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Intellectual property (IP) is a legal term that refers to creations of the mind. Examples of
intellectual property include music, literature, and other artistic works; discoveries and
inventions; and words, phrases, symbols, and designs. Under intellectual property laws,
owners of intellectual property are granted certain exclusive rights. Some common
types of intellectual property rights (IPR) are copyright, patents, and industrial design
rights; and the rights that protect trademarks, trade dress, and in some jurisdictions
trade secrets. Intellectual property rights are themselves a form of property, called
intangible property.
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. Some commentators have noted that the objective of intellectual property
legislators and those who support its implementation appears to be "absolute
protection". "If some intellectual property is desirable because it encourages innovation,
they reason, more is better. The thinking is that creators will not have sufficient incentive
to invent unless they are legally entitled to capture the full social value of their
inventions". This absolute protection or full value view treats intellectual property as
another type of "real" property, typically adopting its law and rhetoric.
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.
Economic growth
The protection of intellectual property rights is essential to maintaining economic
growth. The two reasons for intellectual property laws are 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. And 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.
Economists have also shown that IP can be a disincentive to innovation when that
innovation is drastic. 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.
Patents
The procedure for granting patents, requirements placed on the patentee, and the
extent of the exclusive rights vary widely between countries according to national laws
and international agreements. Typically, however, a granted patent application must
include one or more claims that define the invention. A patent may include many claims,
each of which defines a specific property right. These claims must meet relevant
patentability requirements, such as novelty, usefulness, and non-obviousness. The
exclusive right granted to a patentee in most countries is the right to prevent others, or
at least to try to prevent others, from commercially making, using, selling, importing, or
distributing a patented invention without permission.
A patent does not give a right to make or use or sell an invention. Rather, a patent
provides, from a legal standpoint, the right to exclude others from making, using, selling,
offering for sale, or importing the patented invention for the term of the patent, which is
usually 20 years from the filing date subject to the payment of maintenance fees. From
an economical and practical standpoint however, a patent is better and perhaps more
precisely regarded as conferring upon its proprietor "a right to try to exclude by
asserting the patent in court", for many granted patents turn out to be invalid once their
proprietors attempt to assert them in court. A patent is a limited property right the
government gives inventors in exchange for their agreement to share details of their
inventions with the public. Like any other property right, it may be sold, licensed,
mortgaged, assigned or transferred, given away, or simply abandoned.
A patent, being an exclusionary right, does not necessarily give the patent owner the
right to exploit the invention subject to the patent. For example, many inventions are
improvements of prior inventions that may still be covered by someone else's patent. If
an inventor obtains a patent on improvements to an existing invention which is still
under patent, they can only legally use the improved invention if the patent holder of the
original invention gives permission, which they may refuse.
In most countries, both natural persons and corporate entities may apply for a patent. In
the United States, however, only the inventor(s) may apply for a patent although it may
be assigned to a corporate entity subsequently and inventors may be required to assign
inventions to their employers under an employment contract. In most European
countries, ownership of an invention may pass from the inventor to their employer by
rule of law if the invention was made in the course of the inventor's normal or
specifically assigned employment duties, where an invention might reasonably be
expected to result from carrying out those duties, or if the inventor had a special
obligation to further the interests of the employer's company.
The inventors, their successors or their assignees become the proprietors of the patent
when and if it is granted. If a patent is granted to more than one proprietor, the laws of
the country in question and any agreement between the proprietors may affect the
extent to which each proprietor can exploit the patent. For example, in some countries,
each proprietor may freely license or assign their rights in the patent to another person
while the law in other countries prohibits such actions without the permission of the
other proprietor(s).
The ability to assign ownership rights increases the liquidity of a patent as property.
Inventors can obtain patents and then sell them to third parties. The third parties then
own the patents and have the same rights to prevent others from exploiting the claimed
inventions, as if they had originally made the inventions themselves.
Copyright
Copyright is a legal right created by the law of a country that grants the creator of an
original work exclusive rights to its use and distribution, usually for a limited time, with
the intention of enabling the creator (e.g. the photographer of a photograph or the
author of a book) to receive compensation for their intellectual effort. The exclusive
rights are, however, not absolute and do not give the creator total control of their works
because they are limited by limitations and exceptions to copyright law.
A copyright, or aspects of it, may be assigned or transferred from one party to another.
For example, a musician who records an album will often sign an agreement with a
record company in which the musician agrees to transfer all copyright in the recordings
in exchange for royalties and other considerations. The creator (and original copyright
holder) benefits, or expects to, from production and marketing capabilities far beyond
those of the author. In the digital age of music, music may be copied and distributed at
minimal cost through the Internet, however the record industry attempts to provide
promotion and marketing for the artist and his or her work so it can reach a much larger
audience. A copyright holder need not transfer all rights completely, though many
publishers will insist. Some of the rights may be transferred, or else the copyright holder
may grant another party a non-exclusive license to copy and/or distribute the work in a
particular region or for a specified period of time.
Copyright may also be licensed. Some jurisdictions may provide that certain classes of
copyrighted works be made available under a prescribed statutory license (e.g. musical
works in the United States used for radio broadcast or performance). This is also called
a compulsory license, because under this scheme, anyone who wishes to copy a
covered work does not need the permission of the copyright holder, but instead merely
files the proper notice and pays a set fee established by statute (or by an agency
decision under statutory guidance) for every copy made.
Free License
There are a large number of free licenses, where users are granted several rights; for
example, those mentioned in the Free Software Definition, Open Source Definition,
Debian Free Software Guidelines or Definition of Free Cultural Works. Examples of free
licences are the GNU General Public License, BSD license and some Creative
Commons licenses.
Trademarks
The usage of trademarks by its owner can cause legal issues if this usage makes them
guilty of false advertising or if the trademark is offensive.
The owner of a trademark may pursue legal action against trademark infringement.
Most countries require formal registration of a trademark as a precondition for pursuing
this type of action. The United States, Canada and other countries also recognize
common law trademark rights, which means action can be taken to protect an
unregistered trademark if it is in use. Still common law trademarks offer the holder in
general less legal protection than registered trademarks.
In the United States, the registration process includes several steps. First, the
trademark owner files an application to register the trademark. About three months after
it is filed, the application is reviewed by an examining attorney at the U.S. Patent and
Trademark Office. The examining attorney checks for compliance with the rules of the
Trademark Manual of Examination Procedure. This review includes procedural matters
such as making sure the applicant's goods or services are identified properly. It also
includes more substantive matters such as making sure the applicant's mark is not
merely descriptive or likely to cause confusion with a pre-existing applied-for or
registered mark. If the application runs afoul of any requirement, the examining attorney
will issue an office action requiring the applicant to address certain issues or refusals
prior to registration of the mark. If the examining attorney approves the application, it will
be "published for opposition." During this 30-day period third parties who may be
affected by the registration of the trademark may step forward to file an Opposition
Proceeding to stop the registration of the mark. If an Opposition proceeding is filed it
institutes a case before the Trademark Trial and Appeal Board to determine both the
validity of the grounds for the opposition as well as the ability of the applicant to register
the mark at issue. Finally, provided that no third-party opposes the registration of the
mark during the opposition period or the opposition is ultimately decided in the
applicant's favor the mark will be registered in due course.
Outside of the United States the registration process is substantially similar to that found
in the U.S. save for one notable exception in many countries: registration occurs prior to
the opposition proceeding. In short, once an application is reviewed by an examiner and
found to be entitled to registration a registration certificate is issued subject to the mark
being open to opposition for a period of typically 6 months from the date of registration.
A registered trademark confers a bundle of exclusive rights upon the registered owner,
including the right to exclusive use of the mark in relation to the products or services for
which it is registered. The law in most jurisdictions also allows the owner of a registered
trademark to prevent unauthorized use of the mark in relation to products or services
which are identical or "colourfully" similar to the "registered" products or services, and in
certain cases, prevent use in relation to entirely dissimilar products or services. The test
is always whether a consumer of the goods or services will be confused as to the
identity of the source or origin. An example may be a very large multinational brand
such as "Sony" where a non-electronic product such as a pair of sunglasses might be
assumed to have come from Sony Corporation of Japan despite not being a class of
goods that Sony has rights in.
Once trademark rights are established in a particular jurisdiction, these rights are
generally only enforceable in that jurisdiction, a quality which is sometimes known as
territoriality. However, there is a range of international trademark laws and systems
which facilitate the protection of trademarks in more than one jurisdiction.
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.
Trade Secret
The precise language by which a trade secret is defined varies by jurisdiction (as do the
particular types of information that are subject to trade secret protection). However,
there are three factors that, although subject to differing interpretations, are common to
all such definitions: a trade secret is information that:
Trade secrets are by definition not disclosed to the world at large. Instead, owners of
trade secrets seek to protect trade secret information from competitors by instituting
special procedures for handling it, as well as technological and legal security measures.
Legal protections include non-disclosure agreements (NDA) and non-compete clauses.
In exchange for an opportunity to be employed by the holder of secrets, an employee
may sign an agreement not to reveal his or her prospective employer's proprietary
information. An employee may also surrender or assign to his employer the right to his
own intellectual work produced during the course (or as a condition) of employment.
Violation of the agreement generally carries the possibility of heavy financial penalties.
These penalties operate as a disincentive to reveal trade secrets. However, proving a
breach of an NDA against a former employee who is legally working for a competitor
can be very difficult. A holder of a trade secret may also require similar agreements
from other parties he deals with, such as vendors or licensees.
A company can protect its confidential information through non-compete and non-
disclosure contracts with its employees (within the constraints of employment law,
including only restraint that is reasonable in geographic- and time-scope). The law of
protection of confidential information effectively allows a perpetual monopoly in secret
information it does not expire as would a patent. The lack of formal protection,
however, means that a third party is not prevented from independently duplicating and
using the secret information once it is discovered.
Secret formulae are often protected by restricting the key information to a few trusted
individuals. Famous examples of products protected by trade secrets are Chartreuse
liqueur and Coca-Cola.
Protection of trade secret can, in principle, extend indefinitely and therefore may provide
an advantage over patent protection, which lasts only for a specific period of time.
Coca-Cola, for example, has no patent for its formula and has been very effective in
protecting it for many more years than the twenty years of protection that a patent would
have provided. In fact, Coca-Cola refused to reveal its trade secret under at least two
judges' orders. The disadvantage is that there is no protection once information
protected as trade secret is uncovered by others through reverse engineering, for
example, whereas patent has a guaranteed time of protection in exchange for disclosing
the information to the public.