Leveraging Intellectual Property (IP)
Assets for Business Success;
Introduction to Intellectual Property
(IP) Rights
Mozambique 21-22 August, 2006
Guriqbal Singh Jaiya
Structure of the
Presentation
1. Intellectual Property in Today’s Economy
2. What are Intellectual Property Rights?
3. IP Rights and Competitiveness
Intellectual Property in
Today’s Economy
• Since 1993, patent applications at
the European Patent Office have
increased by 8.3% a year.
• Companies such as IBM,
Motorola, Philips, Mitsubishi,
Canon, Hitachi, Eastman Kodak
file over 1000 patents a year.
Intellectual Property in
Today’s Economy
• IBM earns over US$ 1 billion a year from
patent licensing revenues
• US Patent License Royalties (in billions
US$:
$120
$100
$80
$60
$40
$20
$0
1980
2002
Intellectual Property in
Today’s Economy
• Over 80% of the market value of Microsoft
derives from its intangible assets, especially
its intellectual property
• The value of the Coca-Cola trademark
exceeds US$ 50 billion.
Dr. Horst Fischer, Corporate Vice
President, Siemens AG
“Any company wishing to prosper in the
next millennium will also have to
efficiently manage its IP portfolio”.
“For this reason it has become essential that
every manager in the enterprise - not just
those working in the corporate legal
department - appreciates and understands
not only what IP is, but how it can be
more effectively exploited."
Why have IP rights
become so important?
• Intangible assets as main source of competitive
advantage for firms
• Outsourcing of manufacturing by large enterprises
• Legislative changes (national, regional and
international)
• New types of patentable subject matter (e.g.
biotechnology, software, business methods)
• Universities and public research institutions also
beginning to focus on IP, especially patents
What are IP Rights?
• Industrial Property Rights
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Patents and Utility Models (or “short-term patents”)
Trademarks
Industrial Designs
Geographical Indications
Trade secrets
Topographies of integrated circuits
• Copyright and Related Rights
• New Varieties of Plants
• Non-original databases
IP Rights: Patents
• Definition: A patent is an exclusive legal right granted
for an invention that is:
– New (Novelty)
– Involves an inventive step (Non obvious)
– Capable of industrial application
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Duration: 20 years from filing date
Territorial right
Requires disclosure of the invention
Can be licensed to third parties
Utility Models (or short-term patent): up to 10 years
Patents
• Why do SMEs apply for patent protection?
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Market exclusivity
To recover R&D investments
Facilitates licensing
Advantageous negotiating tool
Financing opportunities (venture capitalists, etc)
Favorable image and credibility
Freedom to operate
Higher market value and publicity
International expansion
Case study on
patent protection
• Case study on the commercialization of a patented
product
– Croatian pharmaceutical company (Pliva)discovers new
antibiotic (azythromicin)
– Pliva applies for patent protection in Croatia and in
various potential export markets
– Large pharmaceutical multinational Pfizer searches
patent databases and discovers the Pliva patent
– Pliva licenses Pfizer to produce the antibiotic in the US
as well as in some other countries in Western Europe
while Pliva maintains the exclusive right to
commercialize the antibiotic in Eastern Europe
IP Rights: Trademarks
• Trademarks:
– A sign capable of distinguishing the goods (or services) produced
(or provided) by one enterprise from those of others
– Crucial to differentiate products from those of competitors
– Basic pillar of any marketing strategy
– Important for enhancing recognition and reputation of the
product and for creating a loyal clientele
• Trademark registration:
– Provides exclusive right to prevent others from making identical
or similar products under the same or a confusingly similar mark
– Duration: 10 years. Can be renewed indefinitely.
Case study on trademark
protection
• An Italian businessman buys unmarked t-shirts from
manufacturers of generic clothing, attaches his trademark
and begins to sell them to retail stores
• Started in a garage in the periphery of Rome
• Today the Pickwick trademark is perceived by Italian
teenagers as a synonym of style and quality
• Pickwick has exports its products across Europe
• Its trademark is its most valuable asset.
IP Rights: Geographical
Indications
• Geographical indications:
– sign used on goods that have a specific
geographical origin and possess qualities or a
reputation that are due to that place of origin
– most commonly, a geographical indication consists
of the name of the place of origin of the goods.
– Examples: champagne, roquefort, tequila, chianti.
• Tequila
Case Study on geographical
indications
– In 1977 Tequila was registered as a geographical
indication in Mexico
– Tequila registered through Lisbon agreement
and mutual recognition agreements with the EU
– Only Mexican producers from 5 specified
regions of the country (where the raw material
“agave” grows) are entitled to produce Tequila
– Over 190 million liters of Tequila are produced
annually, giving direct employment to over
36,000 Mexicans
IP Rights: Industrial Designs
• Industrial Designs
– Aesthetic features of a product
– Must be new, original and have an individual character
– Adds value to the product by making it more appealing to
consumers.
– Enables customization of products to specific markets or target
groups (e.g. women, children, etc.)
• Design protection
– Provides exclusive rights to prevent others from making, offering,
importing or selling any product in which the design is incorporated
– Duration: in the European Union up to 25 years (unregistered
design: 3 years).
Case Study on industrial
design protection
• Trax® is a system of public seating
manufactured by OMK Design Ltd.
• Originally designed for British Rail. Had to be
visually appealing, comfortable and weatherresistant.
• In 1990 it was installed in railway stations in UK
• 14 years later it is installed in over 60 airports.
• Industrial design protection in UK, France,
Germany, Italy, Benelux, Australia and the US
has guaranteed a degree of exclusivity keeping
imitators away.
IP Rights: Copyright
• Rights given to creators for their literary
and artistic works
• Protected works: books; newspapers; computer
programs; databases; films, musical compositions;
choreography; paintings; drawings; photographs;
sculpture; architecture; advertisements; maps and
technical drawings.
• Generally protected for 70 years after te death of
the author
• Does not require registration (however…)
Case Study on Copyright
Protection
• Uruguayan software developer Memory®: accounting
programs for SMEs
• Copyright belongs to company
• Each copy of the Memory Software includes a license
for use
• Registered its software in the different countries in
which it operates
• Technological protection measures
• Permanent innovation
• Franchising of Memory business model
IP and Competitiveness
What are the factors that determine
the success of a new product in the
marketplace ?
Factors determining the
success of a new product
• The product provides functional
advantages
• Price
• Attractive design
• Reputation of brand
• Available in the main retail shops
• Consistent product quality
• After-sales services
How should SMEs Respond?
• If functional improvements, attractive
designs and a well-positioned brand are
some of the features that may determine the
success of a new product, what can an SME
do to protect these and maintain its
exclusivity over their use in the marketplace
and deal with free riders?
Legal protection of IP
grants exclusive rights
• Innovation - improvement
of functional aspects or
fabrication process of the
product
Patents, Utility Models
• Design - the product’s
appearance
Industrial Designs
• Brand - commercialization /
marketing of the product
Trademarks
Intellectual Property Rights
• Innovative functional
features
Patents or utility
models
• Design / aesthetic
aspects
Industrial designs
• Brands
Trademarks
Example 1
• Patent for the fountain pen
that could store ink
• Utility Model for the grip and
pipette for injection of ink
• Industrial Design: smart
design with the grip in the
shape of an arrow
• Trademark: provided on the
product and the packaging to
distinguish it from other pens
Source: Japanese Patent Office
Example 2
• Invention of CD player
protected by patent
• Brand on CD player
protected by trademark
• Design of CD player
protected by industrial
design
• Music played on CD player
protected by copyright
SMEs and Global Economy
• In the new knowledge economy, intangible
assets, including innovative ideas, information
and know-how have become central business
assets.
• In the US, SMEs contribute 2.38 times more
innovations per employee than do larger firms
(Source: OECD)
• SMEs are proven innovators in the broad sense
SME Competitiveness
• In the new knowledge economy competitiveness is
increasingly based on firms ability to provide
high-value-added products and services at a
competitive price
• Globalization and trade liberalization has made it
crucial for SMEs to become internationally
competitive even when competing exclusively in
domestic markets
SME Competitiveness
• In order to be internationally competitive SMEs need
to constantly improve their efficiency, reduce
production costs and enhance the reputation of their
products by:
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Investing in research and development
Acquiring new technology
Improving management practices
Developing creative and appealing designs
Marketing their products and services
SME Competitiveness
• The above require SMEs to make significant
investments.
• Without intellectual property protection there is a
strong risk that investments in R&D, product
differentiation and marketing will be wasteful
• Intellectual property enables SMEs to have exclusivity
over the exploitation of their innovative products, their
creative designs and their brands, thus creating an
appropriate incentive for investing in improving their
international competitiveness
How can IP ‘add value’
to your business?
• Providing exclusivity over product or design: greater
market share
• Increasing revenue (through licensing)
• Enhancing market value of the firm
• Enhance image of the company
• Help in raising funds
• Access to new markets
Conclusion
By establishing a culture of identifying, cultivating
and strategically using its IP assets, an enterprise
can increase its revenue, have an edge over its
competitors and position itself well in the market.
Ignoring IP altogether is in itself an IP strategy that
may prove costly to the enterprise in the longterm.
Welcome to visit WIPO’s website for SMEs :
http://www.wipo.int/sme
Thank You!