Intellectual Property Intellectual Property ProtectionProtection

in ain a

Rapidly Globalising Rapidly Globalising EconomyEconomy

Asset or Liability?Asset or Liability?

Presentation & Dialogue withPresentation & Dialogue with Prof CC HangProf CC Hang

Chairman, Intellectual Property Office of SingaporeChairman, Intellectual Property Office of Singapore7 April 20047 April 2004

No. of Patents Granted to Residents No. of Patents Granted to Residents (IMD (IMD World Competitiveness Yearbook 2003*)World Competitiveness Yearbook 2003*)

No. of patents granted to No. of patents granted to residentsresidents

123,978123,978

83,09083,090

34,05234,052

20,09420,094

18,32818,328

16,34016,340

11,290 11,290

4,491 4,491

3,9833,983

3,7423,742

63

RankRank

Japan (1Japan (1stst) )

US (2US (2ndnd) )

Korea (3Korea (3rdrd) )

Taiwan (4Taiwan (4thth) )

Germany (5Germany (5thth) )

Russia (6Russia (6thth) )

France (7France (7thth) )

UK (8UK (8thth))

Italy (9Italy (9thth))

China (10China (10thth) )

Singapore (45th)

*Based on no. of patents granted to residents (average 1998-2000)

No. of Patents granted to Singapore residents in 2003: 240

No. of Patents Granted Per Million Population by No. of Patents Granted Per Million Population by the US Patents and Trademark Office the US Patents and Trademark Office (WEF Global Competitiveness Report 2003)(WEF Global Competitiveness Report 2003)

RankRank

USA (1USA (1stst) )

Japan (2Japan (2ndnd) )

Taiwan (3Taiwan (3rdrd) )

Sweden (4Sweden (4thth) )

Switzerland (5Switzerland (5thth) )

Israel (6Israel (6thth) )

Finland (7Finland (7thth) )

Germany (8Germany (8thth) )

Canada (9Canada (9thth))

Singapore (10th)

No. of patents granted per capitaNo. of patents granted per capita

301301

273273

241241

190190

189189

165165

155 155

137137

109109

97

No. of Patents Granted to Residents per No. of Patents Granted to Residents per 1000 R&D Persons 1000 R&D Persons

(IMD World Competitiveness Yearbook 2003)(IMD World Competitiveness Yearbook 2003)

RankRank

Taiwan (1Taiwan (1stst) )

Korea (2Korea (2ndnd) )

Japan (3Japan (3rdrd) )

New Zealand (4New Zealand (4thth) )

South Africa (5South Africa (5thth) )

Thailand (6Thailand (6thth) )

Italy (7Italy (7thth) )

Chile (8Chile (8thth) )

Austria (9Austria (9thth))

France (10th)

Singapore (42nd)

No. of patents granted per 1000 R&D personsNo. of patents granted per 1000 R&D persons

367.7367.7

263.4263.4

221.6221.6

97.697.6

95.295.2

81.381.3

73.8 73.8

69.469.4

65.665.6

58.0

10.7

Importance of IP – the IP Value Chain Importance of IP – the IP Value Chain

CCreationreation

OOwnershipwnership

EExploitationxploitation

Protected IP

IP-savvy culture and

environment

CommercialSuccess

Technological Success

Awareness

Registration and Enforcement

Creation and Acquisition

IP ValueChain

Exploitation

Stac Electronics v Microsoft CorpStac Electronics v Microsoft Corp

1993 – Stac Electronics (US) sued Microsoft 1993 – Stac Electronics (US) sued Microsoft (US) for software patent infringement(US) for software patent infringement

The Stac patent involved software data-The Stac patent involved software data-compression technology, used in Microsoft’s compression technology, used in Microsoft’s then-standard DOS operating systemthen-standard DOS operating system

Verdict:Verdict: US$120mil against Microsoft US$120mil against Microsoft awarded in 1994awarded in 1994

Microsoft’s patent applications jumped from 6 Microsoft’s patent applications jumped from 6 to 60 per year! to 60 per year!

Eolas Technologies v Microsoft CorpEolas Technologies v Microsoft Corp

1999 – Eolas Technologies (US) sued 1999 – Eolas Technologies (US) sued Microsoft (US) for patent infringement Microsoft (US) for patent infringement

Eolas alleged Eolas alleged that the Microsoft infringed on that the Microsoft infringed on its patents when enabling Internet Explorer to its patents when enabling Internet Explorer to use plug-ins and applets in the softwareuse plug-ins and applets in the software

Verdict:Verdict: US$521mil against Microsoft US$521mil against Microsoft awarded in 2003awarded in 2003

Microsoft has appealed and the case is Microsoft has appealed and the case is pendingpending

Priceline v Expedia Priceline v Expedia

Priceline (US) sued Expedia (US) in Priceline (US) sued Expedia (US) in 1999 for infringement on it’s “name-1999 for infringement on it’s “name-your-own-price” business modelyour-own-price” business model

The dispute was subsequently settled The dispute was subsequently settled out-of-court, with Expedia agreeing out-of-court, with Expedia agreeing to pay royalties to Pricelineto pay royalties to Priceline

What is Intellectual Property (IP)What is Intellectual Property (IP) Creation that is original and innovative

Legally-protected in the form of • Patents• Copyright ©• TrademarksTM, ®• Designs• Layout-Designs of Integrated Circuits• Geographical Indications• Trade Secrets

Globalisation and Ecommerce – Globalisation and Ecommerce – Challenges for IP protection Challenges for IP protection

Ecommerce occurs globally Ecommerce occurs globally IP can be used and licensed in many IP can be used and licensed in many

countries simultaneously, due to wide-countries simultaneously, due to wide-reaching potential customer base via reaching potential customer base via the internetthe internet

Global nature creates challenges in Global nature creates challenges in obtainingobtaining and and enforcingenforcing IP rights in IP rights in different countries different countries

Global Challenges in Global Challenges in Obtaining Obtaining IP RightsIP Rights

Differences on what can be patentedDifferences on what can be patented

E.g. In the US, business methods can be E.g. In the US, business methods can be patented. E.g. patented. E.g.

Amazon’s “one-click” purchasingAmazon’s “one-click” purchasing eBay’s patent on information presentation eBay’s patent on information presentation

and management in an online trading and management in an online trading environment environment

Business methods are not currently Business methods are not currently patentable under the EU systempatentable under the EU system

Different rules before patent can be grantedDifferent rules before patent can be granted

First-to Invent v First-to-File First-to Invent v First-to-File

The US uses the The US uses the first-to-inventfirst-to-invent rule. rule. I.e. The first inventor who conceives and the I.e. The first inventor who conceives and the

technology or invention to practice. technology or invention to practice.

Other countries, e.g. the EU and Singapore, Other countries, e.g. the EU and Singapore, follows the follows the first-to-filefirst-to-file rule. rule.

I.e. The patent is granted to the first person who I.e. The patent is granted to the first person who files a patent application for an invention, files a patent application for an invention, regardless of who invented the technology. regardless of who invented the technology.

Global Challenges in Global Challenges in Enforcing Enforcing IP RightsIP Rights

Difficult to find the infringer and enforce IP Difficult to find the infringer and enforce IP rights that are violated on the Internet rights that are violated on the Internet

Unclear which country’s courts will have Unclear which country’s courts will have jurisdiction over disputes relating to E-jurisdiction over disputes relating to E-Commerce and IP Commerce and IP

Laws affecting IP vary from country to Laws affecting IP vary from country to country so levels of protection may be country so levels of protection may be different. different.

Trademarks and Domain NamesTrademarks and Domain Names

Due to the Due to the • higher costs of patentinghigher costs of patenting• difficulty in obtaining patents in some difficulty in obtaining patents in some

instancesinstances

Companies ought to maximise their Companies ought to maximise their IP assets by obtaining strong IP assets by obtaining strong protection for their Trademarks and protection for their Trademarks and Domain names. Domain names.

Maximising your IP Assets Maximising your IP Assets

Globalisation is unstoppable – at the Globalisation is unstoppable – at the core nature of ecommercecore nature of ecommerce

IP assets needs to be maximised to IP assets needs to be maximised to overcome differences in global IP overcome differences in global IP regimes regimes

IP must be used as a dynamic IP must be used as a dynamic strategic strategic tool to advance a company’s interests. tool to advance a company’s interests.

Strategic Use of IP OwnershipStrategic Use of IP Ownership

Market entry barrier Market entry barrier

Cost saving Cost saving

Source of income Source of income

Business expansionBusiness expansion

Case Study 1– Preventing others’ IP from Case Study 1– Preventing others’ IP from becoming your becoming your liabilityliability

Macronix InternationalMacronix International (Headquarters: Taiwan)(Headquarters: Taiwan) • US$1bil semi-conductor company founded in 1989US$1bil semi-conductor company founded in 1989

• Patent portfolio of 1200 patents worldwidePatent portfolio of 1200 patents worldwide

To avoid IP from becoming their liability,To avoid IP from becoming their liability,• In-house legal/IP team of 15 members, 13 of which In-house legal/IP team of 15 members, 13 of which

are IP-trainedare IP-trained

• Defended itself against Atmel (one of top 10 Defended itself against Atmel (one of top 10 semiconductor companies) in 5 US litigation cases. semiconductor companies) in 5 US litigation cases. Won all 5 cases Won all 5 cases

Case Study 2 – Turning potential Case Study 2 – Turning potential liabilityliability into mutual into mutual asset asset

Samsung Electronics (Korea) and SanDisk Corp (US)• Sued each other in California and Texas courts in

2002 over patent rights

• Both sides found that it would be more beneficial to fight together rather than against each other

• Dismissed the lawsuits and signed a seven-year extension to a deal that covers licensing and supply of flash memory technology

Case Study 3 – Profiting from IP Case Study 3 – Profiting from IP IBM (US)IBM (US)

• In 1991, IBM was a net payer for the IP of othersIn 1991, IBM was a net payer for the IP of others

• IBM decided that it could and should adopt IBM decided that it could and should adopt strategies to maximise its own IP assetsstrategies to maximise its own IP assets

• Embarked on an aggressive IP effort to ensure Embarked on an aggressive IP effort to ensure that patents were carefully mined, and all forms that patents were carefully mined, and all forms of IP were exploited through licensingof IP were exploited through licensing

• Close to 6,000% growth in annual licensing Close to 6,000% growth in annual licensing revenue, from US$30mil in 1990 to US$1.8bil revenue, from US$30mil in 1990 to US$1.8bil todaytoday

Conclusion: IP protection – Conclusion: IP protection – Asset Asset or Liability?or Liability?

Globalisation presents new challenges Globalisation presents new challenges in in obtainingobtaining and and enforcingenforcing IP rights IP rights

IP is an IP is an assetasset or or liabilityliability - Depends on - Depends on the extent of your company using IP the extent of your company using IP as a strategic toolas a strategic tool

Proactive approach to IP ownership Proactive approach to IP ownership and use is and use is imperativeimperative for IP to be an for IP to be an assetasset

Thank youThank you