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 (pre-innovation),
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
Price (p)
Costs

b
P1 a MC1=AC1
c d
P2

P3 e f g MC2=AC2

D
Q1 Q2 Q* quantity (Q)

MR
 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
BrandFinance)
Top trademarkers in the US and Europe

US Trademarks 2006 EC trademarks 2006

(registered) (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 115

Società per Azioni
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
 Proportion of firms applying for IPRs by
sector (large firms in UK,1996-2000)
Sector No. firms in U.K. Community U.K. Patents EPO
sample Trademarks Trademarks 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 0.22 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 UK TRADEMARKS UK DESIGNS
NEC 209 GLAXO GROUP 118 ORIENTAL 90
WEAVERS
HEWLETT PACKARD 196 UNILEVER 104 TY INC 90

SAMSUNG 177 NATIONAL 87 MAINETTI 72

LOTTERY
SCHLUMBERGER 172 BRITISH 82 KEEL TOYS 47
TELECOMS

IBM 171 ICI 80 NIKE 44

BAKER HUGHES 120 WESTWOOD 59 WITHIT 38

CONSULTING

ERICSSON 115 EMBRAER 58 MAYFAIR 34

AERONAUTICA BRASSWARE

MOTOROLA 113 BOOTS 46 BLACK AND 33

DECKER
VISTEON GLOBAL 112 GLAXOSMITH- 42 NOKIA CORP 33
TECH. KLINE BIO.
FORD 100 AVON PRODUCTS 40 DEVONSHIRE 30
STATUARY
 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.