Assignment 3 - Intellectual Property and International Business

Description of the assignment

After reading chapter 8 of the textbook, reviewing the course lecture notes and other course materials, explain the most important intellectual property concerns for business planning to expand outside their own national borders.

Pleaseexplain in a lengthy paragraph. All sources MUST be cited.

\fI . Q I E II . M I I By the end of this module, you will be able to: - Describe the underlying rationale of IP protection. - Develop awareness of the importance of intellectual property for international business. - Differentiate the various types of intellectual property which are available. - Understand how to obtain IP protection domestically and internationally. Topics for this Module 1. Introduction 2. The International Intellectual Property Framework 3. Patents 4. Trademarks 5. Copyright 6. Industrial Designs 7. Geographical Indications 8. Trade Secrets/Confidential Information 9. Personality Rights 10. Choice of Intellectual Property Rights: A Final Word 3IntroductionWinn - \"Intellectual Property refers to the creations of the mind: Inventions, literary and artistic works, and symbols, names, images, and designs used in commerce\" - IP Laws regulatethe - Creation - Use - Exploitation of products of mental/creative labour - Recognise and protect (valuable) intangibles, by granting property rights over ideas, inventions, signs & information Industrial Property (patents, including utility models Copyright and inventor's certificates (author's rights, + neighbouring trade marks, including service marks rights) and geographical indications) Industrial Designs Unfair competition and trade secrets Sui generis Rights (liability rules) (integrated circuits, plant varieties, databases) IP rights can be very valuable $ 98,3 BILLION Google $ 93,3 BILLION Coca Cola $ 79,2 BILLION C D AUDI'S PATENT PORTFOLIO: http:/vimeo.com/26490727 7| | || |!!|'|'| . I |'[' I' - Freeriding problem caused by the public goods dilemma. - This would lead to an underproduction of these goods, i.e. market failure. - Property rights then serve to overcome the public good dilemma. - Enables right holder to exclude others from using the protected information. | | || |!!|'|'| . ! IT I' - Property rights then serve as an incentive to innovate and create. - Also ensures that information is disseminated and disclosed and not kept secret. - However, there are also other means of solving the public goods dilemma such as taxation, centralised purchasing, research grants or prizes. - Also, overly broad IP can have adverse effects on innovation and creativity. Wm - IP rights provide protection against a competitor directly copying the idea. This helps the entrepreneur to recover their costs in developing the idea. - IP rights help businesses maintain their long-term competitive edge. Registered IP ensures that entrepreneurs get all the financial benefits from their ideas. Continued revenue will keep the business afloat. - Registered IP is an asset. It helps convince financial institutions to invest in a business, enabling more money to be raised for development. 10 B ['IEIIIIIIE ll I' ll - Registered IP gives consumers confidence that products meet appropriate standards and quality. - By being able to profit from their IP, entrepreneurs are rewarded for taking risks and developing new innovations. They can invest profits in work on new ideas. . Ownership of the IP enables entrepreneurs to license or franchise ideas to others without risk. This means entrepreneurs are able to expand the market for their products and services more easily, and can increase revenue for the business. 11 The International Intellectual Property FrameworkIntellectual Property Laws . Predominantly national laws: - i.e. Canadian Patents Act , Copyright Act, Industrial Designs Act, Trade-marks Act . International Influences: - World Intellectual Property Organisation (WIPO): . Paris Convention 1873 . Berne Convention 1876 - World Trade Organisation: TRIPS (Trade-Related Aspects of Intellectual Property Rights) Agreement 1994 13W General principles binding on all WTO Member States . National treatment of foreign rights holders 0 Most-favoured-nation Clause - Harmonised set of minimum standards Enforcement mechanism through the Dispute Settlement Understanding (see Module 2) 14 Scope of TRIPS Copyright: - computer programs protected, Article 10 (1) TRIPS - rental right, Article 11 TRIPS - adopts Berne/Rome Conventions, Article 9 (1) TRIPS Patents: - Member states cannot exclude any field of technology from patent, Article 27 (1) TRIPS - term of protection is 20 years, Article 33 TRIPS - right of importation, Article 28 (1) TRIPS Geographical indications, trade secrets, trade marks / unfair competition/semiconductor topography, design laws introduced/harmonised 15TRIPS has "teeth" Dispute Settlement Understanding (DSU): - Compliance with Agreement can be assessed by the DSU mechanism - Only Member States of WTO have ius standi - Non-compliance can attract trade sanctions 16World Intellectual Property Organisation (WIPO) . UN Specialised Agency which was established in 1967 by the WIPO Convention . Seat: Geneva . Membership: 187 . Task of WIPO: Administration of international IP treaties . Important treaties include the Paris Convention for the Protection of Industrial Property (i.e. patents and trade marks) and the Berne Convention for the Protection of Literary and Artistic Works (i.e. copyright law) 17\fWhat i5 3 DEED]? - A patent is a state granted exclusive right in: a patented invention; or a patented process. - |t grants the proprietor of that patent the right to stop other people doing things in relation to that product or process (e.g. making the product or using the process) - It does not grant the right to use the invention. - Patent protection does not arise automatically but requires registration at a patent office. - Patents are granted for 20 years. After this period, the invention may be used by anyone without authorisation of the patent owner, 19 I'I'I'IEIIII' - Patents are territorial. - Therefore a Canadian patent has no effect outside Canada (and a US patent has no effect outside the USA). - A patent revoked in one county does not affect the validity of patents in other countries; - A person has to apply for patent protection in each country in the world. But there are systems to make this easier (Patent Cooperation Treaty, regional Patent Offices). 20 Subject matter of inventions . General rule established by Article 27 (1) TRIPS: patents are "available for any inventions, whether products or processes, in all fields of technology, . However, They must also be: new, - involve an inventive step and - be capable of industrial application 21W - Article 27 (2) permits to exclude certain subject matter, such as mathematical methods, abstract ideas, methods for medical treatment, computer software and business methods - This has led to divergent practices with regard to excluded subject matter (e.g. business methods may be patented in the US but not in Canada) 22 WW - Article 27 TRIPS also enables WTO Member States to exclude such invention \"to protect ordre public or morality\" Much case law here on biotechnological inventions Example: The Onco Mouse: A transgenic mouse whose cells have been genetically altered by a cancer- promoting gene. The mouse was susceptible for cancer and was used for cancer research. Mouse received patent protection, inter alia, in the USA and Korea The Canadian Supreme Court rejected patent protection with regard to the patent claim on the mouse itself 23 QII" || Patents can be granted by: - National patent offices Such national patents are only valid in that country 0 Regional patent offices (e.g. the European Patent Office (EPO) for European States) A "European patent" is equivalent to national patents in the countries for which it was granted the applicant chooses the countries the cost depends on the number of countries designated - Patent Cooperation Treaty (PCT; administered by WIPO) Just one initial application for 152 contracting states After the international phase, the international application leads to multiple national patent examination procedures No international patent, but an international patent application procedure 24 Q l' I I'll' [II - Generally, the inventor will also be the owner of the patent - This may differ in employee situations, e.g. where the invention was devised by an employee. - Canadian courts look at following factors: Was the employee hired for the specific purpose of inventing? Was the employee privy to confidential information of the employer in relation to the invention? - Patents (and patent application) are property They can be assigned or licensed if the owner does not wish to exploit the invention himself. 25 - Unauthorized use, distribution of sale of the patented invention can lead to infringement of the patent. - Infringement even occurs where the defendant was unaware about the patent Infringement will, however, not occur where the use or manufacture of the patented invention was covered by an exception, eg. for experimental purposes. - Patent infringement are heard and enforced by courts - The available remedies include: lnterlocutory or permanent injunctions Damages Accounting of profits Seizure and destruction of infringing goods 26 Patenting: The pros and cons Pros Cons - 20 year monopoly - Requirement of disclosure - Infringement (and - Costs (i.e. filing, injunction relief) even where enforcement) defendant acted innocently 27Does IP really promote innovation? . Discussion 28Trademarks 35W - Trademarks protect signs which are used to distinguish the goods or services from one undertaking from another. Such signs can include: Words (i.e. names or slogans; e.g. ROLEX) Symbols (e.g. the Apple logo) Colours Sounds (e.g. the NBC chimes) Smells . Trademarks ensure the public to know the source of goods and services Thus, they aim at prohibiting the distortion of trade which occurs when customers purchase products and services they do not wishto obtain. 30 Right Holder Avoid confusion and hence diversion of trade Avoid confusion Protecting the Brand Protection against Dilution and unfair competition Quality assurance 31 QII" || | - Generally, trademarks can be protected through registration Canada, the USA and the UK also provide protection of unregistered marks through common law rights - Trademark protection is territorial; this means that trademarks need to be individually registered in the countries where protection is sought. However, the EU Trade mark (previously calls Community Trade Marks provide protection throughout all EU Member States Also possible to file for trademark protection in multiple jurisdictions through a single international trademark application through the Madrid Agreement or Madrid Protocol. - Generally, two criteria have to be met for trademark protection: The sign is distinctive (i.e. it can work to distinguish the goods and services of the trade mark owner from other The sign is not deceptive or against morality or public order 32 D' i l' . More distinctive Less distinctive Generic I Descriptive I Suggestive I Arbitrary I Fanciful FACIAL &%%& cfbank Protected upon . No \"Secondary Strong Protection Protection Meaning\" (\"Inherently Distinctive\") Q l' |.||. II I [I | | - Ownership over registered trademarks arises through the registration of the mark Unregistered trademarks gain protection through their use. - The owner of a trademark has the right to exclusively use the trademark with regards to the goods and services it is registered for. . This means that: The registered mark is protected against the use of aconfusingly similar marks. Protection is also provided against such uses of third parties which may depreciates the marks goodwill. - Trademarks can be assigned or licensed 34 Infringement and enforcement of Trademark rights . Trademarks are infringed where identical or similar trademarks are being used on similar or identical goods or services for which the trademark is registered for. - In addition, such use must be likely to lead to a confusion of the relevant consumers. . Well-known or famous trademarks are given broader protection beyond the protection against confusingly similar marks. . Infringement then occurs where an identical or similar mark is being used for dissimilar goods. In such cases, consumers are not confused but the use may impair the distinctiveness or reputation of the famous mark 35I E . I I E I [I I I . I I mun - Unregistered trademarks may be protected in Canada at common law or under section 7 of the Trademark Act where these 4 requirements are met: Reputation in the marketplace Misrepresentation by the defendant to a actual or prospective customer of the goods and services supplied by the plaintiff Actual or potential confusion of consumers Damaged resulting from the confusion of consumers - The available remedies include: lnterlocutory or permanent injunctions Damages Accounting of profits Seizure and destruction of infringing goods 36 Trademarks: The Pros and Cons Pros Cons Potentially a perpetual right - Limitation of what can be protected by trade marks - Registration delineates the protected right 37CopyrightDefining characteristics of copyright . Copyright is a state granted exclusive right in a copyright work. . It subsists in original literary, dramatic, musical and artistic creativity and can be expressed in various mediums, such as printed publications, films, sound recordings and communications signals . It is territorial (and so Canadian copyright only applies in Canada) - The Berne Convention (administered by the WIPO) provides an international framework which establishes minimum standards for protection. 39DE" | |.|.[ '|| - Copyright protects only original expressions of ideas. It does not provide protection of the idea itself. - Copyright provides, inter alia, following exclusive rights: The right to produce and publish the work in any material form The right to perform the work in public The right to broadcast the work - Additionally, copyright also provides moral rights to authors. The right to be named as the author (\"paternity right\") The integrity right which enables the author to object the alteration or mutilation of the work. - Generally, copyright subsists for 70 years after the death of the author. (After the death of the author, his or her heirs can exercise copyright). 40 The artist and sculptor Michael Snow created the sculpture \"Flight Stop\" consisting with a number of Canada geese which were placed within the Eaton Centre in Toronto in 1979. In 1981, the operator of the Eaton Centre placed red ribbons around the neck of the geese during the festive season. Snow argued that this would distort his work. The Ontario High Court agreed with Snow that his right of integrity was violated. Ell" '|| - The work needs to be original creation, i.e. it must originate from the author and cannot be a copy of another work. - It is an unregistered right (and so comes into being automatically) There are no formalities and no registration. - However, some countries require the work to be fixed in a tangible form for copyright to subsist. 42 Q l' |.||. II t E '|| - Generally, the creator of the work is the first owner of the copyright in the work Where the work is created in the course of employment (e.g. a journalist working for a newspaper), copyright will be held by the employer. - Copyright can be assigned or licensed. Some jurisdictions do not permit the assignment of copyright law (e.g. Germany). But licensing remains possible. - Many times, collecting societies will exercise copyright on behalf of its members. This facilitates the administration of works. 43 It" IIEE IEE '|| - Copyright is infringed where someone exercises the exclusive rights of the copyright owner without his or her permission. Many times, copyright law provides for exceptions to infringement. They are often referred to \"fair use\" or \"fair dealing\" and occur, for instance, where a work has been copied for the purpose of criticism, review or news reporting. The internet has heightened the problem with pirated works and legislators have been trying to address this issue by strengthening copyright law and its enforcement in the digital field Remedies include damages, account of profits, injunctive relief 44 WWW cons - Cost free creation - Ideas as such are not protected - Automatic creation (albeit need to - Often only direct copies are fix in the UK) protected (depends on type of work as well as jurisdiction) - Enforcement might be tedious (i.e. in Peer to peer networks) 45 Industrial Designs 50DE" | |.|. [III'ID' - Industrial designs protect non-functional designs - Protected are: \"Shapes\" and \"configurations\" relates to 3D designs (e.g. a chair) \"Patterns\" and \"ornaments\" cover 2D designs (e.g. an engraving or a graphic user interface for mobile phones) - Registered designs are protected from 10 to 25 years depending on the country. The subject matter of design protection may also be susceptible to copyright protection and its longer protection period. Section 64.2 of the Canadian Copyright Act regulates the relationship of both rights and stipulates that copyright protection does not exist where the article \"is reproduced in a quantity of more than fifty\". This aims at avoiding overprotection of industrially produced goods. Section 64(3) of the Canadian Copyright Act provides an exception to the rule within section 64(2) and provides full copyright protection to, for instance, architectural works. 47 Q I'El'll' II [ [III-I D . E. II - Ownership of an industrial design right belongs to the creator of the design. - Where the work is created by an employee then the design right belongs to the employer in the majority of countries where the design was created in the course of employment - Deigns rights require registration Some countries provide protection for unregistered designs which commence to exist when the design is being used. - Designs need to be new which is examined by the IP offices Some jurisdictions require additional requirements, such as the design being of \"individual character and not against public morality. - Industrial designs may be assigned or lincencsed. 48 It. I IEE It'll-ID- Bight: - Industrial design rights gives its owner exclusive rights which are infringed when conducted by someone else without authorisation of the owner - These rights are: To make articles that embody or apply the design To import, sell offer to sell or rent such articles - The rights are limited: The infringing article needs to apply a substantially similar design Design protection does not extend to the such features of the design which are not solely dictated by a utilitarian function. (These should remain available for other competitors to use) - Remedies include damages, account of profits, injunctive relief 49 \fDEUI. [E |' || |' I' - Geographical indications which are mark used on products which identify a product from originating in a particular geographical region where its quality, reputation or another characteristic is linked to that region. Often relates to food, wines or spirts - Examples: Parma Ham, Cognac, Parmesan cheese (Parmigiano Reggiano); also: Feta cheese which does not designate a geographic region but can nonetheless be attributed to Greece. - Traditionally strong protection within Europe but increasingly significant for developing countries which wish to promote social and economic development within rural areas. - See Module 4 on the impact of CETA 51 Ownership, Exploitation and transfer of Geographical Indications . The TRIPS Agreement prescribes that geographical indications need to be protected within WTO Member States but does not prescribe the way how to do this. WTO Member state have provided trademark, unfair competition rules or special legislation to protected geographical indications. . The EU, for instance, provides registration for geographical indications. . Other jurisdictions provide protection through certification marks. 52Infringement and enforcement of geographical indications . Most jurisdictions provide protection through statutory or common law . Infringement will usually need to be based on following requirements: - The geographical indication has acquired goodwill or reputation - The geographical indication is used on products not originating form the designated place Consumer deception 53Trade Secrets/Confidential InformationTrade Secrets/ Confidential Information . Trade secrets and confidential information remain the most commonly used protection of valuable information . Examples are: The recipe for Coca Cola, know how of harvesting silkworm thread . And information (scientific, technical, financial, marketing) may be susceptible to protection . The requirements are: - The information is of commercial nature - It is used in business to provide a competitive advantage - It is kept in confidence 55Ownership. Exploitation and transfer of rights on confidential information . The concept of ownership is problematic for confidential information as there is no monopoly right. - Independent development of the of the same information or legal acquisition is possible . Trade secrets only provide a remedy where the secret information is disclosed in violation of a relationship of confidence - Such relationship can be established expressly for instance through contract or can even be implied. 56It" IIEE It'll II We - Enforcement of confidential information depends on how they are protected within in the country at question: Could be contractual, tort law, unfair competition law, criminal or administrative law, employment laws Special regulations are provided where employees who have acquired such information in the course of employment and leave the job. - In Canada, an action for breach of confidence has three requirements The information is confidential A confidential relationship between plaintiff and defendant An unauthorized use of that information 57 Confidential information: The pros and cons Pros Cons - "No competition" - Reverse engineering - Unlimited period of - Patenting by other parties protection - No "registration" - "WikiLeaks" 58\fDefining characteristics of Personality Rights . Protection provided to prominent individual with regards to their names, voices or other distinguishing features. . Are relevant in relation to film, music and sports industries . Question arises who can qualify as a "celebrity" . Celebrity rights can be classified in 3 categories: Personality rights - Publicity rights ( related to the exploitation of a personality's fame) - Privacy rights 60Q I . I .I I. I E I [ I.I . II - Personality rights are assignable and licensable. (e.g. for marketing or endorsement of products) - The rights are infringed where the person's fame is used without authorization This can be based om trademark law, copyrightlaw, the common law tort of passing off 61 Choice of Intellectual Property Rights: A Final Wordaiming: - Example Blackberry phone: Display, circuit board and machinery protectable through patents or trade secrets Term \"Black Berry\" protected by trademarks Shape and ornamentation protected by industrial designs Instruction manual and user interface protectable by copynght 63 Important considerations re IP protection . Which IP rights are available? . Is the product easy to reverse engineer? - Then trade secret protection might not suffice. . What is the geographical extend of the rights? - i.e. in which jurisdiction is protection required? . Length of obtaining IP rights - i.e. sometimes the product cycles are too short to warrant the costs of IP registration Scope and enforceability of rights - i.e. how fast and efficient is IP enforcement in the chosen jurisdiction? 64iummam - Intellectual property can be valuable assets for international businesses. - Some IP rights need to be registered in order to be protected. IP rights are territorial; this means that IP protection needs to be acquired where protections is sought. - International businesses should adapt an IP policy and investigate which assets they seek to protect and where to protect them. 65