Intellectual Property and Incremental Innovation in OECD Countries An Overview 14 September 2009 7. Annual WIPO Forum on IP and SMEs in OECD countries.

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Presentation transcript:

Intellectual Property and Incremental Innovation in OECD Countries An Overview 14 September 2009 7. Annual WIPO Forum on IP and SMEs in OECD countries Geneva, Switzerland Christoph Spennemann, Legal Expert, IP Team Division on Investment and Enterprise UNCTAD

Overview of Presentation SMEs and incremental innovation Incremental innovation & patent protection One alternative: utility model protection Trade secrets protection Conclusions

SMEs and incremental innovation Large SME presence in industries that depend on cumulative/incremental innovation E.g. toy manufacturing; clock & watch making; optics; microtechnology; micromechanics Lower standard of inventiveness than in high tech industry (e.g. biotech; ICTs) Inventions easy to copy

Incremental innovation and patent protection (1) Risk of free riding  need for protection Patent system Effective protection Cost factor Low degree of inventiveness  should the patent system be adapted?

Incremental innovation and patent protection (2) Example US: lower standards of patentability since 1980s Many small scale innovations become patentable US Federal Trade Commission in 2003: balance too far in favor of exclusive rights; competition is needed for innovation US Supreme Court in KSR/Teleflex (2007): tighter standard of non-obviousness

One alternative: utility model (UM) protection (1) Objective: rapid & inexpensive protection of sub-patentable inventions Common traits (no TRIPS standard) Exclusive rights for inventor Mostly registration instead of examination Novelty & industrial application requirements apply Based on « Utility Models and Innovation in Developing Countries », by Uma Suthersanen, UNCTAD-ICTSD Issue Paper No. 13, Geneva, 2006.

One alternative: UM protection (2) National laws differ in important respects Protected subject matter: technical solution to a problem (products & processes); or limitations to three-dimensional forms Novelty standards vary (worldwide, national) Inventive step requirement does not always apply; standards vary Term of protection: 6 – 25 years

National experiences in UM protection (1) Germany: continued high use of UMs; but R&D investment by SMEs decreasing since 1998 (as of 2006) Japan: high use until 1980s; strong decrease 191,000 applications/year in 1980s 8,000 in 2003 Industry unhappy with modified UM regime Registration instead of examination  legal uncertainty Shorter terms of protection Less focus on incremental innovation

A different approach: trade secrets (TS) protection (1) Minimum standards in Article 39.2, TRIPS Agreement Any information that is Secret Has commercial value due to its secrecy Subject to reasonable efforts to keep it secret

TS protection (2) Protection against misappropriation through unfair commercial means But no protection against independent development or discovery through honest commercial means  no exclusive right Reverse engineering possible, as opposed to patents and UMs  promotes follow-on innovation & competition

Conclusions SMEs depend on protection of small scale innovation Patents often inappropriate (inventive step; cost; effect on competition) Utility models appropriate alternative, but domestic laws need to correspond to industry needs Trade secrets offer tool to balance protection and competition

Contact Christoph Spennemann Legal Expert Intellectual Property Team Division on Investment and Enterprise (DIAE) UNCTAD E-mail: Christoph.Spennemann@unctad.org Tel: ++41 (0) 22 917 59 99 Fax: ++41 (0) 22 917 01 94 http://www.unctad.org/tot-ip