Monday, 16 July 2012

What is IP?

I think young lawyers-to-be quite like IP. IP stands for Intellectual Property, so it reassures you that you have to be intellectual to understand it. But the concept is pretty easy to grasp.

Think back to the Vodkat case described in a previous post. There, Diageo were concerned that some other company was getting the benefit of the goodwill built up in ‘vodka’. Someone else was piggybacking on the hard work of the vodka industry to sell their own lower-strength spirit. Or think of rip-off football shirts. No one buys a knock off football shirt because they think it’s a pretty tee-shirt – they buy it because it associates them with the club and their brand. The rip-off shirt manufacturer has piggybacked on the reputation of the club.

The same applies to trademarks. If I mixed sugar, ink and fizzy water and sold it in a bottle labelled ‘Coca-Cola’ then I am using the trademark’ of Coca Cola to sell my concoction. Another aspect of IP is patents. If you work for ten years developing a wonder drug and then I just make cheap copies (because I’m not trying to pay back ten years’ worth of research), then I am piggybacking on your efforts.

Intellectual Property, then, is the fruit of one’s labours that is not tangible. You can’t steal the money I earned, or live in the house I built, so you can’t just ‘steal’ the value in a brand, a reputation, a trademark, an artistic creation, a formula or a code.

Of course, a company needs to try and protect its IP. That’s why they get copyrights and patents and trademarks. Disputes get costly when no one knows what brand belongs to who. For example, you may have come across Budweiser, in both American and Czech forms. They are beers brewed by different companies, and they have argued over who owns the name for ages. In one of the judgements, an English Court of Appeal judge suggested they should maybe just chill out and stop arguing about it (my words, not his)[1]

One question must be relate to whether and when any IP should be freely available, or what should be freely available to some. For example, should academics be allowed freer access to certain material than commercial organisations?

Another problem is where there are so many patents that it is hard for companies to know what they can do – a ‘patent thicket’. As the 2011 Hargreaves Report said:

“businesses working at the leading edge of a particular technology may find it difficult or even impossible to know with whom they are in conflict, or whom they should approach for a licence. A current generation smartphone, for example, may well be covered by hundreds of patents owned by tens of rights holders.”

And you might have spotted a legal/policy tension. IP lets companies make money. You can’t just sell my new wonder drug at cheaper prices. Usually we like companies undercutting each other on price – that’s why we have competition law. So where competition law promotes competition, IP seems to set restrictions on it. That’s so that companies have an incentive to innovate. Why put in the hard yards if someone else takes the money in the end? The interface between IP and competition is a tough one to negotiate. 

[1] Ward LJ, para 65 of [2009] EWCA Civ 1022 I would like to say the dispute is all over; a CA judgement of July 2012 [2012] EWCA Civ 880seems to put paid to it all (and both get to carry on as they were). But given that between them, the parties have let the whole thing rumble on for so long, I’m not entirely sure!

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