Intellectual Property Policies for Innovation in Kazakhstan

1. BOOSTING KAZAKHSTAN'S
NATIONAL INTELLECTUAL
PROPERTY SYSTEM FOR
INNOVATION
Science and Technology Policy Division
OECD Directorate for Science, Technology and Innovation
National Intellectual Property Systems,
Innovation and Economic Development

2. Project background
Kazakhstan’s socio-economic conditions and
innovation potential
Organisation of Kazakhstan’s intellectual
property (IP) system
Different IP user groups in Kazakhstan
Creating the conditions for IP markets
Policy recommendations
Overview
1
2
3
4
5
6
2

3. Project background
Kazakhstan’s socio-economic conditions and
innovation potential
Organisation of Kazakhstan’s intellectual
property (IP) system
Different IP user groups in Kazakhstan
Creating the conditions for IP markets
Policy recommendations
1
2
3
4
5
6
Overview
3

4. Intellectual property rights serve innovation
in multiple ways
IP
Rights
Shape incentives to invent, to transfer knowledge and
to implement new technologies
Facilitate access to knowledge and inventions
Resolve information asymmetries
Facilitate international trade
Enhance access to finance for innovation
4
Project background1

5. ... hence IP policies can have an impact on socio-
economic development
IP policies are complementary
to other innovation policies
5
Project background1

6. Context and objective of the project
Context
• Decisive role of innovation in
developing and emerging
countries
• Importance of IP rights and
related policies for innovation
• Need to incorporate the
development dimension into
discussions of IP
Objective
• Support countries in
strengthening the
contributions of their
national IP systems to
innovation
–Identify strengths and
weaknesses in IP systems
–Provide policy
recommendations
For more information, go to project website!
6
Project background1

7. The project has two main phases:
development of framework and implementation
Conceptual
framework Implementation
Map actors, conditions, policies
and relations of IP systems:
1. Organisation of IP systems
and policy design
2. Universe of active and
potential IP users:
• SMEs
• large companies
• research
institutes/universities,
• traditional sectors
3. IP markets and diffusion
4. IP policies for innovation
A B
IP reviews based on conceptual
framework:
• Colombia (2014)
• Indonesia (2014)
• Malaysia (2015)
• Kazakhstan (2016)
7
Project background1

8. • Stakeholder interviews with 22
institutions in Kazakhstan
• Collection and analysis of country
information (evidence & statistics)
• Feedback and consultation with
Kazakh stakeholders
Current report evaluates Kazakhstan IP system …
8
Implementation
Project background1

9. … and defines 4 key priorities and 22 detailed
recommendations
For overall assessment and full list of policy
recommendations, see Chapter 1 of the report.!
9
Facilitate SMEs’ and traditional sectors’ use of trademarks,
industrial designs and utility models – in addition to patents – in
support of developing an innovative private sector and fostering their access
to relevant IP (including from abroad).
Adapt IP policies currently targeted to universities and public research
institutions (PRIs) to enhance their contributions to private sector
development.
Improve intra-governmental co-ordination in IP policy design and
implementation.
4 priorities:
1
2
3
Project background1
Adopt a sectoral focus in IP policies, to strengthen their effects on
innovation (i.e. start by fostering IP use and strengthening IP
commercialisation expertise in specific priority sectors, such as the
agricultural and textile sectors).
4

10. Kazakhstan’s IP review also contributes to other
projects
10
OECD Reviews of
Innovation Policy
• Comprehensive assessment of the
innovation system of different
countries
• The Review of Innovation Policy of
Kazakhstan is to be released soon
• See project’s website
OECD Innovation for
Inclusive Growth project
• This project analyses the impact
of innovation and related
policies on inclusive growth.
• See project’s website
Project background1

11. Project background
Kazakhstan’s socio-economic conditions
and innovation potential
Organisation of Kazakhstan’s intellectual
property (IP) system
Different IP user groups in Kazakhstan
Creating the conditions for IP markets
Policy recommendations
1
2
3
4
5
6
Overview
11

12. Kazakhstan has experienced substantial economic
progress since its independence
For full analysis of the socio-
economic conditions and innovation
potential, see Chapter 2 of the
report
!
Transition to a
market system
1991
Upper-middle-
income country
Today
Heavy reliance on extractive
industries, with diversification
efforts
• Services (55% GDP, 2014)
• Oil and gas industry (25% of
GDP, 1% of employment)
• Mining and metallurgy
industries (9% of GDP, 5% of
employment)
• Agriculture (4.5% of GDP, 26%
of employment)
12
Goal to become
among the top 30
global economies by
2050
Kazakhstan’s socio-economic conditions and innovation potential2
Figure 1. GDP growth in Kazakhstan, 1991-
2014 (annual %)

13. But Kazakhstan’s innovation performance is still weak
13
Kazakhstan’s socio-economic conditions and innovation potential2
• State-owned companies (SOEs) dominate most industries: they
import ready-to-use equipment and technologies from abroad
• Small and medium-sized enterprises (SMEs) have a low
contribution to the national economy (26.2% of GDP and 33% of
employment in 2014) and engage little in innovation.
• Inward foreign direct investment (FDI) is concentrated mainly in
the extractive industries  lack of investment in R&D-related facilities.
• Innovation capacities are concentrated in universities and public
research institutes (PRIs): they account for over 50% of the
country’s R&D expenditure.
• Low relevance of university research to industry.

14. 14
Innovation is now viewed as key for development…yet
challenges persist
Obstacles to innovation
• Gross expenditure in R&D (GERD)
remains very low
• Scarcity of skilled human capital
• Lack of science-industry linkages
• Low relevance of university
research to industry
• Lack of finance for innovators
• Bureaucratic barriers to doing
business
Figure 2. Gross expenditure on R&D in
Kazakhstan and selected countries
(% of GDP)
Source: World Bank, 2016. World Development Indicators
• Increased policy support for innovation with the objective to build a
diversified, knowledge-based economy (“2050 Strategy”)
• ICT infrastructure has improved over the past decade
Context for innovation

15. Project background
Kazakhstan’s socio-economic conditions and
innovation potential
Organisation of Kazakhstan’s
intellectual property (IP) system
Different IP user groups in Kazakhstan
Creating the conditions for IP markets
Policy recommendations
1
2
3
4
5
6
Overview
15

16. • IP legal framework and
institutions have improved over the
past years.
• International conventions and
regional and bilateral treaties for
IP protection have been signed
(incl. Patent Cooperation Treaty and
the Eurasian Patent Convention).
• Satisfying IP processing
performance (according to interview
feedbacks).
Kazakhstan has good formal conditions for a well-
functioning IP system
Kazakhstan IP system
For full analysis of the organisation of Kazakhstan’s IP system,
see Chapter 3 of the report! 16
Organisation of Kazakhstan’s IP system3
Table 1. Procedures for obtaining invention
patent rights in Kazakhstan
As member of WTO since 2015, Kazakhstan has adopted the
Agreement on Trade-Related Intellectual Property Rights (TRIPS)
Procedure
type
National
procedure
Eurasian
procedure
PCT procedure
Governing
laws
National Patent
Law
Eurasian Patent
Convention
PCT national phase
or the regional
(Eurasian) phase’s
corresponding
regulations
Substantive
examination
Yes Yes Yes
Conversions To utility model
To national
application
Language
Kazakh and
Russian
Russian Kazakh and Russian

17. Court system,
police and customs
But the governance of the national IP system is complex
17
Committee of
Science Technology
Commercialization
Centre LLP (TCC)
Ministry of Education and Science
Department of International
Economic Integration
Ministry of the National Economy
State Inspection for Pedigree Breeds and the
State Commission for Crop Variety Testing
Ministry of Agriculture
Granting of IP and
enforcement
IP for
innovation
Foreign Investors’ Council
IP for FDI
and trade
IP users
Organisation of Kazakhstan’s IP system3
Department for
Intellectual
Property Rights
National Institute
of Intellectual
Property (NIIP)
Ministry of Justice
National Agency for
Technological Development
(NATD)
Ministry of Investment and Development
Small and medium sized
enterprises (SMEs)
State-owned
enterprises (SOEs)
Foreign
firms
Traditional
sectors
Universities, PRIs &
individual inventors

18. Improving intra-governmental co-ordination in IP policy
design and implementation is key
18
Organisation of Kazakhstan’s IP system3
Aspect Challenges faced by Kazakhstan’s IP system
Institutional
• Co-ordinating inter-ministry efforts to address IP issues that affect national
innovation performance
Policy related
• Proposing and revising IP-related laws and regulations to further promote
innovation
• Optimising and linking IP-related policies on public research funded by
different ministries
• Promoting the use of IP in targeted agriculture and industrial sectors
Operational
• Building/upgrading intellectual property infrastructure, including a free,
open and user-friendly information portal of intellectual property, an e-
platform of IP market
• Raising general IP awareness
• Exploring the provision of IP valuation services in the country

19. Project background
Kazakhstan’s socio-economic conditions and
innovation potential
Organisation of Kazakhstan’s intellectual
property (IP) system
Different IP user groups in Kazakhstan
Creating the conditions for IP markets
Policy recommendations
1
2
3
4
5
6
Overview
19

20. Kazakh residents use IP little by international standards
Figure 3. Resident patent applications and gross domestic expenditure on R&D (GERD), five-year
average, 2009-2013
20
Different IP user groups in Kazakhstan4
For full analysis of the characteristics and statistics of IP use, see
Chapter 4 of the report
!
Notes: 1. A resident application is an application filed with an
IP office by an applicant residing in the country/region in
which that office has jurisdiction. 2. A ranking of “a resident
patent applications-per-GERD” out of 55 offices for which data
are available is displayed in parentheses.
Sources: OECD calculations based on WIPO (2015), WIPO
Statistics (database), www.wipo.int/ipstats/
en#data; OECD (2015), Main Science and Technology
Indicators (database), http://stats.oecd.org/Index
.aspx?QueryId=33210; UNESCO (2015), UIS.Stat (database),
http://stats.uis.unesco.org; NIIP (2013),
Annual Report 2013, http://kazpatent.kz/2013_annual_report
for 2012 resident patent applications data.

21. 21
… and there are limited signs of increasing IP use
over the past decade
Resident patent & trademark
applications have remained stable IP imports have increased
Different IP user groups in Kazakhstan4
Figure 3. Evolution of resident patent
applications in Kazakhstan and selected
countries (2004 = 100)
Figure 4. Evolution of royalties and
licensing fee payments in Kazakhstan and
selected countries (2005 = 100)
Source: WIPO, 2015 Source: World Bank, 2015
0
100
200
300
400
500
600
700
800
2005 2006 2007 2008 2009 2010 2011 2012 2013
Belarus Kazakhstan Kyrgyzstan
Russia Hungary Malaysia
Poland Thailand Ukraine
0
100
200
300
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Belarus Kazakhstan Russia Malaysia
Poland Thailand Ukraine Hungary

22. The use of utility models and industrial designs is low
22
• Resident patent applications per million population have been at
around 100 per year for 2004-14 (Russia is 167 in 2014).
• Patent filings in foreign offices by Kazakh residents have been almost
negligible.
• Trademark applications by Kazakh residents have remained relatively
stable since 2000 (nearly 150 per million population in 2014).
• Utility models and industrial designs are not used much.
• 37 geographical indications (GI) registered (as of Dec. 2015): most of
them correspond to foreign products (only 5 correspond to Kazakh
products)
Different IP user groups in Kazakhstan4

23. • Universities and public research
institutes
 Accounted for 54% of granted
patents in 2015
 Concentrated among a few
institutions
• SMEs
• Traditional and informal sectors
• State-owned enterprises (SOEs)
23
Not all user groups are equally active
Most active users Least active users+ -
Different IP user groups in Kazakhstan4
Rank Name of institution Number of patents
1 Satpaev Kazakh National Technical University 69
2 Al-Farabi Kazakh National University 33
3 Gumilyov Eurasian National University 31
4 Bekturov Institute for Chemical Sciences 31
5 Asfendiyarov Kazakh National Medical University 13
Figure 5. Top 5 Kazakh institutions by number of patents granted by the national
patent office, 2014
Source: Information provided to the OECD by the National Center for Scientific and
Technological Information (NCSTI).

24. Recent initiatives aimed at increasing IP users and
fostering innovation (1/2)
24
Law on Commercialization of Scientific Activities (2015)
Main objectives of the law:
• Increase transparency among participants in processes of commercialisation
• Guarantee the rights of researchers involved in invention processes
• Provide economic incentives for the commercialisation of scientific activities in
the priority sectors of the economy
• Increase the integration of education, science, industry and institutions engaged
in innovative development
To ensure its successful implementation, it will be critical to provide:
 Technical support to facilitate implementation in universities and PRIs
 Guidelines & model contracts covering options for IP commercialisation
 Guidelines for assessing the value of IP
 Effective incentives for researchers to collaborate with industry
 More flexibility to researchers to engage in spin-offs
Different IP user groups in Kazakhstan4
For more detailed analysis, see Chapter 5 (section 5.1.2) of the report!

25. Recent initiatives aimed at increasing IP users and
fostering innovation (2/2)
25
More R&D investments, grants for commercialisation, IP registration
fee reductions and training courses
• The Samruk-Kazyna sovereign wealth fund – the manager of most SOEs – is
required by law to invest at least 10% of its net profit in R&D.
• 2012 amendments to mineral legislation require firms active in the subsoil
sector to invest at least 1% of total revenue in R&D activities in Kazakhstan
• 20% discount on IP registration fees for SMEs
• Increasing number of grants for technology commercialisation (7 grants
awarded in 2011, 10 in 2012, 19 in 2013, 29 in 2014)
• Free training courses on IP offered to entrepreneurs and SMEs by
different institutions
Different IP user groups in Kazakhstan4

26. Project background
Kazakhstan’s socio-economic conditions and
innovation potential
Organisation of Kazakhstan’s intellectual
property (IP) system
Different IP user groups in Kazakhstan
Creating the conditions for IP markets
Policy recommendations
1
2
3
4
5
6
Overview
26

27. Initiatives:
• Creation of technology transfer offices (TTOs) &
agencies to provide advice to potential IP buyers
• Provision of knowledge broker services by NCSTI
• Online technology platform by NCSTI showcasting
results of public research and patents registered in
Kazakhstan (but no longer updated)
• Creation of a catalogue of marketable
technologies in the country by the TCC
27
There have been early efforts to create infrastructure
and establish the legal and administrative conditions to
enable IP markets
Creating the conditions for IP markets5
For full analysis of conditions and challenges for creating IP
markets in Kazakhstan, see Chapter 6 of the report
!
To date
however
there have
been few
success
stories

28. • Low quality of research for commercialisation
• Low demand for technology by the business sector,
partly due to limited capacities to commercialize IP
• Excessive bureaucracy, restrictions and absence
of incentives for researchers to partner with industry
• Low managerial and entrepreneurial capacities of
universities
• High costs in finding sellers and buyers
• Lack of legal rules or guidelines on IP valuation
28
But there are still challenges to the creation of
dynamic IP markets in Kazakhstan

29. 29
Policy needs to initially focus on connecting potential
IP suppliers and buyers
Facilitate connection between
potential suppliers and buyers
Facilitate IP valuation
Objectives Examples of suggested measures
• Provide advice on valuation approach to follow
• Establish a system to record IP transactions
• Develop local skills base for IP valuation
• Use IP guidelines developed abroad and adjust
to national needs
Facilitate IP financing
1
2
In the long term
• Set up an adequate legal framework
• Focus on collateralisation or securitisation of
licensed patents or copyrights
• Provide government support for IP financing
(e.g. subsidize interests, provide guarantees)
• Create an online information platform on all
types of IP for license or sale (also connected to
international platforms)
• Provide specialised brokerage services
Once linkages are established
3

30. Project background
Kazakhstan’s socio-economic conditions and
innovation potential
Organisation of Kazakhstan’s intellectual
property (IP) system
Different IP user groups in Kazakhstan
Creating the conditions for IP markets
Policy recommendations
1
2
3
4
5
6
Overview
30

31. Improvement of IP governance and private sector
access to IP
31
Policy recommendations6
Priorities Recommendations*
IP policy
co-ordination
 Improve intra-governmental co-ordination of IP policy design
and implementation (r.2)
 Define IP policy responsibilities of institutions engaged in IP
system (r.3)
Private sector access
to IP (beyond
patents)
 Provide IP training and technical support to SMEs (r.14)
 Support the creation of trademarks for food products and
traditional handcrafts (r.16)
 Support policies focused on SMEs and traditional sectors (r. 13)
 Create a new prize for innovative SMEs actively using IP (r. 15)
 Foster the use of franchises in the food and textile sectors (r. 21)
 Promote sourcing of Kazakh technologies by state-owned
enterprises (r. 17)
For full list of policy recommendations,
see sections 1.2 and 1.3 of the report!
* The numbers following each recommendation stand for the number of the corresponding recommendation as listed in the report.

32. 32
Adapt IP policies currently targeted at universities
and PRIs to enhance their contribution to private
sector development
Priorities Recommendations*
Commercialisation
of public research
and private sector
development
 Develop guidelines and tools to facilitate commercialisation (r.9)
 Reform researchers’ rewards system to incentivise research
commercialisation (r.11)
 Introduce new performance measures for university funding (r.10)
 Empower a central agency to promote IP commercialisation (r.8)
 Support spin-off creation conditional on quality (r.12)
 Strengthen the quality of technology transfer office services (r.7)
 Promote sourcing of Kazakh technologies by state-owned
enterprises (r.17)
 Expand the technology screening activities of the National Agency
for Technological Development (r.18)
 Connect with global technology markets (r.19)
* The numbers following each recommendation stand for the number of the corresponding recommendation as listed in the report.

33. Sectoral approach to IP, more transparency in IP
processing and beyond
33
Policy recommendations6
* The numbers following each recommendation stand for the number of the corresponding recommendation as listed in the report.
Priorities Recommendations*
Sectoral approach
to IP policies
 Empower central agency to promote IP commercialisation,
building expertise in specific sectors (r.8)
 Foster the use of franchises in the food and textile sectors (r.21)
IP processing
 Provide free, open access to information on IP registered and
applied for in Kazakhstan (r. 4)
 Publish information on NIIP’s processing procedures and
pendency statistics (r.5)
 Improve the information system on IP transactions to facilitate
the future development of markets for technology (r.6)
Beyond IP policy
 Implementation of complementary innovation policies (r.1)
 Use the improvements in IP system to attract R&D related FDI
(r.20)

34. Executive summary
Chapter 1. Overall assessment and recommendations
- Overview of Kazakhstan’s IP system
- Identification of IP policy priorities for Kazakhstan
- Detailed recommendations for Kazakhstan
Chapter 2. Kazakhstan’s socio-economic conditions and innovation potential
- Kazakhstan´s socio-economic development, industry structure, trade patterns, FDI
- Conditions for innovation: human capital, access to finance and infrastructure
- Kazakhstan’s national innovation system
- Policy and governance of science, technology and innovation
Chapter 3. Organisation of Kazakhstan’s intellectual property system
- Overview of IP laws and regulations
- Governmental stakeholders and co-ordination mechanisms
- IP operations and procedures
- Challenges for Kazakhstan’s IP system
Publication content details (1/2)
34

35. Chapter 4. Intellectual property use in Kazakhstan: Statistics
- Statistics on patents, utility models, trademarks, industrial design, geographical
indications, copyright, royalties and licensing fees.
Chapter 5. Opportunities and challenges of Kazakhstan’s IP system for different
user groups
- Public research institutes and universities
- Traditional and informal sectors
- “Catching-up” businesses: SMEs and young companies
- Leading “frontier” businesses
Chapter 6. Developing IP markets in Kazakhstan
- Enabling commercialisation of public research
- Addressing IP valuation in the future
- IP financing: preconditions and steps to be undertaken
Publication content details (2/2)
35

36. Project website:
http://oe.cd/ip-studies
Innovation policy reviews:
http://www.oecd.org/sti/inno/oecdreviewsofinnovationpolicy.htm
Contact:
Caroline Paunov (caroline.paunov@oecd.org)
Further information
36