CONTENTS
WHAT IS INTELLECTUAL PROPERTY?
Two experts explain the mysteries of patents, trademarks, copyrights, and trade secrets.
SUPPORT FOR ECONOMIC AND POLITICAL FREEDOM
The former U.S. Commissioner of Patents and Trademarks suggests why it is in every country's interest to establish and maintain an effective intellectual property system.
A DEVELOPING COUNTRY'S PERSPECTIVE
Intellectual property rights, says a Ghanaian copyright official, galvanize domestic industry while retaining national culture, inventiveness, and creativity.
PROGRESS IN THE PHARMACEUTICAL INDUSTRY
Striking a blow against patent piracy is essential to the future of pharmaceutical research, says a former association executive.
A TRADE ASSOCIATION AT WORK
The representative of a book publishing association recounts her organization's efforts to enforce international copyright standards.
INTERNATIONAL POLICY AND ACCORDS
Here are the key multinational treaties and conventions that require member countries to provide intellectual property protection for the benefit of foreign nationals.
GLOSSARY
From assignment to World Trade Organization, an attorney defines some commonly used terms related to intellectual property rights.
SOURCES OF INFORMATION ON INTELLECTUAL PROPERTY
How to get in touch with U.S. government entities, international organizations, and other groups in the forefront of the intellectual property scene.
ADDITIONAL READINGS
IN BRIEF...
Fair Use
Copyright in an Electronic Age
The U.S. Patent System
The U.S. Special 301 Process
The World Intellectual Property Organization
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Executive Editor: George Clack
Editor: Kathleen Hug
Art Director: Thaddeus A. Miksinski, Jr.
Picture Editor: Joann Stern
Contributing Editor: Eileen Deegan
Internet Design: Barbara Long
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WHAT IS INTELLECTUAL PROPERTY?
By Laurence R. Hefter and Robert D. Litowitz
Countries with innovative local industries almost invariably have
laws to foster innovation by regulating the copying of
inventions, identifying symbols, and creative expressions. These
laws encompass four separate and distinct types of intangible
property namely, patents, trademarks, copyrights, and trade secrets, which collectively are referred to as intellectual property.
Intellectual property shares many of the characteristics associated with real and personal property. For example, intellectual property is an asset, and as such it can be bought, sold, licensed, exchanged, or gratuitously given away like any other form of property. Further, the intellectual property owner has the right to prevent the unauthorized use or sale of the property. The most noticeable difference between intellectual property and other forms of property, however, is that intellectual property is intangible, that is, it cannot be
defined or identified by its own physical parameters. It must be
expressed in some discernible way to be protectable.
All four types of intellectual property are protected on a
national basis. Thus, the scope of protection and the
requirements for obtaining protection will vary from country to
country. There are, however, similarities between national legal
arrangements. Moreover, the current worldwide trend is toward
harmonizing the national laws.
Patents: Society's Contract With Inventors
One might say that a patent is a contract between society as a
whole and an individual inventor. Under the terms of this social
contract, the inventor is given the exclusive right to prevent
others from making, using, and selling a patented invention for a
fixed period of time in return for the inventor's disclosing the
details of the invention to the public. Thus, patent systems
encourage the disclosure of information to the public by
rewarding an inventor for his or her endeavors.
Although the word patent finds its origins from documents
issued by the sovereign of England in the Middle Ages for
granting a privilege, today the word is linked synonymously with
this exclusive right granted to inventors. The World Trade
Organization (WTO) Agreement on Trade-Related Aspects of
Intellectual Property Rights (TRIPS) provides the international
standard for duration of patent exclusivity, which is 20 years
from the date of filing. After the January 1, 2000,
implementation date, all WTO members will be obligated to meet
this standard. Under all patent systems, once this period has
expired, people are free to use the invention as they wish.
The benefits of an effective patent system can be partially
illustrated as follows:
A patent rewards the investment of time, money, and effort
associated with research. It stimulates further research as
competitors invent alternatives to patented inventions, and it
encourages innovation and investment in patented inventions by
permitting companies to recover their research and development
costs during the period of exclusive rights.
The limited term of a patent also furthers the public
interest by encouraging quick commercialization of inventions,
thereby making them available to the public sooner rather than
later. Patents also allow for more latitude in the exchange of
information between research groups, help avoid duplicative
research, and, most importantly, increase the general pool of
public knowledge.
Although the right conferred by a patent is a right to
exclude others from making, using, or selling a patented
invention during the term of the patent, it is important to
understand that a patent does not necessarily give the patent
owner the right to make, use, or sell the invention himself or
herself. For example, the owner of a patent for an improved
method of producing a chemical compound would not be free to sell
the compound made using the patented method if the compound is
itself patented by someone else.
Although all WTO members are subject to patent provisions in
the TRIPS Agreement, patents are granted under national laws and,
therefore, the rights are also national in scope. Thus, a U.S.
patent can be asserted only against infringing conduct in the
United States. In most countries these rights are enforceable by
civil rather than criminal proceedings.
Accordingly, enforcement falls solely to the patent owner.
In general, any act of making, using, or selling the patented
invention without permission infringes that patent, whether it be
by the state, a corporation, or an individual. Any such
infringing act will give rise to liability, regardless of the
infringer s intent or lack of knowledge of the patent.
Remedies for patent infringement can include injunctions,
orders to deliver up or destroy infringing articles, and
compensation for damages suffered by the patentee or profits made
by the infringer.
An issued patent remains open to attack for invalidity, and
it is a common defense for an alleged infringer to assert that
the patent is invalid. Typically, patents are challenged on the
ground that the claimed invention was invented by someone other
then the named inventor or that the invention would have been
obvious to persons skilled in the relevant technology.
What Can Be Patented?
Article 27 of the TRIPS Agreement provides that WTO member states
shall provide patents for any invention, either a product or a
process for creating a product, provided that they are new,
involve an inventive step, and are capable of industrial
application. In other words, to be patentable, an invention must be novel, useful, and nonobvious.
A prerequisite to patentability is that the invention must
be capable of some practical application. This emphasizes the
importance the patent system puts on usefulness. Although this
principle remains constant, the phraseology used within the
legislation of particular countries varies; for example, in the
United States, patentable subject matter must be useful,
whereas in the United Kingdom it must be capable of industrial
application.
The invention must be new that is, the subject matter of
the invention is not or cannot be inferred to be part of what is
already known. This is commonly referred to as the novelty
requirement. New or novel in this context means new to the
public. Therefore, something that has previously been used or
known but has not been made available to the public (for
instance, if it has been kept a secret) is not a bar to
patentability.
The invention must also be nonobvious. This prevents someone
from taking advantage of the patent system and obtaining
protection for something that is a mere extension or trivial
variation of what is known. Generally the test for inventiveness,
or nonobviousness, is based on what a reasonable person skilled
in the field to which the invention pertains, at the time the
invention was made, would consider to be nonobvious.
The TRIPS Agreement provides a transitional period for
developing economies that do not currently provide product patent
protection in the areas of agro-chemicals or pharmaceuticals. In
fact, most already do because of the development benefits to the
biotechnology sector from full patent protection. Process patent
protection does not encourage investment because of the
difficulty of enforcing a process patent. It is particularly
difficult to enforce a process patent because the burden of proof
to show that the patent has been infringed is on the patent
owner. The patent owner must prove that a particular
manufacturing process (that is, the process covered by the
patent) was used to manufacture the particular chemical. This can
be very difficult to show where there are many possible process
variants and where access to the potential infringer s facility
is not available. In practice, this is done by looking for trace
impurities that are characteristic of the manufacturing process.
One can imagine how complex the issues can become if, for
instance, a patent protects a pharmaceutical that is made in a
country where there is no protection for pharmaceuticals and then
is exported to a second country that provides protection only for
manufacturing processes.
Over the past 15 years or so, many countries have changed
from process to product patenting, and we expect all WTO
members to upgrade their patent laws within the next few years
because, under the WTO TRIPS Agreement, member states must
provide full product patent protection no later than January 1,
2005.
Not only are the utilitarian aspects of new and useful
inventions patentable, but many countries extend patent
protection to novel, ornamental industrial designs. In the United
States, this form of protection is known as a design patent,
while in many European countries, the property right in an
industrial design is referred to as a design model.
In addition to such usual subjects of patent protection as
devices, chemical compositions, and processes, some countries
provide patent protection for living matter. For example,
asexually reproduced varieties of plants, excluding bacteria,
uncultured plants, and tuber propagated plants, can be protected,
as can sexually reproduced plants (by seed), excluding bacterial,
fungi, and first-generation hybrids. The TRIPS Agreement does not
require protection for new living matter or plant varieties, but
WTO members may join the International Union for the Protection
of New Varieties of Plants, or UPOV.
Trademarks and Service Marks: Identifying the Source
Trademarks and service marks are primarily intended to indicate
the source of goods and services and to distinguish the
trademarked goods and services from others. They also symbolize
the quality of the goods or services with which they are used.
Most trademarks and service marks (called marks) are words, but
they can be almost anything that distinguishes one product or
service from another, such as symbols, logos, sounds, designs, or
even distinctive nonfunctional product configurations.
The TRIPS Agreement extends the same level of recognition
and protection for service marks as for trademarks (TRIPS
Agreement Articles 15, 16). In some countries, registration of a
mark may not be required to protect the mark, but in any case WTO
members are obligated to provide protection for well-known trade
or service marks. Because determinations of whether a mark is
well known in the relevant sector of the public are made on a
case-by-case basis, firms may find it desirable to register well-
known marks. For marks that are not well known, countries may
require the owner of the mark to register the mark with the
national trademark office before protection in that country is
granted.
The duration of protection afforded a mark varies greatly
from country to country. Registrations are issued for finite
periods of time. However, because of the fundamental purposes of
marks namely, avoiding public confusion, encouraging
competition, and protecting the owners' goodwill registrations
may be renewed and thus extend indefinitely as long as the marks
are used.
The owner of a mark may preclude others from using a similar
mark if such use is likely to cause confusion in the minds of
purchasers. Determining whether two marks are so similar as to be
confusing usually involves a multi-factor analysis that compares
the parties marks, their goods or services, their advertising
and trade channels, the defendant s intent in choosing its mark,
and the presence or absence of actual confusion.
A Spectrum of Protection for Trademarks and Service Marks
As in other intellectual property areas, trademark and service
mark legislation is national in origin but must comply with
provisions of the TRIPS Agreement. Some countries grant rights to
the first person to use the mark in the course of business, while
other countries grant rights to the first person to obtain a
registration in that country.
In first-to-use countries, rights may subsist without
registering the mark with the national trademark office. However,
registration is still desirable because it is presumptive
evidence of the validity of the mark and the owner's right to use
that mark. It also appears on the national register of marks,
providing notice to the world of the owner's use and claim of
ownership. Under TRIPS, actual use of a trademark shall not be a
condition for filing an application for registration of a
trademark or service mark. Following the use or registration of a
trademark, the owner must use the mark or it may become subject
to attack by others on the grounds that the owner has abandoned
it.
At a minimum, most countries require that a mark be
distinctive; that is, it should be capable of distinguishing the
goods or services of the owner of the mark from the goods or
services of others. A mark may include any original combination
of numbers, letters or other symbols, colors, or musical tones.
To determine whether a mark meets this test, one must determine
the strength of the mark.
A mark's strength is usually measured across a spectrum. This spectrum includes, from weakest to strongest, terms that are
generic, descriptive, suggestive, arbitrary, and fanciful. At the
weakest end of the spectrum are words, symbols, or devices that
are not capable of distinguishing goods because they are common
terms used to identify the goods themselves, such as book, table,
or chair. Such terms are called generic terms and are not
protectable as trademarks.
The next category comprises descriptive terms. A mark is
descriptive if it describes the intended purpose, function,
physical characteristic, laudatory quality, or end use of the
product. Examples of descriptive marks include DAYBRITE for
lighting fixtures, MICRO for wheel weights that are very small,
and SUPREME for wine allegedly of superior quality. Because they
are not inherently distinctive, a descriptive term cannot be
protectable as a mark until, through extensive sales and
advertising, the term has come to identify the source of the
goods bearing the mark. In the United States, when a descriptive
mark achieves this level of distinctiveness, it is said to have
acquired a secondary meaning.
In contrast to descriptive marks, suggestive marks do not
immediately describe the goods for which the mark is used; they
rather require thought, imagination, or perception to reach a
conclusion about the nature of the goods. Suggestive marks are
considered inherently distinctive and protectable without first
acquiring secondary meaning. Examples of suggestive marks may
include HERO for fire extinguishers or STRONGHOLD for nails.
Arbitrary marks are words, symbols, and devices that are in
common use but, when used on the goods of the trademark owner,
neither describe nor suggest the quality of those goods. Examples
of arbitrary marks include APPLE for computers and DOVE for soap.
Like suggestive marks, arbitrary marks are inherently
distinctive, and secondary meaning need not be proved.
The most distinctive marks are fanciful marks. A fanciful
mark is a coined word or symbol invented or selected solely to
function as a mark. Examples of fanciful marks include EXXON for
gasoline, KODAK for photographic supplies, XEROX for photocopying
equipment, and PEPSI for soft drinks. Fanciful marks are
traditionally afforded the greatest scope of protection.
Copyright: An Author's Expression
A copyright is an exclusive right to reproduce an original work
of authorship fixed in any tangible medium of expression, to
prepare derivative works based upon the original work, and to
perform or display the work in the case of musical, dramatic,
choreographic, and sculptural works. Copyright protection does
not extend to any idea, procedure, process, system, method of
operation, concept, principle, or discovery, regardless of the
form in which it is described, explained, or embodied. Rather,
copyright protection is limited to an author s particular
expression of an idea, process, concept, and the like in a
tangible medium.
Copyright protection automatically subsists in all works of
authorship from the moment of creation. The TRIPS Agreement
provides a minimum standard for duration of copyright protection.
In the case of a person, the term is the life of the author plus
50 years. In the case of a corporate entity, it is 50 years from
the end of the calendar year of authorized publication or, in the
absence of publication, from the end of the calendar year of
making (TRIPS Article 12). The term of protection for live
performances that are recorded is 50 years for the performer and
producer, and 20 years for the broadcaster of the work. The
United States recently upgraded its protection for copyrighted
works as part of the Digital Millennium Copyright Act, or DMCA.
For instance, in the United States, the copyright for the work of
an individual author created on or after January 1, 1978, lasts
for his or her lifetime plus 70 years after the author's death.
However, if the work is made for hire, the copyright lasts for
120 years from the time of creation or 95 years from first
publication, whichever is shorter.
The exclusive rights granted to the copyright owner do not
include the right to prevent others from making fair use of the
owner s work. Such fair use may include use of the work for
purposes of criticism, comment, news reporting, teaching or
education, and scholarship or research. The nature of the work,
the extent of the work copied, and the impact of copying on the
work s commercial value are all considered in determining whether
an unauthorized use is a fair use.
Originality As the Key to Copyright
To secure copyright protection, the work in question must be an
original work of authorship fixed in a tangible medium of
expression. Works of authorship that fall within this definition
may include:
Literary works (including computer programs);
Musical works and accompanying lyrics;
Dramatic works and dialogue;
Pantomimes and choreographic works;
Pictorial, graphic, and sculptural works;
Motion pictures and other audiovisual works; and
Sound recordings.
It is important to note that the laws of many countries do
not limit the type or form of work because authors are continuing
to invent new ways of expressing themselves.
The test for the originality of a work is usually two-
pronged. First, the work of authorship must originate from the
author, in the sense that it must have actually been
independently created by the author and not copied from other
works. Second, the work must contain a sufficient amount of
creativity so as to be more than trivial.
To be copyrightable, a work must be fixed in a tangible
medium of expression. A work is fixed when its embodiment in a
tangible medium is sufficiently permanent or stable as to permit
it to be perceived, reproduced, or otherwise communicated for a
period of time that is not transitory. The means, manner, or
medium of fixation is irrelevant.
Copyright registration in most countries is relatively
straightforward and inexpensive. Although copyright protection
subsists from the moment the work is fixed in a tangible
expression, copyright registration confers additional important
benefits in some countries. Although some WTO members, including
the United States, retain a registration system for copyrighted
works, the TRIPS Agreement precludes use of formalities such as a
registration system as a prerequisite for foreign nationals
before initiating legal action to stop copyright infringement or
to recoup costs, including attorneys' fees, of enforcement. So,
for example, the United States may require that U.S. citizens,
but not foreign authors, register works with the U.S. Copyright
Office. In addition, in some countries, a copyright registration
constitutes prima facie evidence of the validity and ownership of
the copyright.
Trade Secrets: The Competitive Edge
A trade secret is information that is secret or not generally
known in the relevant industry and that gives its owner an
advantage over competitors. Trade secret protection exists as
long as the information is kept secret or confidential by its
owner and is not lawfully and independently obtained by others.
Examples of trade secrets include formulas, patterns, methods,
programs, techniques, processes, or compilations of information
that provide one s business with a competitive advantage. The
owner of a trade secret may recover damages resulting from the
improper disclosure or use of its trade secret by another.
Determining When a Trade Secret Is Secret
Trade secrets are not registered like other forms of intellectual
property and are not creatures of statutes. Instead, the judicial
system of each country determines the requirements for obtaining
trade secret protection. Protection for trade secrets is found in
the TRIPS Agreement under the heading Protection of Undisclosed
Information (TRIPS Article 39). Protection of undisclosed test
data for marketing approval of pharmaceutical products is
particularly sensitive and is required in TRIPS Article 39(3).
Some of the factors commonly considered include:
The extent to which the information is known outside of
the business;
The extent to which the information is known by employees
and others involved in the trade secret owner s business;
The extent of the measures taken to guard the trade
secret;
The value of the information to the owner and his
competitors;
The amount of money or effort expended by the trade secret
owner in developing the secret; and
The effort required by others to acquire or duplicate
(through reverse engineering) the information.
The secrecy of an alleged trade secret is the most important
factor to be considered. If the information claimed to be a trade
secret is available through any legitimate means and is obtained
in this way, then the information is no longer secret and may
become ineligible for protection. However, if the owner has taken
reasonable steps to protect the information, but the trade secret
information nonetheless is publicly disclosed, the courts in many
countries may still grant protection. Such reasonable steps may
include requiring those persons who encounter the information as
the result of normal business ventures to sign confidentiality
and nondisclosure agreements.
Costs vs. Benefits
As with all business-related activities, economics plays a large
role in determining whether to protect intellectual property.
Companies must weigh the potential value of an intellectual
property right against both the probability of realizing that
value and the costs of securing, enforcing, and maintaining that
right.
There are no hard and fast rules that determine the
potential value of a given intellectual property right. What is
valuable to one individual or company may be worthless to
another. There are certain obvious factors that contribute to the
potential value of the intellectual property, including the
potential value of exclusive or other rights, assignments, or
licenses, cross-licenses, enforcement against infringers, and as
collateral for securing financing.
A trademark or service mark may be a very valuable asset.
For example, it is widely believed the German automobile
manufacturer BMW purchased the British automobile manufacturer
Rover primarily to obtain its portfolio of desirable trademarks
including Land Rover, Range Rover, Triumph, Austin, and
MGB. On the other hand, a trademark may be virtually worthless
if consumers associate it with poor quality.
Laurence R. Hefter and Robert D. Litowitz are partners in
Finnegan, Henderson, Farabow, Garrett & Dunner, one of the
largest intellectual property law firms in the United States.
Mr. Hefter is a frequent lecturer and writer in the fields of
trademarks, unfair competition, franchising, and litigation. He
has served on the board of directors of the International
Trademark Association and the American Intellectual Property Law
Association, and as an adjunct professor at the National Law
Center at George Washington University. Mr. Litowitz has also
lectured and written in the fields of trademark law and has
practiced before the International Trade Commission. He is a
member of the International Trademark Association and the
American Intellectual Property Law Association.
SIDEBAR: Fair Use
SIDEBAR: Copyright in an Electronic Age
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