Intellectual Property and Business: The Power of Intangible Assets
Publication Year: 2014
Intellectual Property (IP) is one of the most vital assets for any business organization. It is a domain not restricted to lawyers alone; it is a crucial area of concern for business organizations, managers, and corporate leaders. Intellectual Property and Business demonstrates how companies can deploy their IP not just as legal instruments but also as dominant and powerful financial assets, and as useful arsenal that can boost their business.
The book aims to provide a basic understanding of various forms of IP that business organizations need to protect, and to analyze and understand IP management and strategy through case studies. It highlights these aspects of IP management through the lens of both a lawyer and a business manager.
- Front Matter
- Back Matter
- Subject Index
- Chapter 1: The Intangible Landscape—Understanding Core Concepts
- Chapter 2: Intellectual Property Approaches and Strategies
- Chapter 3: Intellectual Property—Defending Position
- Chapter 4: Intellectual Asset Management
- Chapter 5: Brand Protection and Management
- Chapter 6: Intellectual Property Risk Management
- Chapter 7: Intellectual Property Licensing
- Chapter 8: Franchising—Understanding the Mechanism
- Chapter 9: Royalty and Intellectual Property
- Chapter 10: Intellectual Property Valuation
Copyright © Rodney D. Ryder and Ashwin Madhavan, 2014
All rights reserved. No part of this book may be reproduced or utilized in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage or retrieval system, without permission in writing from the publisher.
First published in 2014 by
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Published by Vivek Mehra for SAGE Publications India Pvt Ltd, typeset in 11/13 Bembo by RECTO Graphics, Delhi, and printed at Saurabh Printers Pvt Ltd, New Delhi.
Library of Congress Cataloging-in-Publication Data
Ryder, Rodney D.
Intellectual property and business: the power of intangible assets/Rodney D.
Ryder, Ashwin Madhavan.
Includes bibliographical references and index.
1. Intellectual Property—United States. I. Madhavan, Ashwin. II. Title.
KF2979.R94 346.7304'8—dc23 2013 2014018433
ISBN: 978-81-321-1791-9 (PB)
The SAGE Team: Sachin Sharma, Isha Sachdeva, Anju Saxena and Dally Verghese
Rebecca, Mark, Gunjan
—Rodney D. Ryder
Sandy: my adorable four-legged brother Amma and Appa for always believing in me and supporting me Naani (Saroja Chary) for her unconditional love
Thank You for Choosing a SAGE Product![Page vi]
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List of Illustrations[Page ix]Figures
- 1.1 Types of Intellectual Property 7
- 1.2 Types of Patents 15
- 1.3 Procedure for the Filing of a Patent 20
- 1.4 Procedure for Filing of a Copyright 30
- 1.5 What is “Trademarkable”? 35
- 1.6 Procedure for Filing of a Trademark 40
- 1.7 Domain Names 56
- 2.1 The Intellectual Property Value Chain 61
- 2.2 Research Push Approach 65
- 2.3 Market Pull Approach 67
- 2.4 Open Innovation 72
- 3.1 Enforcement 119
- 4.1 Centralized IP Management Structure 142
- 4.2 Decentralized IP Management Structure 143
- 5.1 Elements of Brand Strategy 171
- 6.1 Defensive Insurance 191
- 6.2 Offensive Insurance 192
- 7.1 Types of License 212
- 7.2 IBM Patent Licensing 217
- 7.3 Microsoft Patent Android Licensing 221
- 7.4 Types of Merchandising Licensing 235 [Page x]
- 8.1 Types of Franchise 243
- 9.1 Royalty Determination 255
The idea of writing this book came from various interactions we have had in these past five years on Intellectual Property (IP). The goal of this text is to help people understand and use our IP system as a “force” to further creativity and economic development.
The audience for this text is anyone who is associated with innovation, creativity, and new ideas, in any way—managers, business leaders, advocates, policy makers—irrespective of where they are located or which sector they operate in.
We felt that there was a need for a book that explains the nuances of this unique form of intangible property, which many people did not understand properly. Whenever we conducted training programs and workshops for professionals on ways to protect their IP assets, we could see eyebrows being raised and a sense of ignorance on the very meaning of the term IP.
With this in mind, we began penning down our thoughts on the various facets of this exciting subject of law and management. Many people believe that IP is only for lawyers and in-house legal counsels of very large corporations. What these people do not understand is the fact that having IP gives any corporation big or small a certain financial muscle, which if used properly can reap in immense financial benefits. IP is nothing without law because without legal protection, the value of an intangible asset is minimal, but equally important is the fact that IP is nothing without proper management. We will demonstrate through the pages of this book the reason why managing IP assets is equally important.
When we first conceived of the idea of writing this book, we planned to target it at practicing lawyers and in-house legal counsels. Through our legal experience, we have come across lawyers and in-house counsels who want to understand the concept of IP. As we wrote the book, we realized that the business [Page xii]organizations as well as the student community in India would definitely benefit from this book. A number of business professionals and experts who read the earlier drafts of this book gave us feedback on how to make it more appealing to the business and the nonlegal community. Several chapters including (a) Intellectual Property Approaches and Strategies and (b) Intellectual Asset Management have been inspired by those conversations that we had with our early reviewers.
This book is for all those individuals who want to know more about the power of IP and its various nuances. It has been written in the simplest of language without going into any legal jargon, which many a times puts off people. We begin this book with an introduction on why IP is important and explain the characteristics of the various forms of IP. We then focus on the approaches and strategies to protect IP. We dive deep into how organizations should defend their IP assets.
The following chapters on IP management, brand management, IP licensing, and franchising contain useful information about how companies should use their IP assets with the help of several live example case studies.
As a bonus, we have also added chapters on IP valuation and royalty, which highlight the various ways in which IP is valued and how royalty is paid to various stakeholders.
Throughout the book, we have included case studies, and tips and techniques that will help you in understanding this subject that we love in a much better way.
We do hope you find this book useful!
This book took us five years to write. All books are collaborative efforts and this one is no exception. We owe a deep sense of gratitude to many people who helped us write this book by sharing their thoughts and insights. Writing a book about IP from the management and business perspective while practicing law and running a knowledge business required the patience and support of many individuals.
We could have never undertaken this task of writing on a topic that is new in India without the help and support of Devna Arora, Akshat Razdan, Roshan John, and Kshitij Parashar, who researched for this project. To put it in another way, to have such young and bright individuals to bring about excellent research material for this book is truly commendable and our sincere thanks to all these four. Many thanks to Mr. Rinku Kumar and Mr. Neeraj Bhalla for designing the figures for this book.
We wish to express our special gratitude to our commissioning editor, Sachin Sharma, and Isha Sachdeva, associate production editor, at SAGE Publications for their enthusiasm, insight, and perseverance to get this book published.
Finally, we owe this book to our families who have been incredibly patient and supportive through the process. We are indeed very fortunate to have such families backing us.[Page xiv]
- Abstract: A brief summary of an invention, book, or periodical to help in quickly identifying its key features.
- All Rights Reserved: Refers to a notice which indicates that all rights granted under copyright law are retained, including the rights to take legal action, if there is any infringement.
- Anticipation: Refers to when Prior Art discloses each and every element of a claimed invention. In India, Chapter VI of the Patents Act, 1970 talks about anticipation.
- Basic Application: A basic application is the priority document in any country where patent protection is sought in another country. An applicant who files a basic application for patent in a convention country can make application in India within 12 months from the date of basic application.
- Business Method Patents: Class of patents that reveal new ways of doing business; they are the most recent iteration of patent types and have come under scrutiny by the courts over eligibility issues.
- Certificate of Registration: Official confirmation that your design, copyright, or trademark has been registered.
- Classes: Patents, trademarks, designs, and plant variety rights each have an internationally recognised classification system that divides their respective applications into different technology groups, classes of services or goods, or plant varieties. India uses these classification systems to assist with searching our databases of patents, trademarks, designs, and plant varieties. Classes for patents are determined by the International Patent Classification system; trademarks by the NICE International Classification; designs by the Locarno System of Classification; and plant variety rights [Page 286]by the International Union for the Protection of New Plant Varieties (UPOV). Clearly Descriptive: A mark that clearly describes a feature of a ware or service and therefore, cannot be registered as a trademark.
- Co-inventor: Refers to an inventor who is named with at least one other inventor in a patent application, wherein each inventor contributes to the conception (creation) of the invention set forth in at least one claim in a patent application.
- Collective Mark: A mark used in the course of trade by members of an association. An association is an unincorporated body and includes any organization of people with a common purpose and a formal structure such as a society, club, trade union, or other body. The association of persons, who own collective marks may compose of the manufacturers, traders, producers or professional bodies such as Institute of Chartered Accountants, Patent Agents, Trade Mark Agents, Board of Cricket Control, or alike.
- Collective Works: A work, such as an issue of a magazine, an anthology, or an encyclopedia, in which a number of contributions, constituting separate and independent works in themselves are assembled into a collective whole.
- Complete Specification: This is the basis for your patent. It must describe your invention fully, detail the best way of putting your invention into effect, and include at least one claim.
- Computer Program: Refers to a set of statements or instructions to be used directly or indirectly in a computer to bring about a certain result.
- Concept: An idea or design.
- Copies: Refer to material objects, other than phonorecords, in which a work is fixed by any method now known or later developed, and from which the work can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device. The term “copies” [Page 287]includes the material object, other than a phonorecord, in which the work is first fixed.
- Copyright Infringement: Violation of copyright through unauthorized copying or use of a work or other subject matter under copyright. In R.G. Anand v. Delux Films, the court held that copyright does not subsist in an idea and hence cannot be infringed.
- Counterfeit Mark: Refers to a spurious mark that is identical with, or substantially indistinguishable from, a registered trademark.
- Country Code Top-level Domain: It is an Internet top-level domain generally used or reserved for a country.
- Domain Name: A domain name is the unique name that corresponds with an Internet protocol address. It is often easy and intuitive to remember. For example, Law Wire™ is located at http://www.lawwireonline.com.
- Dramatic Work: Includes any piece for recitation, choreographic work, or entertainment in dumb show, the scenic arrangement, or acting form of which is fixed in writing or otherwise but does not include a cinematograph film.
- Drawings: Drawings (or photographs) disclose the industrial design and are a basic requirement of a design application.
- Examination Trademarks: The process through which the Trademarks Office determines whether an application for trademark is registrable.
- Exception: A provision in a copyright law permitting the use of a work by defined user groups without the consent of its creator or without the payment of royalties, conditions that would normally constitute an infringement of copyright. Examples of user groups benefitting from exceptions are educational institutions, libraries, museums, archives, and persons with a perceptual disability.
- Fair Dealing: Use of works for purposes of private study, research, criticism, review, or news reporting that does not constitute infringement of copyright. [Page 288]
- First to File: A patent system in which the first inventor to file a patent application for a specific invention is entitled to the patent. In India and in most other countries, the first person to file has priority over other people claiming rights for the same invention.
- Fixed: When a work is set in a tangible medium of expression. It occurs when a work's embodiment in a copy or phonorecord, by or under the authority of the author, is sufficiently permanent or stable to permit it to be perceived, reproduced, or otherwise communicated for a period of more than transitory duration. A work consisting of sounds, images, or both, that are being transmitted, is “fixed” for purposes of this title if a fixation of the work is being made simultaneously with its transmission.
- Generic Top-level Domain: Refers to one of the categories of top-level domains (TLDs) maintained by the Internet Assigned Numbers Authority (IANA) for use in the domain name system of the Internet. It is visible to Internet users as the suffix at the end of a domain name. For example, Law Wire™'s domain name is http://www.law-wireonline.com and the gTLD is .com.
- .INDRP (.IN Dispute Resolution Policy): The INDRP has been formulated by the National Internet Exchange of India (NiXI), and has laid down terms and conditions to resolve domain name disputes between the registrant and the complainant concerning the use of the .in Internet domain name.
- Joint Application: An application in which the invention is presented as that of two or more persons.
- Joint Inventor: An inventor who is named with at least one other inventor in a patent application, wherein each inventor contributes to the conception of the invention set forth in at least one claim in a patent application.
- Joint Work: Refers to a work prepared by two or more authors with the intention that their contributions be merged into inseparable or interdependent parts of a unitary whole. [Page 289]
- License: Refers to a legal agreement granting someone permission to use a work for certain purposes or under certain conditions. A license does not constitute a change in ownership of the copyright.
- Licencing an Invention: Allowing a business or individual to manufacture and sell an invention, usually in exchange for royalties.
- Licensee: If an entity is licensed by or with the authority of the owner to use the mark, and the owner has direct or indirect control over the character or quality of the wares or services with which the mark is used, then the licensee's use of the mark or a trade name including the mark is deemed to have, and to always have had, the same effect as use by the owner.
- Literary Work: Refer to work consisting of text such as novels, poems, song lyrics without music, catalogues, reports, tables as well as translations of such works. It also includes computer programs.
- Logo: A graphic representation or symbol of a company name or trademark, usually designed for ready recognition. The term has no legal significance in the law of trademark.
- Moral Rights: Rights an author retains over the integrity of a work and the right to be named as its author even after sale or transfer of the copyright. This view was upheld by the court in Mannu Bhanáari v. Kala Vikas Pictures Ltd., AIR 1987 Delhi 13.
- Notice: A formal sign or notification attached to physical objects that embody or reproduce an intellectual property right.
- Novelty: To be patentable an invention must be “new.” It is one of the three conditions that an invention must meet to be patentable. Novelty is present if every element of the claimed invention is not disclosed in a single piece of prior art.
- Obviousness: A condition of nonpatentability in which an invention cannot receive a valid patent because a person with [Page 290]ordinary skill in that technology can readily deduce it from publicly available information (prior art).
- Patent Office: India's patent granting authority and disseminator of patent information.
- Patent Pending: A label sometimes affixed to new products informing others that the inventor has applied for a patent and that legal protection from infringement (including retroactive rights) may be forthcoming.
- Patent Thicket: A dense web of overlapping IPRs that a company must hack its way through to actually commercialize new technology.
- Patent: An exclusive right to exploit an invention commercially, granted for a limited term in return for public disclosure of the invention.
- Piracy: The act of exact, unauthorized, and illegal reproduction on a commercial scale of a copyrighted work or of a trade-marked product.
- Place of Origin: A word or depiction that designates the origin of a product or service and that therefore may not be registered as a trademark.
- Plagiarism: Using the work (or part of it) of another person and claiming it as your own.
- Plant Variety Rights: Plant variety rights are used to protect new varieties of plants by giving exclusive commercial rights to market a new variety or its reproductive material.
- Preliminary Search: The search of Trademarks Office records that one should undertake before submitting an application for trademark registration. The search may turn up conflicting trademarks and show that the application process would be in vain.
- Prior Art: All information that has been disclosed to the public in any form about an invention before a given date.
- Priority Date: A priority date is a concept in IP law whereby the first to take a particular action is entitled to a right that excludes others who may have innovated later. For example, in most countries, if two people apply independently [Page 291]for a patent on the same invention, the earlier application has priority and so can prevent the second succeeding. Also public disclosures made before the priority date are relevant for determining whether an invention is new and inventive for patents and new and distinctive designs.
- Private Copying: Copying of prerecorded musical works, performers' performances, and sound recordings into a blank medium, such as audio tape or cassette, for personal use.
- Provisional Application: A provisional application is an interim document in patent actions. It does not form the basis of the grant of the patent but is a document that precedes the complete application upon which the grant is based. A provisional application establishes a priority date for disclosure of the details of an invention and allows a period of up to 12 months for development and refinement of the invention before the patent claims take their final form in a complete application.
- Publication: Refers to the distribution of copies or phonorecords of a work to the public by sale or other transfer of ownership, or by rental, lease, or lending. The offering to distribute copies or phonorecords to a group of persons for purposes of further distribution, public performance, or public display constitutes publication. A public performance or display of a work does not of itself constitute publication.
- Punitive Damages: These are damages intended to reform or deter the defendant and others from engaging in conduct similar to that which formed the basis of the lawsuit. In simple words, these are damages exceeding simple compensation and awarded to punish the defendant.
- Search: The act of searching through IP records in order to verify whether a patent, trademark, or industrial design has been previously filed or registered.
- Service Mark: Service mark is a trademark used in some countries to identify a service rather than a product. [Page 292]
- Sound Recordings: Refer to works that result from the fixation of a series of musical, spoken, or other sounds, but not including the sounds accompanying a motion picture or other audiovisual work, regardless of the nature of the material objects, such as disks, tapes, or other phonorecords, in which they are embodied.
- Trade Name: Refers to any name used by a person to identify his or her business or vocation.
- Uniform Domain–Name Dispute–Resolution Policy: ICANN requires that all registrars in the .biz, .com, .info, .name, .net, and .org TLD follow the Uniform Domain– Name Dispute–Resolution Policy (UDRP). Under the UDRP, many trademark based domain name disputes must resolved by agreement, court action, or arbitration before a registrar cancels, suspends, or transfers a domain name. Ownership disputes alleged to originate from cyber squatting or other “bad faith” registration practices may be addressed through expedited administrative proceedings, initiated by the trademark holder through an approved Dispute Resolution Service Provider (DRSP). To initiate proceedings under the UDRP the trademark owner must either file a complaint in a court of proper jurisdiction against the domain name holder (e.g., an in rem action concerning the domain name) or submit a complaint to an approved DRSP.
- Utility Patent: It is granted to anyone who invents or discovers any new and useful process, machine, article of manufacture, or compositions of matters or any new useful improvements thereof.
- WIPO: World Intellectual Property Organization (WIPO) is one of the United Nations specialized agencies created to encourage creative activity, to promote the protection of IP throughout the world in 1967.
- Word Mark: Refers to a form of trademark comprised of text.
About the Authors[Page 303]
Rodney D. Ryder is a leading technology, intellectual property, and corporate lawyer. He is the founding partner at Scriboard®. He is presently Advisor to the Ministry of Communications and Information Technology, Government of India on the implementation of the Information Technology Act, 2000.
Mr. Ryder has been nominated as a “Leading Lawyer” in intellectual property, technology, communications, and media law by Asia Law, Who's Who Legal, Asia Legal 500, among other international publications. He was named as one of Indian Lawyer 250's “40 under 45” last year in recognition for his work.
His second book, Intellectual Property and the Internet, published by LexisNexis is perhaps the only one of its kind in Asia. The text has been acknowledged to be an authoritative work by the Hon'ble Supreme Court of India and has been quoted in the first and only judgment by the Hon'ble Supreme Court of India on domain names. He is advisor to the National Internet Exchange of India (NiXI) and a member of the panel of independent and neutral arbitrators with NiXI.
He has authored the following books:
- Guide to Cyber Laws (E-commerce, the Information Technology Act, 2000, Data protection and the Internet) (LexisNexis Butterworths Wadhwa Nagpur, India).
- Intellectual Property and the Internet (LexisNexis, 2002).
- Brands, Trademarks and Advertising (LexisNexis, 2004).
- Internet Law and Policy (Oxford University Press, 2010).
- Drafting Corporate and Commercial Agreements: Legal Drafting Guidelines, Forms and Precedents (Universal Law Publishing, 2005; Reprint 2007). [Page 304]
- An Introduction to Internet Law and Policy: A Course Book on Cyber Law (LexisNexis Butterworths Wadhwa Nagpur, India, 2007)
Ashwin Madhavan is Co-founder and Director of Enhelion Knowledge Ventures Pvt. Ltd., heading the Strategic Alliances and Operations team. He is also a lawyer at Scriboard—Advocates and Legal Consultants, where he advises clients on intellectual property, management, and information technology issues. He completed his law from Gujarat National Law University and an LLM in Technology Laws and Intellectual Property Laws from Dalhousie University, Canada. He is a founding member of Enhelion. His areas of expertise are domain names and cyber squatting, trademarks, copyrights, and information technology laws. He is a former member of the Canadian Bar Association. He has advised various Fortune 500 companies on various aspects of India's technology and IP laws. He has written several articles for various journals, national, and international publications. He was a member of the Editorial Board of Journal of Legal Research, GNLU, and also a member of Law Wire's Editorial Board.
Mr. Madhavan loves to read books related to history, business management, and foreign policy. He has travelled extensively to different parts of the globe. He has taken part in discussions pertaining to India's foreign policy matters at Jawaharlal Nehru University. He has conducted workshops on intellectual property and management in Indian law schools and universities. He recently was an instructor at a training program on “Intellectual Property and the Plant Varieties Act” organized by the Ministry of Agriculture—Government of India for scientists. Very recently he was invited to be a speaker at the U.S.–India Business Council summit on intellectual property held in Gujarat National Law University. During his spare time, he practices yoga and plays the piano. This is his first book. He can be contacted at madhavan. firstname.lastname@example.org