Understanding and making money
Out of your Intellectual Property
by YOHANES DJINGGA
Faculty of Law UGM
Faculty of Law Queen Mary University of London
This paper aims to answer the questions on commercializing on your Intellectual Property (“IP”). Specifically, on why, how and when to do it. To go in depth to understanding different methods of commercializing, it is important to understand the basics of IP and know its worth before dwelling into how to exploit its worth.
What is Intellectual Property
IP is used to describe three things. First, IP is an intangible subject matter which results from mental or creative effort. Think, for example, of a scientist inventing a new diagnostic test to detect a type of disease; a software designer writing a new app for a mobile phone or a sculptor designing a new three-dimensional work. Second, It is also referred to certain legal entitlements that exists in relation to this subject matter. These entitlements are rights held by the entities and are enforceable under the law against other legal entities. Finally, the term IP is used to refer to the particular laws that give rise to IPRs in respect of particular intangible stuffs. These laws are grouped under particular titles.
A. Characteristics of IP
This part will analyse the nature of IP and its common characteristics
i. The rights of exclusivity
Most tangible assets can be possessed or owned exclusively by virtue of the fact that they are tangible. Exclusive possession of intangible assets is, however, problematic, precisely because they are intangible. This means they cannot be physically secured against unauthorised access or use by third parties.
ii. Common characteristics of IPRs
a) Specific subject matter
Only IP subject matter for which there is a specific legal regime obtain the benefit of the grant of exclusive rights. For example: only an invention may be granted a patent, only certain types of signs may be registered as a trademark and so on and so forth.
b) Innovation/creation thresholds
The laws generating IPRs would usually stipulate a set of threshold of invention or creativity that must be satisfied for the subject matter to gain the benefits of the rights.
c) Limitation on exclusivity of rights
The exclusivity granted by IPRs is not absolute, rather they are limited to certain scope of activities. Such as the use of copyright material for educational purposes, or the use of new inventions for experimental purposes.
d) Limitation on duration of rights
Most IPRs do not subsist indefinitely, rather, they are available for a set period of time. For example, in patents, the duration for the owner’s exclusive rights is 20 years from the date of filing the application. Or in the example of trademark, where the exclusivity continues so long as the registration is maintained.
e) Transferability of rights
IPRs are assets like other property rights. They may be transferred to other parties by the owner. The rights may be assigned (when being sold) or licensed (when being leased) for a limited duration to another person. (it is important to note that licensing is a contractual right and not a transfer of property)
iii. Statutory basis of rights
The majority of IPR are created by statute. It is enacted by national legislations.
iv. IP is a negative right
IP being a negative right gives someone a rights to stop rather than to do. An IP rights owner can stop another trader using a sign which is the same or confusingly similar to his trademark. But such rights to stop does have some positive characteristics. If an IP rights owner can stop someone from infringing his rights then he can also, in effect, authorize them to do something which would infringe but by paying the rights owner for permission to do so
v. IPRs are national rights
IPRs are national rights. This means that you may have a patent protecting an invention in one country but not in another country. This means that a rival trader could manufacture and sell in Singapore a product which would, if manufactured and sold in Indonesia, infringe the Indonesian patent. But since you only have the Indonesian patent, you cannot file for infringement against the Singaporean patent. In order to have an international rights over the IPR, registration in multiple countries would be necessary to fulfil the rights of an international IP.
A lot of people have the misconception that IP is only patent. However, there are far more types than just of patent, and in this part we will spend some time reflecting light unto the different types of IP and its significances.
Patents occupy the highest tier in the IPR spectrum since they are often seen as the strongest and for some businesses, the most valuable IPR. A patent is a national IPR. It has to be applied for under a process which tests the application for validity according to a series of criteria which are broadly applicable worldwide. Once successfully obtained, a patent provides the owner with a national 20-year monopoly to exercise the rights given by the patent. Basically, these rights to stop other infringing the owner’s monopoly.
The key tests for patentability are commonly as follows:
- Novelty à the invention to which the application relates must be new, which means that its details cannot be obtained from any publicly available source anywhere in the world.
- Inventiveness à the invention must not merely be an obvious solution to a problem. It must take a genuine and definitive step beyond the obvious.
- Applicability à the invention must be capable of being put to commercial or industrial use.
- Not to be excluded from patentability à the output must fall within the the scope of patentable materials.
Copyright is an automatic IPR. It is not (at least in most countries) a registered right. It comes into existence when an author records a copyright work (i.e: by writing it down or recording it in some other way). Note, mere ideas are not protected by copyright laws.
Trademarks are national rights it can be defined as a sign which is capable of identifying the goods or services of a particular trader or other organisation. The official definition of “trademark” means any sign which is capable—
- of being represented in the register in a manner which enables the registrar and other competent authorities and the public to determine the clear and precise subject matter of the protection afforded to the proprietor, and
- of distinguishing goods or services of one undertaking from those of other undertakings.
A trademark may, in particular, consist of words (including personal names), designs, letters, numerals, colours, sounds or the shape of goods or their packaging.
It is sometimes said that trademarks have three overlapping functions:
- ORIGIN – to identify the source of goods or services
- QUALITY or GUARANTEE – to symbolise the qualities associated with a product or service
- INVESTMENT – to represent the value of the investment made by a business or other organisation in a product or service and its promotion and advertisement.
The key element in a trade mark is DISTINCTIVENESS – its ability to distinguish the goods or services of one trader from those of another trader. The most distinctive trademarks are thus made-up words or specifically devised logos. KODAK is a good example. Some ordinary words – APPLE or EASYJET can acquire distinctiveness over time through use.
d. Trade Secrets
As the word describes it, this is basically a secret. No form of protection is provided by law, but claims over infringement of unlawful attainment of such secrets are possible. The trade secret is usually covered by the use of non-disclosure agreements between individuals and would be a contractual obligation to ensure the secret is not made public.
 All information used by the writer is based on the teachings of classes by Mr John Hull, LLb, LLM, lecturer of Queen Mary University of London, and associated footnotes within.
: A.Christie and S.Pryor: “IP and Intangible Assets: A Legal Perspective.” IP Research Institute of Australia Occasional Paper No 1/05 (2005), p 6 – A. Christie: “IP and Intangible Assets” – http://achristie.com/wp-content/uploads/2011/09/Christie-IP+IA.pdf