Intellectual Properties for layman. Its definition and types.

Intellectual Properties for layman. Its definition and types.

Table of Contents

1. What is Intellectual Property?

2. Brief History

3. Different IP Rights        #Trademarks        #Patents        #Copyrights        #Trade Secrets

4. Searching for trademarks

5. Do you know?

What is Intellectual Property?

According to World Intellectual Property Organization (WIPO), “Intellectual property (IP) refers to creations of the mind, such as inventions; literary and artistic works; designs; and symbols, names and images used in commerce.”

Intellectual property is basically divided into two categories:

• Industrial Property and
• Copyright

The definition can be extended to “Intellectual property rights are like any other property right. They allow creators, or owners, of patents, trademarks or copyright works to benefit from their own work or investment in a creation.”

Broadly there are five types of protections:

1. Trademarks
2. Patents
3. Industrial Design
4. Copyright and
5. Trade Secrets

Brief History

First instant of legislation drawn related to IP was in 1623, when British Parliament passed the “ Statute of Monopolies”. In a change brought through this legislation, the hold of powerful industry guilds, who dictated what and how much can be imported or made available in the market, was broken. As per the new law, authors or inventors were allowed to retain their ownership rights for a period of 14 years during which they held the exclusive rights to manage the use of their invention and creation. Various further enactments related to copyright laws were passed by British parliament. Significant among them was “Statute of Anne”. Brought in 1710, in an era of printing press and new colleges and universities, an author was granted property rights over his work for 14 years with provision for renewal of further 14 years.

In USA, the first patent act was signed in 1790, based on new constitution of USA. Similarly in 1791, during French Revolution, patents laws were created, followed by Copyright legislation in 1793, under which such patents were extended to outside France. By 19^th century most of the developed countries had Patent and copyright laws.

However, by end 19^th century situation so arose that patent and copyright laws were rampantly misused due to national boundaries. Paris Convention in 1883 established a trans-boundary union. Under this convention signed by 11 countries, a foreigner was granted equal right as a citizen, meaning a French had equal rights with regards to copyrights as a Spanish citizen enjoys in Spain. Further, right to priority was granted, which enabled any copyright holder to file patent within 12 months and within 6 months for trademark and industrial designs from filing of patents in their own country. During this period, the patent holders were granted temporary protection in other countries.

The journey of harmonization continued with prominent revisions of treaty in:.

1886       –     Berne Convention

1891       -      Madrid Agreement

1893       -      BIRPI

1925       -      Hague Agreement

1957       -      NICE Agreement

1967       -      WIPO , Stockholm Convention

1970       -      Patent Co-operation treaty ( PCT )

1973       -      European Union comes together for EPC (EU)

1974       -      WIPO joins United Nations

1989       -      Madrid Protocol

1994       -      TRIPS ( under WTO )

1996       -      WIPO Copyright Treaty ( WCT )

1997       -      Trademark Law Treaty

2000       -      Patent Law Treaty

2011       -      America Invents Act ( AIA )

2012       -      Unitary Patent Rules

2013       -      UPCA ( EU )

 Currently there are 177 member nations.

Different IP rights

Trademarks

According to WIPO’s definition “a Trademark is a sign capable of distinguishing the goods or services of one enterprise from those of other enterprises”.

A trademark can be any of the following:

• Single and simple word   Apple, Shell, Mobil, Virgin
• Combination of words     Microsoft, JOHNNIE WALKER, US Polo
• Family Name                   TATA, Gucci
• Geographic Name           Himalaya, Mont Blanc, Mount Everest
• Pseudonyms                   Paco Rabanne, Kate Moss, Lady Gaga
• Numbers                         737,747 of Boeing, i586 of Intel,501 of Levi

The primary goals of Trademarks are: 

• Distinguishing mark
• Origin and quality of goods which goes with the name behind the Trademark
• Prevent competitors to benefit from goodwill of the brand.

A trademark can be a combination of:

A sign    

Image

 A combination of colors and words

A sound

A smell

The scent, Flowery Musk Scent used in Verizon stores was trademarked in 2014. 

And,

3-D hologram

A holder of trademark enjoys some exclusive rights :

• Trademark can be sold or transferred
• Trademark can be licensed or permitted to be used commercially

Conditions of validity

1. Distinctive Character – TM needs to be arbitrarily chosen, having no link with necessity and should not be descriptive. 

Yahoo, Kodak and Xerox have no link with what they are into, while International Business Machine and Microsoft partially indicate their line of business.


2. A mark is not distinctive when it fails to indicate origin, does not allow a reasonable choice of purchase or is anti-competitive.

3. A registered trademark is not permanent and the following factors can end protection:

• TM is not auto-renewed. They need to be renewed every ten year.

• Protection can be refused if TM rights is not lawfully used in form of trade or in litigation for 3 to 5 years.

• TM should not be subjected to de-generation, i.e., consumers start referring to it in generic manner instead of a registered trademark and the TM is lost to common use. 'Cellophane' of Innovia Films Ltd, 'Dry Ice' of Dry Ice Corporation and 'Escalator' of Otis Elevator Company are examples of such trademarks lost due to common use.

Patents

WIPO defines Patents as “an exclusive right granted for an invention, which is a product or a process that provides, in general, a new way of doing something, or offers a new technical solution to a problem. 

To get a patent, technical information about the invention must be disclosed to the public in a patent application.”

Patents are:

• Limited to the territory where it is patented.

• Patents are independently granted in different countries/region.

• Protection is generally given for maximum of 20 years from date of filing of application, subject to payment of annual fees. On a lapse or expiry, a patent is free to be used by anyone. For example generic drugs are free for usage once patent has expired.

• Patents are designed for exclusion rather than for making and using. Meaning, it forbids others from using the same technology or design, but does not give the holder exclusivity of usage. Any similar patent can hamper the plans of the holder.

• A patent is exhausted on first sale anywhere. A patentee loses rights once it is sold anywhere in the world. Until recently US was an exemption, where a sale in any other country was viewed as non-exhaustion in US. It may be noted that, the sale as mentioned is of the patent and not of the product.

It may be interesting to know that, India in 2012 allowed Natco Ltd, a local bulk drug manufacturing company to sell copies of Bayer’s cancer medicine Nexavar at fraction of Bayer's price. This was done under a provision which enabled governments to issue compulsory licence under certain conditions, such as public health emergencies. A licence fees is paid under this arrangement but does not require any permission from patentee.

For more information on this matter, please read : https://www.wto.org/english/tratop_e/trips_e/public_health_faq_e.htm  and  

https://www.reuters.com/article/us-india-patents-usa/india-defends-right-to-issue-drug-compulsory-licenses-idUSKCN0WP0T4

Copyrights :

Definition as per WIPO is, “Copyright (or author’s right) is a legal term used to describe the rights that creators have over their literary and artistic works. Works covered by copyright range from books, music, paintings, sculpture, and films, to computer programs, databases, advertisements, maps, and technical drawings.”

Broadly speaking, by copyrights the protection is provided for:

• Literary works such as novels, poems, plays, reference works, and newspaper articles;

• computer programs, databases;

• films, musical compositions, and choreography;

• artistic works such as paintings, drawings, photographs, and sculpture;

• architecture; and

• advertisements, maps, and technical drawings.

It may be noted that Copyrights does not protect the idea itself, but the expressions of the idea. Meaning, a painter’s painting of a landscape is copyright for the method and style of expression but it cannot deter somebody else to paint the same landscape in a different way.

A copyright is enforceable from the moment of creation and there is no requirement for registration of such rights, expect in certain cases.

Only the original ideas are protected and Originality is defined as an “expression of the author’s personality” in countries which use civil laws, while in countries practicing common laws, a work is original if an author puts skill and effort into its creation.

Definition of ‘authorship’ also differs in the two systems, in Copyright system, it can be a physical person or legal entity while in Droit d’ auteur system it is a physical person.

As per WIPO, there are two types of rights under copyright:

economic rights, which allow the rights owner to derive financial reward from the use of his works by others; and

moral rights, which protect the non-economic interests of the author.

Most copyright laws state that the rights owner has the economic right to authorize or prevent certain uses in relation to a work or, in some cases, to receive remuneration for the use of his work (such as through collective management). The economic rights owner of a work can prohibit or authorize:

• its reproduction in various forms, such as printed publication or sound recording;
• its public performance, such as in a play or musical work;
• its recording, for example, in the form of compact discs or DVDs;
• its broadcasting, by radio, cable or satellite;
• its translation into other languages; and
• its adaptation, such as a novel into a film screenplay.

Protection in EU and US is for 70 years from death of author and 50 years in others.

Trade Secrets

As per WIPO, “any confidential business information which provides an enterprise a competitive edge may be considered a trade secret. Trade secrets encompass manufacturing or industrial secrets and commercial secrets. The unauthorized use of such information by persons other than the holder is regarded as an unfair practice and a violation of the trade secret. Depending on the legal system, the protection of trade secrets forms part of the general concept of protection against unfair competition or is based on specific provisions or case law on the protection of confidential information.

The subject matter of trade secrets are usually defined in broad terms and includes sales methods, distribution methods, consumer profiles, advertising strategies, lists of suppliers and clients, and manufacturing processes. While a final determination of what information constitutes a trade secret will depend on the circumstances of each individual case, clearly unfair practices in respect of secret information including industrial or commercial espionage, breach of contract and breach of confidence.”

A trade secret is not needed to be registered and protection is permanent. It may be noted that, trade secrets are secret only if they are kept as secret, i.e., they should be not be available in public and right holders takes appropriate steps to keep them so. Any disclosure or sharing should be through legally enforceable contracts.

Know-how differs from Trade Secrets and is generally defined as:

• A production factor, i.e., it is used in manufacturing or processing of goods and materials,

• Negative information is included, i.e., a knowledge to prevent mistakes by using the know-how,

• A know-how gives an advantage over others, and

• It must meet the criteria of a trade secret.

Searching for trade marks

For search related queries, the following sites may be visited :

1. TESS
2. eSearch plus
3. TMview , the newest and most popular

Do you know?

That, even though Apple Computers is a registered trade mark, it cannot stop Apple Products Inc from using a similar name and logo, as products of both the companies are different and filed under different chapters.

That, the word "Entrepreneur" is a trademark word.

That, catchphrase: "That's Hot!" is trademarked to Paris Hilton.

That, Twitter failed to register the phrase “tweet” because a third party developer trademarked the phrase “Let Your Ad Meet Tweets" in 2008. The matter was mutually settled in 2011.
http://www.telegraph.co.uk/technology/twitter/8821577/Twitter-wins-battle-over-ownership-of-tweet-trademark.html

That, Harley Davidson tried and failed to trademark the sound of revving engine.

And

Donald Trump once tried trademarking the phrase “You are fired”. Ironically, it got rejected because it sounded too similar to “You are hired”, a board game.

Vinay Pandey, 29/11/2017

PS : If you have a suggestion or have noticed a mistake, please leave a comment.

Advantage and disadvantage of Exports

Any commercial activities that take place across borders comprise International Business. Nature of such business may involve movement of goods, providing services, expansion of franchise, outsourcing or off-sourcing production or research and development.

As a domestic firm, it may be an intended strategy to export products and services. However, before venturing into the export business the firm must assess both advantages and disadvantages. Such firms will have its fair share of opportunities and face various deterrents.

Why a firm would be inclined to export? What incentive does exporting provide?

There may be various reasons, prominent among them are:

1.Using excess capacity

A firm may look to exploit surplus production capacity which it may have. It can extend its manufacturing facility to a party from outside the country or export its products directly.

Certain industries are seasonal in nature. By also focusing on export market, they can ensure manufacturing throughout the year.

2.Lack of domestic market

A firm may not have a market of its product in its own country.

A mining company with natural resources but with no processing capability of its own or producer in its own country may be forced to export raw materials.

3.Stagnation in domestic market

A producer in domestic arena finds down the line a decline in sales and lack of interest from consumers, perhaps because of changed technology or availability of substitute in its own country. Exports can open up new opportunities in markets where its products can still do well.

An electronic manufacturer would prefer to export to under-developed countries in its declining phase instead of incurring losses by sticking to domestic market only.

4.Targeted market is not present in its own country

A firm may not be able to sell its products, designed for a targeted segment which does not exists in its own country and hence would need to export to other countries.

An order supplier for niche leather goods brands would need to export rather than try to sell in domestic market where buyers are non-existent.

5.Over-competition in own country

Domestic market in its own country may have become price sensitive and with no cost advantage it needs to look for fresher grounds.

6.Brand name

A firm with domestically established brand name may want to capitalize on it.

Mahindra and Mahindra, going global with its brand of SUVs is an example of such expansion.

7.Spreading of risk

Firms spread their risk by diversifying into international market and by not tying themselves to business cycles in their own country. Firm’s own country could face recession and during such period revenues from overseas business play an important role in survival.

8.Economics of scale and higher profit margin

With expansion into international market a firm increases its scale of operation, consequently higher utilization of production facility and acquiring cost advantage and hence increased profitability.

9.Identification of demand

A firm may identify a demand that exists in another country and hence choose to produce and export to the country.

10.Foreign exchange

A firm may be inclined to export and earn foreign exchange to negate its own requirement for imports.

11.Export Incentives

Many governments hand out incentives in form of Duty Draw back, Duty free import licences, tax holidays etc. Exporters can be major beneficiary of such schemes, contributing to their income and presenting them with competitive advantage.

Disadvantages of Exports

1.Fluctuation in foreign exchange rate

Fluctuation in foreign exchange rate can adversely affect profit margins in local currency terms. A stronger local currency would imply lower revenue. Over a long run, it can be genesis for loss of competitive advantage in international market.

2.Economic conditions in importing country

An economic slowdown in importing country can cause reduced export orders.

3.Political conditions in importing country

De-growth in economic could be consequence of an adverse change in political environment.

An importing nation going to war with its neighbor or deterioration in political stability could result in diminishing imports.

4.Change in regulation in importing country

Governments in importing country could bring out a change in laws, regulations or policy, adversely affecting export potentials.

Higher import duty or regulations to deter dumping changes business scenario.

5.Rivalry between nations

A competing nation’s government sometime provide higher export incentives or could even extend sovereign assistance in dumping into an importing nation; meaning significant lower business for the firm.

6.Socio barriers

Difference in language and culture creates socio barriers for exporting firms.

7.Higher  working capital requirement

Export could require higher inventory days and abound logistic challenges while shipping to certain destinations.

8.Credit risk

One of the major risks which an exporter faces is payment risk. Unrealized proceeds mean financial loss to exporters.

Even though international financial transactions have undergone standardization and is regulated, possibility of non-liquidation of export receivables exists.

Conclusion 

While exports present more advantages than disadvantages, it is important for firms to review periodically to assess benefits and draw their strategy accordingly.

Vinay Pandey, 27/11/2017

PS : If you have a suggestion or have noticed a mistake, please leave a comment.