WHY AND HOW TO PROTECT YOUR INTELLECTUAL PROPERTY
In the last column, we discussed how investing in innovation pays dividends, and how much of a premium innovators (and their investors) can enjoy over their less innovative peers. That is, provided they’ve also secured the intellectual property rights of their innovations.
What is intellectual property? At the end of the 19th century, intellectual property (IP) was formally recognised in two treaties: the Paris Convention for the Protection of Industrial Property (1883) and the Berne Convention for the Protection of Literary and Artistic Works (1886).
According to the World Intellectual Property Organization, which oversees both treaties, intellectual property refers to creations of the mind or intellect. Creators can file an application to be assigned exclusive ownership of their creations, which can be inventions or discoveries; artistic works including literature and music; and symbols, names, phrases, designs and images used commercially.
What are the most important types of IP rights? Like any property right for tangible goods and assets, IP rights let creators (IP owners) benefit from their own creative work and upfront investment in time, money and other resources. IP rights include patents, industrial design rights, trademarks and copyright:
Patents ensure that inventions cannot be commercially made, used, distributed or sold without the patent owner’s approval. A patent application can be filed for a product or a process (that provides a new way of doing something, or that offers a new technical solution to a problem). The applicant must credibly demonstrate that the invention is novel, original and useful (in short: creative), and that it introduces an “inventive step” that a person with average knowledge of the technical domain cannot deduce.
Industrial design rights protect new and original (but non-functional) ornamental or aesthetic aspects (such as shapes, patterns, lines or colours) of an industrial product or handicraft. They are applied to a wide range of products, including technical and medical instruments, watches, jewellery, textiles, housewares, appliances, vehicles and architectural structures, among others.
Trademarks are distinctive signs that signal to customers that certain products or services are made or provided by a trusted company or individual, not by a counterfeiter. Trademarks may include words, letters and numerals, drawings, symbols and three-dimensional signs, such as the shape and packaging of goods (think of the shape of a Coca-Cola bottle, the logo and the ribbon).
Copyright protects the literary and artistic works of authors, artists and other creators. These include novels, poems, plays, reference works, newspapers, software, films, music, paintings, photographs, sculpture, architecture, and TV and sound recordings, among others.
Why should innovators secure their IP? Innovators deserve financial compensation for their often substantial upfront investment of time, money and other resources, as well as a reputational reward for their creativity. They can monetise their IP by marketing it directly or by licensing or selling it to others.
IP rights also protect consumers and society from criminal counterfeiters and “cheap” copycats eager to free-ride on innovations without investing their own time, money and brainpower.
Moreover, patents in particular expand the total body of technical knowledge and stimulate further creativity and innovation, as patent owners need to publicly disclose information on their inventions in exchange for protection.
How about creators who openly share work, such as open-source software, with others for free? Clearly, such “open creation” is noble; however, these creators run the risk that others will monetise all or parts of their inventions, and maybe even secure the IP rights for themselves.
My personal view is this: the more you can monetise your novel, original and meaningful creations, the more money you have to invest in future creative projects, the more additional innovations you can produce, the more additional money you make to invest and grow, and the more seriously other business players will take you. That is, provided all others play by the rules of IP laws.
The dark side of IP: Does investing in securing IP rights mean you’re always protected? Unfortunately not. Why?
First, as with any physical assets, some people like to take from someone else what they want without paying for it. As Steve Jobs noted: “Stealing things is everybody’s problem. We [Apple] own a lot of intellectual property, and we don’t like when people steal it. So people are stealing stuff and we’re optimists.”
Second, you may not be able to enforce your IP rights for various reasons. Smaller players may lack the deep pockets and shrewd IP lawyers to fight a lengthy IP infringement lawsuit with several levels of appeals against a multinational or large local corporate player.
Third, in developing countries with a corrupt or nationalistic judiciary, even reputable multinationals regularly lose lawsuits against local parties that blatantly violate IP rights.
Finally, being right and having done everything right to protect your IP still doesn’t mean that you’re protected against bullying and unfair practices.