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- Herausgeber: John Wiley & Sons
- Kategorie: Fachliteratur
- Sprache: Englisch
This book analyses the various ways in which intellectual property (IP) operates in relation to innovation activity. It reflects on the "classical" issues of the IP system related to the necessity of protecting risky and often costly investments undertaken by firms and others players involved in the innovation process. Beyond this, it stresses the numerous challenges addressed by contemporary technological and societal change, especially in a world where the digital revolution is rapidly transforming the way in which innovation is organized. In this context, the new corporate IP and innovation practices call for responses on the part of public policies.
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Veröffentlichungsjahr: 2017
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Table of Contents
Cover
Title
Copyright
Introduction
1 The Rationale of the System and the Diversity of the Forms of Protection
1.1. Going back to the origins and goals of intellectual property law
1.2. The formal tools of intellectual property law
1.3. Informal means of protection
2 How Companies Choose these Tools
2.1. The factors behind the choice to use these different tools
2.2. The microeconomic effectiveness of protection
3 How Effective is the System in Terms of Social Welfare? The Dimensions of the Problem
3.1. Intellectual property rights as a second-best solution
3.2. Looking for an effective patent
3.3. Several possibilities to best configure rights according to the general interest
4 How Companies Use Intellectual Property
4.1. Defensive strategy
4.2. Licensing strategy
4.3. Cooperative strategy
4.4. Movement strategy
5 What is the Contribution Made to Emerging Forms of Innovation?
5.1. The challenges of the digital world and the new forms of innovation
5.2. The risk of adverse effects in the recent development of the patent system
5.3. Two emblematic cases of considerable tension: biotechnologies and the software industry
6 The Main Trends of Intellectual Property Regimes
6.1. A reinforcement trend deriving mostly from America
6.2. A trend which is also present in Europe and Japan
6.3. Which multilateral framework should we consider, especially in relation to the needs of developing countries?
6.4. A reinforced copyright regime as well
7 A System that is the Victim of its own Success or an Anomaly that should be Remedied?
7.1. The escalation of trademarks, industrial design rights, copyright, counterfeiting and piracy
7.2. A multiplication of patents of mixed quality and occasionally with vague outlines
7.3. Increased pressure on the judicial system
7.4. A new reform movement from the United States: the backlash?
8 Overall Assessment and Conclusion
8.1. A possible lever for the countries’ economic growth through the incentive to innovate
8.2. A key factor for technology transfer and the dissemination of knowledge
8.3. A joint evolution on a sectorial level as well
8.4. Status quo, reform or abolition?
Bibliography
Index
End User License Agreement
List of Illustrations
2 How Companies Choose these Tools
Figure 2.1. The share of companies using some forms of protection to protect their innovations (sorted according to the location of the company; in %). For a color version of this figure, see www.iste.co.uk/lallement/property.zip
4 How Companies Use Intellectual Property
Figure 4.1. Four broad types of intellectual property strategies
Figure 4.2. The main reasons why product and process innovation is patented (in % of the respondents) (Field: companies in the manufacturing sector involved in R&D activities in the United States.
7 A System that is the Victim of its own Success or an Anomaly that should be Remedied?
Figure 7.1. The development of the number of triadic patent families (1985–2014)
1
. For a color version of this figure, see www.iste.co.uk/lallement/property.zip
8 Overall Assessment and Conclusion
Figure 8.1. Balance between intellectual property income and payments (in billions of dollars at current prices) (Source: Balance of payments statistics of the International Monetary Fund, compiled by the World Bank). For a color version of this figure, see www.iste.co.uk/lallement/property.zip
Guide
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Table of Contents
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Innovation between Risk and Reward Set
coordinated by Bernard Guilhon and Sandra Montchaud
Volume 3
Intellectual Property and Innovation Protection
New Practices and New Policy Issues
Rémi Lallement
First published 2017 in Great Britain and the United States by ISTE Ltd and John Wiley & Sons, Inc.
Apart from any fair dealing for the purposes of research or private study, or criticism or review, as permitted under the Copyright, Designs and Patents Act 1988, this publication may only be reproduced, stored or transmitted, in any form or by any means, with the prior permission in writing of the publishers, or in the case of reprographic reproduction in accordance with the terms and licenses issued by the CLA. Enquiries concerning reproduction outside these terms should be sent to the publishers at the undermentioned address:
ISTE Ltd27-37 St George’s RoadLondon SW19 4EUUK
www.iste.co.uk
John Wiley & Sons, Inc.111 River StreetHoboken, NJ 07030USA
www.wiley.com
© ISTE Ltd 2017
The rights of Rémi Lallement to be identified as the author of this work have been asserted by him in accordance with the Copyright, Designs and Patents Act 1988.
Library of Congress Control Number: 2017950130
British Library Cataloguing-in-Publication Data
A CIP record for this book is available from the British Library
ISBN 978-1-78630-070-6
Introduction
“Therefore, we need to move beyond the simple idea of closure that excludes opening, the simple idea of opening that excludes closure […] like in the idea of frontiers, as a frontier is both what allows and prevents passage, what closes and what opens” (Edgar Morin, La Méthode – Tome 1: La nature de la Nature, Le Seuil, Paris, 1977).
Intellectual property has clearly become a key factor for innovation processes in the complex chain, starting with the creation of new ideas and ending with the launch on the market of the goods or services that may derive from them. It plays a primary role in the promotion or channeling of innovation in every decentralized market economy where public authorities are not necessarily in the best position to orient innovation efforts towards socio-economic needs. The legal framework and the relevant institutions play an increasingly significant role as a regulation instrument, supplementing the market mechanisms.
Moreover, evidence suggests that in recent times owning and using intellectual property is playing a more significant part in the strategies of innovative companies and, similarly, issues of intellectual property have come to the fore of the political agenda concerning innovation policies [WIP 11].
However, the crucial role of intellectual property is ambiguous and often very controversial. Intellectual property is not a simple indicator of innovation capacity. In this field, more does not necessarily mean better. The relevant rights make it possible to regulate access to knowledge and its potential use by establishing the conditions for the right-holder to either accept to let a third party exploit the protected subject matter or not. It is in this sense that intellectual property rights essentially constitute a monopoly and exclusive rights: they confer to their respective holders the right to authorize as well as forbid. In this respect, intellectual property law departs from the principle of freedom of trade and industry and is often at the center of heated debates on a philosophical and practical level. This is why the basic issue that involves finding out how and to what extent intellectual property rights boost innovation is anything but easy.
This work aims to provide interpretation keys that make it possible to understand these debates by analyzing the different ways in which intellectual property rights interact with innovation activity. It deals with this subject mainly from an economic standpoint, but it also refers to its legal, technological and management dimensions. It is meant both for an academic audience (students, teachers, researchers) and for people working in the field and interested in the issues of intellectual property in their institution or organization, be it a company or any other kind of body (technology transfer organizations, etc.).
This work is structured as follows. The first three chapters deal with classic questions of intellectual property in relation to innovation.
After taking a brief look at the historical creation of intellectual property rights, the first chapter begins by reconsidering the issue of their goals. Insofar as the digital revolution is often highlighted to justify a need for aggiornamento, it is undoubtedly useful to reconsider the origins and principles underlined to justify the establishment of these rights, mostly during other revolutions, namely the industrial revolutions in the 19th Century. Besides, the analysis recalls that other mechanisms can be conceived to promote the production of the knowledge necessary for innovation, especially in the field of research and development (R&D). The general presentation of intellectual property rights allows us to highlight the fact that they are not limited to the best-known formal legal tools, namely patents. Taking into consideration other tools such as copyright, trademark law and industrial design right is all the more important as innovation cannot be reduced to R&D activities, and it includes a non-technological component, whether commercial, organizational, or esthetical. It is also recalled that other informal mechanisms, among which trade secrets and lead time over competitors, also allow companies to reap the rewards of their innovation activities.
The following chapter examines the choices made by companies in relation to these different means of protection. It shows that the means used to secure the product of their innovation effort may occasionally be combined and are practically more or less relevant, especially according to the countries considered, the size of the companies that use them, their business lines and the types of innovations involved. Moreover, several empirical works make it possible to compare the effectiveness of each way of protecting innovation from the standpoint of the company involved. Some also lead us to assess the added value that companies see in patenting a specific innovation. They show that the premium provided by the patent to its holder is, in most cases, only a true incentive in a small number of sectors. However, they also indicate that there are inventions that are worth being patented in all industrial sectors since, in the end, each patent is like a bet where the return on investment is most often unfavorable but in case of success the profits may be considerable.
Are these profits on a microeconomic level, which derive from conferring temporary monopoly rights that aim to boost innovation, well-proportioned? Do they not involve, on the other hand, costs that are too high for third parties? This issue has been hotly debated for a long time and it produced interesting results about the optimal dimensions of patents and copyright (term, field protected, etc.). Besides, different arrangements or potential adjustments allow us in principle to set the rights as well as possible in order to find the best balance for overall social welfare: obligation to disclose technical information in patent applications, pre-grant opposition procedures, mechanisms related to licenses, interaction with competition policies, exemption regimes in some cases, fees for obtaining or renewing patent rights, etc. (Chapter 3).
The two chapters which follow examine the new ways in which companies are using intellectual property in relation to new patterns of innovation.
Focusing on how companies use intellectual property, Chapter 4 underlines how these uses are less and less limited to the traditional role of protecting innovation in a narrow sense, namely against counterfeiting or piracy. They have become more subtle and ambiguous. We can schematically distinguish broadly between four groups of strategies. One of them, based on licensing agreements, goes hand-in-hand with the development of markets for technology. Another corresponds to a cooperation strategy where intellectual property may be used both as currency and as a way of sharing some intangible assets that are essential for innovation, but also as a signaling tool, especially to make it easier to obtain funding for innovation. Another type of use, which is the most controversial, refers to a movement strategy, reminiscent of an arms race, and can be illustrated by the notion of blocking patents. As a result, intellectual property rights by now interact with innovation through complex channels and have acquired a central role in helping the right-holders situate themselves in relation to their competitors or partners.
Moreover, what do we basically know about the way in which the system of intellectual property rights meets the needs resulting from new forms of innovation and the development of new technologies? To what extent can this system adapt to the challenges that derive from the expansion of information goods and the digital transformation that eliminates copying costs, etc.? Other questions deal with its ability to drive the new collaborative innovation practices called open innovation. Moreover, to what extent is the increasing number of patents an obstacle to innovation in the technological fields where innovation is cumulative and each invention heavily relies on previous progress? To make an assessment, we have chosen to examine two critical fields: biotechnologies – with the delicate issue of access to genetic resources and research tools – and software development. In the latter case, the respective advantages and drawbacks of patents and copyright are always debated but open-source licenses offer innovative solutions while also showing new ways of tackling the issues related to intellectual property (Chapter 5).
The last three chapters analyze the new regulatory issues, namely the challenges faced by public policies in relation to the recent and future developments of the intellectual property system.
The changes that have marked the use of intellectual property rights and innovation practices can be ascribed to a large extent to the evolution of the general institutional framework. In this respect, the main feature is the overall trend towards the reinforcement of intellectual property systems that started at the beginning of the 1980s. At first sight, this movement begins in the United States and involves a broadened scope of patentability which includes new fields and the creation of specialized courts. However, it is more general and, to a large extent, it corresponds to a sort of one-upmanship in which most developed countries have indulged. The progressive growth of the copyright protection term can aptly illustrate this point. This change can be conceived in relation to developed countries, where intellectual property rights are used as tools to ensure international competitiveness and attractiveness. On the other hand, it is decidedly less evident that it corresponds to the interest of developing countries, even though it is also largely establishing itself in these areas, if we take into consideration the multilateral framework implemented more than two decades ago, especially within the World Trade Organization (Chapter 6).
At first both legislative and judicial, these changes of the legal framework have been overwhelmingly supported by users, to the extent that the last few decades have led to an unprecedented increase in filed patents, trademarks and industrial design rights. Is this somehow the price of success? A sort of intellectual property inflation unrelated to innovation activity? Statistical data can validate or refute this hypothesis according to the fields and countries considered. Other signs point in any case to a worrying drift. Thus, the extension of patentability to include new domains seems to have involved more relaxed patentability criteria so that major patent offices have granted too many patents for inventions that do not always deserve legal protection. Similarly, but on a more general level, as the field of copyright is also quite affected, disputes are tenser than ever. In certain sectors, strategies based on threats of legal action have gained far-reaching importance, and the cost of litigation involving intellectual property deprives innovation of a substantial part of the companies’ resources. The awareness of some dysfunctions, seems to have already caused a backlash, as is shown by the reform movement started at the beginning of the current decade in the United States (Chapter 7).
Apart from several controversies that characterize these debates, which overall state of affairs can we deduce from the analysis of the relationships between intellectual property rights and innovation on a larger scale? The empirical studies available, which focus on various periods and countries, teach us something useful about this topic, especially by distinguishing between the sectors and the levels of development of the countries considered. Although it is often difficult to point out on a macro- or meso-economic level the extent to which the intellectual property system directly drives – or on the contrary deters – innovation, recent works interestingly shed more light on the matter by tackling the issue from a more indirect perspective. Some focus on the contribution of this system to the transfer of technology and the emergence of technological knowledge markets. This is a significant point especially in relation to the transfer of public research results to private businesses. Finally, this work reconsiders the nagging question: in the name of innovation, should we ultimately abolish intellectual property rights, stick to the status quo, or reform the system? This work argues in favor of a reform and outlines its principal aspects (Chapter 8).
1The Rationale of the System and the Diversity of the Forms of Protection
Before going back to the fundamental reasons that account for how intellectual property rights have been established, we need to outline a few reminders of the origins of the intellectual property system.
1.1. Going back to the origins and goals of intellectual property law
When were intellectual property rights established and which fundamental need does intellectual property meet in terms of innovation?
1.1.1.Some historical points of reference
The need to adopt an intellectual property system has been felt for a long time, as a short historical contextualization focused on a few key stages can illustrate. The history of patent systems started in Europe during the period between the Renaissance and the end of the 18th Century. The first law on patents as exclusive right conferred to an inventor dates back to 1474 in the Republic of Venice and provided protection for a period of up to ten years [GUE 07]. The actual turning point was in England in 1623-4, when the Parliament passed a “Statute of Monopolies” that limited the royal power to create monopoly rights to patents. Over the following two centuries, this text was also a model both for British colonies and other countries. As for France, Louis XV’s edict of 1762 provided protection to inventors for a period of 15 years through patents. Most other European countries only established this type of rule in the 18th – or even in the 19th – Century, especially Austria (1794), Russia (1812), the Netherlands (1817), Portugal (1837), etc. [MAC 58].
As for copyright, the legal framework similarly aimed at first to limit the arbitrariness of executive power. In France, the laws of 1791 and 1793 established that, after an author’s death, his or her work would be protected for up to five years. In the United States, Article I (section 8) of the Constitution of 1787 conferred to the Congress the power to “promote the progress of science and useful arts, by securing for limited times to authors and inventors the exclusive right to their respective writings and discoveries”. In Japan, the adoption of a legal framework for intellectual property, especially the “Patent Monopoly Act” of 1885, began in the Meiji period [GRA 16].
Beyond national borders, the legal framework of intellectual property also developed quite precociously in its multilateral dimension, as is shown by the Paris Convention of 1883 and the Bern Convention of 1886, which focused on industrial property and literary and artistic property respectively.
Therefore, the reasons that justify the establishment of intellectual property rights are not new. They are part of a debate of ideas that is several centuries old. However, they become particularly significant in the context of what is conventionally called the knowledge-based economy, namely a world where knowledge has become the main driving force for the creation of wealth.
In this knowledge-based economy, whose relative significance has been growing for several decades and is currently increasing with the development of digital technology, intellectual property plays a key role, especially as a means of valorization and diffusion of knowledge and information, in particular in their technological dimension.
1.1.2.Some market failures that must be addressed
From an economic point of view, the central issue raised by knowledge and information goods is that they present the two main features of a public good, namely the fact of being a non-rival and non-excludable good. Taking into consideration that a non-rival good is a good whose consumption by one user does not decrease another user’s consumption, it is clear that the problems raised by non-rivalry are especially tricky when we deal with digital goods, which can a priori be replicated at zero cost and used simultaneously by an infinite number of individuals. Non-excludable goods are those whose use cannot be easily denied to certain users, even if these users do not contribute to the funding of said goods. They lead to a “free-rider” problem that can direly affect the profitability of the economic models involved for the holders.
As we know that it is very hard to determine the value of an invention without revealing its content, the very fact of disclosing this knowledge allows anyone to appropriate it and exploit it as he or she pleases if it is not protected. As a result, the market mechanisms on their own do not allow innovators to cover their costs. Therefore, and to the extent that the efforts made by someone to create new knowledge may thus benefit imitators, the private value of investing in innovation tends to be lower than its social value. Consequently, there is a high risk of global underinvestment in innovation in relation to society’s needs [ARR 62].
The establishment of intellectual property rights aims precisely to tackle this fundamental issue of market failure. To overcome these difficulties concerning appropriation, it limits access to certain intellectual works by conferring to individuals or organizations exclusive rights to the result of their innovation and creation activities. Therefore, it is a matter of protecting these activities by making it possible to reap the resulting benefits, all the more so as creating knowledge by investing in innovation is a risky activity with unpredictable returns, which occasionally entails extremely high costs.
Although a solution may involve the institution of a certain degree of private property, several other mechanisms can be conceived to promote the production of the knowledge necessary for innovation, especially in the domain of R&D. Before delving deeper into the issue of the advantages and drawbacks of intellectual property rights, it is useful to mention those of these alternative solutions.
A first possibility involves public authorities that provide regular funding to public institutions or organisms devoted to research. This solution, however, is not suitable for downstream research, close to the market outlets where companies are in competition with one another.
A second approach, which is adopted very often, involves the public authorities’ allocation of direct (subsidies, repayable advances, public procurement, etc.) or indirect support (tax exemptions, cuts in social security contributions) to encourage companies to get involved in R&D activities. Therefore, this is a kind of R&D funded at least in part with public money but carried out by the private sector.
A third method, which is a variant of the previous one, involves awarding prizes for innovation to reward the progress made towards a publicly relevant and pre-established goal. In theory, it presents numerous advantages, insofar as it makes it possible to obtain the equivalent of the ex-ante incentivizing aspect of intellectual property (the prospect of a substantial reward) without implying ex post the market distortion problems and therefore the “social cost” involved in any kind of monopoly right. In practice, its application remains limited to the small number of cases where public authorities can assess beforehand the value of the innovation considered. However, in most cases companies have special information about the potential of the innovations in question and their likely market value, posing a moral hazard as they can ipso facto manipulate the estimates of public authorities [CLA 13].
This kind of difficulty – especially the problem of information asymmetry between companies and public authorities in relation to the cost and value of research programs – applies not only to the awarding of rewards (prizes or distinctions) but also to the aforementioned mechanism of public subsidy [ENC 06]. It helps to recall that public authorities are not necessarily in the best position to guide researchers effectively and quickly towards innovations needed by the economy and society, especially as, in practice, innovations quite often take shape in fields where they were not expected at the beginning [GRE 10]. According to Stiglitz [STI 08], incentivizing through the awarding of prizes has many qualities but it also presents the major drawback of not working when the objective is not well defined, so will never replace the patent system.
In comparison, the system of intellectual property rights presents several advantages. It exempts public authorities from enquiring about sensitive economic information known only to private actors especially concerning R&D costs or the private value of the inventions. It leaves to the actors involved in innovation the responsibility to freely choose and make their investments profitable. Besides, the cost of intellectual property rights relies on users rather than taxpayers [ENC 06]. In other words, intellectual property rights are conceived as an incentivizing system that channels market forces and guides the innovation activity following a logic of decentralized initiative. Insofar as organizations and individuals are those who know best about the chances of success of the different options available in terms of innovation, this system promotes an efficient way of allocating the relevant available resources [WIP 16]. Evidently, these different mechanisms of incentivization are more complementary than alternative. Thus, and to the extent that intellectual property rights only allow the entitled parties to recover part of the profits deriving from their innovations, it is justified that companies may occasionally profit at the same time from public support for R&D.
1.2. The formal tools of intellectual property law
Innovation, however, cannot be reduced to R&D. Moreover, the canonical definition of innovation, provided by the OECD in its Oslo Manual, stopped being limited to technological innovation in the third edition of this manual, which now also includes business and organizational innovation [OEC 05]. As an example, the study carried out by Hall and Sena [HAL 17] based on the Community Innovation Survey (CIS) and involving several innovative companies in different sectors shows that R&D spending in the United Kingdom represents on average only around 22% of overall innovation spending. This part of R&D (internal or external), which hovers around 29% in the manufacturing sector, is half as much (around 15%) in the other sectors considered: services, business, utilities and the construction industry. For this set of innovative companies, other innovation expenses involve mostly the purchase of IT equipment and software (45% of the total on average and even more if we consider SMBs and service companies) and, for the rest, correspond to marketing expenses (around 13% of the total), training expenses (around 10% of the total), design expenses (around 6% of the total) and expenses related to the acquisition of external knowledge (around 3% of the total).
For companies, innovation thus includes a range of activities much wider than R&D. It is all the more important that we do not focus solely on the issue of patents, as important as it may be, and that we also consider other tools such as trademarks, copyright or industrial design right.
1.2.1.Patents
In spite of all this, it is reasonable to focus on the formal tools of intellectual property law and patents in particular. This has to do with how patents are, out of these tools, those that require the most expertise and involve the largest number of economic and financial issues, at least in industry. Before analyzing in depth how patents work as mechanisms that protect innovation, it is enough at this stage to recall some of their fundamental features. In most cases, patents are characterized by a legal protection term of 20 years, they protect technological solutions, and they are granted only at the end of a fairly costly examination process. The granting of a patent mainly requires that three criteria are met: novelty, inventiveness or non-obviousness for persons “skilled in the art” and finally utility or industrial application potential. Once a patent has been granted, its rights are maintained only if its holder pays off the yearly license-fees. These filing fees and annuity amounts depend largely on the geographical coverage of the protection sought by the person who files the patent. The countries chosen are a priori identified as those including the main reference markets, as the exclusive right is limited to the geographical area of the jurisdiction where the patent is registered. The main patent offices are therefore national, for example the United States Patent and Trademark Office (USPTO) in the United States. This also holds true for Europe, even if the European Patent Office (EPO), created after the Munich Convention of 1973, grants protection in several European countries. Another possibility involves applying for international protection through the procedure called PCT (Patent Cooperation Treaty), which is managed by a specialized agency belonging to the UN, the World Intellectual Property Organization (WIPO). The PCT procedure, however, does not lead to the issue of a patent that is valid all over the world. Rather, it involves the simplification of the filing procedure and the reduction of the expenses related to what filing a series of patents in several offices involves.
