Intellectual Property Rights (IPRs) Wim Smit, HAN Smart Business Center, February 2008, Version 3.

Intellectual Property Rights (IPR’s)

Wim Smit, HAN Smart Business Center, February 2008, Version 3.

Contents (1)

Globalization and IPR’sIPR definitionThe role of managersDifferent types of IPRHistory of IPRControversiesWhat IPR’s do

Contents (2)

Forward thinking companiesValuation of Intellectual PropertyExpansion in nature and scope of IP lawsUseful websites and databases Strategic IssuesAcademic coursesConclusions and References

Globalization and IPR’sNext to the centers of creativity and business in the known triade of the USA, Europe and Japan, many new centers are formed with a very high pace in the so-called BRIC coun-tries, causing for companies which are in a globalization drive huge changes in business habits and the legal environment, including IPR’s.

IPR definition

Intellectual property (IP) is an umbrella term for various legal entitlements which attach to certain names, written and recorded media, and inventions. The holders of these legal entitlements may exercise various exclusive rights in relation to the subject matter of the IP.

What is Intellectual Property?Intellectual Property confers a bundle of exclusive rights in relation to the particular form or manner in which ideas or information are expressed or manifested, and not in relation to the ideas or concepts themselves. The term "intellectual property" denotes the specific legal rights which authors, inventors and other IP holders may hold and exercise, and not the intellectual work itself.

Why is IP important for managers?

It often is an intangible asset of high value giving the company for a number of years an exclusieve right to manufacture and sell products and services in specific designated areas in the world.Many businesses only survive and grow by the presence of a strong IP position

What managers should do with IP?

Stay aware of all new inventions and innovations emerging in and outside the operations of the company.Stay in big companies in close contact with the internal patent and branding department.Stay in SME’s in close contact with one or more external patent and branding consulting companies which have a proven expertise in the field of operation of the company.

Different types of IPR

CopyrightPatentTrademarkIndustrial design rightTrade secret

CopyrightCopyright may subsist in creative and artistic works (e.g. books, movies, music, paintings, photographs, and software) and give a copyright holder the exclusive right to control reproduction or adaptation of such works for a certain period of time (historically a period of between 10 and 30 years depending on jurisdiction, more recently the life of the author plus several decades).

PatentA patent may be granted for a new, useful, and non-obvious invention, and gives the patent holder a right to prevent others from practicing the invention without a license from the inventor for a certain period of time (typically 20 years from the filing date of a patent application).

Trademark

A trademark is a distinctive sign which is used to distinguish the products or services of different businesses.

Industrial design right

An industrial design right protects the form of appearance, style or design of an industrial object (e.g. spare parts, furniture, or textiles).

Trade secret

A trade secret (which is sometimes either equated with, or a subset of, “confidential information") is secret, non-public information concerning the commercial practices or proprietary knowledge of a business, public disclosure of which may sometimes be illegal.

IP Summary

Patents, trademarks, and design rights are sometimes collectively known as industrial property, as they are typically created and used for industrial or commercial pur-poses.

History of IPR (1)

In Europe A. Nixon mentioned “propriété intellectuelle” in his Droits civil des auteurs, artistes et inventeurs, published in 1846. In the USA the term “intellectual property” appeared in 1845 in a Massachusetts Circuit Court ruling in the patent case of Davoll et al. versus Brown.

History of IPR (2)

Section 1 of the French law of 1791 stated: “All new discoveries are the property of the author, etc.”The World Intellectual Property Organization (WIPO) actively promotes the term since 1967.

Controversies

Some critics of IP characterize it as intellectual protectionism or intellectual monopoly, and argue that the public interest is harmed by protectionist legislation such as copyright extension, software patents and business method patents.The most fundamental critique against the idea of IP has been formulated by Eben Moglen in his dotCommunist Manifesto.

What IPR’s do

IPR’s can and do provide protection in the form of a barrier to entry. Obtaining IPR protection makes it harder for competitors to encroach upon your business.

Forward thinking companies

These companies are constantly innovating, seeking new markets and further protecting themselves with whatever IPR’s are available. By constantly expanding their own IPR portfolio they can continue to maintain a barrier to entry (see e.g. Eugene R. Quinn, Jr).

Valuation of Intellectual Property

Little argument over intellectual property (IP) would occur if it did not have a value for the owner. The principle of valuing IP is to determine the future income associated with its ownership (see Smith & Parr). Note that the value of IP is generally independent of its cost.

Transfer of IP Rights

Like other forms of property, IP (or rather the exclusive rights which subsist in the IP) can be transferred, licensed (or rented), or mortgaged to third parties.In some jurisdictions it may also be possible to use IP as security for an loan.

Licensing

Most exclusive rights are the right to sue an infringer, which has the effect that people will approach the rightsholder for permission to perform the acts to which the rightsholder has exclusive rights.The granting of this permission is termed licensing.

IP valuation methods

1. Cost based approach2. Market based approach3. Income based approach

Expansion in nature and scope of IP laws

In recent times there has been a general expansion in intellectual property laws. This can be seen in the extension of laws to new types of subject matter such as databases, in the regulation of new categories of activity in respect of subject matter already protected, in the increase of terms of protection, in the removal of restrictions and limitations on exclusive rights, and in an expansion of the definition of "author" to include corporations as the legitimate creators and owners of works.

Useful websites and databases

In the next sheets some websites are given which introduce the student further in the world of IP.In this course the sites are limited to sites in the USA, UK and Europe. Most sites are multilingual and cover patent and trademark databases worldwide.

European Patent Office (EPO)

Accessible via: http://ep.espacenet.com/This website is the official website of the EPO and has a worldwide database.The site offers quick and advanced search, number search and classification search.Searches can start via different entries.

U.S. Department of State site

Accessible via: http://usinfo.state.gov/This site is the official International Information Program of the USA.The site has an excellent introduction on ‘What is intellectual property’, that is prepared by Thomas G. Field Jr.

UK Intellectual Property Office (IPO)

Accessible via: http://www.ipo.gov.uk/Intellectual Property Office is the operating name of the UK Patent Office.A lot of information can be found on this site, and searches can be performed in a rather easy way.Via this site also a lot of information on former British controlled countries can be found.

University of Idaho, USA

Accessible via: http://www.lib.uidaho.edu/patentsClear site with an excellent guide to patent and trademark searching.Very useful and informative website for managers working in large companies and SME’s.

NOLO Company

Accessible via: http://www.nolo.com/Ralph Warner was co-founder of this firm.The NOLO Company wants to make America’s legal system accessible to everyone.It is basically a patent and law firm.

Other useful websites

Wikipedia under the term Intellectual property. A nice overview of the field and a relevant refence list and bibliography are given.Via: http://www.iusmentis.com/patents/ a clear website is reached with some short crash courses on IP, Patents, copyrights, trademarks and database rights.

Exercises

In the next sheets two exercises will be given on how to search and use the European Patent Organization (EPO) database.These exercises will only give a general idea of the wealth of these database. In case a profound and thorough search is needed it is recommended to consult a patent attorney or patent lawyer.

EPO Statistics (1)

Since its foundation 823,500 European patents were granted, equivalent to approx. 6.9 million national patents.Total patent applications filed in 2006: approx. 208,500. From the EU countries came 48% of the filings; USA 26%, Japan 16% and 10% from other countries.

EPO Statistics (2)

In 2006 abt. 56% of the procedures led to a patent. Granted were in that year approx. 63,000 patents.The top three filers with EPO in 2006 were: Philips (4425 applications), Samsung (2355) and Siemens (2319).

Exercise 1: Quick search on name

Go to website: http://ep.espacenet.com/Chose Quick Search.Select database: worldwide.Select type of search: persons.Select term: Middelman.Click on Search, to obtain the result list, showing the name of the patent.

Exercise 2: Quick search on topic

Go to website: http://ep.espacenet.com/Chose Quick Search.Select database: worldwide.Select type of search: persons.Select term: crossply laminate.Click on Search, to obtain the result list, showing the name of the patent.

Strategic Issues (1)Most business opportunities in the next decades will emerge in the USA, Europe, Japan, and the so-called BRIC countries.For EU based companies IPR protection should be created via the European Patent Office (EPO) and the various national patent offices, which also can be used to create the same protection in the USA and Japan.

Strategic Issues (2)

China and India both show an increasing awareness on IPR issues, and for EU companies it makes sense to develop as quickly as possible IPR protection in both countriesChina is growing into the manufacturing house of the world and India is growing into a global software house.

Strategic Issues (3)

Next to China and India IPR protection should be sought in Brasil and Russia, because it is to be expected that the so-called BRIC countries will become more dominant as global business players in the decades ahead.

Academic coursesThe study of intellectual property has grown in to a distinct academic discipline, most notably in law schools from higher education institutions in developed countries. Postgraduate courses (often referred to as an LLM or Master of Laws) are available for those looking to further their academic exposure and gain internationally recognised qualifications for intellectual property.

Conclusions

In a knowledge driven society IP is becoming more and more of high and strategic value, but often unseen in the P/L and balance sheets of the industrial enterprises.IPR’s are becoming one of the dominant factors for enterprises in an increasing globalized world, and will determine largely the survival power.

References (1)Connell, Shaun (October 2007). Intellectual Ownership. Retrieved on 2007-12-13, via Wikipedia. Templeton, Brad (October 2004). 10 Big Myths about copyright explained. Retrieved on 2007-09-08, via Wikipedia. Smith & Parr, Valuation of Intellectual Property and Intangible Assets, 3rd Edition, Wiley, 2000.

References (2)

Eugene R. Quinn, Jr., Introduction to United States Patent Law, download via Wikipedia. Eugene R. Quinn, Jr., Debunking the Intellectual Property Monopoly Myth, download via Wikipedia.Eben, Moglen, The dotCommunist Manifesto, 2003

References (3)

Arthur R. Miller & Michael H. Davis, Intellectual Property: Patents, Trademarks, and Copyright, 3rd edition, New York: West/Wadsworth, 2000.