Certificate in IPR Management Lecture 2

www.newmorningip.com +353 1 254 2340
Lecture 2
Commercialisation of IP
July 2013

Outline
• Recap on IP – 20 mins
• Origins of IP – 20 mins
• Commercialisation – 20 mins
• IP Audit – 15 mins
• Technology transfer and licensing – 30 mins
• Break 15 mins
• Heads Exercise – 15 mins
• Licensing Exercise – 15 mins
• Supply chain issues - 15 mins

IP RECAP
Discussion

Recap- Patent
• Monopoly rights for inventions
– Novel
– Inventive step
– Industrial application
• Not abstract, aesthetic or mental “as such”
– Computer programs
– Scheme for playing a game
– Business methods
– Presentation of information
• Territorial
• 20 years

Recap-Design
• Appearance of whole or part of a product resulting from the
features of, in particular, the lines, contours, colours, shape,
texture, and/or materials of the product itself and/or its
ornamentation.
– Territorial (but RCD)
– Cheap
– 25 years subject to renewal
– Becoming more important in mobile/UI etc

Recap-Trade mark
• Sign – Graphical – Indicator of Origin
• Indicator of origin
– Protects consumers by indicating quality
– Protects owners from unfair competition
• Classes of goods and services
• Indefinite subject to renewal and maintenance of validity
• Territorial
• CTM
• Note collective and certification marks

Recap-Copyright
• Literary, dramatic, musical or artistic works
• Sound recordings, films, broadcasts, typogrpaphy
• Criteria
– EU: Author’s own intellectual creation
– US: Spark of creativity
• Idea/Expression
• Restricted acts
– Copy
– Distribution right
– Rental or lending rights
– Performance right
– Communication right
– Adaptation right
• Moral rights

Recap Database
• Original database under copyright
– Author’s own intellectual creation involved in the selection and
arrangement of contents
– E.g. compilations (even of facts or other non-copyright material)
• Sui generis right
– Substantial investment in obtaining, verifying or presenting contents
of the database
– But not creating!
– Extraction and re-utilisation are restricted

Recap-Remedies
• Pecuniary (i.e. $$$)
– Account of profits
– Damages
• Non-pecuniary
– Declaration (e.g. non-infringement)
– Delivery up/destruction
– Reveal information
– Injunction
• Customs suspension
• Criminal
• Threats

Sources of IP
• Theory
• International Law
• EU Law
• Domestic Law

THEORY OF IP
Discussion

Welfare or incentive theory
• Basics
– It is rooted in utilitarianism, the principle that we should pursue “the greatest happiness
for the greatest number.”
– This is prospective (forward-looking) and collective (group-based) theory.
– The “public goods problem”: Public goods (those that are nonrivalrous and
nonexcludable) are under-produced.
– government can solve the public goods problem in several ways. One way is to protect
the producers of public goods against competition. Copyright does this.
• Copyright policies welfare theory might favour
– Protections calibrated to incentivize production of works without going “too far”
• Copyright policies welfare theory might disfavour
– Very long copyright terms
– Retroactive extensions of copyright terms

Fairness
• Basics
– Each person has a natural right to the fruits of his or her intellectual labour.
– It is based on Locke’s theory that labour upon land held in common gives the labourer a
right to the land and the fruits.
– Modified form (equity theory): A theory of distributive justice—each person deserves a
share of the fruits of a collective project proportionate to the magnitude of his or her
contribution to the venture.
• Copyright policies fairness theory might favour
– Rights to factual works
– Fair compensation of contributors to composite works
• Copyright policies fairness theory might disfavour
– Tempering copyright to reflect contributions of materials from the public domain (but
fairness theory might also favour this)

Personality (or personhood) theory
• Basics
– Many human needs (e.g. privacy, autonomy, self-realization) are served by private property rights.
– Intellectual products are manifestations or extensions of the personalities of their creators.
– Appreciation of creators’ personal interests provides support for “moral rights.”
– Modern modification: All persons must be enabled to express themselves artistically, and creativity is
increasingly dependent upon re-use of extant intellectual products.
– Influence of Kant and Hegel
• Copyright policies personality theory might favour
– Policies that “protect” artists from themselves (such as termination of transfers)
– Fair use (or a similar exception) for transformative works
– Moral rights
• Copyright policies personality theory might disfavour
– Copyright terms that are shorter or longer than the life of the author
– Work-for-hire doctrine

Culture Theory
• Basics
– Human nature is mysterious but discoverable. It causes people to flourish more under some
conditions than others. Social and political institutions should be organized to facilitate that
flourishing.
– Certain conditions (e.g. life, health, autonomy, but see map) are necessary for the full realization
of personhood.
– It favours a certain kind of distributive justice and is based on the premise that
diversity, art, education, and democracy (political and semiotic) are desirable.
• Copyright policies culture theory might favour
– Increased opportunities (under fair use or similar) for creative reuse of works
– Moral right of attribution
– Formalities
• Copyright policies culture theory might disfavour
– Privileges for “consumptive” uses (such as Sony)
– Moral right of integrity

SOURCES OF IP LAW
Discussion

Historical
• UK
– Statute of Monopolies (1623)
– Statute of Anne (1709)
– US constitution
• Up to 19th century national in scope with little international
cooperation

Article 1, Section 8 of US Constitution

TFEU

International Harmonisation
• International Treaties to set minimum standards
– Berne convention
– Paris convention
– WIPO Treaties
– TRIPS, ACTA and other free trade agreements
• Trend is for more harmonisation driven by Western (i.e. US)
priorities

EU Harmonisation
IP Rights
 TM
 Designs
 Copyright
 SPC
 Patent*
Decreasing Harmonisation

Domestic Legislation
• Patents Act
• Trade Mark Act
• Industrial Designs Acts
• Copyright and Related Rights Act etc.

Common Law Rights
• Passing off
– Complements registered trade mark rights
– Goodwill
– Misrepresentation
– Damage to goodwill
• Confidentiality
• Privacy
– E.g. image rights
– Poorly defined
– Overlap with data protection and other law
– Varies with jurisdiction

COMMERCIALISATIONS

Intellectual Property is the
legal right to control the
results of creativity and
innovation

Intellectual Property
strategy is how you use the
intellectual property system
to your advantage

Monetize
Exclude Interact
Licence
Sell
Collateralise
Enforcement
Threat
Access other
innovation
Leverage
Standards
Interoperability

The Business Model Investors Prefer, MIT Sloan Management Review June 22 2011

Business Value
• Defence
• Cost avoidance
• Revenue Generation
• Strategic

Defensive Patents Trade Marks Know-How Relationships
Conflict Avoidance/Resolution
• Protection (exclude others)
• Design Freedom
• Cross-licensing (defensive)
• Litigation bargaining power
• Protection (exclude
others)
• Protection (trade secret) N/A
Offensive
Revenue Generation
• Products and Services: Sales, Licensing, JV, Optimisation of core
tech, Value from non-core tech, Integration
• Patents: Sales, Licenses, Infringement policing
• Increased bargaining power (e.g. suppliers, customers,
affiliates, JV partners)
• Market penetration
• Increased speed to market
• Products and Services:
Sales, JV, Alliance
• TM: Sales, licensing, co-
branding, Infringement
policing
• Sales
• Licenses
• JV
• Strategic Alliances
• Integration
• Increased speed to
market
• Product and services
sales
Cost Reduction
• Litigation avoidance
• Access to technology of others
• Improved knowledge transfer
• Reduce knowledge gaps
• Access to tech of others
• Improved knowledge
transfer
• Reduced marketing
costs
Strategic Position
• Reputation/image
• Exclusivity/blocking
• Barrier to competition
• Supplier control
• Customer control
• Optimization of core technology
• Name recognition
• Customer Loyalty
• Barrier to comp
• JV
• Alliance
• Reputation/image
• Barrier to entry
• Reputation/Image
• Customer loyalty
• Barrier to entry
Adapted from “Edison in the boardroom revisited” S Harrison and P Sullivan 2012

36
What needs to change?
Business
Value
Business
IP Technology
Creation
Business
Technology
Now
Future
CIPO

IP AUDIT

IP Audit
External
Internal

Source: WIPO
Source: WIPO

External
• Patent searching and landscape
• TM databases
• Design right filings
• Competitive intelligence

TECHNOLOGY TRANSFER

Types of Agreement
• Pure IP Licence
– E.g. patent
• Technology Transfer
– Mixed know-how and IPR
• Technical assistance
– Communicate technology and provide services

Motivation
• For the licensee:
– need for up-front cash to reduce the cash burn;
– freeing up resources for further development of other products;
– lack of expertise and know-how if the technology/product in question has spun off from other technologies
or products;
– benefit from the development expertise of licensor;
– reduction of development cost in favour of other products;
– avoidance of patent litigation if the licensee could potentially block the commercialisation of the product or
technology.
• For the licensor:
– fill in gaps in the product pipeline;
– access technology rather than building expertise in-house;
– expansion into new areas;
– gain earlier access to market compared with in-house developed products;
– build or strengthen a franchise in a particular territory;
– total amount available for licensing a technology or product.

Checklist
• Preliminary
– Availability of protection (patent, confidentiality)
– Direct exploitation
– Sale of technology
– Licensing
– Choosing a suitable licensee

General considerations
• Royalty levels
– Degree of exclusivity
– Industry practice
– Benefit to licensor
– Differential rates
• Confidentiality
• Heads of agreement
• Local law
• Competition law
• Technical Assistance
• Tax

Licence Provisions
• Parties
• Recitals
• Definitions
• Scope
• Royalties
• Licensee’s obligations
• Warranties
• Infringement
• Improvements
• Confidentiality
• Termination and consequences
• Jurisdiction
• Registration

Confidential information
• No IP right per-se
• Circumstances giving rise to obligation
– Contract
– Implied by circumstances/relationship
– Statute

HEADS EXERCISE

LICENSING
53

LICENCE EXERCISE
55

Introduction
• Border Measure Regulation (BMR) is an important tool for the
IP strategist advising global companies
• Procedures for customs authorities relating to goods
suspected of infringing certain intellectual property rights
• Normally to facilitate infringement proceedings
• Goods imported or exported or transiting EU customs area
• Supply chain consequences
58

www.newmorningip.com +353 1 254 2340 59

Strategy
• Understand your supply chain
• Identify points of import/export/transit in EU Customs area
• Strategic use of various national and community rights
• Risk analysis for potential infringements
• Surveillance program for potential infringers
• Preparation for action or reaction
– Forms/contacts
– Proofs
– IP right coverage of goods
• Readiness to initiate or defend judicial procedures
• Readiness to walk away from a shipment?
60

Customs Procedures
• Which rights
• Where to apply
• How to apply
• What will customs do?
• When to apply
• Who to apply to
61

Counterfeit Goods
Unauthorised TM use
62

Pirated Goods
– Copies made without consent of copyright or design right holder
63

Infringement
• Patent
• Supplementary Protection Certificate
• Plant variety right (national or community)
• DO and GI (national or community)
• Geographical designation (community)
64

65
IP Right National Rights Community Rights
Registered Trade Mark
Unregistered Trade Mark
Copyright + Related Rights
Registered Design
Unregistered Design
Sui generis Database
Patent
Utility Model
SPC (medicines and plants)
Geographical Indication
Designation of origin
Geographical Designation
Plant Variety Right
Semiconductor Topography

Irish Law
• Regulation is directly effective
• SI 244/2005 is implementing regulation
• Designates Revenue as competent customs authority
• Offences
– False or misleading details in an application
– False declaration
– Aiding and abetting
– Summary offence up to €5,000 fine
– Personal and corporate criminal liability
– Probation Act does not apply
66

Goods in Transit
• Are they put on the market
• Manufacturing fiction
• Over ruled in Philips/Nokia
• Challenged by India and Brazil before WTO
• New guidelines on goods in transit
• Mere placing under customs control not infringement
• Must be a “commercial act” directed at the European market
– Sale or offer
– Advertising
– Apparent from documents incl. Instruction manuals
– Risk of fraudulent diversion
– Destination not provided where it is required
– Lack of identity where it is required
67

Infringement
• Infringement under law of Member State in which the
application for customs action is made
– Note copyright law is quite fragmented
• Understand what the infringement is and whether or not there
are any local law issues
• UK, NL, DE etc
68

Procedure
• RTFM!
– http://ec.europa.eu/taxation_customs/resources/documents/custom
s/customs_controls/counterfeit_piracy/right_holders/manual_en.pdf
• Use the forms
• Who
– Rights Holder
– Licensee
– Representative of above
69

• Customs can act ex-oficio (i.e. off their own bat)
• Application can be made with effect lasting up to a year
• No need for actual knowledge of infringement
– Can be used if suspicion
– General surveillance
• No Fee but applicant pays for translations
• Can be renewed with 30 day processing time
• No procedure for automatic extensions
• Two procedures
– National covers one member state and a national right
– Community can cover multiple member states but limited to community rights
70

• Mandatory information
– Proof of right
• Certificate or other
– And if licensee or representative
• License
• Letter of authority/proxy
– Technical information concerning goods
– Any specific information concerning type or pattern of fraud
– Name and address of contact person appointed by right-holder
– Article 6 declaration
– For Community Applications also name and address of right holder in each of the
member states concerned
– Other information
71

Practical Tip
• Tell customs what a regular shipment looks like and what an
irregular shipment should look like.
72

Article 6 Declaration
73

• 30 Working days to make a decision
• Duty to notify customs if
– rights cease to be valid
– No longer enforceable by right holder
– Change in contact information
– New information
– Withdrawal
74

If a shipment is discovered
• Customs may detain or suspend release
• Inform
– Customs office that processed application
– Right holder
– Holder of the goods
• Names and address of consignor etc
• Samples
• Note obligations on use of information
75

Procedure after detention
• Simplified procedure where there is a settlement
• 10 working days to initiate proceedings
– Max 10 day extension
– Shorter period, no extension for perishable goods
• For certain rights goods may be released pending litigation
once security is provided by owner or related party
76

Statistics
79

Cases
• Class International
– Aquafresh
• Montex
– Diesel
• Philips
– Electric shavers intercepted at Antwerp port
– Detained
• Nokia
– Nokia phones and accessories intercepted at Heathrow
– Released applying Montex
90

Manufacturing Fiction
92

Resources
• DG Customs and Tax
• Revenue Commissioners
• Case Law
• Irish Law
93

http://www.revenue.ie/en/customs/leaflets/counterfeit-pirated-goods.html

Proposed New BMR
• Part of Strategy on IPR and Single Market Act
• New rights
– Trade Name
– Semiconductor Topography
– Utility model
– Parallel trade (by removing current Article 3)
– Circumvention of technical measures
• Simplified procedure
– “where it is clear that the goods are counterfeit or pirated”
– Small postal e-commerce transactions
– No right holder involvement and customs pays for destruction
– Recipient is not sanctioned
95

• Traders’ rights and Charter of Fundamental Rights
– Timelines
– Information release
– Destruction procedures for cases other than counterfeiting and
piracy
• Broadens who can act including collecting societies and
professional defence bodies
96

Issues
• BMR as a detention procedure versus customs becoming enforcers
• Complexity of investigating infringement
• Creation of new IP rights in particular for transit and parallel trade
• Due process issues
• Free trade and supply of medicines into countries where no rights
exist (usually poor countries)
• Balance with harm caused by infringements
97

ACTA
• Anti Counterfeiting Trade Agreement
• ACTA is an international trade agreement that will help
countries work together to tackle more effectively large-scale
Intellectual Property Rights violations. Citizens will benefit
from ACTA because it will help protect Europe's raw material –
innovations and ideas.
• Sets international standards for IPR enforcement and allows for
information exchange and other cooperation
98

When you are explaining you are losing
• ACTA does not
– Monitor the Internet
– Change EU law
– Favour industry over fundamental rights
– Prevent online sharing of content
– Poor countries from buying cheap medicines
101

102
Rejected by resounding majority in the European Parliament July 2012

Current Status - EU
• Commission asks ECJ to clarify whether ACTA is incompatible - in any way -
with the EU's fundamental rights and freedoms – such as freedom of
expression and information or data protection. The European Commission
is convinced that ACTA is fully in line with the EU's high standards and does
not interfere in citizen's fundamental rights of freedom of expression and
data protection.
• Commission wants to provide the European citizens, the National
Parliaments and the European Parliament with the most detailed and
accurate information possible, and therefore looks forward to receiving an
independent opinion of Europe's highest court. In this way the debate will
again be based upon facts and not upon misinformation or rumours.
103

Current Status Worldwide
104
Comes into force in ratifying
countries once 6 countries have
ratified

fred.logue@newmorningip.com
+353 (0)1 254 2340 l www.newmorningip.com l @newmorningip

Certificate in IPR Management Lecture 2

Certificate in IPR Management Lecture 2

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