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 crossborder 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
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Patents (Utility & Design)
Plant varieties
Semiconductor designs
Trade secrets
Trademarks (Service marks, Collective marks)
Geographical indicators
Copyrights & Related rights
Patents 1
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Patentability:
Novelty
Non-obviousness
Industrial application
Issues of Prior Art
Issues of Research Exemptions
Patents 2
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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 CocaCola 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
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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
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Minimum standards
Inclusion of new areas for patenting
Restrictions on compulsory licensing
TRIPS and access to medicines
Parallel imports