Legal Aspects Of Intellectual Property Research Paper

1. Origins

The modes of intellectual property law developed and have evolved in response to the rise of commerce, the shift toward industrial means of production and the development of technologies for the reproduction and distribution of works of authorship (Merges et al. 2000). The first use of trademarks can be traced back almost 4000 years to the earliest merchant societies in China, India, Persia, Egypt, Greece, and Rome where craftspeople marked their wares with distinctive symbols in order to identify the source of their goods, develop a distinctive reputation for quality, and assist in resolving ownership disputes. The roots of trade secret protection can also be traced back at least as far as the Roman empire, where courts created a cause of action for corrupting a slave through bribery or intimidation to obtain disclosure of the slave owner’s confidential business information. By the time of the Renaissance, most European nation-states had laws that protected businesses (notably, the Guild cartels) from those who used their secret processes and ideas without permission. These early laws were translated during the Industrial Revolution into statutes that protected ‘industrial secrets.’

The first formalized patent systems emerged during the early mercantilist period as a means for European nation-states to unify and increase their power and wealth through the development of manufacturers and the establishment of foreign trading monopolies. The term patent, derived from the Latin patere (to be open), refers to an open letter of privilege from the government to practice an art. The Venetian Senate enacted the first patent statute in 1474, providing the maker of any ‘new and ingenious device … reduced to perfection so that it can be used and operated’ an exclusive license of 10 years to practice the invention. Other nations followed suit and the granting of monopolies for inventions became the dominant means of promoting technological advance (Merges 1995).

The need for formal protection against copying did not significantly arise until the invention and diffusion of the printing press in the fifteenth and sixteenth centuries. Out of fear that this new technology would spread religious heresy and foment political upheaval, the British Crown in 1534 prohibited publication of literary works without a license and approval of royal censors. In 1557, it conferred a publishing monopoly upon the Stationer’s Company, a group of London printers and booksellers. This monopoly expired in 1694, resulting in competition from new publishers and widespread counterfeiting of published works. The Stationers persuaded Parliament that such economic conditions would not support new works of authorship, leading in 1710 to the first copyright act, the Statute of Anne, ‘An Act for the Encouragement of Learning, by vesting the Copies of Printed Books in the Authors or Purchasers of such Copies, during the Times therein mentioned.’ By shifting protection from publishers to authors, this statute laid the foundation for a vibrant market for works of authorship and the flourishing of ideas. As technology for recording and distributing new works of authorship developed, copyright law has expanded and adapted to afford protection against copying in these new and evolving media (Goldstein 1994).

The rise of entertainment industries and celebrities in the twentieth century has led to the development of a right of publicity, which protects individuals against the appropriation of their name, image, or likeness for commercial gain. New information technologies have spurred new forms of protection for the design of semiconductor chips and databases.

2. Modern Landscape

The modes of intellectual property law have evolved into highly detailed bodies of statutory law augmented through judicial interpretation. International agreements and the globalization of commerce have harmonized many aspects of national regimes, although variations persist. Furthermore, the development of technologies that cut across the modes of protection, such as computer software, have led to more integration in the practice of intellectual property law (Lemley et al. 2000).

2.1 Patent Law

An inventor of a new, nonobvious, and useful process, machine, manufacture, or composition of matter, or improvement thereof, obtains exclusive rights to make, use, and sell the invention for a term of 20 years from the filing of a patent application. This period, during which the inventor can exclusively exploit the invention, directly or through licensing, provides strong incentives for research and development. The public benefits through the spur to innovation and disclosure of the patented invention. After the patent expires, the innovation becomes part of the public domain, free to all. In addition to utility patents, patents are available in the USA for distinctive plants and ornamental designs for articles of manufacture. Design patents have a 14-year term. A patent can only be enforced in the nation in which the patent has been awarded.

2.2 Copyright Law

Copyright law promotes creativity in literature and the arts by affording authors and artists lengthy terms of protection (life of the author plus 70 years) against copying. Copyright law protects the expressive elements of a broad range of works—including books, graphical works, dramatic works, choreography, musical compositions, sound recordings, films, sculpture, architectural works, and computer programs—but does not extend to facts, ideas, or utilitarian aspects of such works. Copyright protection inheres upon the creation of original works of authorship fixed in a tangible medium of expression. By contrast with patent protection, copyright law employs a relatively low threshold for protection and substantially longer duration, but the scope of copyright protection is narrower and less absolute. For most categories of works, copyright owners have the exclusive right to make copies, prepare derivative works, and distribute, perform, and display their works during the term of protection. Most continental European nations, and to a lesser extent the USA and other nations, protect attribution and the artistic integrity of expressive works through inalienable moral rights. In response to the increased vulnerability of digital works to widespread piracy, the World Intellectual Property Organization (WIPO) Copyright Treaty requires signatory nations to provide adequate legal protection against the circumvention of copy protection systems and the removal or alteration of copyright management information conveyed along with a copyrighted work.

Unlike patent rights, which are essentially absolute (apart from antitrust limitations), the rights of copyright owners are constrained by the fair use doctrine, which permits limited use of protected works for criticism, news reporting, teaching, scholarship, and research. Copyright law also provides for compulsory licensing of musical compositions and television signals for cable distribution under particular circumstances. Under international conventions, works qualifying for copyright in member nations are protected in other member nations.

2.3 Trademark Law

Trademark law facilitates and enhances consumer decisions and encourages firms to supply quality products and services by protecting names, logos, words, phrases, symbols, sounds, trade dress, product configuration and other means of designating the source of commercial products or services (Economides 1988). A supplier acquires trademark protection by being the first to use a distinctive mark to identify its goods in commerce. Inherently distinctive marks, such as Kodak for photographic supplies, and suggestive marks, such as Coppertone to designate sun tanning products, receive protection immediately, whereas descriptive (or geographic) marks acquire protection only after they have acquired secondary meaning for the consuming public. Trademark protection is perpetual unless a mark is abandoned or becomes associated in the public’s mind with a general category of products rather than the source of the product. For example, the terms ‘escalator,’ and ‘thermos,’ which initially referred to the products of particular manufacturers, have become generic and hence unprotectable.

Trademark owners have the right to prevent others from using their marks or otherwise confusing consumers as to the source of a product. In some jurisdictions, and now under federal law in the USA, the owner of a famous mark can enjoin and obtain damages for the dilution, blurring, or tarnishment of the owner’s mark. Trademark law does not protect functional aspects of a product and allows others to use a mark fairly, such as for comparative advertising or other descriptive purposes, so long as such use does not confuse consumers.

Trademarks are territorial in nature. Unless registered, trademarks are protected only in those geographic regions in which the marked products are sold or advertised. National registration affords nationwide protection of trademarks and the opportunity to obtain foreign registration. Because the USA has not joined the Madrid Agreement Concerning the Prevention of False or Deceptive Indications of Source, the main international trademark convention, US trademark owners must prosecute trademark applications in each country where they seek protection.

2.4 Trade Secret Law

A trade secret is information that derives independent economic value from not being generally known or readily ascertainable and is the subject of reasonable efforts to maintain secrecy. Unlike patent law, information need not be novel in order to qualify for trade secret protection. Most nations protect trade secrets through national or regional regimes. Trade secret protection lasts until the information becomes publicly known. By contrast with patent protection, trade secret law does not protect against independent discovery or reverse engineering by competitors. Those who violate trade secret law are liable for damages and in some cases injunctions against use or further disclosure.

2.5 Other Forms Of Intellectual Property Protection

Many jurisdictions recognize some form of unfair competition or misappropriation law prohibiting the appropriation of some forms of information not protected by traditional modes of intellectual property law. The right of publicity, which is recognized in about half of the USA, protects individuals against the use of their name, image, or likeness for commercial gain.

With the advent of new technologies, some new specialized intellectual property regimes have emerged in recent years. Many industrialized nations, at the urging of the USA, have adopted regimes for the protection of semiconductor chip designs. In 1996, the European Union adopted a directive on the legal protection of databases.

3. Utilitarian Economic Theories

Economic research demonstrates that technological advancement and increased human capital of the labor force account for most of the annual productivity increase in the USA and other industrialized nations (Denison 1985). It is not surprising, therefore, that public policy analysts and social scientists have viewed intellectual property protection principally as a means of promoting intellectual creativity. The precise role of intellectual property protection in promoting technological advancement and the optimal design of such regimes, however, have proven extraordinarily complex and elusive (Menell 1999).

3.1 Theoretical Perspectives

The utilitarian theory of intellectual property developed in response to the use of monopoly power to spur innovation. Adam Smith, while generally critical of monopoly power as detrimental to the operation of the ‘invisible hand,’ nonetheless justified the need for limited monopolies to promote innovation and commerce requiring substantial up-front investments and risk. In the terminology of modern welfare economics, information is a public good: like national defense, it is difficult to exclude those who do not pay for the good from consuming it and additional consumers of the good (e.g., the ideas in a book or improved production process) do not deplete the quantity or quality of the good available to others. Therefore, apart from the costs of distribution and incentives for creation, the optimal cost of information is zero. And in networks markets—such as telecommunications systems, computer operating systems, and standardized parts— there may be positive externalities to more people knowing and using the same information (Shapiro and Varian 1999).

3.2 Historical, Industry, And Institutional Studies

Studies across a wide range of industries find that technologies undergo a ‘gradual, evolutionary development which is intimately bound up with the course of their diffusion.’ (David 1985). Secondary inventions—including essential design improvements, refinements, and adaptations to a variety of uses—are often as crucial to the general of social benefits as the initial discovery. Many studies emphasize the critical commercial importance of linking innovation with understanding consumer needs and astute marketing. Economic historians and industrial organization economists conclude that patents were rarely the principal means of appropriating returns in most industries (outside of pharmaceuticals and chemicals), and that trade secrecy, lead time, rapid movement down the learning curve, and marketing efforts play substantial roles in the appropriating of returns to investments in research and development (Levin et al. 1987, Mansfield, 1986, Schwartzman, 1976, Taylor and Silbertson, 1973). Saxenian (1994) finds that Silicon Valley has thrived as an incubator of technological innovation because of an extraordinary confluence of factors, including a unique culture of collaboration and sharing of know-how both within and across firms, high mobility of labor, competitive rivalry among many dynamic competitors, high density of complementary specialized enterprises, development of effective trade associations and consortia, creative use of strategic partnering, cross-licensing, a responsive, knowledgeable, and competitive venture capital financing network, close research university industry relationships, a legal culture emphasizing informal, practical, flexible, and less litigious solutions, a management style emphasizing teamwork, openness, participation, and autonomy of decentralized engineering teams, and the use of stock options to attract, motivate, and reward innovation. Nonetheless, patents continue to play a significant role in the economy as evidenced by the steady rise in the number of patent applications and the importance of patents in the financing of technology companies.

Public funding of research, as well as university research more generally, also play substantial roles in technological advance (National Science Board 1998). Focusing upon social norms motivating scientific research, particularly in university laboratories, Merton (1973) and Eisenberg (1987) suggest that intellectual property rights may undermine scientific progress by supplanting noneconomic reward structures such as publication, reputation, and professional advancement, discouraging the sharing of research and prompt disclosure, and shifting research away from basic research toward projects with more immediate commercial returns. Rosenberg and Nelson (1994) emphasize, however, that intellectual property fosters the diffusion of academic and medical discoveries beyond research institutions into the consumer marketplace. Furthermore, many research universities now protect and license technologies developed on their campuses as a means of funding research, although the implications for scientific progress are complex (Rai 1999).

Content and entertainment industries rely significantly upon copyright protection, although some scholars have questioned whether the incentives for creativity outweigh the economic inefficiency of monopoly exploitation (Breyer 1970). While there is little question that many expressive works would be created even in the absence of copyright protection and that publishers could appropriate some reward streams through first mover advantages and price discrimination of originals, there is little question that the elimination of copyright protection would dramatically alter the incentives motivating many authors and artists and undergirding the burgeoning content industries (Siwek 1999, Tyreman 1971).

3.3 Normative Analysis

The early formal models of intellectual property rights assumed that inventors conducted research in isolation on noncompeting projects (Nordhaus 1969). As such, the models focused on the optimal reward to induce particular innovations by a single inventor. As the historical and institutional literatures reflect, however, the actual environment for innovation is substantially more complex. In particular, different innovators (and firms) often compete to invent first, thus resulting in patent races. Economists developed richer, dynamic models in order to understand the positive and normative implications of rivalrous competition (Barzel 1968, Kamien and Schwartz 1982) as well as models examining design parameters beyond duration of protection such as scope and exclusivity of protection (Gilbert and Shapiro 1990, Klemperer 1990).

Building on Barzel’s model of rivalrous competition which emphasizes the inefficient duplication of research, Kitch (1977) argues that the patent system in essence provides the first to claim an invention with a ‘prospect’ or ‘development rights,’ authorizing the patent holder to ‘mine’ the claim exclusively or license those better able to do so. Kitch defends this function of the patent system as promoting efficient (nonrivalrous) exploitation of innovation. Other scholars reach an opposite conclusion. Drawing on a wide range of empirical evidence, theoretical models of bounded rationality, and evidence suggesting high transaction costs in technology licensing, Merges and Nelson (1990) see vibrant competition as a more positive force in spurring invention, innovation, and diffusion of technology than coordinated development by a single prospector.

The modern literature has also developed models to study the implications of cumulative innovation (Scotchmer 1991) and network externalities on the design of intellectual property protection (Menell 1987).

3.4 Positive Analysis

Notwithstanding the serious questions regarding the efficacy and complexity of intellectual property rights, the past two decades has seen a veritable intellectual property ‘land grab’ as new opportunities to acquire ‘intangible’ property have emerged. Virtually every field of intellectual property law has seen an expansion of intellectual property rights—software and business method patents (Merges 1999), extension of the term of copyright protection (Patry 1997), anti-dilution law (Port 1994)—and new modes of protection—such as the right of publicity, semiconductor chip protection, and database rights—have emerged. The rapid expansion of intellectual property, often without adequate consideration of the diffuse interests of the public at large, suggests that traditional models of political economy apply reasonably well to the intellectual property arena (Menell 1994, Litman 1989, Ryan 1998, Samuelson 1996).

4. The Expanding Social, Philosophical, And Political Significance Of Intellectual Property

Although the utilitarian framework has dominated the analysis of intellectual property, natural rights, personhood, libertarian, distributive justice, and other nonutilitarian theories have played a role in justifying intellectual property, especially with regard to the protection of literary and artistic expression (Gordon 1993, Hughes 1988, Waldron 1993). Continental European nations place greater emphasis than the USA or the UK on the inalienable moral rights of authors. Digital technology and the decoding of genetic structure have raised fundamental questions about the rationale, implications, and appropriate scope of intellectual property protection, pushing the debate further beyond the utilitarian frame of reference.

4.1 The Digital Revolution

As with the development of human language, writing, printing, and industrial methods of production, computer and network technology represent a fundamental advance in the ways in which humans societies function (Robertson 1998). In just a few years, the Internet has reshaped many industries by dramatically reducing information and transaction costs and creating new opportunities and pathways for commerce to flow (Evans and Wurster 1999, Shapiro and Varian 1999). The ease with which expressive works can be created and distributed in the information age pose threats to traditional copyright-based industries as well as great opportunities (National Research Council 2000). More fundamentally, the Internet has begun to transform social and political life by unleashing a tremendous wealth of easily accessible information and enabling social and political communities to form, function, and evolve in new ways.

Intellectual property plays many roles in the new information economy, from providing incentives for new enterprises to regulating the flow of information. As a result, intellectual property protection has increasingly come into conflict with freedom of speech, privacy, contract, and with other fundamental aspects of civil society, leading scholars to reexamine the role and implications of intellectual property (Lessig 1999, Netanel 1996).

4.2 Biotechnology

The decoding of genetic structure has led to the discovery of new ways of identifying and treating human disease, increasing agricultural and aquacultural yields and the nutritional content of foods, and reducing crop vulnerability to pests. These technological advances, however, have raised a host of troubling ethical, religious, social, economic, political, and ecological questions ranging from the morality of cloning humans to the ecological risks posed by the release of genetically modified organisms. At the most basic level, biotechnology research has led some to question the morality of uncritically promoting scientific discovery and the diffusion of new products. For example, the risk-taking and commercialization ethos of the intellectual property system has increasingly come into conflict with the precautionary principle of international and environmental law. The great commercial value of many biotechnology advances has spawned a growing list of quandaries for intellectual property law, including the existence and scope of property rights in human body parts, cell lines, and waste products, whether the human genome or particular sequences of genetic information should be protectable under intellectual property law, the ownership of intellectual property derived from human material, the ownership of intellectual property derived from native plants found in sovereign nations and the rights of indigenous people to use such intellectual property (Sedjo 1992), and the use and dissemination of genetic testing information.

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