Intellectual Property Rights: some key issues

Prasada Reddy

Centre for Entrepreneurship

University of Oslo, Norway

What is intellectual property (IP)?

• IP as a term describes the ideas, inventions, artworks, music and literature that are basically intangible in creation.

• IP is the commercial application of imaginative thought to solving a technical or artistic challenge.

• IP is not the product itself, but the idea behind it, the way the idea is expressed, and distinctive way it is named and described.

What is IP 2

• IP contains the word ‘property’ denoting its value and its application only to inventions, works and names for which an individual or group of people claims ownership.

• Ownership is important as potential economic gains act as a powerful driving force to innovate.

Historical context of IP 1

• Ancient traders from China, Egypt and India used logos to distinguish their products from others.

• The Venetian Law of 1474 - first systemic way of protecting inventions by a form of patent.

• 16th Century Tudor England - the Statue of Monopolies in 1624 was the first written law providing for the grant of a monopoly for an invention for a limited period of time.

• France 1791, USA 1788.

Historical context of IP 2

• Invention of movable type printing press by Johannes Gutenberg around 1440, facilitated copying of books, which were previously copied by scribes.

• Restrictions imposed the Roman Catholic Church on printing of books by reformers.

• Monopolies of the press in England and France.• The Statue of Anne enacted by the British Parliament

reduced monopoly powers of the press and recognized the rights of authors and their heirs.

Early international treaties 1

• Flourishing economies of the European countries in the second half of 19th century created cross-border trade and investments.

• International Exhibition of Inventions in Vienna in 1873 - foreign exhibitors refused to attend for the fear of their ideas getting copied and commercialized in other countries.

• Paris Convention for the Protection of Industrial Property in 1883.

Early international treaties 2

• Mid-1800s - renowned authors works illegally reproduced for sale in other countries.

• Establishment of International Literary Association by Victor Hugo and others, which became International Literary and Artistic Association.

• Berne Convention for the Protection of Literary and Artistic works in 1886.

• Principle of international treaties is the ‘national treatment’.

Types of IP

• Industrial Property - Patents, Trademarks

• Literary and Artistic works - Literature, Paintings and Music.

Convention of WIPO in 1967

• Literary, artistic and scientific works• Performance of performing artists, phonograms,

and broadcasts• Inventions in all fields of human endeavor• Scientific discoveries• Industrial designs• Marks and commercial names and designations• Protection against unfair competition

Technology and Economy 1

• The law of diminishing returns

• Endogenous growth theories - technological change is included in the capital and labor stock.

• Exogenous growth theories - technological change increases output, but source unknown.

Technology and Economy 2

• Schumpeter - innovations and entrepreneurs lead the economic growth. Some degree of monopoly required to spur innovation and entrepreneurship.

• Robert Solow 1956: Between 1909 and 1949 growth in capital and labor accounted for only half of the growth in total GDP of the US. The rest Solow residual.

• Technology as exogenous factor and economic policy cannot influence it, but visa versa is possible.

Technology and Economy 3

• Paul Romer 1986 - accumulation of knowledge as the driving force behind economic growth.

• Technological progress in industry requires concerted, profit-oriented activity that yields two components: 1) specific technical features embodied in products that can be patented and produced, excluding rivals from the same activity; 2) the knowledge that those features were essentially for the public good.

• Encourage R&D and subsidize human capital.

Economic rationale for an IP system

• Provides motivation to innovators by granting them temporary monopoly rights.

• Disclosure of technical details would lead to wider diffusion of technology after the patent expiry.

• Leads to early disclosure of technical information that would facilitate further innovations.

• Reduces consumer search costs (e.g. trademarks)• Encourages producers to deliver qualitative and

high performance goods and services, increasing consumers welfare.

Basic functions of an IP system

• Facilitate IP CREATION (e.g. patent databases as sources of innovative ideas)

• Provide IP PROTECTION (e.g. protection from illegal reproduction and loss of profits)

• Support IP APPROPRIATION (e.g. higher profits with innovative products, establish good will and reputation in the market and provides value & tradability)

• Prevent IP ABUSES (e.g. unfair competition)

Firms-level IP strategies 1

• i) Technology-related – Facilitates alliances with other firms. Patent searches will enable firms to identify technology trends and alternative sources of technologies;

• ii) Finance-related – Provides access to venture capital and other capital resources;

• iii) Market-related – Provides a distinctiveness to its products (knowledge/technology) and also helps in assessing competition.

Firms-level IP strategies 2

• Pro-active strategies

• Preventive strategies

• Portfolio of IPRs (Apple iPod case)

Intellectual Property Rights

• Patents (Utility & Design)• Plant varieties• Semiconductor designs• Trade secrets• Trademarks (Service marks, Collective marks)• Geographical indicators• Copyrights & Related rights

Patents 1

• Patentability:

• Novelty

• Non-obviousness

• Industrial application

• Issues of Prior Art

• Issues of Research Exemptions

Patents 2

• Non-Patentable:• Innovation vs. Discovery• Surgical procedures• Mathematical formula (software??) • Business methods (exceptions digital

methods – single click method for Amazon)• Living beings (exceptions genetically

modified versions)

Trade Secrets

• Secrecy is a state of being concealed or maintained as a secret

• Known to only a few people and withheld from general knowledge (only two people know Coca-Cola syrup formula)

• Two conditions for protection: 1) it provides a competitive advantage, and 2) it is maintained as a secret by the firm.

• Non-disclosure agreements

Trademarks

• Distinctive word, name, symbol, slogan, shape, sound, smell or logo or movement that identifies the source of a product or service.

• Danger of trademark becoming a generic name (e.g. Jeep).

• Franchising of trademarks• Trademarks and Parallel Trade

Trademarks 2

• Brand values:• 1) Coco-Cola – USD 67 b.• 2) Microsoft – USD 57 b.• 3) IBM – USD 56 b.• 6) Nokia – USD 30 b.• 7) Toyota – USD 28 b.• 9) McDonalds – USD 27 b.• Interbrands Annual Ranking 2006

Copyrights & Related Rights

• Protection to authors, composers and artists relating to the FORM OF EXPRESSION rather than the SUBJECT MATTER.

• Related rights (e.g. screen play writers, actors, broadcasters, etc.)

New technologies and IP system

• Problems in applying old IP concepts to emerging technologies.

• Patenting of software

• Patenting of business methods

• Patenting of living organisms

• Trademark vs domain name

• Patenting of public knowledge

National IP systems and global business

• International Conventions - Paris, Berne, Madrid, Washington, etc.

• World Intellectual Property Organization (WIPO) as an arbitrator in some cases

• E-commerce• Patent Cooperation Treaty (PCT)• Trade-related Intellectual Property Rights

(TRIPS)

TRIPS Agreement

• Minimum standards

• Inclusion of new areas for patenting

• Restrictions on compulsory licensing

• TRIPS and access to medicines

• Parallel imports