The transformaton of innovaton into commercial value depends primarily on appropriate protecton of the intellectual property, usually by patents, and efcient pathway(s) of its transferability as well as the transfer of the protected knowledge. The key features of patents, from an economic perspectve, are that they encompass new knowledge and confer monopoly rights to the owner. The exclusiveness of patent rights is generally conceived as a necessary mechanism to ensure further innovaton, stmulate advanced research and facilitate efcient market transactons with patent rights. The patent holder can transfer the technology embodied by way of grantng to others a license to use the patented inventon in return for a share of the revenues, usually royaltes. Patent rights transferability has been proven to be efcient and proftable to the industry as well as benefcial to the welfare of society. The economic and practcal perspectves of the transferability and commercializaton of patent rights are discussed.
Keywords: blocking patents, cross-licensing, exclusion right, intellectual property rights, innovaton, knowledge, licensing, patents, patent pools, technology transfer, transferability
In general, the mobility of knowledge or innovaton, including from universites and research insttutes, to industry is described as ‘technology transfer’. I have indicated elsewhere that the exclusive nature of intellectual property rights is conceived to be essental and instrumental for efcient exchange transactons (Levy, 2011). I have further indicated that knowledge can be non-excludable since once it is made public, in the absence of clearly defned and protected property rights, users cannot be prohibited from using it. The most common way of excluding knowledge is by patent protecton. Therefore, many companies, partcularly the large ones, have a decisive patent strategy aimed at protectng their proprietary technology thus giving their products an advantage over competng products.
Licensing of intellectual property rights can successfully and eﬀectvely bring protected innovaton through to the market place. Efcient licensing transactons are dependent, among others, on the economic strength of the licensee, which is required to be fnancially, technologically and operatonally competent to develop, manufacture and market innovaton.
It is apparent that the transfer of property, in general, is a crucial driving force in a market economy. Correspondingly, the ability of a society to produce and commercialize knowledge (innovaton) is critcal for sustained economic growth and improved quality of life. Notably, the transformaton of knowledge or innovaton into commercial value depends primarily on its appropriate protecton and successful transfer and acquisiton.
This paper ensues the previous one (Levy, 2011) discussing the ‘transformaton of basic research into commercial value’. It is aimed at elaboratng on the economic and practcal perspectves of the transferability and commercializaton of intellectual property rights, in partcular scientfc achievements and technological innovaton.
Theoretcal and Economic Analysis of Tangible and Intangible Property Rights
The consequence of property rights is well established in economic theory literature. However, they are defned inconsistently in the economics literature and economists sometmes defne property rights in ways that diverge signifcantly from the conventonal legal paradigm. See, for example, (Cole & Grossman, 2000).
In their fundamental paper in law and economics school, Calabresi and Melamed present a framework which basically describes all legal transferable enttlements as protected by either Property rules or Liability rules (Calabresi & Melamed, 1972). An enttlement to private property is protected by property rules (decided by a government agency) to the extent that one cannot remove such enttlement without paying the value decided and agreed upon by the holder itself, ex-ante. Most real estate, for example, is protected by this class of enttlement.
To the contrary, enttlements protected by liability rules allow non-holders to infringe or transfer an enttlement as long as that they adequately compensate it expost, on the basis of damages determined by court. Liability rules are beyond the scope of this paper and are thoroughly discussed in the literature. In this paper I limit the discussion to property rules with implicaton on intellectual property rights.
In the economic literature, the term “property right” carries an additonal meaning implying the ability of the holder to gain from its property, by consumpton or exchange. Barzel has designated it as “Economic Property Right” (Barzel, 1977), as opposed to “Legal Property Right”, discussed above. Transacton cost is closely associated with the economic property right, and encompasses transfer, capture and protecton of the property right. In order that the rights to a property complete or become perfectly delineated, both the holder of the right and the party interested in the property right must possess complete informaton on its atributes. Availability of complete informaton facilitates the transfer of the enttlement to be readily consummated. Evidently, high transacton cost would prohibit the transfer of the property right. In practce, there are positve transacton costs, thus the allocaton and implicaton of enttlement is signifcant as it can ultmately aﬀect social product.
The above introductory discussion on property rights is applicable, to the extent described below, also to intangible property. Intangible or intellectual property rights are defned by The Conventon Establishing the World Intellectual Property Organizaton (WIPO) as follows: “Intellectual Property shall include rights relatng to literary, artstc and scientfc works; performances of performing artsts, phonograms and broadcasts; inventons in all felds of human endeavor; scientfc discoveries; industrial designs; trademarks, service marks and commercial names and designatons; protecton against unfair competton; and all other rights resultng from intellectual actvity in the industrial, scientfc, literary or artstc felds”.
In this paper I purposely limit the discussion to inventons, which are usually protected by patents. A patent is an intellectual property right granted by a natonal government agency to an inventor to exclude others from making, using, oﬀering for sale, or selling the inventon throughout the country or importng the inventon into the country for a limited tme in exchange for public disclosure of the inventon when the patent is granted. Patents are therefore valid in individual countries for specifed periods, usually for twenty years. They are generally granted by a natonal patent ofce or a regional one like the European Patent Ofce (EPO).
Interestngly, the origin of modern patent law can be traced to the late sixteenth century. Monopoly grants were issued through a royal legal device known as a “leter patent”" (for further reading see e.g., (Mossoﬀ, 2001)). Two-hundred years later, patents became explicit legal tools for promotng and protectng an inventor's property right in his or her creaton. Nowadays, it is beyond doubt that patents are property rights as patents secure only the right to exclude - ius excludendi alios. This is derived from a concepton of property in land and other tangible property interest, and became the standard defniton of legal enttlements in property comprising a right to exclude.
Patent scholars have adopted the exclusion concept of property in land, and to a certain extent to chatels, and have similarly redefned the patent law. Chisum states that “a patent grants to the patentee and his assigns the right to exclude others from making, using, and selling the inventon. …It does not grant the afrmatve right to make, use or sell…." (Chisum, 2006). Markedly, unlike other forms of property, a patent includes only the right to exclude and no other rights, see, for example, (Merges & Duﬀy, 2007); while property rights pertaining to land and chatels secure the traditonal “bundle of rights”. Apparently, patents are conceptually diﬀerentated from land because of seemingly important doctrinal diﬀerences between the enforcement of tangible and intangible property enttlements (Wlaterscheid, 2005).
The validity of the exclusion doctrine of patents may be demonstrated in the phenomenon of ‘blocking patents’. A blocking patent exists when two separate patents cover aspects of the same inventon, and thus each patentee can exercise their right to exclude the other patentee from using their respectve contributon to this inventon (see also discussion on cross-licensing and patent pools in Secton 3, below). Such situatons are quite common, thus prior inventors are able to exclude consequent commercial applicatons of their inventons. Some scholars however tend to view the blocking patent scenario as evidence of the distncton between property and exclusive patent rights (Mossoﬀ, 2009). Notably, there is no parallel example to the blocking patent in the domain of tangible property, which is why blocking patents are cited as evidence of the conceptual distnctveness of patents as property.
It should be mentoned that the exclusion concept of patents and its inﬂuence on modern patent doctrine has been critcized in the literature. Mossoﬀ, for instance, suggests reconsidering both the substance and signifcance of the conceptual analysis of patents as property (Mossoﬀ, 2009). The queston whether an intellectual property right is actually more than an ‘exclusion right’ is worthy to be brieﬂy considered, in partcular vis-à-vis the ownership and transferability of the intellectual property right, which is the subject mater of this paper. In brief, legal positvism arguments suggest that creators, in additon to their copyright, may be enttled to a reward based on a ‘moral right’. European and other intellectual property laws convey a “moral right” to creators in connecton with the ‘commercial’ copyrights; see, for instance, French copyright law. I reason that the necessity for an additonal moral right is to complement the economic property right (which enttles the creator to gain from the protected right) with what I defne as a ‘social property right’, aimed at additonally enttling the creator with recogniton by society and dignity, for example, a book will always bear the name of the author. Contrary to the property right, the moral right is not and should not be transferrable. It should be pointed out that ‘moral right’ is uncommon in patent treates. To this end, I propose to consider a ‘moral right’ in context of economic property right, which is virtually protected by patents. This concept will be discussed in a forthcoming paper.
The key features of patents, from economic perspectves, are that they encompass new knowledge and they confer monopoly rights to the owner that arise from the right to exclude. The patent related monopoly right is controversial and vastly discussed in the literature, see, for instance, (Kaplow, 1984); (Posner, 2005); (Nordlin & Levine, 2008)). It is worth notng that modern anttrust policy follows the general prohibiton of monopolies while modern patent law succeeded the exempton. The conﬂict between anttrust law and patent policy has persistently perplexed jurists. It has been argued that the monopoly right purpose is to ensure further innovaton and knowledge which are critcal for sustained economic growth and improved quality of life and welfare. Posner distnguishes between ‘legal’ and ‘economic’ monopoly. A legal monopoly is not necessarily an economic monopoly. It is evident to assume that a patent can be used as a lever to obtain power over the price of unpatented products that are complements of the patented products. Furthermore, patented products do not confer a power over the price of substtutes, which are not patented products (Posner, 2005). Others argue against intellectual property monopoly suggestng that monopolies work to move the wealth to the monopolists, most easily accomplished by blocking innovaton and productvity growth as monopolists will do everything necessary to retain their profts (Nordlin & Levine, 2008).
Indubitably, the conﬂict between patent and ant-trust policies reveals the inherent contradicton among the private and the public interests. Nonetheless, patent law should oﬀer a balance between the freedom to use existng ideas and the incentve to innovate and create new ones.
In economic terms, the excludability right inherent in patents is generally conceived as a necessary mechanism to ensure innovaton, urge further research and facilitate efcient market transactons with patent rights, as well as other intellectual property rights, see also (Landes & Posner, 2003). It is therefore argued that absent of exclusion rights, an inventor may bear all the costs of the creaton of a commercially valuable inventon, or other creatve outcome (e.g., music) while everyone has an incentve to free ride, exploit and beneft from this innovaton, at no cost and with no strings atached.
Apparently, there is a consensus in the literature of economic analysis of intellectual property rights that they enable owners to gain return on their investment made in creatng, inventng and developing new and improved products and technologies. Intellectual property in all forms is in fact considered one of the major drivers of innovaton in ‘knowledge-based economies’ - economies which are directly based on the producton, distributon and use of knowledge (OECD, 1996). Seemingly, in absence of excludability rights knowledge-based economy growth would be atenuated.
The economic signifcance and awareness of the value of patent protecton is demonstrated in the WIPO’s report on ‘World Intellectual Property Indicators’ (WIPO, 2011). Consequently, “patent flings worldwide have reached historically unprecedented levels. The numbers of flings at the largest patent ofces were stable untl the 1970s, but then saw substantal growth”. Patent subject mater has expanded over the past decades to include biotechnology, sofware and, in some countries, methods of doing business. Figure 1 demonstrates the increase in the number of patent applicatons during the past twenty fve years.
According to WIPO, the increase in patent applicatons may indicate accelerated technological progress and thereby generatng economic prosperity. It may also reﬂect the changing nature of innovaton systems (WIPO, 2011). Increased internatonal commerce and the vital need for companies to protect their knowledge in internatonal markets are a third important factor. The number of patents granted during same period is shown in Figure 2. I argue however that the ‘Total number of patents’ does not necessarily imply on the strength of the patents (e.g., validity; frm and durable claims), their commercial value or commercial exploitaton.
Therefore, I propose that the later parameters be considered and taken into account when referring to ‘total number of patents’ as an indicator for generatng economic prosperity in knowledge based economy. As a mater of fact, it is evident that numerous patents are not and may never be used or exploited commercially. I aim to address this mater in a forthcoming paper.
Economic and Practcal Analysis of Patent Right Transferability
As abovementoned, unlike other forms of property, a patent includes only the right to exclude and no other rights; whereas property rights pertaining to personal property, such as land and chatels, also secure the exclusive rights of possession, use and dispositon. One of the signifcant rights in this bundle is the right to transfer the holder’s property right to others. Patents as well have the atributes of personal property. Consequently, applicatons for patent and patents are assignable in law. The applicant or patentee may grant and convey an exclusive (or non-exclusive) right under his or her applicaton for patent or patents.
It should be noted that grantng a license per sē is not assigning the ttle to the right itself but rather grantng the licensee a permission to use the inventon, which is interpreted as a contractual commitment (‘covenant’) not to sue for an alleged infringement. Hence, the licensor remains the owner and holds ttle to the inventon. The owner may however choose to assign his or her ownership enttlement to others, pursuant to certain legal procedures and deeds, for a fair market value.
Ownership of the patent rights presents material legal and economic implicatons worthy to be brieﬂy addressed herein. It is now a common policy and practce in developed countries that employers, as well as universites, claim and retain ttle to inventons made by their employees, including faculty scientsts, during the course of their work. This is implemented either by legislaton or contractually (i.e. employment contracts). I argue in the previous paper (Levy, 2011) that a more broad strategy should be endorsed, according to which the ownership of intellectual property rights should neither depend on the source of funding nor on the nature of the employer but rather should be determined by and depend on the employer-employee labor relatons in general. Such policy is implemented, for instance, in the Israel Patent Law and the UK Patent Act.
It is evident that transfer of property, in general, is a crucial driving force from market economy perspectve. Correspondingly, the ability of a society to produce and commercialize knowledge (innovaton) is critcal for sustained economic growth and improved quality of life. Recent policy statements from the OECD, the World Bank, and others, clearly echo that knowledge is the most important factor in economic development. The role it plays in the process of innovaton and economic growth has become even more central since the emergence of the knowledge-based economies enabled, among others, by technology transfer. Evidently, the transformaton of knowledge or innovaton into commercial value depends primarily on its successful transfer and acquisiton.
There is an apparent universal interest in commercially exploitng viable inventons. On one hand, owner of patent rights seeks to at least return his or her investment, on the other hand, potental “infringers” seek out to improve their products or develop new ones using the inventon at no cost. The patent holder can exploit the inventon exclusively or can transfer the technology embodied by way of grantng a license to use the patented inventon to others (during the life of a valid patent) in return for a share of the revenues, normally royaltes. The strength of patents (i.e. legal and economical) may be critcal to the holder’s decision to license new technologies rather than to use them exclusively. It is argued in the literature that in facilitatng technology transferability patents may be self-correctng. A stronger legal right to exclude others from using an inventon generally provides a stronger economic incentve to include them through licensing, as infringement may result in costly law suits or setlements. Whereas weak patented inventons can disseminate through non-infringing imitatons or through royalty based licenses oﬀered to discourage costly imitaton by compettors (Gallini, 2002). Apparently, the economic value and the strength of the protected inventon determine its transferability cost.
The transfer of the intellectual property right will impose costs on both partes atemptng to determine the value of its atributes, the consequences of which was discussed above. Among others, one partcular concern is the “freedom to operate”, namely, the ability to develop, make, and market products without legal liabilites to third partes (i.e. patent holders). Consequently, it is crucial to conduct freedom to operate analyses prior to a licensing, acquisiton of patents or investment transactons in technology based companies. Similarly, freedom to operate analyses should be conducted in case several potental research pathways are feasible so as to allow selecton of pathway with the least dependence on third-party patents in order to avoid potental litgaton, due to infringement, or pay licensing royaltes.
Patents enable companies to maintain and defend a market advantage. Many companies, partcularly the large ones, have a patent strategy aimed at protectng the proprietary technology thus giving their products an advantage over competng products. Moreover, companies’ research and development (R&D) strategy is ofen driven by the potental strength of their patents. Indubitably, nowadays companies are urged to develop, or acquire, a sustained patent portolio.
A recent vivid example that demonstrates the materializaton of such strategy is the recent transacton in which Microsof acquired from AOL more than 800 patents for $1.056 billion in cash. This remarkable transacton reﬂects the crucial role that patents are increasingly playing in the business of the world’s leading technology companies.
It should be pointed out that diﬀerent industries vary greatly in how they approach innovaton and the importance of innovaton to sustained growth. The pharmaceutcal industry exemplifes this paradigm. In this industry, a patent represents only the beginning of a long and partcularly costly process of developing a marketable medicine. It is a common knowledge that the development of new drugs (and medical innovatons in general) requires massive long term investments in R&D, expertse in pharmaceutcals development, obtaining regulatory approval, producton and marketng capacites. On average, developing an innovatve new drug takes about 12 years. A recent estmate of the average cost of developing an innovatve new drug is over $800 million, including expenditures on failed projects and the value of forgone alternatve investments (DiMasi, Hansen, & Grabowski, 2003). Large pharmaceutcal companies fnd viable innovaton to be much more difcult to accomplish internally (Christensen, 1997). The challenges, including, among others, lack of in house basic research set-up and actvites, encourage large pharmaceutcal frms to pursue collaboratve alliances. Majority of these alliances materialize through licensing transactons with university scientsts and small spin-oﬀ companies. Some remarkable licensing instances of basic research in the medical feld from academia in Israel to industry are shown in Table 1. Pharmaceutcal executves seem to recognize that collaboratve arrangements provide a vital mechanism enabling to expand product pipeline. With fewer new drugs coming to market and proprietary drugs losing their market protecton from generics, big companies switched to mergers and acquisitons for contnued growth, inter alia, by acquiring patent rights to proprietary drugs.
|Product||Indicaton||Licensee||Sales in 2011 (in millions)||Licensor|
|Copaxone||Multple Sclerosis||Teva||$3,570||Weizmann Insttute (WI)|
|Exelon||Alzheimer||Novarts||$1,067||Hebrew University (HU)|
|Doxil[a]/Caelyx||Cancer||Schering-Plough||$320[b]||HU and Hadassah Hospital|
|Aziltec||Parkinson||Teva||$290||Technion Medical School|
|Sources: Companies’ Annual Reports 2011|
[a] Sold by Johnson & Johnson (through its acquisiton of Alza) in the United States and Schering Plough (under the trade name Caelyx) internatonally. Source: htp://www.zoominfo.com/#!search/profle/ person?personId=1059435901&targetd=profle.
[b] In 2010, Source: htp://www.evaluatepharma.com/Universal/View.aspx?type=Entty&enttyType=Product&id=12704&lType =modData&componentID=1002.
In many industries companies license a product patent(s) for productve efciency reasons, partcularly, to achieve lowest manufacturing and distributon costs and yet gain from permited producton and sales by third partes. It is likely that a patent holder, which manufactures and sells a protected product, may not be situated to supply the market demand or to export to other territories due to shortage of producton facilites, distributon setup or adequate fnance to expand its operaton. It is therefore a common practce that large established companies license out the producton and sales of their patented product to third partes for generatng more revenues, sometmes even to compettors. For instance, in the computer industry IBM's know-how along with intellectual property assets reaches into nearly every industry and every discipline of science and technology. IBM’s revenues from intellectual property and custom development income reached over $1.1 billion in 2011, accountng for circa 7 percent of IBM’s net proft. The noteworthy feature is that ofen large companies license their protected technology and knowhow to potentally compettors.
A well-known illustratve and worth notng example of licensing to potental compettors is the case of VCR (Video Cassete Recorder) technology. In 1975 Sony introduced the Betamax, a proprietary technology, which represented a breakthrough on the VCR market. A year later, a competng (apparently lesser than Betamax) technology, VHS (Video Home System) was introduced by JVC (Victor Company of Japan, Ltd.). The strategy of JVC and Matsushita Electric Internatonal (Panasonic) was aimed at creatng an alignment of producers and gaining market share. The two companies agreed to ship original equipment manufacturer (OEM) VCRs to their licensees and then to further development of the VHS system. This helped the two companies to gather numerous partner companies around them, whereas Sony’s approach to exclusively use its technology was seen by most as uncooperatve. The outcome was that in 1978 all major European producers adopt VHS standard and in 1984 US partner Zenith abandons the Betamax format. Betamax format has practcally become obsolete. Albeit this case undoubtedly reveals a remarkable business strategy, it similarly demonstrates the economic impact and signifcant contributon of technology transfer or from legal perspectves transferability of intellectual property rights in general, and to compettors, in partcular.
An additonal notable approach is the ‘cross-licensing’. Accordingly, two (or more) companies grant each other cross-licenses to all technology developed by either party during a defned period with corresponding payments being made to cover any defcit in the value of technology licensed by one side or the other. Consequently, crosslicensing allows freedom to operate for each party. This approach, for instance, is common among Japanese electronics companies.
One noteworthy example of an open cross-licensing transacton illustrates the transfer of technology from Japan to Asia. In the early ninetes Samsung Electronics and Fujitsu entered a broad cross-licensing agreement that allowed each access to the other’s microchip technologies patented in the US, Japan and Europe. Under the agreement Samsung paid Fujitsu ¥4 billion to compensate for Fujitsu’s technological edge. This was some 25 percent of Samsung’s 1991 pre-tax profts and the frst tme that Fujitsu had received royaltes from a Korean frm in a cross-licensing agreement (Miyake, Yoshikawa, & Inoue, 1992). It can be safely stated that cross-licenses may be especially useful in industries, such as the semiconductor and computer industries that are characterized by large numbers of overlapping patent rights.
An additonal related licensing arrangement is known as ‘patent pools’, which generally are created when a group of patent holders each decides to license its respectve patents to each other and to third partes collectvely. In many industries, the patent rights necessary to commercialize a product are ofen controlled by several rights holders. This can increase the transacton costs of negotatng multple licenses and greater cumulatve royalty payments. They are ofen formed when multple patented technologies are needed to produce a standardized product or to solve the blocking patents situaton. Pools composed only of complementary patents tend to increase efciencies and lower prices to consumers. However, it is argued that pools composed of pure substtute patents, are more likely to harm social welfare than are pools of complementary patents (i.e., that do not compete with each other). Seemingly, the current form of patent pools that have been approved by the U.S. Department of Justce (see Chapter 3: Anttrust analysis of portolio cross-licensing agreements and patent pools in guideline (2007)) have been highly benefcial to the public, with no apparent antcompettve eﬀects. The Japanese Guidelines for the ‘Use of Intellectual Property under the Antmonopoly Act’ provides an additonal supportve case. A representatve example is the MPEG-2 patent pool, where in spite of the patent pool competton did not cease, to the contrary, companies have and contnue to develop new digital video standards (for further reading on patent pools efciency, see e.g., (Lerner & Tirol, 2004).
In summary, patents enable companies to maintain and defend a market advantage over compettors. In many industries companies license a product patent(s) for productve efciency reason, partcularly, to achieve lowest manufacturing and distributon costs and yet gain from permited producton and sales by third partes. However, when the patent rights necessary to commercialize a product are controlled by several holders of rights they will ofen prefer to cooperate and share patented knowledge through cross-licensing and patent pools. The various licensing approaches have been proftable not only to the companies but also have been highly benefcial to the public.
Unlike tangible property right, which includes the right to exclude as well as a bundle of other rights, intangible property or intellectual property right includes only the right to exclude. The exclusiveness nature of patent rights is conceived to be essental and instrumental for efcient exchange transactons. From economic perspectve, the right to exclude confers (quasi) monopoly rights to the owner to prevent others from commercially exploitng the protected knowledge (inventon). I agree with the concepton that the (quasi) monopoly right purpose is to ensure further innovaton and knowledge which are critcal for sustained economic growth and improved quality of life and welfare.
The patentee (or patent applicant) may grant to others, by way of a licensing arrangement, a right under his or her patent applicaton(s) or patent(s) to use make and sell a protected product (inventon). In economics terms, the developer of knowledge or technological innovaton and owner of intellectual property rights avails it to an appropriate business (strategic) partner for more efcient commercial exploitaton.
It should be noted that universites have become more important players in knowledge-based economies and scientsts, researchers and engineers have played a critcal role in driving technological progress and innovaton. It is evident that for universites technology transfer by way of licensing out can successfully and eﬀectvely bring their innovaton through to the market place.
Nowadays companies are urged to develop, or acquire, a sustained patent portolio. In industries where blocking patents exist, such as the semiconductors, companies exchange and use knowledge and technology among themselves via two efcient instruments, cross-licensing and patent pools. These patent rights transferability approaches have been proven to be efcient and proftable to the companies as well as benefcial to the welfare of society.
To conclude, the role technology transfer plays in the process of innovaton and economic growth has become more central since the emergence of the so-called knowledge-based economies. Moreover, the transformaton of patented knowledge and innovaton into commercial value depends primarily on strong intellectual property rights and efcient transfer and acquisiton.
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- More practcally, technology transfer is defned, in economic terms, as the process by which a developer of knowledge or technological innovaton and owner of intellectual property rights avails it to a business partner for more efcient commercial exploitaton.
- Non-transferrable enttlements are protected by Inalienability rules.
- Note that common contract law provides another example of a liability rule whereby partes to a contract can breach it, so long as they pay ex-post court-determined damages (or by alternatve dispute resoluton (e.g., arbitraton, mediaton approach).
- For suggested reading, see e.g., (Coase, 1960); (Calabresi & Melamed, 1972); (Kaplow & Shavell, 1996); (Cole & Grossman, 2000).
- Concluded in Stockholm on July 14, 1967 (Artcle 2(viii))
- “Inventons are new solutons to specifc technical problems. Such solutons must, naturally, rely on the propertes or laws of the material universe (otherwise they could not be materially or “technically” applied), but those propertes or laws need not be propertes or laws “not hitherto recognized.” An inventon puts to new use, to new technical use, the said propertes or laws, whether they are recognized (“discovered”) simultaneously with the making of the inventon or whether they were already recognized (“discovered”) before, and independently of, the inventon”. (Cited from: htp:// www.wipo.int/export/sites/www/about-ip/en/iprm/pdf/ch1.pdf)
- Scientfc discoveries are not the same as inventons. The Geneva Treaty on internatonal Recording of Scientfc Discoveries (1978) defnes a scientfc discovery as “the recogniton of phenomena, propertes or laws of the material universe not hitherto recognized and capable of verifcaton” (Artcle 1(1)(i))
- The claimed inventon appears to be novel, to involve an inventve step (to be non-obvious), and to be industrially applicable (Utlity) [see e.g., United States Code Title, Chapter 10, Sectons 35 U.S.C. 101-103; Patents Patent Cooperaton Treaty - PCT Artcle 33(1)-(4)].
- "The crown’s prerogatve to issue leters patent was a central tool in bestowing privileges upon individuals in the furtherance of royal policies."
- The right to exclude is also interpreted as allowing the owner that alleges patent infringement to ask before a court not only damage compensaton but also remedies that aim at stopping the infringing actvity, mainly, injunctve relief. In a way, it is similar to land boundaries and trespass.
- For example, as promulgated within The American Patent Act 1952.
- Note that I purposely mostly refer to the abundant literature and scholars views vastly available with respect to the common law and the American patent law.
- i.e., the right to exclude; the right to transfer; and the right to possess and use.
- For example, say inventor A discovered a new drug X and was granted a patent; inventor B discovered a process to make X and was granted a patent on the process. Inventor A can exercise its right to exclude inventor B from making the drug X. In this situaton, A has a “blocking patent,” because it can block B to use of its own patented process. A seems to have a greater scope of exclusivity as it can produce the drug in a diﬀerent process, if available, without infringing B’s patent.
- Arising from the exclusion right
- From legal perspectves infringing the moral right may enttle the creator to compensaton, that in additon to damages for the infringement of copyrights. (See also infra note 31).
- Firstly, patents are disclosed to the public and include the names of the inventors. Secondly, inventors (patent holders) may publish, in the scientfc and technical literature the inventon or technology embodied in the patent. In both ways the inventor(s) [creator(s)] will gain recogniton and dignity without the protecton of a moral right.
- The authors designate this phenomenon as “IP inefciency”
- It should be noted that knowledge can be non-excludable, since once it is made public, in the absence of clearly defned and protected property rights, users cannot be prohibited from using it. Some forms of knowledge are (or can be made) excludable. For instance, it may be possible to keep new knowledge secret (‘trade secret’), thereby excluding use by others. The most common way of excluding knowledge is by seeking protecton through patents. Nonetheless, certain advances in basic knowledge, such as mathematcal theorems, are not patentable despite their importance and their potental practcal applicatons.
- Defned as all unprocessed applicatons at any stage in the applicaton process
- It should be noted that property laws impose various restrictons on this right. For example, conditon to “never sell the land” imposes an invalid conditon.
- See e.g., US patent law, 35 U.S.C. 261; UK Patents Act (1977)
- The remedies which may be available to the patent owner where infringement has been established are usually provided for in the natonal patent law and are generally in the form of civil sanctons, including the award of damages, the grant of an injuncton or any other remedy provided in the general law.
- Assignment requires legal procedure and registraton with the patent law ofce.
- The Israel Patents Law (5727—1967)
- See also The UK Patents Act (1977).
- It should be noted that companies’ intellectual property management can be divided into two areas. The frst concerns internal management (disclosures, patent applicatons, maintenance, etc.). The second concerns external management, primarily how a company interacts with other companies’ intellectual property rights and vice versa; as well as monitoring possible infringements and initate litgaton process.
- See AOL press release - htp://corp.aol.com/2012/04/09/aol-and-microsof-announce-1-056-billion-patent-deal/
- For further discussion on the signifcance of technology transfer from university to industry see e.g., (Levy, 2011)
- Pharmaceutcal company mergers and acquisitons reached $690 billion over the last decade. For instance, GlaxoWellcome’s 2000 acquisiton of SmithKline Beecham was valued at $74 billion. Other large deals included SanofSynthelabo’s $65.5 billion acquisiton of Avents in 2004; Merck & Co.’s acquisiton of Schering-Plough for $41.1 billion in 2009; and Bayer AG’s $21.5 billion acquisiton of Schering AG in 2006. I should point out, however, that while mergers and acquisiton among pharmaceutcal companies seems to be benefcial to both partes, the outcome of mergers and acquisiton in the pharmaceutcal-biotechnology industry seems to have failed. It is estmated that trillion dollars in the market value were erased in the past decade. This fact can be partally explained by failure of clinical trials and discontnuing R&D projects.
- Interestngly, an OECD report revealing statstcal data shows that licensing markets (related to Europe and Japan) are less developed than they could be, in view of the willingness of patent holding companies to license more of their portolio (Zuniga & Guellec, 2009): “About 20% of European companies and 27% of Japanese companies holding patents license out at least one of their patents to an unafliated partner. The relatonship between size and probability to license out among patent holding companies is U-shaped: the smallest ones and the largest ones are more ofen involved in licensing out than medium-sized ones. The highest proporton of frms license-out in Europe is found in the UK, followed by Nordic countries. Cross-licensing out is the second motve for licensing out, both in Europe and in Japan: that shows a role played by patents in technology exchanges between companies”.
- That includes $309 million from sales and other transfers of intellectual property; $211 million from Licensing/royaltybased fees and Custom development income contributed $588 million, in total $1,108 million. Source: IBM 2011 Annual Report.
- See e.g., htp://www.videointerchange.com/video-history.htm#BetaMax; htp://www.gaoshan.de/university/ presentatons/VCR-Batle-handout.pdf.
- I should point out that one may argue that in certain legal jurisdicton cross-licenses provisions may allegedly violate ant- -trust laws. My surmise however, that such claim is not self-evident. In 1995, the U.S. Department of Justce and U.S. Federal Trade Commission issued its “Anttrust Guidelines for the Licensing of Intellectual Property,” which explicitly noted, cross- -licensing and pooling arrangements may provide pro-compettve benefts (htp://www.usdoj.gov/atr/public/guidelines/ ipguide.htm). However, provisions in portolio cross licenses that may facilitate price fxing, for example, can raise anttrust concerns.
- See e.g., James J. Kulbaski, Comments on Patent Pools and Standards for Federal Trade Commission Hearings Regarding Competton & Intellectual Property (Apr. 17, 2002 Hearing R.) at, htp://www.fc.gov/opp/intellect/020417jamesjkulbaski. pdf.
- such as MPEG-4 and MPEG-7 that are advantageous over MPEG-2.
- In circumstances where the innovaton is at an early stage and far from materializing to a product, licensing is not always plausible; Universites’ technology transfer ofce should therefore explore alternatve avenues, such as formaton of spin-oﬀ companies.