International Competitiveness and Innovation Topic 07...

International Competitiveness and Innovation Topic 07: Role of IPR

International Competitiveness and Innovation

Topic 07:

Role of Intellectual Property Rights in Protecting Innovations


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Topic 01: Introduction Topic 02: What is Innovation and Why does it Matter?

Topic 03: Managing Capabilities in the Firm Topic 04: Design and Selection Technology Strategies

Topic 05: Knowledge and Technology Sourcing Topic 06: Managing Collaborations and Alliances

Topic 07: The Role of IPR in Protecting Innovations Topic 08: Open Innovation

Topic 09: Sectoral Patterns of Innovations Topic 10: Nations and Innovation Capacity

Topic 11: Public Policy for Promoting Innovation and Competitiveness Topic 12: Globalization of Research and Technology

Topic 13: MNCs and their Global Research and Development Operations Topic 14: International Transfer of Knowledge and Technology

S01 Topic 01: Introduction Topic 02: What is Innovation and Why does it Matter?

Topic 03: Managing Capabilities in the Firm Topic 04: Design and Selection Technology Strategies

Topic 05: Knowledge and Technology Sourcing Topic 06: Managing Collaborations and Alliances

Topic 07: The Role of IPR in Protecting Innovations Topic 08: Open Innovation

Topic 09: Sectoral Patterns of Innovations Topic 10: Nations and Innovation Capacity

Topic 11: Public Policy for Promoting Innovation and Competitiveness Topic 12: Globalization of Research and Technology

Topic 13: MNCs and their Global Research and Development Operations Topic 14: International Transfer of Knowledge and Technology

seminar sessions outline

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agenda

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S04


intro

………………….......intellectual property in principle …………………..……….why you should care about IP ………………………………………..…………what is IP ……………………………………….………IP in context …………………………….………………….why have IP

………………………....forms of intellectual property ……strategic management of intellectual property ………………..…intellectual property: new frontiers


Why should you care about IPR? •  1999 – 75% of Fortune 100 total market cap was

represented in intangible assets – King (HBSP)

•  Massive investments required both for IP creation and protection

•  Emergence of knowledge economy

•  Globalization of economies

IP is not something for your lawyers, it is something for you.

IP Management is a critical component of corporate strategy.

intro: importance of IP | what is IP | IP in context | why IP


Possible IPR-related Strategic Concerns •  How can I use IP to achieve sustainable & defensible

competitive advantage & barriers to entry?

•  Given costs, which assets should I protect, & which forms of IPR should I use to protect them?

•  How do IP rights affect the industry structure?

•  How can IP rights help me gain vertical power along the value chain?

•  What options do IP rights offer my competitors?

•  What organizational designs & legal infrastructure accommodate IP strategy most effectively?

•  How and when will I enforce my rights?




What is Intellectual Property? IP law relates to the protection of intangible assets…

•  Literary, artistic, or scientific works

•  Performances of performing artists, phonograms, broadcasts

•  Inventions in all fields of human endeavor

•  Scientific discoveries

•  Industrial designs

•  Trademarks, service marks, commercial names / designations

•  Protection against unfair competition

•  All other rights resulting from intellectual activity in the industrial, scientific, literary, or artistic fields

WIPO (1967)



discussion threads Suppose you buy an mp3 from iTunes. What is it that you are purchasing?

•  The right to listen to the mp3 yourself What rights are you NOT purchasing?

•  Resell •  Broadcast or export •  Significantly sample or adapt •  Manufacture •  License others to use •  Use the trade name, logo or

company trademark


Global Regimes •  1883 Paris Convention for the Protection of Industrial

Property (last updated in 1979) •  Berne Copyright Convention •  Universal Copyright Convention (1952, updated 1971) •  Patent Co-operation Treaty (1970, updated 1979, 1984, 2001) •  1995 Agreement on Trade-Related Aspects of

Intellectual Property Rights (TRIPS)

NOTE: very long negotiating processes due to inertia!

NOTE: Singapore respects copyright works for all nationals, citizens, or residents of member countries of the WTO and Berne Convention but is not a member of the Universal Copyright Convention.




IP regimes differ across countries •  Ability to register

•  Term of monopolistic rights

•  First mover advantage

•  Disclosure requirements

•  Scope of what is covered

•  Registration process and cost

•  Registration and enforcement hurdles

•  Remedies/punishment process

•  Enforcement



IP is not a natural right, but a jurisdiction-based policy in the context of a socio/political/technological/ economic system. What prerequisites would be required for IPR to survive?

•  Centralized political authority •  Government that intervened in economic affairs •  Development of trade and commerce •  Market for literature, art and invention •  The idea of, & respect for, the individual as creator •  Enabling technology •  Legal Framework •  Credible Enforcement



Intellectual Property policy in context Formalized IP laws were developed during the European Middle Ages in which the social/technological prerequisites were all present

"An intellectual property system is made up of laws and practices [which] reflect the larger society of which it is part. Historically, governments have granted such rights to achieve a variety of policy goals.

Which policy goal...depends...on history, circumstances, and the overriding needs of society."

- US Office of Technology Assessment


Intro: importance of IP | what is IP | IP in context | why IP

Why should there be Intellectual Property? "The enactment of copyright legislation by Congress

under the terms of the Constitution is not based on

any natural right that the author has in his writings...

but on the grounds that the welfare of the public will

be served and progress of science and useful arts will

be promoted..."

- Excerpt from the 1909 Copyright Act



IP creates monopolies which is bad for consumers •  Higher prices •  Potential unfair granting of ownership rights

•  Access to medicine •  Unfair pricing •  Treatment of traditional knowledge and inventions •  Genetics!

But….in practice IP laws are good because they drive…

•  Production (and disclosure) of new information & technology •  Transfer of new information & technology •  Global economic policy negotiations



•  IP is a societal tradeoff to maximize social welfare by balancing the evils of monopoly against the benefits of increasing the speed and diffusion of innovation

•  The broader and longer the benefits granted the IP holder, the more incentive and the less social welfare.

•  IP law has a major impact on national competitiveness

why should there be Intellectual Property?


IP forms

………………….......intellectual property in principle ………………………....forms of intellectual property

………………………………………..…..……forms of IP …………………………….………………...….copyrights …….…………………...trademarks and service names …………………………….……………..……….patents …………………………….………….issues facing IPR

……strategic management of intellectual property ………………..…intellectual property: new frontiers


forms: IP forms | copyright | trademark | patent | issues

Forms of IP Protection in Singapore •  Copyright (Copyright Act Cap 63) •  Patents (Patents Act Cap 221) •  Trademarks and Trade Names (Trademarks Act 1998

Cap 332) References/Supplementary Reading

•  Basic Business Law in Singapore, Walter Woon, Prentice Hall

•  Your Guide to Ecommerce Law in Singapaore, Drew and Napier

•  Genesis of American Patent and Copyright Law, Bruce Bugbee



Quick Guide to IP Forms •  Scope of protection (description)

•  Duration of protection

•  Infringement

•  Enforcement

•  Remedies


Copyright basics Attaches transferable rights to every creative work that is represented in a tangible medium of expression

•  Literary works (including source code) •  Musical works •  Artistic works •  Works of architecture •  Design

Copyrights have life spans

•  Life + 70 years for the expression (individual) •  95 years from first publication, or 120 from creation

– whichever comes first (corporation)



Infringement

•  “Substantial” part of original work survives after copy •  Sampling (if skill and effort put into it) is not

regurgitation, and not prohibited •  Fair use and personal use are protected

Remedies

•  Infringement gives rise to civil and criminal liabilities including injunctions and damages

•  Sale or exhibition in public or importing into Singapore not for personal use may lead to 100K fine and imprisonment for up to 5 years



Trademarks and Service Names Any name, word, symbol, packaging, jingle, or device adopted by a merchant to identify his good/service as a means to differentiate his good from other vendors Indicative of reputation and good will that could influence a customer’s buying decision. Intention is to prevent passing off so that companies will find it worthwhile to invest in quality Lifespan of Trademarks and Service names is 10 years from the date of application (you must provide maintenance documents in the 5th year) and may be renewed every successive years thereafter



Infringement

•  Use of trade mark without owner’s permission may lead to civil suit that may lead to damages

•  Even unregistered trade marks may be protected by relying on common law tort of passing off Well-known trade marks given special dispensation since 1998

•  Rights limited to the jurisdiction in which the trademark is registered

•  Agreement on Trade-Related Aspects of IP Rights (TRIPS) and Paris Convention offer more protection for “well-known trade marks”



Introduction to Patents Post-1994 (Uruguay Round Agreements) grant a monopoly for 20 years to an inventor who has invented something new (not obvious to one skilled in the art – novel) in return for the inventor disclosing the invention to the public. At end of term, invention passes to public domain. Note that some inventions are not patentable (public morality, national security, etc) Do you think patent rights are equivalently useful strategically across all industries? Can you really define “novelty” legally?



Why would a company want to patent?


•  A definite period of exclusivity

•  Establish ownership

•  Protection against reverse engineering (?)

•  Prevent others filing first

•  May be valuable in negotiations

•  Confuse competition (misdirection)

•  Clarify collaboration agreements

•  Motivate inventors/a sign of achievement & security


Why would a company NOT patent?


•  Expensive to obtain, maintain, monitor & enforce (litigation?)

•  May offer weak, unenforceable protection

•  Expensive to Limited life (secrets can be kept indefinitely)

•  Timing of disclosure cannot be controlled


Check your comprehension Patent, copyright, trademark, or none of the above

forms: IP forms | copyright | trademark | patent | global

? Google’s search algorithms Trademark IBM

Trade Secret Chemical formula of Classic Coke Patent One click shopping @ Amazon Patent & Trademark Viagra Copyright “Last Living Souls” by the Gorillaz Trademark McDonalds Golden Arches Form of IP protection Subject


IP Mgt

………………….......intellectual property in principle ………………………....forms of intellectual property …….strategic management of intellectual property

……………………………………..……..strategic issues ……………………………………..….……. IP strategies …………………………….………………limitations of IP ……………………..……IP and economic development

………………..…intellectual property: new frontiers


Discussion threads Why register trademarks and copyrights at all? What challenges do the following pose for IPR?

•  Web Browsing •  Caching •  Linking and Framing •  Napster •  Domain names •  Meta-tags

IP Mgt: issues | IP strategy | developing world


issues within the existing system

Are patents useful for SMEs? •  Costs of patent use: education, applications &

renewals in each territory of activity and litigation – Cost of registration can be reduced by applying

under the Patent Cooperation Treaty where Singapore Patent office serves as the PCT receiving office

– Singapore government provides tax incentives, Patent Application Fund (50% fees up to 30K) and Innovator’s Assistance Scheme (70% up to 20K) to help with costs



issues within the existing system •  Is IPR appropriate & adequate for new technologies

(bio-tech, software, multi-tech)? •  How to deal with the problem of standards (e.g. in

the electronics sector)? •  Is it right for public research organisations to take

out patents? •  How to deal with public acceptance of patent rights

(e.g. human genome) and related ethical questions?

•  How to deal with abuses of the system: –  patent flooding, extortionists, blocking patents,

etc •  Is speed of innovation desired? •  Is it fair to grant monopoly rights to public domain



the problems of change

•  The nature of technological change:

–  apparently increasing rapidity of technological change: can systems change quickly enough ?

–  shorter life-cycles/commercial windows

–  globalisation of S&T: international harmonisation



the problems of change

•  The nature of the business environment: –  emergence of the ‘knowledge economy’ dominated by

intellectual capital & intangible assets –  globalisation of industry and markets –  the nature of corporate R&D: systematic, large scale –  competence/capabilities management: IP as a crucial

element in knowledge management, and in overall corporate strategies

•  Future problems –  All of the above, only more so......., and: –  cross-border electronic commerce –  computer-aided patenting/innovation



limitations of IP in the information era Ultimately, law is meaningless without enforcement!

IT makes reproduction and manipulation of information cheaper, faster and more private and global at the same time which makes theft trivial and anonymous unlike with widgets

Does IPR incent the right players in the value chain?

Who supports IPR, labels or musicians? Muscians in the networked world are much more empowered than in the past.



limitations of IP in the information era

•  Although IPR might protect invention, it does not incent combination which is becoming more of a key driver of innovation

•  Information does not follow the same physics as widgets



How does IP affect business strategy

•  Create and Sustain competitive advantage •  Temporary technical lead (main patent as well

as defense against substitutes using patent fences) •  Time to enjoy first mover advantage •  Time to build economies of scale •  Time to build customer loyalty and erect

switching costs •  Time to build next generation before

competitors start on first •  Protect brand names •  Help define/control/predict industry standard •  Use misinformation to confuse competitors




•  IPR can be used to shape industry structure and industry competition to reduce risks

•  IPR can be used to limit supplier power




•  But…technology changes & patents expire – how does time affect your ability to extract profits?

•  Also, invention and innovation is generated by people. A firm needs an effective way to bind people.



Multiple Protection of Inventions: Overlapping IP protection

Copyrights

Patents

Trade and service marks

Trade secrets

ALL FORMS OF PROTECTION



Should a developing country support IP or not?

Perceived need for 1) technology transfer, 2) access to world markets and 3) access to FDI

discussion threads

•  Will IP owners transfer technology without local IP regime?

•  Is it enough just to have a legislative raft?

•  Why might one country choose to implement a strong IP infrastructure and another choose to implement a weak one (hint: cost benefit analysis)?

•  Is IP better for developed or developing countries?



china: a perspective •  Legal system and culture with philosophical

foundation in Confucianism which argues for the morality of public domain

•  No dominant IPR regime until 1982 though there have been several bouts with IPR due to foreign relations over the last 100 years •  Post-war period – administrative rewards •  1970s onwards – pressures of globalization

•  But joining, signing, and enacting law does not mean anything really changes. •  Legal terms, administration and arbitration •  Enforcement



china: a perspective

•  1970’s open door policy (increase int’l competitiveness and access to US markets)

•  1979 - Sino-US High Energy Physics Agreement & Sino-US Trade Agreement - resulted in stalemate over IP

•  Early 80’s – Major changes to IP policy to secure FDI (and to drive its own indigenous IP)

•  1980 patent office opened

•  1982 onwards development of legislative raft with spate of activity in 90s including joining int’l IP organizations and conventions.




•  1988 Omnibus Trade and Competitiveness Act gave US trade reps the right to retaliate against countries that were not enforcing IP by putting them on the “Priority Watch List”. Countries on the list found it difficult to negotiate favorable trade terms with the US

•  1992 Sino-US Memorandum of Understanding on the protection of IP which harmonized some of the laws such as patent terms - stalled Trade War

•  By 1994 China was back on PWL over Copyright infringements




•  Agreement finally reached in 1995 amidst threat of another trade war – but mostly cosmetic “making examples

•  With all this said, China probably also conceded because it felt that it was in its own best interest as well.

•  Bosworth shows that since 1982 “innovation” has accelerated measurably both in terms of IP registered by residents and non residents with Japan and US bringing in the most IP




•  But joining, signing, and enacting law does not mean anything really changes. •  Legal terms, administration and arbitration •  Enforcement



new frontiers

………………….......intellectual property in principle ………………………....forms of intellectual property ……strategic management of intellectual property ………………..…intellectual property: new frontiers


New frontiers

•  open source (next topic) •  IP technology (DRM)

new frontiers


questions…

Questions?

International Competitiveness and Innovation Topic 07...

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