Intellectual Property Right (Encyclopedia)

Intellectual Property Rights (IPR) is the collective name for new and unique ideas, products and creations resulting from human creativity and innovation. Copyright, Trademarks, Patents, Database Rights and Performance Rights are the most relevant rights with regards to those that may apply to digital content too. Once a creative endeavour or innovation is protected, like property, the associated rights can be traded, bought and sold, bequeathed and licensed.

Intellectual Property Rights have become ubiquitous in the economic debate: the front pages of newspapers continually report major controversies among corporations, Government and advocacy groups. National parliaments, the European Union and the North Atlantic Free Trade Association are repeatedly addressing the issue. Above all, IPRs have become one of the core business of the World Trade Organization. Indeed the “Trade Related Aspects of Intellectual Property Rights” Agreement, a founding element of the WTO, constitutes the most imporatnt attempt to establish a global harmonisation of Intellectual Property (IP) protection and enforcement, creating international standards for the protection of patents, copyrights, trademarks and design. In a word, IPRs have emerged as the key issue of global innovation policy. Intellectual Property (IP) refers to creations of the mind: inventions, literary and artistic works, and symbols, names, images, and designs used in commerce. IP is divided into two categories: 

- Industrial Property, which includes inventions (patents), trademarks, other distinctive signs, industrial designs and geographic indications of source, topographies of products and semiconductors, the utility models, confidential business information and new variety of plants;

- and Copyright, which includes literary and artistic works such as novels, poems and plays, films, musical choreographic and pantomimic works, artistic works such as drawings, paintings, photographs and sculptures, and architectural designs, along with computer programs and databases.
 
Rights related to copyright include those of performing artists in their performances, producers of phonograms in their recordings, and those of broadcasters in their radio and television programs. These rights arise from the very moment in which the intellectual work takes shape and recognize the author exclusive right of exploitation of the work itself. Although the property law over the creative work is unique, lawmakers have attributed to the authors a number of specific indipendent rights in order to encourage them to use protected works economically. It should also be noted that, even during a transfer of exploitation rights concerning the protected work, be the transfer either permanent or temporary, the author retains the moral right to claim the autorship of the work and to object to any distortion, mutilation or other change provoking damage to the work itself or prejudice to its honour or reputation.

Hystory

The modern patent system, based on the objectives assessments of inventions, was introduced by the Venetian republic in 1474. The two requirements indicated by the Venetian Republic – the usefulness and novelty of the invention – are still in vigour today in all states. In substance the inventor and the Government undertake a long-term pact: the inventor commits him/herself to disclose all information of his/her invention, while the Government guarantees that it will provide legal protection to give exclusive rights on the economic returns of the invention.

IPRs have evolved substantially over the centuries but the long-term pact between inventor and Government has remained unchanged.

By providing intellectual property rights, the Government assures the inventor the right to exclude others from using the outcome of his/her creative activities without his/her authorisation. Thus the Government gives the inventor a legal monopoly to exploit his/her invention and capture the economic benefits for a limited period of time.

But legislation is far from uniform: for copyright the disclosure is complete by the moment you publish a book or a film, while inventions generally have to pass a merit exam before being granted a patent. As happens with many deals, this one is rarely fully implemented and the inventor often tries to hide as much as possible about his/her invention, while the Government is not in a position to assure full appropriation of the returns of the invention.
Through this deal, the Government manages to disclose information on the already generated knowledge, and perhaps more importantly it provides an incentive to individuals to invest their time and resources in creative activities. Creative activities are in fact time-consuming and costly while it is always uncertain if they will produce something that will generate economic returns.

Once the inventor has discovered a new device or a musician has written a new symphony, it becomes easy for others to exploit their outcomes at very low costs. Without legal protection inventors and authors are not in a position fully to exploit their works and appropriate the economic returns. As a result, in the absence of public regulation there would be an under-investment in creative activities that would be below a socially desirable level.

An IPR regime can be defined as the written and customary rules that apply within a specific political community. In some countries, the Government enforces strong protection of  IPRs and the holders are guaranteed that any infringements will be persecuted by the law and compensation will be obtained. These are the strong IPRs regimes. In other countries, the IPRs regime is much weaker and there is much less public interest in enforcing IPRs. Policing violation is much more relaxed and courts are slow and/or permissive towards infringement.

Modern usage of the term intellectual property goes back at least as far as 1867 with the founding of the North German Confederation whose constitution granted legislative power over the protection of intellectual property to the confederation. When the administrative secretariats established by the Paris Convention (1883) and the Berne Convention (1886) merged in 1893, they located in Berne, and also adopted the term intellectual property in their new combined title, the United International Bureaux for the Protection of Intellectual Property. The organisation subsequently relocated to Geneva in 1960, and was succeeded in 1967 with the establishment of the World Intellectual Property Organization (WIPO) by treaty as an agency of the United Nations. Until recently, the purpose of intellectual property law was to give as little protection possible in order to encourage innovation. Historically, therefore, they were granted only when they were necessary to encourage invention, limited in time and scope.

Identification of IP concept

Intellectual Property, very broadly, means the legal rights which result from intellectual activity in the industrial, scientific, literary and artistic fields. Countries have laws to protect Intellectual Property for two main reasons. One is to give statutory expression to the moral and economic rights of creators in their creations and the rights of the public in access to those creations. The second is to promote, as a deliberate act of Government policy, creativity and the dissemination and application of its results and to encourage fair trading which would contribute to economic and social development.

Generally speaking, intellectual property law aims at safeguarding creators and other producers of intellectual goods and services by granting them certain time-limited rights to control the use made of those productions. Those rights do not apply to the physical object in which the creation may be embodied but instead to the intellectual creation as such. Intellectual property is traditionally divided into two branches, “Industrial Property” and “Copyright.”

The Convention Establishing the World Intellectual Property Organization, concluded in Stockholm on July 14, 1967 provides that “intellectual property shall include rights relating to:

- literary, artistic and scientific works,
- performances of performing artists, phonograms and broadcasts,
- inventions in all fields of human endeavour,
- scientific discoveries,
- industrial designs,
- trademarks,
- service marks and commercial names and designations,
- protection against unfair competition,
- all other rights resulting from intellectual activity in the industrial, scientific, literary or artistic fields.”

The areas mentioned as literary, artistic and scientific works belong to the copyright branch of Intellectual Property. The areas mentioned as performances of performing artists, phonograms and broadcasts are usually called “Related Rights,” that is, rights related to copyright. The areas mentioned as inventions, industrial designs, trademarks, service marks and commercial names and designations constitute the Industrial Property branch of Intellectual Property. The area mentioned as protection against unfair competition may also be considered as belonging to that branch.

The expression “Industrial Property” covers inventions and industrial designs. Simply stated, inventions are new solutions to technical problems and industrial designs are aesthetic creations determining the appearance of industrial products. In addition, Industrial Property includes trademarks, service marks, commercial names and designations, including indications of source and appellations of origin, and protection against unfair competition. Here, the aspect of intellectual creations—although existent—is less prominent, but what counts here is that the object of Industrial Property typically consists of signs transmitting information to consumers, in particular as regards products and services offered on the market, and that the protection is directed against unauthorized use of such signs which is likely to mislead consumers, and misleading practices in general.

Scientific discoveries, the remaining area mentioned in the WIPO Convention, are not the same as inventions. The Geneva Treaty on the International Recording of Scientific Discoveries (1978) defines a scientific discovery as “The recognition of phenomena, properties or laws of the material universe not hitherto recognized and capable of verification”. Inventions are new solutions to specific technical problems. Such solutions must, naturally, rely on the properties or laws of the material universe (otherwise they could not be materially or technically applied), but those properties or laws need not be properties or laws “not hitherto recognized.” An invention puts to new use, to new technical use, the said properties or laws, whether they are recognized simultaneously with the making of the invention or whether they were already recognized before, and independently of, the invention.

Fields of Intellectual Property Protection

Common types of intellectual property rights include patents, copyright, industrial design rights, trademarks, trade dress, and in some jurisdictions trade secrets. There are also more specialized varieties of sui generis exclusive rights, such as circuit design rights, plant breeders’ rights, plant variety rights, supplementary protection certificates for pharmaceutical products and database rights (in European law).

Patents

A patent is a document, issued, upon application, by a Government office (or a regional office acting for several countries), which describes an invention and creates a legal situation in which the patented invention can normally only be exploited (manufactured, used, sold, imported) with the authorization of the owner of the patent. “Invention” means a solution to a specific problem in the field of technology. An invention may relate to a product or a process. The protection conferred by the patent is limited in time (generally 20 years). Patents are frequently referred to as “Monopolies”, but a patent does not give the right to the inventor or the owner of a patented invention to make, use or sell anything. The effects of the grant of a patent are that the patented invention may not be exploited in the country by persons other than the owner of the patent unless the owner agrees to such exploitation. Thus, while the owner is not given a statutory right to practice his invention, he is given a statutory right to prevent others from commercially exploiting his invention, which is frequently referred to as a right to exclude others from making, using or selling the invention. The right to take action against any person exploiting the patented invention in the country without his agreement constitutes the patent owner’s most important right, since it permits him to derive the material benefits to which he is entitled as a reward for his intellectual effort and work, and compensation for the expenses which his research and experimentation leading to the invention have entailed. It should be emphasized, however, that while the State may grant patent rights, it does not automatically enforce them, and it is up to the owner of a patent to bring an action, usually under civil law, for any infringement of his patent rights. Simply put, a patent is the right granted by the State to an inventor to exclude others from commercially exploiting the invention for a limited period, in return for the disclosure of the invention, so that others may gain the benefit of the invention. The disclosure of the invention is thus an important consideration in any patent granting procedure.

Copyright and Related Rights

Copyright law is a branch of that part of the law which deals with the rights of intellectual creators. Copyright law deals with particular forms of creativity, concerned primarily with mass communication. It is concerned also with virtually all forms and methods of public communication, not only printed publications but also such matters as sound and television broadcasting, films for public exhibition in cinemas, etc. and even computerized systems for the storage and retrieval of information. Copyright deals with the rights of intellectual creators in their creation. Most works, for example books, paintings or drawings, exist only once they are embodied in a physical object. But some of them exist without embodiment in a physical object. For example music or poems are works even if they are not, or even before they are, written down by a musical notation or words. Copyright law, however, protects only the form of expression of ideas, not the ideas themselves. The creativity protected by copyright law is creativity in the choice and arrangement of words, musical notes, colours, shapes and so on. Copyright law protects the owner of rights in artistic works against those who copy, that is to say those who take and use the form in which the original work was expressed by the author.

Trademarks

A trademark is – according to the WIPO - any sign that individualizes the goods of a given enterprise and distinguishes them from the goods of its competitors. This definition comprises two aspects, which are sometimes referred to as the different functions of the trademark, but which are, however, interdependent and for all practical purposes should always be looked at together. In order to individualize a product for the consumer, the trademark must indicate its source. This does not mean that it must inform the consumer of the actual person who has manufactured the product or even the one who is trading in it. It is sufficient that the consumer can trust in a given enterprise, not necessarily known to him, being responsible for the product sold under the trademark. The function of indicating the source as described above presupposes that the trademark distinguishes the goods of a given enterprise from those of other enterprises; only if it allows the consumer to distinguish a product sold under it from the goods of other enterprises offered on the market can the trademark fulfil this function. This shows that the distinguishing function and the function of indicating the source cannot really be separated.

Industrial Designs

Industrial design, in a lay or general sense, refers to the creative activity of achieving a formal or ornamental appearance for mass-produced items that, within the available cost constraints, satisfies both the need for the item to appeal visually to potential consumers, and the need for the item to perform its intended function efficiently. In a legal sense, industrial design refers to the right to protect the original ornamental and non-functional features of an industrial article or product that result from design activity. Visual appeal is one of the considerations that influence the decision of consumers to prefer one product over another, particularly in areas where a range of products performing the same function is available in the market. In these latter situations, if the technical performance of the various products offered by different manufacturers is relatively equal, aesthetic appeal, along with, of course, cost, will determine the consumer’s choice. The legal protection of industrial designs thus serves the important function of protecting one of the distinctive elements by which manufacturers achieve market success. In so doing, by rewarding the creator for the effort which has produced the industrial design, legal protection serves as an incentive to the investment of resources in fostering the design element of production.

Integrated Circuits

Another field in the protection of intellectual property is that of layout-designs (topographies) of integrated circuits. The layout-designs of integrated circuits are creations of the human mind. They are usually the result of an enormous investment, both in terms of the time of highly qualified experts, and financially. There is a continuing need for the creation of new layout-designs which reduce the dimensions of existing integrated circuits and simultaneously increase their functions. The smaller an integrated circuit, the less the material needed for its manufacture, and the smaller the space needed to accommodate it. Integrated circuits are utilized in a large range of products, including articles of everyday use, such as watches, television sets, washing machines, automobiles, etc., as well as sophisticated data processing equipment. Whereas the creation of a new layout-design for an integrated circuit involves an important investment, the copying of such a layout-design may cost only a fraction of that investment. Copying may be done by photographing each layer of an integrated circuit and preparing masks for its production on the basis of the photographs obtained. The possibility of such copying is the main reason for the introduction of legislation for the protection of layout-designs.

Geographical Indications

“Champagne,” “Cognac,” “Roquefort,” “Chianti,” “Porto,” “Havana,” “Tequila,” are some well-known examples for names which are associated throughout the world with products of a certain nature and quality. One common feature of all those names is their geographical connotation, that is to say, their function of designating existing places, towns, regions or countries. However, when we hear these names we think of products rather than the places they designate. Those examples show that geographical indications can acquire a high reputation and thus may be valuable commercial assets. For this very reason, they are often exposed to misappropriation, counterfeiting or forgery, and their protection - national as well as international - is highly desirable.

Protection Against Unfair Competition

Protection against unfair competition has been recognized as forming part of Industrial Property protection for almost a century. It was in 1900, at the Brussels Diplomatic Conference for the Revision of the Paris Convention for the Protection of Industrial Property that this recognition was first manifested by the insertion of Article 10bis in the Convention. In according to this article the countries of the Union are bound to assure to nationals of such countries effective protection against unfair competition. Any act of competition contrary to honest practices in industrial or commercial matters constitutes an act of unfair competition. The following in particular shall be prohibited:

- all acts of such a nature as to create confusion by any means whatever with the establishment, the goods, or the industrial or commercial activities, of a competitor;

- false allegations in the course of trade of such a nature as to discredit the establishment, the goods, or the industrial or commercial activities, of a competitor;

- indications or allegations the use of which in the course of trade is liable to mislead the public as to the nature, the manufacturing process, the characteristics, the suitability for their purpose, or the quantity, of the goods.

At first glance, there seem to be basic differences between the protection of Industrial Property rights, such as patents, registered industrial designs, registered trademarks, etc., on the one hand, and protection against acts of unfair competition on the other. Whereas those Industrial Property rights are granted on application by Industrial Property offices and confer exclusive rights with respect to the subject matter concerned, protection against unfair competition is based not on such grants of rights but on the consideration - either stated in legislative provisions or recognized as a general principle of law - that acts contrary to honest business practice are to be prohibited. Nevertheless, the link between the two kinds of protection is clear when certain cases of unfair competition are considered. For example, in many countries unauthorized use of a trademark that has not been registered is considered illegal on the basis of general principles that belong to the field of protection against unfair competition (in a number of countries such unauthorized use is called “passing-off”). There is another example of this kind in the field of inventions: if an invention is not disclosed to the public and is considered to constitute a trade secret, the unauthorized performance by third parties of certain acts in relation to that trade secret may be illegal.

Objectives

The stated objective of most intellectual property law (with the exception of trademarks) is to "Promote Progress." By exchanging limited exclusive rights for disclosure of inventions and creative works, society and the patentee/copyright owner mutually benefit, and an incentive is created for inventors and authors to create and disclose their work.

Financial incentive and economic growth

These exclusive rights allow owners of intellectual property to benefit from the property they have created, providing a financial incentive for the creation of an investment in intellectual property, and, in case of patents, pay associated research and development costs. The WIPO treaty and several related international agreements are premised on the notion that the protection of intellectual property rights is essential to maintaining economic growth. The WIPO Intellectual Property Handbook gives two reasons for intellectual property laws:
One is to give statutory expression to the moral and economic rights of creators in their creations and the rights of the public in access to those creations. The second is to promote, as a deliberate act of Government policy, creativity and the dissemination and application of its results and to encourage fair-trading, which would contribute to economic and social development. The Anti-Counterfeiting Trade Agreement (ACTA) states that "Effective enforcement of intellectual property rights is critical to sustaining economic growth across all industries and globally".

A joint research project of the WIPO and the United Nations University measuring the impact of IP systems on six Asian countries found a positive correlation between the strengthening of the IP system and subsequent economic growth. Economists have also shown that IP can be a disincentive to innovation. IP makes excludable non-rival intellectual products that were previously non-excludable. This creates economic inefficiency as long as the monopoly is held. A disincentive to direct resources toward innovation can occur when monopoly profits are less than the overall welfare improvement to society. This situation can be seen as a market failure, and an issue of appropriability.

Morality

According to Article 27 of the Universal Declaration of Human Rights, "Everyone has the right to the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author". Although the relationship between intellectual property and human rights is a complex one, there are moral arguments for intellectual property. The arguments that justify intellectual property fall into three major categories:

-    lockeans argue that intellectual property is justified based on deservedness and hard work;

-    utilitarians believe that intellectual property stimulates social progress and pushes people to further innovation;

-    personality theorists believe intellectual property is an extension of an individual;

Various moral justifications for private property can be used to argue in favour of the morality of intellectual property, such as:

1. Natural Rights/Justice Argument: this argument is based on Locke’s idea that a person has a natural right over the labour and/or products which is produced by his/her body. Appropriating these products is viewed as unjust. Although Locke had never explicitly stated that natural right applied to products of the mind, it is possible to apply his argument to intellectual property rights, in which it would be unjust for people to misuse another's ideas. Lockeans argument for intellectual property is based upon the idea that labourers have the right to control that which they create. They argue that we own our bodies which are the labourers, this right of ownership extends to what we create. Thus, intellectual property ensures this right when it comes to production.

2. Utilitarian-Pragmatic Argument: according to this rationale, a society that protects private property is more effective and prosperous than societies that do not. Innovation and invention in 19th century America has been said to be attributed to the development of the patent system. By providing innovators with durable and tangible return on their investment of time, labor, and other resources, intellectual property rights seek to maximize social utility. The presumption is that they promote public welfare by encouraging the "creation, production, and distribution of intellectual works". Utilitarians argue that without intellectual property there would be a lack of incentive to produce new ideas. Systems of protection such as Intellectual property optimize social utility.

3. "Personality" Argument: this argument is based on a quote from the “Elements of the Philosophy of Right” written by Hegel (1820-21): "Every man has the right to turn his will upon a thing or make the thing an object of his will..". European intellectual property law is shaped by this notion that ideas are an "extension of oneself and of one’s personality". Personality theorists argue that by being a creator of something one is inherently at risk and vulnerable for having their ideas and designs stolen and/or altered. Intellectual property protects these moral claims that have to do with personality.

Infringement, Misappropriation and Enforcement

Unauthorized use of intellectual property rights, called "Infringement" with respect to patents, copyright, and trademarks, and "Misappropriation" with respect to trade secrets, may be a breach of civil law or criminal law, depending on the type of intellectual property, jurisdiction, and the nature of the action. Patent infringement typically is caused by using or selling a patented invention without permission from the patent holder. The scope of the patented invention or the extent of protection is defined in the claims of the granted patent. There is safe harbour in many jurisdictions to use a patented invention for research. This safe harbour does not exist in the US unless the research is done for purely philosophical purposes, or in order to gather data in order to prepare an application for regulatory approval of a drug. In general, patent infringement cases are handled under civil law (e.g. in the US) but several jurisdictions incorporate infringement in criminal law also (for example, Argentina, China, France, Japan, Russia, South Korea). Copyright infringement is reproducing, distributing, displaying or performing a work, or to make-derivative works, without permission from the copyright holder, which is typically the author, that is, assumed a transfer, a publisher or another businessman. It is often called "Piracy", and as well as in other casesit can obtain the inhibitory use from an unauthorized third part. Generally the copyright holder can only get money damages if the owner registers the copyright. Enforcement of copyright is generally the responsibility of the copyright holder. The ACTA trade agreement, signed in May 2011 by the United States, Japan, Switzerland, and the EU, requires that its parties add criminal penalties, including incarceration and fines, for copyright and trademark infringement, and obligated the parties to active police for infringement. Trademark infringement occurs when one party uses a trademark that is identical or confusingly similar to a trademark owned by another party, in relation to products or services which are identical or similar to the products or services of the other party. As with copyright, there are common law rights protecting a trademark, but registering a trademark provides legal advantages for enforcement. Infringement can be addressed by civil litigation and, in several jurisdictions, under criminal law. In the US, the Trademark Counterfeiting Act of 1984 criminalized the intentional trade in counterfeit goods and services and ACTA amplified the penalties. Trade secret misappropriation is different from violations of other intellectual property laws, since by definition trade secrets are secret, while patents and registered copyrights and trademarks are publicly available. In the US, trade secrets are protected under state law, and states have federal law in the form of the Economic Espionage act of 1996, which makes the theft or misappropriation of a trade secret a federal crime.

Criticism

Some critics of intellectual property, such as those in the free culture movement, point at intellectual monopolies as harming health (in the case of pharmaceutical patents), preventing progress, and benefiting concentrated interests to the detriment of the masses, and argue that the public interest is harmed by ever expansive monopolies in the form of copyright extensions, software patents, and business method patents. More recently scientists and engineers are expressing concern that patent tickets are undermining technological development even in high-tech fields such as nanotechonology.

The World Intellectual Property Organization (WIPO) recognizes that conflicts may exist between the respect for and implementation of current intellectual property systems and other human rights. In 2001 the UN Committee on Economic, Social and Cultural Rights issued a document called "Human Rights and Intellectual Property" that argued that intellectual property tends to be governed by economic goals when it should be viewed primarily as a social product; in order to serve human well-being, intellectual property systems must respect and conform to human rights laws. According to the Committee, when systems fail to do so they risk infringing upon the human right to food and health, and to cultural participation and scientific benefits. In 2004 the General Assembly of WIPO adopted The Geneva Declaration on the Future of the World Intellectual Property Organization which argues that WIPO should "focus more on the needs of developing countries, and to view IP as one of many tools for development, not as an end in itself". Further along these lines, the ethical problems brought up by IP rights are most pertinent when it is socially valuable goods like life-saving medicines are given IP protection. While the application of IP rights can allow companies to charge higher than the marginal cost of production in order to recoup the costs of research and development, the price may exclude from the market anyone who cannot afford the cost of the product, in this case a life-saving drug.

Bibliography

De George R. T. (2005), “Intellectual Property Rights”, in G. Brenkert e T. Beauchamp (a cura di), The Oxford Handbook of Business Ethics, Oxford, Oxford University Press.
Korn N. (2005), Guide to Intellectual Property Rights and Other Legal Issues, London, Minerva Project University
http://www.minervaeurope.org/publications/guideipr.htm
Peter K. Y. (2007). Intellectual Property and Information Wealth: Copyright and related rights, Washington, Greenwood Publishing Group. p. 346
Raysman R. et. al (2006) Intellectual Property Licensing: Forms and Analysis, New York, Law Journal Press.
Worl Intellectual Property Organisation (2008), “WIPO Intellectual Property Handbook: Policy, Law and Use”, WIPO Publication, No. 489  http://www.wipo.int/about-ip/en/.

Ediotr: Francesca BERTI