1 innovation management managing intellectual property (ip)

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Innovation management

MANAGING INTELLECTUAL PROPERTY (IP)

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In this presentation, we will try: to define what is IP and why is used to examine the different types of protection

for IP to identify patent systems and their

limitation to explain why patent is a valuable resource to identify the link between brand name and

trademark to identify the areas of copyright

Introduction

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MANAGING INTELLECTUAL PROPERTY

Coming up with an idea the simplest and cheapest course of action is to do nothing about legal protection, just keep it secret.

BUT What happen if you want to commercially

exploit (i.e. asking for financial rewards, which are usually in the form of royalties)

OR If someone else develop a similar idea (to

yours) and apply for legal protection and seek commercial exploitation? Indeed, research scientists work independent;y towards the same goal.

Introduction

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Intellectual Property (IP) law is consists of laws and regulations allowing you to protect

your ideas from unlawful use or infringement by others.

There are basically 2 reasons why should legally someone protects his ideas:

1. to prevent other business or former employees from unlawfully using your ideas to compete against you

2. To clarify who owns the right to IP developed business and its employees

Introduction

NOTE: Under the law, the ideas created while employed or commissioned by someone else are owned by your employer.

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The world of IP changes at an alarming rate The law tries to keep a pace with technology

changes as well as to allow firms to operate in different ways than before

A degree of confusion seems to exist between national court decisions and those of European Court of Justice

Introduction

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Main Types of Intellectual Property

Type of Intellectual

property

Key features of this type of protection

1. Patents Offers a 20-year monopoly

2. Copyright Provides exclusive rights to creative individuals for the protection of their literary or artistic productions

3. Registered designs

As protected by registration, is for the outward appearance of an article and provides exclusive rights for up to 15 years

4. Registered trademarks

Is a distinctive name, mark or symbol that is identified with a company’s product

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A patent is a contract between an individual or

organization and the state.

In this way, state: Confers the legal right to stop others copying the

invention

but has no obligation to prevent others benefit from it.

This is the responsibility of the individual or the organization who is granted the patent.

The cost of defending a patent against infringement can be

quite high.

Patents

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Monopoly for 20 years:

• valued for EU & US

• it counts from the date the patent application was first filed

• (In return for this monopoly) the patentee pays a fee to cover the costs of processing the patent, and, more importantly, publicly discloses details of the invention

• Patents are granted to individuals or organizations who can claim to a new product, or manufacturing process, or to an improvement of an existing product or process that was not previously known.

Annual fees:

• Heavy annual renewal fees have to be paid to keep it in force

Patents: Forms

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Patent agents:

•The role of a patent agent combines scientific/engineering knowledge with legal one and expertise and it is a specialized field of work

•some firms have in-house patent agents who prepare patents for the company’s scientist search patent databases around the world on

behalf of the company’s scientists

Patents: Forms

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1. Novelty

2. Inventive step

3. Industrial application. Penicillin was a discovery, i.e. why it could not be patented but the process of isolating and storing Penicillin clearly had industrial applications and thus was patentable.

Patents: Criteria for Legal Protection

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Discoveries Scientific theory are not

patentable Mathematical processes

Exclusion from Patents

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The scientific developments in the field of biology, biotechnology and natural science has fueled intense debates about the morality of patenting life forms.

US patent system enables the granting of patents on some life forms. At present many believe that US patent law is too heavily biased towards the needs of inventors and investors rather than the poor.

EU patent system did not enable the granting of patents on any life form.

The patenting of life

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The scientific developments in the field of biology, biotechnology and natural science has fueled intense debates about the morality of patenting life forms.

US patent system enables the granting of patents on some life forms. At present many believe that US patent law is too heavily biased towards the needs of inventors and investors rather than the poor.

EU patent system did not enable the granting of patents on any life form.

QUESTION: What are the consequences from this EU decision?


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ANSWER:

1.The granting of a patent to a company on certain genes may restrict other companies’ ability to work with those genes

2.The deny of granting of patents on some life forms has(had) serious implications for the European biotechnology industry, as its R&D efforts could not be protected with results:

either to stop investments or the capital in the form of intellectual and

financial to flow out from EU to US.


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On 27 November 1997 the EU permitted the granting of patents on certain life forms something that had a significant impact in the area of gene technology


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On 27 November 1997, after a big debate, the EU permitted the granting of patents on certain life forms something that had a significant impact in the area of gene technology

WHY THERE WAS A BIG DEBATE ?


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On 27 November 1997, after a big debate, the EU permitted the granting of patents on certain life forms something that had a significant impact in the area of gene technology

WHY THERE WAS A BIG DEBATE ?

Big debate on the subject of cloning a new life from existing cell.

One view is the pessimistic one of this new sciences where people argue that scientists should not play with nature and even that this new science is a threat to the future of mankind

Another brighter view is that science is on the edge of a new frontier and the future will be one where human suffering is relieved and where incurable illnesses are treated.


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an industry which fives years ago did not exist, but today worth ~ € 45 bio

~800 SMEs work in this field in EU claims of more than 127,000 human genes exist all searching for tests, treatments, cures and

vaccines for diseases all seeking wealth from DNA

Human genetic patenting

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QUESTION

It is given that the biotechnology has been liberalized by both EU and US and that in the past few years the biotechnology firms have been making numerous patent applications for genes or partial human gene sequences. This is a sign that human genes are being turned into intellectual property and licensed to the highest bidders.

• What questions this approach rises?

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ANSWER

The key question is, will this property then be made widely available to help the hungry, the sick, and the desperate?

or

A few firms will profit for sometime (from many years of publicly funded science) and exploit the poor and vulnerable?


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ANSWER

The key question is, will this property then be made widely available to help the hungry, the sick, and the desperate?

or

A few firms will profit for sometime (from many years of publicly funded science) and exploit the poor and vulnerable?

QUESTION: What do you think?


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Patents in Practice

Some have little faith in the patent system Some believe that the patent system is designed for the large

MNCS who have the resources to protect and defend any patent granted to them. The problem is that applying and securing a patent is only the beginning of what is usually an expensive journey

Infringing a patent means that the company has to incur legal actions which are cost and time consuming. One of the most well known cases was Apple Computer Inc. vs. Microsoft, where Apple alleged that Microsoft had copied its Windows operating system

Small firms view the patent system with dread and fear, e.g in UK only 10% of patents are granted to small firms, (when they represent 99% of companies).

In theory, in UK, the whole process sounds straightforward costing 225 pounds/patent, but in practice it end up to 1,000-1500 pounds

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QUESTION

As there is a lot of ground for R&D in genes technology, do not you think that by shortening the patenting 20-years monopoly (say to 10 years) this will give a push so that more SMEs and entrepreneurs will enter the game?

Patents in Practice

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QUESTION

If you obtain a patent for an invention and pay all the necessary fees, what happens if one day you see your invention in a shop window? Can you call in at the local police station and report it? Who will pay to bring a case against the retailer and manufacturer?

Patents in Practice

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QUESTION

What happens when the patent protecting your product expires?

Expiry of a Patent

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ANSWER• For any firm operating in a science-intensive industry, the whole game is to protect its development for as long as it can in order to exploit the costly and time consuming R&D period as well as to engage in new projects.

• For competitors, expiration of a patent means that they are able to use the technology and develop their own products. Such products are referred to as generic products. A generic product is cheap to produce.

Expiry of a Patent

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• For competitors, expiration of a patent means that they are able to use the technology and develop their own products. Such products are referred to as generic products. A generic product is cheap to produce. WHY?

Expiry of a Patent

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• For competitors, expiration of a patent means that they are able to use the technology and develop their own products. Such products are referred to as generic products. A generic product is cheap to produce as no extensive R&D costs are required and relatively easy to copy

• Market share falls of 85% are typical for the patenting product, so costs decline also considerably (see figure in next slide).

Expiry of a Patent

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Marketshare

Time

100%

70%

Patent in force Expiryof patent

Generics enter the market

0%

The company Takeda is expecting a drop in sales of 90% when its $4 bio anti-ulcer treatment drug Prevacid comes off patent in 2009

Expiry of a Patent

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QUESTION

So what form of defense are adopted by manufactures, to protect their product(s) [and their hundred of millions of dollars] after the patent period ?

Expiry of a Patent

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ANSWERThere are two solutions:• Brand development or/and• Patent extension Developing a brand requires long-term effort, so with a time fence of patent protection, the company can develop a brand and a brand loyalty, aiming that when the product goes off-patent customers will continue to ask for the branded product as opposed to generics. In practice, companies adopt adopt a combination of aggressive marketing (to develop the brand) and technical research to improve its characteristics further and file for additional patent to protect the new and improved version

Expiry of a Patent

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Patent offices house millions of patents (e.g. in UK, there are over than 2 mio British patents)

Information available to publicBy searching patents, you can extract info, e.g

How your competitor is doingWhere your competitor is active and how much (due to the details enclosed in the patents)

Where your competitor is heading and what type of products is considering developing

or help you to develop and modify your strategy or to pursue a different approach to a problem

Use of Patents in Innovation Management

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QUESTION

Do patents hinder or encourage innovation?

Use of Patents in Innovation Management

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Trade secrets are the confidential business information, activities, methods and processes which are not of common knowledge, but are not patented, copyrighted or trademarked.

EXAMPLES: Customer lists and statistics which the company has gathered in relation to its customers are trade secrets.Coca-Cola’s recipe is a trade secret.

For most SMEs their trade secrets are their primary IP. Without them, they would have a very difficult time succeeding, and they are often what separate a successful business from another which may not be so successful

Trade Secrets

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Trade Secrets

QUESTION

Given the impressive advances made in science over the past 50 years, especially in the area of detecting substances and ingredients, scientists now claim to be able to detect one drop of blood in a swimming pool full of water. Does anyone still believe that the ingredients in Coca-Cola, for example, are secret and unknown ?

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QUESTION

It was said before that for most SMEs their trade secrets are their primary Intellectual Property. But how can you protect your trade secrets from your employees?

Trade Secrets

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ANSWER

Through contractual agreements.

You may make it a condition of employment that all trade secrets and customer lists remain the property of the business and that they cannot be used or distributed to 3rd parties.

You may also consider requiring the employee to assign to the business all inventions and discoveries made during employment.

Trade Secrets

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Patent vs. Trade Secrets for SMEs

As a practical matter, it is often difficult for an SME to protect a patent, because of the complexity and the expense.

A patent application requires disclosure of great details about the steps taken in the process and the diagrams of the invention. The process is complicated and the cost of defending a patent against infringement can be quite high.

It may be better off keeping the invention or process to the company and protecting it as a trade secret.

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Trademarks

A trademark is a word or symbol used to identify a company or its services and products.

For many companies, especially in the less technology – intensive industries where the use of patents is limited, trademarks offer one of the few methods of differentiating a company’s products.

Trademarks are closely associated with business image, goodwill and reputation.

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Coca-Cola Mars Hoover Dexion Nestle

Trademarks

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The registration of a trade mark is for a period of 10 years from the date of registration which may be renewed indefinitely for further 10-year periods. Once accepted and registered, trademarks are considered to be an item of personal property.

The mark must be unique and cannot be recognized by the market place as belonging to another company.

Example: If the Posh Pita Company has been baking pita bread for 10 years using a smiling pita bread as its symbol, you wouldn’t be able to trademark a smiling pita bread as your new company’s logo even if the Posh Pita Company didn’t register its smiling pita with the trademark office if the smiling pita is instantly recognizable as the logo for the Posh Pit Company.

Trademarks

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There are companies which, for a fee, maintain nationwide surveillance of trademarks and can assist companies in protecting their trademarks

Trademarks

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The fact that a trademark is registered does not mean that one cannot use the mark at all.

EXAMPLE

In the case of Bravado Merchandising Services Ltd vs. Mainstream Publishin Ltd, the respondent published a book about the pop group Wet Wet Wet under the title “A Sweet Little Mystery – Wet Wet Wet – The Inside Story”. Wet Wet Wet was a registered trademark and the proprietor brought an injunction against the use of the name. The court decided that the trademark had not been infringed because the respondent was using the mark as an indication of the main characteristic of the arte-fact which, in this instance, was a book about the pop group.

Trademarks

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Where a business uses a trademark that is similar to another or takes unfair advantage of or is detrimental to another trademark, infringement will have occurred.

EXAMPLE

In the case of Velva-Glo, the trademark was refused for paints because it was judged to be too near the word “Vel-glo” which was already registered

Trademarks

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The design register was set up in the early 1880s in response of British textile manufacturers who saw that their new textile designs could be copied

Why “registered design?” This form of protection is used when a new product may be created which is not sufficient novel or contain an invention step so as to satisfy the exacting requirements for the granting of patents.

A design that is protected by registration is the outward appearance of the article, i.e. intended for those designs intended to have some form of aesthetic appeal, e.g electrical appliances, toys, etc

Registered Designs

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The registered design lasts for a maximum of 25 years. Initially the proprietor is granted the exclusive right to a design for a fixed term of 5 years, which can be renewed for up to further 5-years terms.

An example of registering a design is the design of a kettle. This would prevent other kettle manufacturers from simply copying the design. Clearly, the kettle does not offer any advantages in terms of use, hence a patent cannot be obtained, but a good design is also worth protecting.

Registered Designs

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Copyright is recognized by the symbol Any original work which can be printed can be copyrighted. Copyright can be protected through registration or by noting

on the document itself that it is subject to copyright by using the term “Copyright” or the symbol , giving your name, and showing the year of first publication.

Copyright may subsit in any of 9 descriptions of work and these are grouped into 3 categories:

Original literary, dramatic, musical and artistic worksSound recordings, films, broadcasts & cable programmesTypographical arrangements or layout of a published edition

Copyright

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C

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Copyright

C

QUESTION: Photographs & computer generating work? Category ?

C

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Copyright

C

QUESTION: Photographs & computer generating work? Category 1

C

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The duration varies according to the description of the work. In UK, the first category (i.e. original literary, dramatic, musical and artistic works) expires after 70 years after the death of author, in other cases 50 years after the calendar year in which it was first published.

Copyright

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The area of copyright has changed significantly over the past years, mainly because it now covers computer software

Both computer software and music industry have battled with their illegal copying for many years.

For an author of creative material to obtain a copyright protection it must be in a tangible form so that it can be communicated or reproduced. It must also be the author’s own work and thus the product of his/her skill or judgment.

Copyright

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Concepts, principles, processes or discoveries are not valid for copyright protection until they are put in a tangible form such as written or drawn. It is the particular way that an idea is presented that is valid for copyright.

If someone has written an article, you cannot simply rephrase it or change some of the words and claim it as your own. You are however, entitled to read an article, digest it, take the ideas from the article together with other sources and weave them into your own material without any copyright problems. In most instances common sense should provide the answer.

Copyright

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END

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☺ CASE STUDY

Pricing, patents and profits in the

pharmaceutical industry


1 innovation management managing intellectual property (ip)

Documents

intellectual property

intellectual property

innovation management

legal protection

world of ip changes

ip developed business

type of protection

patent systems