The management and legal aspects of Intellectual Property: Area 1 Introduction

Ideas, innovation and their importance to the progression of business: Developing products

Products need to be continually progressed, or competitors may improve the concept and get a better product to market.

Not all progressions of a product can be easily protected: A Hoover or vacuum with a bigger bag cannot be patented, however a new method of dust collection may qualify for patent protection.

A new method of dust collection was patented by Dyson who utilised cyclonic particle removal to

negate the need for the traditional bag.

It is essential for managers and indeed all employees to have a grasp of innovation and the subsequent protection that is available.

However all innovation begins with an idea. Innovation arises from ideas and these ideas

must be progressed to the market place.

Innovation in any sector is vital as a competitive weapon, it is on rare occasion that a company can maintain its market position without the continued focused progression of its products. If the product is not improved competitors can develop new products, protect them and subsequently begin to impinge on key markets essential for a business to make a profit.

Innovation arises from ideas and these ideas must be progressed to the market place. This is not a simple task as many factors influence the progression and it is rare that even a closely related innovation will take the same path to market. Innovation can arise from

individual or group input and arise in relation to all aspects of a company.

Ideas can arise from many different sources, ranging from an employee idea that has nothing to do with his key area of work to an idea that has arisen from many years of expensive research and development.

A key management issue at this point is to ensure the business owns the resulting innovation rather than the employee leaving and taking his idea with him (or her)

EmployeeEmployer

Developing products (3)The process of guiding an idea to an innovation can be managed in many different ways according to the specifics of the company set up. Thoughtful and flexible management of all aspects of the process can aid a product to market.

Managers have to harness this sweat equity

Innovation does not depend on a standard uniform process; it is inherently dynamic and evolutionary.

Area 2 Protecting Innovation

Innovation and its protection: A introduction to intellectual property

Information, the founding basis of intangible market drivers, is usually

expensive to create, but cheap to copy,

as competitors can copy the information and appropriate the value of the property at a price lower than the costs incurred by the original producers.

Protecting innovationThis allows the second producer to take an

economic free ride,

thus removing value from the product and impinging on the primary producer’s ability to recoup initial expenditure costs incurred by research and development or the “sweat equity” incurred during testing and subsequent production.

Protection innovation: Why?

Protecting Innovation

:Why is it

important?

Knowledge must be made

in to property so it can be sold.

With certain products value attaches to the knowledge not

the actual property e.g. a CD music album.

Intangibles comprise competitive differentiation in many industries.

Very important in global markets.

Inherent rivalry or not?

With physical goods there is inherent rivalry between potential consumers

With intangibles use does not physically degrade the information,

and multiple use is enabled

Intellectual property enables the protection of

intangible goods.

Intellectual property rights are distinct and separate from the

property rights vested within tangible goods.

Tangible: Things that are physical in nature. Intangible: Things that

are not physical but are capable of being owned.

Protecting Innovation

:How is it enabled?

The IP family (1)Area 3 The Intellectual property fam

ily

1.

•Intellectual property has been stolen

2.

•Stolen = Theft

3.

•Theft criminal law therefore dealt with by the Theft Act?

WRONG

Oxford v Moss (1979)

Is information property?

EXAM

PAPER

I will put it back afterI have my evil way

A+

In Oxford v. Moss, the Divisional Court had to decide whether confidential information was "intangible property" for the purposes of the Theft Act 1968.

After considering a number of civil authorities dealing with the subject of confidential information, Smith J. wrote (at pp. 185-86): “we have to consider whether there is property in the information which is capable of being the subject of a charge of theft. In my judgment, it is clear that the answer to that question must be no.”

What is tangible Real Property (1)

Physical property – land, money, houses, clothes, food.Real or tangible property is concerned with the ownership of physical objects; the concept is well understood in Western society, as it is among the oldest institutions of human civilization. According to classical theory there are two principle elements involved in the Western

societal definition of property

What is tangible Real Property (2)

The first concerns the attribute that it can be

purchased or sold.

The second element of property concerns the right to exclude others. This right to exclude has a two-principle application. It may operate against third parties who have no rights over the property. It may also be applicable against those who do have a claim to the property, but one that is inferior to the primary owners.Physical property is expensive to create and to reproduce; for example, houses, automobiles, diamonds.

Intellectual property – ideas (expressed as designs, music, art, writing, dance, software).

Intellectual property is intangible.

A legal distinction is made between intangible property e.g. information contained within a book and tangible property e.g. the book itself

Intellectual property may take a lot of effort to create (e.g. a book) but is easy to reproduce at minimal cost.

What is intangible property?

Intellectual verses physical (1)Characteristics

Recognition of trading opportunities

Disclosure of attributes

Property rights

Property boundaries

Intellectual property

Inherently difficult, due to the intangible nature of the property

Relatively difficult

Limited (patents, trade secrets, copyright, etc)

Often fuzzy, it is often difficult to precisely identify precise boundaries

Physical commodities

Inherently easy, as physical commodities can be seen and quantified

Relatively easy

Broad

Generally sharp, parties usually know what physical goods belong to them

Intellectual verses physical (2)Characteristics

Item of sale

Variety

Unit of consumption

Inherent tradability

Intellectual property

In a digital format information used repeatedly under license

Heterogeneous

Often unclear

Low

Physical commodities

Measurable units, e.g. 20 books can be ordered and subsequently used

Homogeneous

Weight, volume, etc

High

Intellectual verses physical (3)Characteristics

Depreciation

Transfer costs

Intellectual property

Does not wear out, but usually depreciates rapidly, due to dissemination

Hard to calibrate, data is relatively easy to transfer, however know how may be difficult to transfer from one party to another (transfer costs increase with tacit portion e.g. human interaction)

Physical commodities

Wears out, suffers variable depreciation according to the type of goods

Easy to calibrate (depends on transport and related costs)

Intellectual verses physical (4)Characteristics

Enforcements of rights

Social history

Intellectual property

Relatively difficult, enforcement varies depending on the nature of the right. The burden of policing and prosecuting is placed entirely on the owner of the copyright

Evidence of widespread social disrespect in certain areas. Relatively recently established

Physical commodities

Relatively easy, theft is enforced by societal controls such as the police

One of the oldest human institutions

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Area 4 Copyright, Designs and Patents Act 1988

Main legislation concerning copyright, which is the right to copy (simple but important)

Gives details of what can be protected

Defenses

Procedures

It is a fairly large and complicated piece of legislation and has over 300 sections

The Copyright Acts of 1911 and 1956 are of limited effect, but are referred to in certain specific instances set out in the CDPA 1988.

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What Does Copyright Protect?  

Pursuant to section 1(1) of the Copyright, Designs and Patents Act 1988, copyright subsists in: original literary work original dramatic work original musical work original artistic work sound recordings films

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Copyright

Regulates the creation and use of various cultural goods.What does copyright protect? Creative media such as:

Books, Songs, Computer programs.

These are large important industries.

Where is the infringement

?

How much will it cost to stop?

Can I protect my work?

How much is this worth?

What is protected if I

buy the intellectual property?

Copyright does not exist in a pure idea

It must be fixed in some material form by the author or fixed in some material form

Green v Broadcasting Corp of New Zealand (1989)

The idea/expression dichotomy

The Copyright Act itself does

not define “originality.”

In University of London Press, Peterson J. famously stated: “… there remains the rough practical test that what is worth copying is … worth protecting.”

Exceptions to copyright useFair Dealing

Non-commercial research

Criticism, review or news reporting

Drawing, taking a photograph or making a film of buildings or sculptures in a public place

Parody

Area 5: What are patents?

A patent is a national monopoly right which is granted in return for the publication of the invention.

It is the right to prevent others from using the invention.

The right duration is usually 20 years, however it

can be extended in certain sectors.

Patents are the

most basic,

the most valuable,

and, to competitors, potentially

the most dangerous,

of all intellectual property, the category which demands to be studied above all others.

BASIC

What goes into a patent?

Claims:Defines scope of protection for invention

Description:Describes invention in enough Detail to be reproducibleTextFlowchartsBlock diagrams

Products and processes

Process How to make the product

ProductThe product itself

Both can be patented

Basic Requirements for Patentability

(1) NOVELTY

(2) INVENTIVE STEP

(3) INDUSTRIAL APPLICATION

(4) NOT EXCLUDED BY STATUTE