Lecture 9 Intellectual Property.pdf

1 Intellectual Property Outline – Intellectual Property (IP) ▪ What is IP? ▪ Rationale behind IP protection ▪ Benefits and harms of IP protection – Different types of IP protection ▪ Trade secrets ▪ Trademarks...

1 Intellectual Property Outline – Intellectual Property (IP) ▪ What is IP? ▪ Rationale behind IP protection ▪ Benefits and harms of IP protection – Different types of IP protection ▪ Trade secrets ▪ Trademarks ▪ Patents – Patent trolling ▪ Copyright – Clean room design 1 Intellectual Property (IP) 2 What is IP? Intellectual Property (IP) is a subset of intangible assets (IA) which are assets that are non-physical in nature as opposed to physical assets such as machinery. Examples of IP include inventions, literary and artistic works, designs, as well as symbols, names and images used in commerce (WIPO). 3  4 Different Types of IP A non-disclosure agreement (NDA) is a legal contract between at least two parties that outlines confidential material, knowledge, or information that the parties wish to share with one another for certain purposes, but wish to restrict access to (Wikipedia.com) 4  5 Different Types of IP (Cont’d) Copyright is automatically granted upon creation. © 2023 Wendy Hui 5 Rationale Behind IP Protection Franklin said, “As we enjoy great advantages from the invention of others, we should be glad of an opportunity to serve others by any invention of ours; and this we should do freely and generously.” Benjamin Franklin (1706-1790) 6  7 Rationale Behind IP Protection (Cont’d) Two main arguments for IP protection: 1. Fairness to the creators: People should be rewarded for their hard work. It would be unfair to the creators if their IPs are not protected. 2. Encouraging future innovation: If IPs are not protected, fewer people will create IPs. There will be less innovation in the future. In the long run, the society is worse off. 7  8 Rationale Behind IP Protection (Cont’d) Two main arguments against IP protection: 1. Not maximizing social welfare: IP protection represents a restriction that prevents knowledge from benefiting everyone in the society. 2. Discouraging future innovation: IP protection can make it difficult for new knowledge to build on existing knowledge, and hence, it can stifle innovation and hinder technological development. 8  9 Search for Right Balance Promoting Innovation Interests of IP Creators Interests of Public 9  10 Some Other Benefits of IP Protection Economic benefits: Attract global talents and foreign investments. Knowledge sharing: Incentivize creators to publicize their knowledge earlier. Consumer protection: Protect consumers from counterfeits and low-quality products. 10  11 Some Other Harms of IP Protection Anti-competition: Excessive IP protection gives creators an unfair, monopolistic advantage, which is anti-competitive and in the long run stifles innovation. Discourage knowledge sharing: IP protection such as patents can discourage knowledge sharing because it requires potential users of the IP to pay a price before they can use it. Unfair to developing countries and the less privileged: For example, people in developing countries may find patented drugs and copyrighted software unaffordable. Abuse of IP rights: Primary purpose of owners may be monetary gains rather than contributing to innovation. 11 Trade Secrets 12 Trade Secrets Trade secrets refer to confidential and proprietary information that provides a business with a competitive advantage. – In computing, trade secrets may include proprietary algorithms, formulas, source code, customer lists, or other sensitive information. Characteristics: – It is not registrable – There is no time limit Protecting trade secrets involves maintaining confidentiality through non- disclosure agreements (NDAs) and other security measures (e.g., encryption, access control, etc.) 13  14 Trade Secrets (Cont’d) No protection against reverse engineering. – Reverse engineering is a process or method through which one attempts to understand through deductive reasoning how a previously made device, process, system, or piece of software accomplishes a task with very little insight into exactly how it does so (Wikipedia). – Example: A person deduces the recipe of KFC fried chicken after tasting it. 14 Trademarks 15 Trademarks A trademark is a word, symbol, picture, sound, or color used by a business to help consumers recognize their goods and services. By granting a trademark, a government gives a company the right to use it and the right to prevent other companies from using it. Here are some well-known trademarks: 16 Unregistered Trademarks Unregistered trademark may be recognized through use. Legal protection requires proof of reputation and goodwill. 17 Registered Trademarks A registered trademark allows the owner to: – restrict other parties from using the registered trademark in Singapore without the owner’s consent; or – prevent a later trademark, which is similar or identical to an earlier registered trademark, from being registered in Singapore in relation to the same or similar goods or services. A registered trademark gives the owner more options on how to extract financial gains from the IP. A registered trademark is valid for 10 years, and it can last indefinitely if the registration is renewed every 10 years. 18 Rules on Trademarks The following are NOT registrable trademarks: 1. Marks contrary to public policy or morality: For example, a mark that could promote immoral behavior cannot be registered. 2. Deceptive marks: Marks that attempt to deceive the public. These include marks that misrepresent the nature, quality or geographical origin of the goods or services. For example, STEELSCREWS for metal hardware would suggest that the screws are made of steel. 3. Descriptive marks: These are marks that describe the goods and services, e.g., “super”, “best”, “one dozen”, “cheap”, “cleaner” or geographical origin. 19 Rules on Trademarks (Cont’d) 4. Marks ‘common to the trade’: Marks that are signs or indications which are customary in the trade. They are too generic to be used to distinguish the goods and services offered. A phenomenon known as “genericide” can happen to very successful trademarks, e.g., “aspirin”, “escalator”, and “thermos”. 20 Rules on Trademarks (Cont’d) 5. Marks that are identical to earlier marks: If a mark is identical to an earlier mark AND the goods or services for which the trademark is sought belong to the same category (according to Nice classification) as the earlier mark, then they are not registrable. 21 Rules on Trademarks (Cont’d) 6. Marks that could cause confusion: A trademark may not be registered if it is likely to confuse the public. For example, it is similar to an earlier trademark and is to be registered for goods or services identical or similar to those the earlier mark aims to protect. – Example: Putting this symbol on a smart phone. (Source) 22 Rules on Trademarks (Cont’d) 7. Marks that are identical/similar to well-known marks: A trademark may not be registered if it is identical or similar to an earlier mark that is well- known in Singapore. Examples: Trademarks on Slide 16 23 Patents 24 Patents A patent can protect a new product, process or technical improvement to existing technology by excluding others from making, using, selling, offering for sale, or importing the patented IP. The term of protection for a patent is 20 years. Patents can be sold or licensed. 25 Eligibility Three eligibility criteria (ipos.gov.sg): 1. Novelty: The invention should not be publicly known in any way, anywhere in the world. 2. Inventive step: The invention must be an improvement over any existing product or process that is already available. The improvement must not be obvious to someone with technical skills or knowledge in the field of the invention. 3. Industrial application: The invention must be useful and have some form of practical application. It should be capable of being made or used in some form of industry. 26 Eligibility (Cont’d) There are exclusions to patent protection: – A method of treatment of the human or animal body by surgery, therapy or diagnosis practiced on the human or animal body is not patentable. – An invention that is generally expected to encourage offensive, immoral or anti-social behavior will not be published or patentable. 27 Challenge Validity of a patent can be challenged at the patent office or in court. The challenging party has to prove that the patent should never have been granted. – For example, the challenging party could argue that the IP concerned was actually not new or was obvious to the person skilled in the art, at the time the application was filed. 28 Patent Trolls Patent trolls specialize in holding patents and licensing the rights to use these patents. They do not contribute to innovation. Because defending against patent infringement can be very expensive, companies tend to prefer settling the case out of court. 29 Patent Trolls: Example A language teacher offers free online courses to language learners by uploading audio files onto online platforms such as YouTube. One day, he received a letter from a patent troll, claiming that it has rights to a patent that covers recorded language lessons, and demanding that he stop providing online courses. The patent concerned has claims over a particular sequence of “expression segments” to be played on a “recorded medium” using a “playing device.” : 1. The teacher asks how to translate a phrase. 2. There is a short pause. 3. An example student attempts to answer the question. 4. The teacher provides the correct answer. 30 Patent Trolls: Example (Cont’d) “Inventions” that are obvious may be approved by the patent office. In this case, the teacher’s lawyer was able to find a BBC documentary with someone else using the same sequence of expression segments three years before the patent was filed. Therefore, the patent protection was invalid. 31 Patent Trolling More Serious in the US Patent trolling is more serious in the US than in the rest of the world. Partly because each party pays their own litigation fees in the US. In most of Europe and in Singapore, the losing party pays the successful party the legal costs incurred by the successful party. 32 Can Software be Patented? In the US, software can be patented. In some parts of the world, it is more difficult to get software patented. – A computer program by itself is not patentable unless it solves a technical problem. – A computer program that implements a business model cannot be patented. International treaties such as Trade-Related Aspects of Intellectual Property Rights (TRIPS) will, to some extent, harmonize the patentability of software across different countries. 33 Copyright 34 Copyright Five principal rights: 1. The right to reproduce the copyrighted work 2. The right to distribute copies of the work to the public 3. The right to display copies of the work in the public 4. The right to perform the work in public 5. The right to produce new works derived from the copyrighted work Copyright owners also have the right to prevent others from infringing on their rights. Copyright can be sold or licensed. 35 Term of Protection The length of protection will depend on the type of work and the way it is managed. – For works with known authors, protection typically expires 70 years from the death of the author. – For films and sound recordings, the expiry is 70 years from the making of the work, the making available of the work or the first publication, depending on whether the work has been published and if so, when it was published. Once in the public domain, anyone can use the work free of restrictions. 36 Fair Use or Fair Dealing The right given to a copyright owner is a limited right. Under some circumstances, called fair use or fair dealing, it is legal to reproduce copyrighted work without the permission of the copyright holder. – Examples of fair use include citing short excerpts from copyrighted works for the purpose of teaching, scholarship, research, criticism, commentary, and news reporting. 37 Fair Use or Fair Dealing (Cont’d) Determining fair use: 1. The purpose and character of the use: An educational use is more likely to be permissible than a commercial use. 2. The nature of the work used: Use of nonfiction is more likely to be permissible than use of fiction. 3. The amount and substantiality of the portion of the work used, in relation to the whole work: Brief excerpts are more likely to be permissible than entire chapters. 4. The effect that the use will have on the potential market for, or value of, the work: Use of out-of-print material is more likely to be permissible than use of readily available work. 38 Time Shifting is Fair Use In 1975, Sony introduced its Betamax system, the first consumer VCR. People used these systems to record television shows for viewing later, a practice called time shifting. A year later, Universal City Studio and Walt Disney Productions sued Sony, saying it was responsible for copyright infringements performed by those who had purchased VCRs. 39 Time Shifting is Fair Use (Cont’d) The US Supreme Court evaluated the case in light of the four fair use factors and concluded that time shifting is a fair use of copyrighted materials. Copyright © 2020, 2017, 2015 Pearson Education, Inc. All Rights Reserved 40 Digital Contents and Random Access Storage Media Digital contents can be copied easily with zero quality degradation. A VCD or DVD allows you to access contents in any order. This type of access is known as random access. 41 Audio Home Recording Act 1992 The Audio Home Recording Act 1992 protects the right of consumers to make copies of analog or digital recordings for personal, noncommercial use. – For example, a consumer may copy a recording to put in another music player, to give to another family member or to use as a backup. The Act also requires manufacturers of digital audio recorders to incorporate the Serial Copyright Management System (SCMS), which allows a consumer to make a digital copy from the original recording but it prevents someone from making a copy of the copy. 42 File Sharing on the Internet (Not for Profit) In 1994, David LaMacchia, an MIT student, posted copyrighted software on a public bulletin board he created on a university computer. Bulletin board users downloaded more than 1 million dollars’ worth of software in less than two months. Prosecutors had to drop charges against LaMacchia because he had made the programs available for free. Since he had not profited from his action, he had not violated copyright law at the time. 43 No Electronic Theft Act 1997 To close this legal loophole, the US Congress passed the No Electronic Theft Act 1997, which made it a criminal offense simply to reproduce or distribute more than 1,000 dollars’ worth of copyrighted material in a six-month period. 44 Broadband and P2P File Sharing Broadband Internet connection started to replace dial- up connection in early 2000s. It made downloading of large files more practical. Napster was a peer-to-peer network that facilitated sharing of music files. It began operation in June 1999 and became very popular among users. In December 1999, Recording Industry Association of America (RIAA) sued Napster for copyright infringement. In July 2001, Napster was forced to shut down as a result of court rulings against it. 45 Broadband and P2P File Sharing (Cont’d) After Napster, more decentralized peer-to-peer protocols have been designed; and they tend to be harder to take down. BitTorrent divides a file into small pieces, which can be downloaded simultaneously from different computers. This arrangement significantly increases the download speed and facilitates efficient distribution of contents. Popular file-sharing websites, such as The Pirate Bay, provide an online index of digital contents and facilitate peer-to-peer file sharing among users of the BitTorrent protocol. Although BitTorrent is often associated with copyright infringement, there are many examples of legitimate use of the technology. 46 PRO-IP Act Total revenue from music sales and licensing in the US dropped significantly, from $14.6 billion in 1999 to $6.3 billion in 2009. In response, the government introduced new legal restrictions on copying. In 2008, the US Congress passed the Prioritizing Resources and Organization for Intellectual Property (PRO-IP) Act. The Act gives federal law agencies the authority to seize the domain names of Web sites that are allegedly facilitating copyright infringement. 47 Technological Development and Copyright Protection VCD, DVD (copying of digital contents) à Audio Home Recording Act 1992 Internet (non-commercial file sharing) à No Electronic Theft Act 1997 Broadband, P2P (file sharing on global scale) à PRO-IP Act 2008 Changes in Technological Copyright Development Laws Note: The grey arrow may not represent a causal relationship. 48 Free Software Movement What motivates creativity? – Financial gains – Joy from the process of creation itself – Recognition from others Hacker ethics – Software should be free Richard Stallman founded Free Software Foundation Richard Stallman (Wikipedia) 49 Free Software Movement (Cont’d) Free here doesn’t mean free of charge. Free software is software that gives users the freedom to: 1. run, 2. study, 3. modify, and 4. share the software. 50 Open-Source Movement Members of the free software community generally view proprietary software as unethical and unjust. The open-source movement is branched from the free-software movement. Members of this community are generally more accepting of proprietary software, believing that open-source software and proprietary software can co- exist. Open-source software provides access to its source code, allowing anyone to view, modify, and distribute the code. 51 Open-Source Movement (Cont’d) There are different open-source licenses falling into two broad categories: – Copyleft: More restrictive as they demand reciprocity, i.e., any derived works must be distributed with the source code under a copyleft license. Example: GNU General Public License (GPL) – Permissive: Less restrictive as they do not demand reciprocity, i.e., the derived code can be used within proprietary software. Example: Apache License 52 Open-Source Software Examples R Python Firefox MySQL Linux 53 Open Source is Grounded on Copyright 54 Clean Room Design Unconscious copying can be a concern in the software industry because programmers may move from one firm to another. Clean room design is a method of reverse engineering without infringing the copyrights of the original design. Two teams are involved: – The first team to produce the technical specification by inspecting the software they wish to reverse engineer, without revealing how to implement it. – The second develop the code based on the technical specification A good defence again copyright infringement. 55  56 Summary Outline – Intellectual Property (IP) ▪ What is IP? ▪ Rationale behind IP protection ▪ Benefits and harms of IP protection – Different types of IP protection ▪ Trade secrets ▪ Trademarks ▪ Patents – Patent trolling ▪ Copyright – Clean room design 56 End of Lecture 9. Thank you. 57