations was realized. The commercial aspect then, started assuming a significant role in these creations. By the end of the twentieth century, the products created and invented by the human mind were recognised as INTELLECTUAL PROPERTY of the owner. These were also known as intangible properties.
Intellectual Property rights are like any other property rights – they allow the creator, or owner of a patent, trademark, or copyright to benefit from their own creation or work or investment. These rights are outlined in Article 27 of the Universal Declaration of Human Rights, which sets forth the right benefit from the protection of moral and material interests resulting from authorship and any scientific, literary, or artistic production.
The Intellectual Property Rights are essentially recognized and accepted all over the world due to some very important reasons. Some of the reasons for accepting these rights are:-
a) Providing an incentive to the individual for new creations,
b) Providing due recognition to the creators and inventors,
c) Ensuring material rewards for Intellectual property; and
d) Ensuring the availability of genuine and original products.
The Ministry of Science, Technology and Innovation (MOSTI) was given the responsibility to manage Research & Development (R&D) related funds amounting to RM 2.7billion for portfolios such as the Inno-Fund, Science-Fund and Technology fund in the 9th Malaysian Plan. R&D requires large amounts of financial commitments from industries. R&D consortium/alliance provides collaboration and cost sharing for R&D projects while the government provides incentives to encourage the formation of R&D alliance. R&D cooperation among industries, research institutions and academic institutions should be encouraged to ensure that the direction of R&D will meet the future needs of industries.
The commercialisation of intellectual property is a formidable challenge, even for developed countries. It is therefore no surprise that despite a huge amount of funding by the Government of Malaysia, the commercialisation rate is still low. The value of commercialized products as a result of R&D carried out is about 3.4% from the fund allocation. It is acknowledged that as anticipated, the percentage of the products commercialized is small and therefore there is a need to further drive the commercialization effort to generate more revenue from R&D.
Source: Patent Granted by Intellectual Property Corporation of Malaysia (MyIPO)
With the huge amount of money spent on R&D, Malaysia is still not competitive enough compared to neighbouring countries in filing and obtaining patents. Patents granted for local applicants are less that 5% compared to foreign applicants. Research findings show that there are two schools of thought among researchers. One group claims that as a researcher it is their social responsibility to publish their findings and the another feels that commercialisation is important for economic growth.
The New Innovation Model which was endorsed by the National Innovation Council, chaired by The Honourable former Prime Minister, Tun Abdullah Ahmad Badawi provides a guideline to support the innovation capacity and capability development in Malaysia. What is the role of MOSTI in this scenario? MOSTI, as the secretariat to the National Innovation Council also plays a major catalyst role in the National Innovation Coordination Implementation Committee to realize the strategies recommended by the New Innovation Model.
The New Innovation Model emphasises that technology development initiatives need to be innovatively driven by market needs or technology needs. Moving into a knowledge based economy, technology development becomes the core competency to create wealth and societal well-being. As such, technology can be developed organically or acquired if necessary.
In essence, we have to understand that in the globalization era, capacity and capability in innovation are very much needed as they will boost the contribution to the national economic growth. The capacity and capability to produce knowledge-based products and technology, which could be transformed into intellectual property rights, will amplify the organizational competency as well as the national competitiveness to participate effectively in the global business.
Due to this phenomenon, the international businesses nowadays are shifting their focus to give more emphasis in developing their capacity in developing innovation-based products in the form of intellectual property rights, which will then ensure more returns of investment (ROI) in comparison to traditional-based products. An independent research in the United States has demonstrated that nearly 80% of the value of a U.S. publicly-traded company now comes from intangible assets, to which the largest component (or subset) of intangibles is IPR. Further, data showed that small businesses generate 13-14 more patents per employee than large firms. Empirical data suggests that this 80% figure applies, if not more so, to smaller (and private) companies as well[1].
Intellectual Property Commercialisation Policy for Research & Development (R&D) Projects Funded by the Government of Malaysia
The Intellectual Property Commercialisation Policy for Research and Development (R&D) Projects funded by the Government of Malaysia was launched by The Honorable Datuk Dr. Maximus Johnity Ongkili, Minister of Science, Technology and Innovation on the 22 June 2009 at the Putrajaya International Convention Centre. The policy, which allows innovation to be transformed to commercial value, is very much needed to support Malaysia in building the competitiveness - particularly in the knowledge-based economy. The policy is very important to enable the resources of innovation to go through relevant processes and at the end, contribute efficiently to the national GDP.
The main objective of the Intellectual Property Commercialisation Policy is to establish a common framework to regulate the ownership and management of Intellectual Property from the creation, protection, innovation, exploitation and technology transfer activities and to promote and to facilitate the exploitation and commercialisation of intellectual property generated from projects funded by the Government of Malaysia.
The Intellectual Property Commercialisation Policy provides that for any Research and Development (R&D) Projects funded by the Government, the ownership of the intellectual property shall vest with the recipient of the grant. This policy also endorses the Ministry of Science, Technology and Innovation as the focal point of all Government owned intellectual property. It is also the intention of the policy to reward innovation and creative thinking through the sharing of revenues and other incomes generated from the commercial exploitation of the Intellectual Property. When the recipients derive any financial return from the commercial exploitation of the Intellectual Property, such net revenues shall be divided between the recipient (Institution) and the inventors. Upon deduction of reasonable expenses, the recipient shall distribute the disbursable according to the Wealth Sharing Guideline in clause 11 of the Policy.
| | Disbursable Amount | Inventors | Recipients |
| 1 | First RM 250,000.00 | 100% | 0% |
| 2 | Next RM 250,001.00 to RM 1,000,000.00 | 80% | 20% |
| 3 | Next RM 1,000,001.00 to RM 2,500,000.00 | 60% | 40% |
| 4 | Next RM 2,500,001.00 and 5,000,000.00 | 50% | 50% |
| 5. | RM 5,000,001.00 and above | 40% | 60% |
Source: Intellectual Property Commercialisation Policy for Research and Development (R&D) funded by the Government of Malaysia
In recognition of the creative idea generation and innovative research, the fund shall provide incentive schemes for inventors. Payment of such incentive shall be as follows:
a) Upon disclosure of invention : RM 500.00
b) Upon filing patent : RM 5,000.00
c) Upon granting of patent : RM 10,000.00
The new policy sets a new direction by Government in introducing the Government Rights (March in Rights), with respect to an invention in which a recipient has acquired title as a result of Government funding. However the Government shall have the right to require the owner of the Intellectual Property to grant royalty free, a non exclusive, sole or exclusive license to the third party if the Government determines that such action is necessary because the owner has not taken, or is not expected to take effective steps to achieve commercialisation of the subject invention in any field of use within a reasonable time and action is necessary to alleviate public health and national security.
Patent registration and Intellectual Property protection for SME
The Small and Medium Enterprises (SME) sector in Malaysia is a major component in the Malaysian economic landscape. SMEs form about 99.2% of the business establishment in Malaysia[2]. From the total SME establishment, 86.6% are in the services sector, 7.2% are in the manufacturing sector and 6.2% are in the agriculture sector. In terms of contribution to the Malaysian economy, the SMEs contribute 31.0% to the GDP, 52.0% of employment and 17.0% of total exports.
Due to the fact that SMEs comprise a big portion of the economic landscape, they must be made aware of knowledge-based economy games that IP generation, knowledge and protection has become more important than ever. Since the Intellectual Property Commercialisation Policy is also an integral part of industrial policy, the government shall endeavor to establish a sound intellectual property environment and infrastructure to enhance the intellectual property concept, generation and to cope with new technological development and economic interests. Since intellectual property is a valuable asset, its management is key to business success in the future.
Intellectual property protection may serve as one of many incentives for attracting technology transfer and for stimulating economic development. Considering technology transfer and technology commercialization as two important goals for intellectual property protection and economic development, providing comprehensive legal and regulatory infrastructure for intellectual property protection will also be beneficial to the SMEs.
During the past decade, laws and regulations for protecting intellectual property have been upgraded and streamlined to meet international standards. Some nations even adopted laws with higher standards. Because the value of intellectual property is significant, certain governments may intervene to resolve the intellectual property protection issue. Disputes over intellectual property rights are not simply between intellectual property owners and infringers but an important subject for trade negotiations. On the other hand, many nations have been actively fostering the environment to encourage the commercialisation of intellectual property with the goal to realize the value of intellectual property. Intellectual property, separated from product, has become an important object in global trade.
In responding to this issue, MOSTI is developing an initiative to assist the SMEs in creating and registering their intellectual property resulting from their indigenous products. The recent National Innovation Council meeting has endorsed the initiative to provide special funding to assist the SMEs in developing and registering their patents.
Business Matching
Numerous dynamic Malaysian companies and Universities will be brought together by MOSTI in its latest technology commercialisation business pitching events. Business Matching serves as a platform for businesses, universities and research institutes to transfer and trade technologies, products and services. It provides an ideal one-stop platform for technology-based companies to seek technology partners and funding, and for Venture Capitalists and Financial Institutions to source their technology deal flows. With the theme “Matching right ventures to realise true value of technology”, the participants range from technology-oriented companies who want to demonstrate advanced technologies or to seek collaboration with Venture Capitalists and other investors. These efforts would be able to identify promising high-tech companies and investment opportunities from Malaysia and abroad. It also includes entrepreneurs who are seeking market expansion to the region. For the Business Matching programme to materialise, MOSTI is working together with Malaysian Technology Development Corporation (MTDC), the Federation of Malaysia Manufacturers (FMM), Technology Park Malaysia (TPM), Malaysian Industry Government Group for High Technology (MIGHT), and SIRIM.
To date, MOSTI has organised 5 business matching workshops and more are in the pipeline. During the business matching organised by MOSTI and Technology Park Malaysia on the 21 May 2009, a total of 10 technologies were presented by the researchers to Industry. Out of these 10 technologies, there were 5 takers. During the Business Matching Session between MOSTI and MIGHT – Technomart 2009 which was launched on the 5 June 2009 by Y.B Tuan Haji Fadillah Yusof, the Honourable Deputy Minister of Science, Technology and Innovation, a total number of 25 researchers presented their findings. The participation was very encouraging and MOSTI managed to spot a couple of potential licensees. On the 10 to 14 November 2009 MOSTI will be hosting an International Business Matching session together with MTDC. This session will be divided into clusters. Since this is the first International Business Matching for MOSTI, neighbouring countries such as Singapore, Thailand, Indonesia, Vietnam and India will be invited to participate. This will foster good relationship among researchers, Venture Capitalist and create a platform for international collaboration.
National Capacity Building for Technology Transfer Office
MOSTI took an important step forward this year in its effort to assist the Universities and Research Institution’s Innovation and Commercialisation Centre to gain hands-on experience by introducing the National Capacity Building for Technology Transfer Office programme. The National Capacity Building for Technology Transfer Office is a joint programme between MOSTI, Brain Gain Malaysia, SMOT Business School India, MIGHT and Global Innovation Research Centre Sdn Bhd. This programme is structured through three phases - Basic, Intermediate and Advanced. The first phase was held on the 24 – 28 May 2009. A total of 30 participants from 19 Universities took part in this programme. The programme is important to close the gap between Intellectual Property Commercialisation activities and to address some of the challenges faced by Institutions of Higher Learning and Research Institutions. This programme provides a structured approach for the relevant parties involved in commercialisation activities to manage a Technology Licensing Office, to introduce processes and mechanisms based on the best practice and to optimize intellectual property commercialisation.
Yayasan Inovasi Malaysia
The New Innovation Model was designed to enable the development of innovation capability driven by market and technology needs. In this respect, creativity among all walks of Malaysian life is important to support the national technology development aspiration set by the government and to be able to transform those to one of economic growth engines. One of the initiatives to support the Malaysian Innovation Model realization, during the 3rd National Innovation Council meeting held on 10th November 2008, the Honourable former Prime Minister Tun Abdullah Ahmad Badawi, launched the Yayasan Inovasi Malaysia which will become the platform to spur grass root innovation. During the launch of Yayasan Inovasi Malaysia, the Government awarded RM 10 million as matching grants to the Yayasan. The Yayasan Inovasi Malaysia was set up to nurture and support scientific innovation at grassroots level particularly among the youths, women and non-governmental organisations.
Intellectual Property commercialisation is a difficult game, by any standards. Even large institutions and reputable universities worldwide struggle to achieve a commercialisation rate that can be considered satisfactory. In the case of Malaysia, a developing country, more has to be done by all parties to improve our track record. Government alone cannot shoulder the burden and other stakeholders – universities and industry, must work hand in hand with MOSTI to ensure measurable progress. By collaborating with MOSTI, both university and industry can benefit. The end game is one that positions Malaysia as a leading icon of Intellectual Property creation and commercialisation. MOSTI is ready to work with all interested parties to make this a reality.
