Intellectual Property Rights PDF

Intellectual Property Rights Refers to o legal claim through which the proprietary assets of firms and individuals are protected o from unauthorized use by other parties Importance o Provide inventors with a monopoly advantage o for a specifi...

Intellectual Property Rights Refers to o legal claim through which the proprietary assets of firms and individuals are protected o from unauthorized use by other parties Importance o Provide inventors with a monopoly advantage o for a specified period of time, they can exploit their inventions and create commercial advantage o Without legal protection and the assurance of commercial rewards, most firms and individuals would have little incentive to invent Typical Types of Intellectual Property Patent provides right to prevent others from using an invention for a fixed period = granted to anyone who invents a new process, product or useful improvement e.g. protection for 20 years Trademark distinctive design or symbol that identifies a product/service e.g. Nike’s swoosh symbol Protection = as long as payments are made Copyright protects original works of authorship Typically covers works of music, art, literature, movies or software e.g. from 50 to 70 years after the death of producer Protecting Intellectual Property Research IP laws and protections in target countries Register core IP in top countries for business Separate value-chain activities to maintain IP secrecy o E.g., Keep R & D and manufacturing separate so no one can learn the entire production process Emphasize leading-edge or hard-to-understand technologies, which are usually harder to imitate Hire employees who maintain high ethical standards Collaborate with ethical partners. Choose reputable suppliers with no history of IP violations Regularly educate employees and partners about the harm of violating IP rights Include provisions in partner contracts to protect IP Develop trusting relations with partners Perform audits to ensure partners protect your IP Pursue I P violators via prosecution, other legal means Educate customers on the harm of infringing on IP Lobby governments for stronger IP protections Licensing An arrangement in which the owner of intellectual property grants another firm the right to use that property for a specified period of time in exchange for royalties or other compensation Licensors o benefit by access to overseas markets (via licensees) o with little or no investment or ‘local knowledge’. o owns the property Licensees o benefit by access to technologies or products (brands) otherwise unavailable Examples: o Intel licensed the right to a new process for manufacturing computer chips to a firm in Germany. o Warner licenses images from the Harry Potter books and movies to companies worldwide. o Disney licenses the right to use its cartoon characters in producing shirts and hats to clothing manufacturers in Asia Licensing (cont.) In a typical deal, the licensee pays the licensor a fixed amount upfront and an ongoing royalty (usually 2-5%) on gross sales generated from using the licensed asset fixed amount covers the licensor’s initial costs of transferring the licensed asset to the licensee, including training, engineering, or adaptation. Certain types of licensable assets, such as copyrights and trademarks, have much lower transfer costs Licensing as a Foreign Market Entry Strategy for licencors it’s a way to try the market Trademark Licensing Involves a firm granting another firm permission to use its proprietary names, characters, or logos o for a specified period of time in exchange for a royalty Trademarks appear on clothing, food, toys, home furnishings, and numerous other goods and services o E.g., Coca Cola, Harley-Davidson, Laura Ashley, Disney, etc. A trademark like Harry Potter generates millions for the owner, with little efforts Copyright Licensing A copyright gives the owner the exclusive right to reproduce art, music, literature, software, and other such works, as well as distribute copies, or perform or display the work publicly term of protection varies by country, but the creator’s life plus 50 years is typical Many countries offer little or no copyright protection, so it is wise to investigate local copyright laws before publishing a work abroad Leading Licensors Ranked by Licensing Revenues Advantages vs. disadvantages of Licensing Licensor’s Perspective (owner of property) Advantages the licensor avoids development costs and risks associated with opening a foreign market avoid costs → low investment/involvement cost Also avoids barriers to investment Disadvantages Licensor doesn’t have the tight control required for realizing experience curve and location economies Licensor’s limited ability to coordinate strategic moves across countries. proprietary (or intangible) assets could be lost Licensee’s Perspective (user of property) Advantages Fast access to new, surely functional technology/product/knowhow, with known cost rather than developing own thing with uncertain cost/expenses. Learning about the new technology/product/knowhow, and start to develop that of own things… Disadvantages Fees and royalties might be too high – but later Some aspects of the license may be hard to implement (knowhow) Example SAP Germany  Franchising = an advanced (mutated) form of licensing o where the franchisor grants the franchisee the right to use the entire business model Franchisee purchases the right to undertake business activity using the franchiser’s name or trademark o (entire business model/system) rather than patented technology Master franchiser: o = independent company authorized to establish, develop, and manage the entire franchising network in its market o E.g., McDonald's in Japan Franchising as an Entry Strategy Advantages/Disadvantages Franchiser Advantages overseas expansion can be much less expensive and any local adaptations can (with agreement) be made by those well acquainted with cultural issues in that country Disadvantages possible conflict with the franchisee for not following regulations and agreements as well as a threat that the franchisee may decide to ‘go it alone’ in the future and thus become a direct competitor Franchisee Advantages Buy into an existing brand and receive support from the franchiser in terms of marketing, training and starting up When customers walk into a McDonald’s restaurant, they know almost exactly what to expect Disadvantages Restrictions on what they can and can’t do o E.g. McDonald’s have very strict regulations concerning marketing, pricing, training etc. A franchisee cannot simply change the staff uniform, alter prices or vary opening hours as the company operates a standardized approach to doing business Management contract Bringing a package of management knowledge, expertise and skills that provides an integrated service to the client o without incurring the risk and benefit of ownership differs from licensing/franchising in that it requires the contractor to actually manage the entity! entity can be a running business, or a project to be completed at set time in the future Common in international hospitality business, airports, airlines business, construction projects, … Management Contract Model Why Management Contracts? From the contractee’s perspective: ideal solution when there is lack of management expertise to run certain type of organization and its business activity o such as Hotels, airports, banks o aim is to raise performance standards, and quality of service of course! In the long-run, it is a way of developing local management expertise From the contractor’s perspective: Excellent alternative to FDI in high political and business risk locations early step prior to FDI, as the contractor learn about the new market without assets involvement o or in combination with e.g. joint venture to ensure proper running of business operations Other Forms of Management Contracts Turnkey Contracting: Arrangement where a firm plans, finances, organizes, manages, and implements all phases of a project abroad o & hands it over to a foreign country after training local personnel o Typical in the construction and engineering services industries o E.g. Bechtel, Alfa Laval, … Build-Operate-Transfer (BOT): Arrangement where the firm is contracted to build a major facility in a foreign country o e.g. power plant, airport, harbor, telecom networks etc. o Operate the facility for a period of time after being completed, and then transfer the control to the sponsor (business entity or government) International leasing: lesser rents out machinery or equipment to clients abroad, often for several years at a time e.g., Airlines lease aircraft Example Germany Lufthansa Example of Turnkey Projects spectacular Petronas Twin Towers complex in Kuala Lumpur, Malaysia was a seven year turnkey project built by Bovis Lend Lease, one of the world´s leading project management and construction companies