Nature and role of intellectual property Lecture outline

Nature and role of intellectual property Lecture outline: • Introduction to the topic • Why are Intellectual Property Rights awarded? • Main types of intellectual property • Patents • Trade marks • Designs and utility models • Copyright • Alternatives to IPRs • Questions for discussion

Introduction • Range of issues can be discussed, including – Historical development – Recent controversies (see Chapter 11 and/or) • • http: //www. scienceprogress. org/2009/01/patent-reform-101/ http: //www. law. duke. edu/boylesite/ip. htm http: //en. wikipedia. org/wiki/File_sharing http: //www. wto. org/english/tratop_E/TRIPS_e/trips_e. htm

Why are patents awarded? • Incentive to invest in innovation – Note: invention may occur without monetary incentives (due to human curiosity), but an innovation requires investment • Patents balance the need to provide incentives with the introduction of market failure (i. e. high prices of non-rival good) – Have patent protection for up to 20 years, then knowledge/innovation can be exploited by all

Illustrating the role of patents • Figure 2. 1 shows a drastic process innovation – Patent owner now has monopoly (sets high price compared to marginal cost, and restricts quantity) – BUT, price is lower than previous price (preinnovation), hence society wants innovation. – Society would also like lower prices (P=MC), and this happens when patent protection expires (normally after 20 years) • Note: the above logic applies for all product and process innovation, but easy to illustrate with drastic process innovation

Figure 2. 1 A drastic process innovation

Patents • What can be patented? • How to get a patent? • Dimensions of patent • Markets for patent rights • Who uses patents most? (Above are sub-headings in Chapter 2 and summary of material can be found there) May also want to illustrate some famous patents and/or specifics of own country (see below for sources)

Top patentees at US Patent Office and European Patent Office US Patents (grants) 2006 EPO (grants) 2006 IBM 3, 621 Phillips 4, 425 Samsung 2, 451 Samsung 2, 355 Canon 2, 366 Siemens 2, 319 Matsushita 2, 229 Matsushita 1, 529 Hewlett-Packard 2, 099 BASF 1, 459 Intel 1, 959 LG Electronics 1, 214 Sony 1, 771 Robert Bosch 1, 093 Hitachi 1, 732 Sony 1, 088 Toshiba 1, 672 Nokia 882 Micron 1, 610 General Electric 768

Further information on patents • US: http: //www. uspto. gov – http: //www. uspto. gov/web/offices/ac/ahrpa/opa/kids/kidevents_press. html • UK: http: //www. ipo. gov. uk – http: //www. ipo. gov. uk/types/patent/p-about/p-funandgames/p-map. htm • European Patent Office: http: //www. epo. org/ – http: //www. epo. org/topics/ip-webguide. html • World IP Office: http: //www. wipo. int • Patent scoreboards (national offices and also http: //bwnt. businessweek. com/interactive_reports/most_innovative/ • There are many on-line resources, including free patent searches (e. g. http: //www. patents. com/)

Trademarks • What can be registered? • How is a trademark obtained? • Length, breath and geographical coverage • Markets for trademarks • Who uses trademarks most? (Above are sub-headings in Chapter 2) Further information can be found at national IP office web-sites. Note also that ‘brands’ are worlds most successful trademarks (see : http: //www. interbrand. com/best_global_brands. aspx or Brand. Finance)

Top trademarkers in the US and Europe US Trademarks (registered) 2006 EC trademarks (registered) Mattel 639 Glaxo 154 Deutsche Telekom 429 L’Oreal 138 Novartis 134 Novartis 135 American Int’l AIG) 126 El Corte Ingles 127 Disney Enterprises 120 Barilla G. e R. Fratelli Società per Azioni 115 Proctor and Gamble 117 Bristol-Myers Squibb 106 Mars 101 Proctor and Gamble 105 IGT 96 Viacom International 104 Beautybank 93 Lidl Siftung 87 Nedboy, Robin 90 Sony 76 2006

Proportion of firms applying for IPRs by sector (large firms in UK, 1996 -2000) Sector No. firms in sample U. K. Trademarks Community Trademarks U. K. Patents EPO Patents 1 Agriculture/Mining 67 0. 19 0. 12 0. 21 0. 12 2 Manufacturing 640 0. 67 0. 55 0. 40 0. 35 3 Utilities 26 0. 85 0. 62 0. 50 0. 42 4 Construction 89 0. 39 0. 22 0. 09 5 Finance 191 0. 52 0. 26 0. 05 0. 06 6 Real Estate 112 0. 22 0. 12 0. 03 0. 01 7 Wholesale 181 0. 52 0. 33 0. 12 0. 07 8 Retail 132 0. 75 0. 40 0. 08 0. 05 9 Hotel/Catering 54 0. 65 0. 35 0. 06 0. 00 10 Transport/Comm. 115 0. 57 0. 43 0. 10 0. 05 11 Bus. Services 259 0. 57 0. 43 0. 08 0. 06 12 Other Services 188 0. 56 0. 37 0. 10 0. 12

Other IPRs • Designs and utility models - Section 2. 5 discusses these - Next table illustrates use of designs • Copyright (see section 2. 6) – Copyright, and specifically the file sharing issue, may be a key issue for students – Hence, could be that copyright issues is developed in separate lecture and/or as an assignment (some readings for students at end of lecture outline)

UK Top Ten IPR Scoreboard 2003 UK PATENTS NEC 209 UK TRADEMARKS GLAXO GROUP 118 HEWLETT PACKARD 196 UNILEVER SAMSUNG SCHLUMBERGER 177 UK DESIGNS ORIENTAL WEAVERS 90 104 TY INC 90 NATIONAL LOTTERY 87 MAINETTI 72 172 BRITISH TELECOMS 82 KEEL TOYS 47 171 ICI 80 NIKE 44 120 WESTWOOD CONSULTING 59 WITHIT 38 ERICSSON 115 EMBRAER AERONAUTICA 58 MAYFAIR BRASSWARE 34 MOTOROLA 113 BOOTS 46 BLACK AND DECKER 33 VISTEON GLOBAL TECH. 112 GLAXOSMITH- KLINE BIO. 42 NOKIA CORP 33 FORD 100 AVON PRODUCTS 40 DEVONSHIRE STATUARY 30 IBM BAKER HUGHES

Further questions about IPRs • Is patenting always the best route to protection? – Secrecy vs. disclosure. Trade secrecy law • Optimal patent length – Box 2. 1 uses some formal analysis. This can be extended and/or used for maths-based problem. See references in box. • Alternatives to IPRs? – This is only briefly covered in Ch. 2, but extended in Ch. 11. Should alert students to this issue. Could use as on-going assignment through course.

Questions for discussion 1. How does intellectual property differ from tangible property, such as a house or a car? 2. Do patents provide socially optimal incentives? 3. Why do firms use trademarks? 4. Should copyright be made shorter or longer than at present? 5. Why do different industries make use of different types of rights? 6. What factors influence the optimal length of an intellectual property right?

References General: Landes, W. M. and R. A. Posner (2003), The economic structure of intellectual property law, Boston: Belknap/Harvard University Press. HM Treasury (2006), Gowers Review of Intellectual Property, Norwich: The Stationery Office. Lerner, J. (2002). "150 Years of Patent Protection. " American Economic Review 92(2): 221 -25. Hall, B. (2007). "Patents and Patent Policy. " Oxford Review of Economic Policy 23(4): 568 -587. Copyright: Corrigan, R. and Rogers, M. (2005), ‘The economics of copyright’, World Economics: The Journal of Current Economic Analysis and Policy, 6(3), 53 -174. Lessig, L. (2004). Free Culture: How Big Media Uses Technology and the Law to Lock Down Culture and Control Creativity. London, Penguin Press. Boyle, J. (2003). "The Second Enclosure Movement and the Construction of the Public Domain " Law and Contemporary Problems 66(Winter-Spring): 33 -74.