Nature and role of intellectual
property
Lecture outline:
•Introduction to the topic
•Why are Intellectual Property Rights awarded?
•Main types of intellectual property
• Patents
• Trade marks
• Designs and utility models
• Copyright
•Alternatives to IPRs
•Questions for discussion
Introduction
• Range of issues can be discussed, including
– Historical development
– Recent controversies (see Chapter 11 and/or)
•
•
•
•
http://www.scienceprogress.org/2009/01/patent-reform-101/
http://www.law.duke.edu/boylesite/ip.htm
http://en.wikipedia.org/wiki/File_sharing
http://www.wto.org/english/tratop_E/TRIPS_e/trips_e.htm
Why are patents awarded?
• Incentive to invest in innovation
– Note: invention may occur without monetary
incentives (due to human curiosity), but an
innovation requires investment
• Patents balance the need to provide
incentives with the introduction of market
failure (i.e. high prices of non-rival good)
– Have patent protection for up to 20 years, then
knowledge/innovation can be exploited by all
Illustrating the role of patents
• Figure 2.1 shows a drastic process innovation
– Patent owner now has monopoly (sets high price
compared to marginal cost, and restricts quantity)
– BUT, price is lower than previous price (preinnovation), hence society wants innovation.
– Society would also like lower prices (P=MC), and this
happens when patent protection expires (normally
after 20 years)
• Note: the above logic applies for all product and
process innovation, but easy to illustrate with
drastic process innovation
Figure 2.1 A drastic process innovation
Price (p)
Costs
P1 a
c
P2
P3 e
b
MC1=AC1
d
f
g MC2=AC2
D
Q1 Q2
Q*
MR
quantity (Q)
Patents
• What can be patented?
• How to get a patent?
• Dimensions of patent
• Markets for patent rights
• Who uses patents most?
(Above are sub-headings in Chapter 2 and
summary of material can be found there)
May also want to illustrate some famous patents
and/or specifics of own country (see below for
sources)
Top patentees at US Patent Office and
European Patent Office
US Patents (grants)
2006
EPO (grants)
2006
IBM
3,621
Phillips
4,425
Samsung
2,451
Samsung
2,355
Canon
2,366
Siemens
2,319
Matsushita
2,229
Matsushita
1,529
Hewlett-Packard
2,099
BASF
1,459
Intel
1,959
LG Electronics
1,214
Sony
1,771
Robert Bosch
1,093
Hitachi
1,732
Sony
1,088
Toshiba
1,672
Nokia
882
Micron
1,610
General Electric
768
Further information on patents
• US: http://www.uspto.gov
– http://www.uspto.gov/web/offices/ac/ahrpa/opa/kids/kidevents_press.html
• UK: http://www.ipo.gov.uk
– http://www.ipo.gov.uk/types/patent/p-about/p-funandgames/p-map.htm
• European Patent Office: http://www.epo.org/
– http://www.epo.org/topics/ip-webguide.html
• World IP Office: http://www.wipo.int
• Patent scoreboards (national offices and also
http://bwnt.businessweek.com/interactive_reports/most_innovative/
• There are many on-line resources, including free
patent searches (e.g. http://www.patents.com/)
Trademarks
• What can be registered?
• How is a trademark obtained?
• Length, breath and geographical coverage
• Markets for trademarks
• Who uses trademarks most?
(Above are sub-headings in Chapter 2)
Further information can be found at national IP
office web-sites. Note also that ‘brands’ are
worlds most successful trademarks (see :
http://www.interbrand.com/best_global_brands.aspx or BrandFinance)
Top trademarkers in the US and Europe
US Trademarks
(registered)
2006
EC trademarks
(registered)
2006
Mattel
639
Glaxo
154
Deutsche Telekom
429
L’Oreal
138
Novartis
134
Novartis
135
American Int’l AIG)
126
El Corte Ingles
127
Disney Enterprises
120
Barilla G. e R. Fratelli
Società per Azioni
115
Proctor and Gamble
117
Bristol-Myers Squibb
106
Mars
101
Proctor and Gamble
105
IGT
96
Viacom International
104
Beautybank
93
Lidl Siftung
87
Nedboy, Robin
90
Sony
76
Proportion of firms applying for IPRs by
sector (large firms in UK,1996-2000)
Sector
No. firms in
sample
U.K.
Trademarks
Community
Trademarks
U.K. Patents
EPO
Patents
1 Agriculture/Mining
67
0.19
0.12
0.21
0.12
2 Manufacturing
640
0.67
0.55
0.40
0.35
3 Utilities
26
0.85
0.62
0.50
0.42
4 Construction
89
0.39
0.22
0.22
0.09
5 Finance
191
0.52
0.26
0.05
0.06
6 Real Estate
112
0.22
0.12
0.03
0.01
7 Wholesale
181
0.52
0.33
0.12
0.07
8 Retail
132
0.75
0.40
0.08
0.05
9 Hotel/Catering
54
0.65
0.35
0.06
0.00
10 Transport/Comm.
115
0.57
0.43
0.10
0.05
11 Bus. Services
259
0.57
0.43
0.08
0.06
12 Other Services
188
0.56
0.37
0.10
0.12
Other IPRs
• Designs and utility models
- Section 2.5 discusses these
- Next table illustrates use of designs
• Copyright (see section 2.6)
– Copyright, and specifically the file sharing issue,
may be a key issue for students
– Hence, could be that copyright issues is developed
in separate lecture and/or as an assignment (some
readings for students at end of lecture outline)
UK Top Ten IPR Scoreboard 2003
UK PATENTS
UK TRADEMARKS
UK DESIGNS
NEC
209
GLAXO GROUP
118
ORIENTAL
WEAVERS
90
HEWLETT PACKARD
196
UNILEVER
104
TY INC
90
SAMSUNG
177
NATIONAL
LOTTERY
87
MAINETTI
72
SCHLUMBERGER
172
BRITISH
TELECOMS
82
KEEL TOYS
47
IBM
171
ICI
80
NIKE
44
BAKER HUGHES
120
WESTWOOD
CONSULTING
59
WITHIT
38
ERICSSON
115
EMBRAER
AERONAUTICA
58
MAYFAIR
BRASSWARE
34
MOTOROLA
113
BOOTS
46
BLACK AND
DECKER
33
VISTEON GLOBAL
TECH.
112
GLAXOSMITHKLINE BIO.
42
NOKIA CORP
33
FORD
100
AVON PRODUCTS
40
DEVONSHIRE
STATUARY
30
Further questions about IPRs
• Is patenting always the best route to protection?
– Secrecy vs. disclosure. Trade secrecy law
• Optimal patent length
– Box 2.1 uses some formal analysis. This can be
extended and/or used for maths-based problem. See
references in box.
• Alternatives to IPRs?
– This is only briefly covered in Ch. 2, but extended in
Ch. 11. Should alert students to this issue. Could use
as on-going assignment through course.
Questions for discussion
1. How does intellectual property differ from tangible
property, such as a house or a car?
2. Do patents provide socially optimal incentives?
3. Why do firms use trademarks?
4. Should copyright be made shorter or longer than at
present?
5. Why do different industries make use of different
types of rights?
6. What factors influence the optimal length of an
intellectual property right?
References
General:
Landes, W. M. and R. A. Posner (2003), The economic structure of intellectual property
law, Boston: Belknap/Harvard University Press.
HM Treasury (2006), Gowers Review of Intellectual Property, Norwich: The Stationery
Office.
Lerner, J. (2002). "150 Years of Patent Protection." American Economic Review 92(2):
221-25.
Hall, B. (2007). "Patents and Patent Policy." Oxford Review of Economic Policy 23(4):
568-587.
Copyright:
Corrigan, R. and Rogers, M. (2005), ‘The economics of copyright’, World Economics:
The Journal of Current Economic Analysis and Policy, 6(3), 53-174.
Lessig, L. (2004). Free Culture: How Big Media Uses Technology and the Law to Lock
Down Culture and Control Creativity. London, Penguin Press.
Boyle, J. (2003). "The Second Enclosure Movement and the Construction of the Public
Domain " Law and Contemporary Problems 66(Winter-Spring): 33-74.