Intellectual Property and Other Legal Issues Chapter Five

The Concept of Intellectual Property

IP Incentive Theory Incentives to invent Incentives to disclose Incentives to commercialize

Patents It must have utility. (It must be useful with a practical purpose.) It must not contain prior art. It must be novel in an important way that is not known by others and not previously published for public consumption. It must be non obvious to someone with ordinary skills in the field of invention. For example, it cannot be the logical next step in a known process.

Five Classes of Patents 1. Machine or something with moving parts or circuitry (e.g., fax, rocket, photocopier, laser, electronic circuit). 2. Process or method for producing a useful and tangible result (e.g., chemical reaction, method for producing products, business model). 3. Article of manufacture (e.g., furniture, transistor, diskette, toy). 4. Composition of matter (e.g., gasoline, food additive, drug, genetically altered life-form). 5. A new use or improvement of something from the first four categories.

Types of Patents Utility patents Functional part of a machine or process Business method patents A form of utility patent under the classification of process Design patent Visual ornamental characteristics of an article of manufacture Plant Patent New and distinct varieties of asexually reproducing plants

An Effective Patent Strategy Establishes a temporary monopoly First-mover advantage Improves financial performance Majority of assets reside in IP – use as revenue generators Save money by using as bargaining chips Increases competitiveness First mover advantage Can be licensed Patents of competitors yield important intelligence

When and If to Patent

Patent Infringement When a party other than the inventor or legal licensee makes and sells a product that contain every one of the elements of a claim in the patent Successful prosecution of an infringer will result in a reasonable royalty and an injunction to prevent further use Defendants bear the burden of proving the patent is invalid Courts tend to favor inventors

Trademarks Symbol, logo, word, sound, color, design, or other device used to identify a business or product Holder has right to exclude others from using confusingly similar marks Counterfeiting and misappropriation Infringement, when a mark can cause confusion Dilution, when use dilutes the value of the mark to the owner For valid trademark, must show intent-to-use or that the mark is in use in country commerce.

Protecting Trademarks The standard for judging trademark infringement is the likelihood of confusion Trademarks are adjectives that describe – they are not the product Monitor all uses of the company’s trademark and make sure it is used correctly

Trade Secrets Information such as formulas, patterns, devices, etc. that derive value from not being known and are not readily ascertainable. Any information commonly known or in common use cannot be a trade secret Conveys the right to prevent others from copying, using, and benefiting from the secret.

Copyrights Protects artistic works Protect the original works of authors, composers, screenwriters, computer programmers, and other developers of creative works. Work must be in a tangible form Copyright notice is not required © Copyright 2012 by [name of copyright holder]

Licensing Intellectual Property Licensing: a grant to another party that permits development, manufacture, distribution, and use of the licensor’s IP. Advantages of licensing Platform technologies have too many applications for one company to handle Inventor company does not have the resources to develop applications May be more profitable Reach multiple markets without the expense of distribution channels

Licensor’s Perspective Decide what will be licensed Define the benefits to the licensee Determine the value of the license The economic life of the IP Potential for direct competition Potential for negative government legislation or regulation Changes in market conditions that might obsolete the technology Conduct market research Screen candidates Manage the license

Licensee’s Perspective Search for the right technology Does the technology work in the way the licensor claims? On what measures are the performance data calculated? Will the licensor provide any guarantees of the technology’s performance? Is the technology completely owned by the licensor or does the licensee also have to be concerned about another party and their role in the process? Prepare a business plan Negotiate the type of license Exclusive Non-exclusive

Intellectual Property Protection In Ethiopia

In Ethiopia … Ethiopia has enacted laws for the protection of Inventions, Literary and artistic works, Distinguishing marks and new plant varieties Through patents, copyright, trademarks and plant breeders’ rights Ethiopia is also party to several international intellectual property agreements

Intellectual Property Laws in Ethiopia Traditional Knowledge (Access Genetic Resources No. 482), Proclamation, Proclamation No. 482/2006 Access to Genetic Resources and Community Knowledge, and Community Rights Proclamation Copyright, Law (Proclamation), 24/07/2004, No Proclamation No. 410/2004 on Copyright and Neighboring Rights Protection Industrial Designs (Proclamation No. 123/1995), Regulations, 10/12/ inventions, Minor Inventions and Industrial Designs Regulations (Proclamation No. 123/1995) Industrial Property, Law (Proclamation), 10/05/1995, No Proclamation No. 123/1995 concerning Inventions, Minor Inventions and Industrial Designs Industrial Property (Science and Technology Commission), Law (Proclamation),1994, No Proclamation No. 91/1994 to Provide for the Establishment of the Ethiopian Science and Technology Commission Other (Transfer of Technology), Regulation, 1993, No Council of Ministers Regulations to Regulate the Transfer of Technology No. 121/1993

Patent in Ethiopia “Inventions, Minor Inventions and Industrial Designs” Proclamation was enacted in 1995 with the objective of encouraging local inventive activities A patent is given in Ethiopia for 15 years (and additional five years if the patentee works the invention in the country.) Included in the country’s patent law is the protection of minor inventions through utility model certificates and the protection of designs through industrial design registration certificates.

Trademarks Ethiopia has issued a Trademark Law in July 2006 for the protection of signs which distinguish goods or services The registration of a trademark in Ethiopia shall remain valid for a period of seven years A trademark which is entitled to protection under an international convention to which Ethiopia is a party

In Ethiopia In Ethiopia the law does not permit illegal copying of books, music tapes or computer software for business purposes The exceptions are copying of the mentioned works for personal use, for the purpose of teaching and for use in libraries, museums and other similar institutions

Need For a Lawyer Entrepreneurs needs to be aware of any regulations that may affect his or her new venture. At different stages of the start-up there will be a need to seek legal advice. The legal expertise required will vary based on such factors as whether the new venture is independent start-up, a buyout, consumer versus industrial product, a franchise, nonprofit, or involves exporting or importing By being aware of when and what legal advice is required, the entrepreneur can save time and money.

Business Registration For a business to operate legally there is a need for registration and getting a license from the appropriate regional and/or federal government body. For registering a business there are different requirements. Examples: the legal form of the business, its size, and the sector of operation. The entrepreneur needs to determine the requirements from the appropriate government body or business formation advisors.

Product Safety and Liability Product liability problems are complex and are important consideration for entrepreneurs Claims regarding product liability usually fall under one of the following categories: Negligence, Warranty, Strict Liability or Misrepresentation The best protection against product liability is to produce safe products and to warn consumers of any potential hazards

Insurance It is in the best interests of the entrepreneur to purchase insurance in the event that problems do occur. It is important for the entrepreneur to not only determine what kind of insurance to purchase but also to determine how much to purchase and from what company. Seeking advice from an insurance agent is often difficult because the agent is trying to sell insurance.

Taxes Tax is one of the legal concerns of entrepreneurs There are many kinds of taxes that entrepreneurs have to withhold and/or pay to the government.

Taxes Taxes can be classified into two as direct taxes and indirect taxes. Direct taxes include personal income, business profit tax, tax on income from rental of building, tax on interest income on deposits, dividend income tax, tax on income from royalties etc. Indirect taxes include turnover tax, value added tax (VAT), excise tax, and customs duty.

Taxes Entrepreneurs need to know the taxes that apply to their business and to which category of taxpayers they belong. There may be a need to get advice from experts on how to manage taxes.

End of Course Lecture