Mini Master's in Intellectual Property (MIP)

HAVING WORKING IP KNOWLEDGE FOR ICM

Chapter 8 discussed the economic and commercial value and management of IP in the knowledge economy. It is important to note here why a working knowledge of IP is essential for strategic business management.

•   First and foremost, protection of knowledge assets through the acquisition of IP rights is an essential step in protecting the business asset base of the enterprise, which amounts in some businesses to 80 percent. Having a working knowledge of IP, therefore, is essential for business managers, accountants, and other personnel entrusted with business asset management in general.

•   Failing to understand and thus acquire IP to protect an organization's knowledge assets may seriously jeopardize the competitive advantage of a business unit. A working knowl­edge of IP is instrumental for a business unit's preservation and enhancement of its com­petitive power.

•   Failure to effectively protect IP may result in extensive losses, particularly at a time when misappropriation of trade secrets, pirating copyrighted works on the Internet and other­wise, producing counterfeit products, and infringing patents are on the increase. A work­ing knowledge of IP is essential to devise protection plans and deter violation of the organization's rights.

•   A working knowledge of IP, particularly the primary form, is essential for the design of the appropriate ICM model since IPM is the final stage at which the value derived from the business IC is maximized.

Therefore, this appendix presents a working knowledge of IP for the business manager deal­ing with acquisition of IP, scope of protection, international treaties and protection in other coun­tries, issues that management should beware of, and, finally, how to deal with issues relating to infringement, enforcement, and litigation. These will be discussed for each of the main forms of IP—patents, trade secrets, trademarks, and copyrights. The table at the end of the appendix pres­ents a snapshot of the main differences between the various forms of IP.

PATENTS

Acquisition and Scope of Protection

Patents are the hardest to acquire with the most stringent legal requirements but provide the strongest protection. They cover "any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof."2 Aprocess is defined as "a mode of treatment of certain materials to produce a given result."3 Process patents are also available for new uses of old compounds or products, processes, or machines. The term machine includes apparatus, mechanism, device, and engine. Manufacture refers to articles of manufacture, whether used as raw or prepared materials, provided they have novel qualities, properties, or combinations.4 Composition of matter covers compositions made by "chemical union or mechanical mixture,"5 but excludes naturally occurring compositions except if they were materially changed so that they have characteristics that would not develop naturally. This also applies to genetically engineered life forms, provided they have different new and useful characteristics from those occurring naturally. Since theories, physical formulae, and mathematical algorithms are discoveries of natural laws, they are not patentable, except if incorporated into defined applications.

Patents can also be obtained to protect novel plant varieties, provided they can be reproduced asexually. Those that cannot can be protected through plant varieties certificates, which provide patent-like protection for 20 years, and 25 years for trees.

To apply for a patent, an inventor should file a patent application at the Patent and Trademark Office (PTO). The application is processed and prosecuted through different stages where the PTO examines the patentability of the invention. An average application takes two to three years until a patent issues with prosecution cost of approximately $10,000, depending on the complex­ity of the invention. An inventor who fails to apply for a patent for a considerable time after reducing the invention to practice may be deemed to have abandoned the invention and lose the right to apply for a patent. A patentee may also be enjoined from enforcing the patent if it was proved that the patent was misused in a way to gain more market power than that enabled by the patent. The courts have recognized certain practices that may constitute patent misuse. The patent may be rendered invalid if it was proven that the inventor misrepresented material facts to the PTO or withheld material information about the patentability of the invention.

To be patentable, the invention should be novel, nonobvious to a person of ordinary skill in the art, and useful. The first requirement of novelty relates to the policy of not awarding patent rights to an idea or an invention that is already in the public domain. The test is very wide, with the effect of excluding from patenting an invention that was in use, known, offered for sale, or men­tioned in a printed publication or a previous patent. Though patent protection is limited to the country of the granting body, the public domain scope is universal, including references in other countries and not only the country where the inventor seeks to patent his or her invention. The inventor loses the right to patent a novel invention upon disclosing the invention in almost all countries. In the United States, however, the inventor is given a one-year grace period after first disclosure of the invention to file a patent application.

The invention should also satisfy the requirement of nonobviousness. This entails that the invention should be one that would not occur to someone skilled in the art other than the inven­tor, when presented with the same problem. In considering this, the PTO considers analogous technologies that are related to the technology field in which the invention falls.6

The patent is a grant from the state to the inventor of the exclusive right to exploit and use the invention for 20 years, starting from the date of filing for patent. During that period a patentee may exclude others, including independent inventors, from using, making, selling, offering to sell, or importing into the United States the invented patent or a product that is made by a patented process. More, the patentee can stop any party that manufactures or makes components of the patented invention to be assembled abroad. Nor can another import into the United States a product that was made by a process patented in the United States.

If infringement is found, the courts will award damages that cover the patentee's lost profits attributable to the infringement or reasonable royalties. Damages for patent infringement are considerably high and thus the mere threat of being sued acts as a deterrent to many possible infringers. Contributory infringement of patents, and inducements to infringe patents, are also actionable.