Intellectual property rights

 

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1.3 Has the government implemented laws and regulations for the protection of intellectual property rights and effective enforcement mechanisms? Does the level of protection encourage innovation and investment by domestic and foreign firms? What steps has the government taken to develop strategies, policies and programs to meet the intellectual property needs of SMEs?


Rationale

Intellectual property (IP) rights give businesses an incentive to invest in research and development, fostering the creation of innovative products and processes. They also give their holders the confidence to share new technologies through, i.a. joint ventures and licensing agreements. In this way, successful innovations are in time diffused within and across economies, bringing higher productivity and growth.

 

Intellectual property has significant value and thus deserves the same types of registration and protection systems as other forms of property (see Question 1.2). But intellectual property right regimes need to strike a balance between society’s interests in fostering innovation, in keeping markets competitive and, especially in the case of essential medicines, in sufficient supply.

 

The intellectual property rights regime is of concern not only to large firms and multinational enterprises but also to SMEs. Although SMEs are a driving force behind innovation, their potential to invest in innovation activities is not always fully exploited. They tend to under-utilise the intellectual property system. Measures to make the system more accessible may thus help to attract investment in research and development (R&D) and to transmit the positive spillovers to society that such investment embodies.

 

Key considerations

The question focuses on the laws, regulations and instruments that give value to intangible forms of property. (The protection of tangible assets is covered in Question 1.2) The main formal IP instruments cover patents, trademarks, copyright, new varieties of plants, industrial designs and geographic indications.

  • Access to, and use of, the IP rights system
    What laws and regulations are in place to protect ownership rights to intellectual assets? How much protection and coverage do these laws provide? How efficient is the registration process in terms of costs involved and time required? Is it reliable and secure? What are the procedures for handling intellectual property that is registered in other jurisdictions?
     
    SMEs require specific consideration: they are a major source of innovation yet they tend to under-utilise the formal IP protection system. The diversity of SMEs (e.g. sectors, size, age) means that the obstacles they face using the IP system are likely to differ (e.g. high costs, limited knowledge of the system and lack of legal and technical IP expertise), as well as their needs (e.g. use of certification and collective marks). Strategies to meet the IP needs of SMEs must, therefore, take into account their specific features and characteristics.
     
  • Enforcement and dispute settlement mechanisms
    As with tangible assets, for a market to function effectively, property rights must be secure, i.e. protected against fraud, theft and crime. Government has a responsibility to protect owners from violations of their IP rights and their citizens from abuses of IP rights. This depends on how IP rights are enforced and the mechanisms (e.g. special unit of the IP office, courts, special tribunes) to adjudicate disputes. The ability to protect IP rights is related to contract enforcement and dispute resolution, points that are also taken up in Question 1.4.
     
  • An innovation policy framework
    An incentive to invest in R&D does not guarantee success in innovation. How effective the incentive that IP protection gives to innovation depends on the country’s broader innovation policy framework. How do IP laws and regulations fit within the country’s overall innovation strategy? What are the links between businesses and universities, especially the rules on IP ownership, royalty sharing and commercialisation of IP rights. What programmes are in place to improve access to existing knowledge, especially among SMEs?

Policy practices to scrutinise

Key issues when assessing a country’s laws and regulations for the protection of intellectual property rights include: how laws and regulations define IP rights and balance these rights with society’s wider interests; how well the IP filing process performs; how accessible the IP system is for SMEs and how much use they make of it; and how effective are IP enforcement and dispute settlement mechanisms.

 

The following issues ought to be considered:

  • The extent that businesses and entrepreneurs are using the IP system and their filing success rate. When usage is restricted to larger firms or low in comparison to other similar economies, it is a sign that businesses have poor confidence in the IP protection system. The filing success rate provides a summary measure of how well businesses are informed about IP filing requirements.
     
  • A low utilisation rate of the IP system needs to be interpreted with care, however. It may reflect the use alternative strategies by businesses to appropriate the value of their intangible assets, such as secrecy, exploitation of lead-time advantages and technical complexity. These less formal instruments can be supported through legislation on trade secrets and unfair competition (see Chapter 4). Trade secrets, for example, are recognised as intellectual property by the TRIPS Agreement.
     
  • Establishing why usage of the IP system is low or limited predominantly to large enterprises requires an examination of the following policies, practices and constraints that may limit access:
    • Availability of legally-recognised instruments and laws to protect ownership of all types of intellectual property. In countries that are signatories to the WTO TRIPs Agreement, whether national legislation has been enacted to comply with this Agreement.
       
    • The costs of filing and obtaining IP (e.g. application, publication and maintenance fees, translation costs when applying for protection in other markets), as well as those incurred to maintain and enforce IP rights.
       
    • The time required and the complexity of the filing system. This depends on the number and types of procedures needed, how easily information on the filing requirement is obtainable, the processes used by the IP office to examine, register and grant IP, physical accessibility, in terms of distance to the IP office and whether electronic filing is allowed.
       
    • The geographic coverage of IP protection afforded to a business can be expanded cost effectively if the home country of the business signs onto international IP agreements administered by WIPO. Is the country a party to the Patent Co-operation Treaty for inventions, the Madrid system for trademarks and the Hague system for industrial designs?  If not, then what deters the country from doing so?
  • Use of the IP system by business depends also on the mechanisms and practices that are employed to raise awareness and understanding of all elements of the IP system. Areas that need to be considered include whether the IP office or its equivalent:
    • Organises information seminars and campaigns on IP and provides capacity building programmes on how to file for IP protection.
       
    • Produces practical IP guides and other information materials targeted to specific customer groups (e.g. start-up companies, inventors, researchers, government institutions, universities and businesses in specific sectors like bio-technology or agriculture).
       
    • Collects and disseminates case studies illustrating good practices in applying for and enforcing IP protection.
       
    • Facilitates procedural and administrative issues relating to the application process (e.g. help desks within IP offices, information kits, web sites and simplified procedures for granting IP protection to SMEs).
  • The effective use of the IP protection system in promoting investment in innovation and its subsequent diffusion depends on policy practices that flank IP laws and regulations, e.g. collateral laws that allow IP owners to pledge their IP as collateral. Care needs to be taken, however, not to enter domains that are being filled by commercial providers of business services. Publicly-funded activities address a market failure or serve to awaken a latent demand. Practices to examine include whether the IP office or its equivalent:
    • Regularly transforms information available in patent databases into more workable knowledge, e.g. by compiling and disseminating technical information on recent patent filings in given technical fields and translating information in patent data bases into other languages.
       
    • Provides easy access to patent information, e.g. through free on-line consultation of patent records, with functional search and analytical tools, holding information sessions on how to use and benefit from the public disclosure of patent information and by linking patent databases into patent libraries.
       
    • Promotes close ties and collaboration between universities and businesses to commercialise inventions and new technologies, e.g. by laws that enable universities to share royalties from jointly-produced innovations.
  • The goal of fostering innovation and investment in R&D needs to be balanced against the public interest in terms of access to goods and services and knowledge, and each government will seek to achieve an appropriate balance. How well do provisions in place meet the government’s policy objectives? Practices include IP laws that limit the period of protection granted (normally 20 years for a patent); the use of special provisions defining circumstances when the state can use patents outside of normal patent protection rules on the grounds of the wider public interest; and provisions that require the inventor publicly to disclose how to make and use the invention.
     
  • What mechanisms are in place to enforce a country’s IP system and to resolve disputes? Mechanisms that limit the cost to business of enforcing and monitoring the use of their IP rights make the IP system more accessible.
    • Procedures exist for quickly settling IP disputes out of court. Examples that appeal to inventors/businesses with limited financial resources include expedited arbitration and pre- and post-grant opposition or review procedures at IP offices. Greater use of arbitration and mediation and developing a market for IP insurance would also help reduce the costs of litigation.
       
    • Fast and efficient procedures for hearing disputes in courts are also necessary (see also Question 1.4). Jurisdiction for hearing IP disputes needs to be clearly defined in law, with each agency involved having well-delineated responsibilities.
       
    • Penalties for transgressions of IP laws and processes for enforcement of penalties or legal judgments exist. Whether these take into account aggravating and mitigating factors, such as the severity of violation, the resulting harm to the IP owner, the benefits that the offender derived from the violation, prior violations, early admission of the violation, co-operation or refusal to co-operate with the investigation, and the economic and financial situation of the offender.
       
    • Mechanisms might be available in principle to enforce IP rights, but experience often shows that the process of enforcement can militate against overall effectiveness. What is the track record of enforcing IP rights and the outcomes of disputes? A proxy measure of performance is whether the country features on watch-lists for not adequately enforcing IP rights (e.g. US Trade Representative Special 301 reports). What steps are being taken to address concerns raised by the international community or revealed by a poor enforcement track record (e.g. educational campaigns, specialised training for law enforcement officials and creation of specialised courts to deal with IP issues)?

Further resources and case studies

WIPO - World Intellectual Property Organization www.wipo.int

  • WIPO is responsible for administering 24 international treaties covering intellectual property protection. These treaties ensure that one international registration or filing will have effect in any of the relevant signatory States.
     
  • WIPO has 189 country and 10 regional copyright and industrial property offices with information relating to the registration of intellectual property. 
     
  • It also maintains a comprehensive source of information on intellectual property issues for SMEs, which takes into account their time and resource constraints. It brings together practical information and case studies on best practices for making IP rights more accessible and relevant to SMEs.
     
  • The WIPO Arbitration and Mediation Center offers alternative dispute resolution options, in particular arbitration and mediation, for the resolution of international commercial disputes between private parties. The procedures offered by the Center are particularly appropriate for technology, entertainment and other disputes involving IP. The Center provides information on how it works, case examples, fees, and background resources.

WTO - World Trade Organization www.wto.org

  • The WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), covers five broad issues: i) how basic principles of the trading system and other international IP agreements should be applied ii) how to give adequate protection to intellectual property rights; iii) how countries should enforce those rights adequately in their own territories; iv) how to settle IP disputes between members of the WTO; and v) special transitional arrangements during the period when the new system is being introduced. 

Others

  • The African Intellectual Property Organisation aims to foster the conditions which allow national firms to profit from the results of research and exploit technological innovations, encourages the transfer of technology and makes the IP legal framework attractive to private investors. They offer training courses, and their website provides tools, including guides to filing for IP and model applications and access to a patent database.
     
  • The European Patent Office has produced a series of case studies that provide practical information on how SMEs manage their intellectual property.
     
  • The European Commission website on intellectual property includes surveys of IP enforcement worldwide and extensive links to other resources.
     
  • The Australian government's IP toolbox offers practical information to businesses on the use and management of IP. While parts of the Toolbox are specific to Australia, the guide is a useful resource to all IP owners and managers.

 

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