INTELLECTUAL PROPERTY

RIGHTS AND GLOBAL

BUSINESS


INTELLECTUAL PROPERTY RIGHTS AND
GLOBAL BUSINESS

Intellectual property rights (IPR) is a legal concept which refers to creations of the mind for
which exclusive rights are recognized. Under intellectual property law, owners are granted certain
exclusive rights to a variety of intangible assets, such as musical, literary, and artistic works;
discoveries and inventions; and words, phrases, symbols, and designs. Common types of
intellectual property rights include copyright, trademarks, patents, industrial design rights, trade
dress, and in some jurisdictions trade secrets.
Although many of the legal principles governing intellectual property rights have evolved over
centuries, it was not until the 19th century that the term intellectual property began to be used, and
not until the late 20th century that it became commonplace in the majority of the world. The British
Statute of Anne (1710) and the Statute of Monopolies (1624) are now seen as the origins of
copyright and patent law respectively.

History
Modern usage of the term intellectual property goes back at least as far as 1867 with the founding
of the North German Confederation whose constitution granted legislative power over the
protection of intellectual property (Schutz des geistigen Eigentums) to the confederation.
When the administrative secretariats established by the Paris Convention (1883) and the Berne
Convention (1886) merged in 1893, they located in Berne, and also adopted the term intellectual
property in their new combined title, the United International Bureaux for the Protection of
Intellectual Property.
The organisation subsequently relocated to Geneva in 1960, and was succeeded in 1967 with the
establishment of the World Intellectual Property Organization (WIPO) by treaty as an agency of
the United Nations. According to Lemley, it was only at this point that the term really began to be
used in the United States (which had not been aparty to the Berne Convention), and it did not enter
popular usage until passage of the Bayh-Dole Act in 1980.
"The history of patents does not begin with inventions, but rather with royal grants by Queen
Elizabeth I
(15581603) for monopoly privileges... Approximately 200 years after the end of Elizabeth's reign,
however, a patent represents a legal [right] obtained by an inventor providing for exclusive control
over the production and saleof his mechanical or scientific invention... [demonstrating] the
evolution of patents from royal prerogative tocommon-law doctrine."

The Law, Regulations and Rules of intellectual Property Rights
In contrast to international trade agreements, standards and enforcement procedures pertaining to
intellectual property rights date back much farther. While domestic laws to protect private property
begin in 1474 with the Venetian Statute and in England from the very early eighteenth century,
they covered primarily printed works. 5 Some years later, the Paris Convention on the Protection
of Industrial Property, concluded in 1883, was the first international instrument to cover patents
on industrial innovations. The Berne Convention for the Protection of Literary and Artistic Works
was established three years later to cover copyright, and the Madrid Agreement Concerning the
International Registration of Marks, dealing with trademarks, was concluded five years later. Even
today, the subject matter of these three agreements covers the principal categories of intellectual
property, although industrial designs, geographical indications (GIs), computer circuit
topographies and plant breeders rights, as well as traditional knowledge, access to genetic
resources and trade secrets, have become increasingly important as stand-alone categories in the
past two decades.
The three late-nineteenth century agreements noted above became part of a larger umbrella
organization, the Bureaux Internationaux Runis pour la Protection de la Proprit Intellectuelle
(BIRPI), in 1893; in the post-World War II era this evolved into the Geneva-based World
Intellectual Property Organization (WIPO), which became a formal part of the United Nations
system in 1974. The focus of WIPO, and BIRPI before it, is intellectual property standards, as high
and as harmonized as the dominant members of the organization can agree upon. In contrast to the
strong consultative and judicial provisions accompanying mutually agreed upon rules in the
international trade system, however, enforcement provisions in WIPO remain non-existent for all
practical purposes. Whereas the principle of non-discrimination between domestic and foreign
goods and services a core element of global international trade arrangements has always
been part of international intellectual property conventions, international trade concerns and issues
have not been central to the ongoing operation of WIPO. To the extent that trade has been involved,
enforcement of intellectual property rights standards and norms has 4 Plurilateral outcomes, which
in specific agreements may bind only those countries wishing and able to meet all the obligations,
are one way of moving forward. One such agreement covering government procurement was
agreed to at the WTO Ministerial Meeting.


Types

Common types of intellectual property rights include patents, copyright, industrial design rights,
trademarks, trade dress, and in some jurisdictions trade secrets. There are also more specialized
varieties of sui generis exclusive rights, such as circuit design rights (called mask work rights in
USA law, protected under the Integrated Circuit Topography Act in Canadian law, and in
European Union law by Directive 87/54/EEC of 16 December 1986 on the legal protection of
topographies of semiconductor products), plant breeders' rights, plant variety rights, industrial
design rights, supplementary protection certificates for pharmaceutical products and database
rights (in European law).

Patents
A patent grants an inventor exclusive rights to make, use, sell, and import an invention for a limited
period of time, in exchange for the public disclosure of the invention. An invention is a solution to
a specific technological problem, which may be a product or a process.

Copyright
A copyright gives the creator of an original work exclusive rights to it, usually for a limited time.
Copyright may apply to a wide range of creative, intellectual, or artistic forms, or "works".
Copyright does not cover ideas and information themselves, only the form or manner in which
they are expressed.


Industrial design rights
An industrial design right protects the visual design of objects that are not purely utilitarian. An
industrial design consists of the creation of a shape, configuration or composition of pattern or
color, or combination of pattern and color in three dimensional form containing aesthetic value.
An industrial design can be a two- or three-dimensional pattern used to produce a product,
industrial commodity or handicraft.

Trademarks
A trademark is a recognizable sign, design or expression which identifies products or services of
a particular source from those of others.

Trade dress
Trade dress is a legal term of art that generally refers to characteristics of the visual appearance of
a product or its packaging (or even the design of a building) that signify the source of the product
to consumers.

Trade secrets
A trade secret is a formula, practice, process, design, instrument, pattern, or compilation of
information which is not generally known or reasonably ascertainable, by which a business can
obtain an economic advantage over competitors or customers. In the US, trade secret law is
primarily handled at the state level under the Uniform Trade Secrets Act, which most states have
adopted, and a federal law, the Economic Espionage Act of 1996 (18 U.S.C. 1831 1839 ),
which makes the theft or misappropriation of a trade secret a federal crime. This law contains two
provisions criminalizing two sorts of activity. The first, 18 U.S.C. 1831(a) , criminalizes the theft
of trade secrets to benefit foreign powers. The second, 18 U.S.C. 1832 , criminalizes their theft
for commercial or economic purposes. (The statutory penalties are different for the two offenses.)
Trade secret law varies from country to country.:150153

Objectives

The stated objective of most intellectual property law (with the exception of trademarks) is to
"Promote progress." By exchanging limited exclusive rights for disclosure of inventions and
creative works, society and the patentee/copyright owner mutually benefit, and an incentive is
created for inventors and authors to create and disclose their work. Some commentators have noted
that the objective of intellectual property legislators and those who support its implementation
appears to be "absolute protection." "If some intellectual property is desirable because it
encourages innovation, they reason, more is better. The thinking is that creators will not have
sufficient incentive to invent unless they are legally entitled to capture the full social value of their
inventions." This absolute protection or full value view treats intellectual property as another type
of 'real' property, typically adopting its law and rhetoric. Other recent developments in intellectual
property law, such as the America Invents Act, stress international harmonization.




Financial incentive

These exclusive rights allow owners of intellectual property to benefit from the property they have
created, providing a financial incentive for the creation of an investment in intellectual property,
and, in case of patents, pay associated research and development costs. Some commentators, such
as David Levine and Michele Boldrin, dispute this justification.
In 2013 the United States Patent & Trademark Office claimed that the worth of intellectual
property to the U.S. economy is more than US$5 trillion and creates employment for an estimated
18 million American people. The value of intellectual property is considered similarly high in other
developed nations, such as those in the European Union.

Economic growth

The WIPO treaty and several related international agreements are premised on the notion that the
protection of intellectual property rights are essential to maintaining economic growth. The WIPO
Intellectual Property Handbook gives two reasons for intellectual property laws: One is to give
statutory expression to the moral and economic rights of creators in their creations and the rights
of the public in access to those creations. The second is to promote, as a deliberate act of
Government policy, creativity and the dissemination and application of its results and to encourage
fair trading which would contribute to economic and social development.

The Anti-Counterfeiting Trade Agreement (ACTA) states that "effective enforcement of
intellectual property rights is critical to sustaining economic growth across all industries and
globally". Economists estimate that two-thirds of the value of large businesses in the U.S. can be
traced to intangible assets.

"IP-intensive industries" are estimated to generate 72 percent more value added (price minus
material cost) per employee than "non-IP-intensive industries". Wikipedia: Disputed statement
A joint research project of the WIPO and the United Nations University measuring the impact of
IP systems on six Asian countries found "a positive correlation between the strengthening of the
IP system and subsequent economic growth."

Economists have also shown that IP can be a disincentive to innovation when that innovation is
drastic. IP makes excludable non-rival intellectual products that were previously non-excludable.
This creates economic inefficiency as long as the monopoly is held. A disincentive to direct
resources toward innovation can occur when monopoly profits are less than the overall welfare
improvement to society.






Licensing of intellectual property rights; a vital component of the business
strategy

You may be interested in starting a new business, expanding an existing business (extending your
territory or the nature of business) or improving the quality of the goods or services of your SME
and thereby its market position. In many situations, licensing of intellectual property rights is an
effective tool for achieving these business goals.
A licensing agreement is a partnership between an intellectual property rights owner (licensor) and
another who is authorized to use such rights (licensee) in exchange for an agreed payment (fee or
royalty). A variety of such licensing agreements are available, which may be broadly categorized
as follows:
Technology License Agreement
Trademark Licensing and Franchising Agreement
Copyright License Agreement
In practice, all or some of these agreements often form part of one single contract since in transfers
of this nature many rights are involved and not simply one type of intellectual property right. You
may also come across licensing agreements in other circumstances, such as, during a merger or
acquisition, or in the course of negotiating a joint venture.
All of these mechanisms either on their own or in combination will provide your SME, as a licensor
or licensee, a wide variety of possibilities in conducting business in your own country or elsewhere.
As an intellectual property owner and a licensor, your SME can expand its business to the frontiers
of your partners' business and ensure a steady stream of additional income. As a licensee, your
SME can manufacture, sell, import, export, distribute and market various goods or services which
it may be prevented from doing otherwise.
In the international context, a formal licensing agreement is possible only if the intellectual
property right you wish to license is also protected in the other country or countries of interest to
you. If your intellectual property is not protected in such other country or countries then you would
not only not be able to license it, but also you would have no legal right to put any restriction on
its use by anyone else.
Licensing of IP Rights
Technology Licensing and Joint Ventures
Franchise or Trademark License and Copyright License Agreements
The Post-TRIPS Intellectual Property Environment
Since the implementation of the TRIPS chapter as part of the Uruguay Round outcome in 1995,
there has been much activity, but not much forward movement, in trade-related intellectual
property rule making at the multilateral level. Perhaps the most important development in terms
of standards has been the 2003 Doha Declaration on the TRIPS Agreement and Public Health. 11
Under this exception, negotiated with great difficulty and used only once by a single country to
date (Canada in 2005), domestic patent provisions in any WTO member country can be amended
to allow generic pharmaceutical companies to obtain compulsory licenses to manufacture and sell
medicines to least-developed countries facing public health crises in the three carefully defined
and circumscribed medical categories of HIV/AIDs, malaria and tuberculosis.
More recently, in response to theft and piracy concerns and the desire of some countries to
bypass the WTO, where negotiated outcomes have been slow or non-existent, tougher standards
and, more importantly, stronger enforcement and coordination mechanisms to combat
counterfeiting were agreed to in negotiations that led to the ACTA, concluded in October 2010.
This plurilateral initiative involved some 40 countries, including all 27 EU member states,
Australia, Canada, Japan, Korea, Mexico, Morocco, New Zealand, Singapore, Switzerland and the
United States, although to date only 20 countries have passed the necessary legislation. Separately,
several countries have launched dispute settlement actions involving intellectual property, or
threatened to do so, in recent years. The most significant of these actions have been brought against
China by the United States for weak copyright and trademark standards, and in particular, for
ineffective civil, customs and criminal enforcement of intellectual property rules. The results of
these judicial actions have been mixed, with dispute panels tending overall to insist on higher
copyright standards and better enforcement by China in meeting its WTO obligations.
As well, the United States and the European Union have insisted on including TRIPS-plus
provisions, such as lengthened patent data requirements, strengthened copyright provisions and
expanded coverage for GIs in new regional and bilateral trade agreements to which they are a
party.
The sole additional initiative in recent years concerns intellectual property standards relating to
aboriginal or folkloric material (traditional knowledge). These cultural and social aspects of
intellectual property rights have evoked interest from civil society and non-governmental
organizations and have involved increasingly the United Nations Educational, Scientific and
Cultural Organization (UNESCO).