In the last column, we discussed how investing in innovation pays dividends, and how much of a premium innovators (and their investors) can enjoy over their less innovative peers. That is, provided they’ve also secured the intellectual property rights of their innovations.
What is intellectual property?
At the end of the 19th century, intellectual property (IP) was formally recognized in two treaties: the Paris Convention for the Protection of Industrial Property (1883) and the Berne Convention for the Protection of Literary and Artistic Works (1886).
According to the World Intellectual Property Organization (WIPO), which oversees both treaties, intellectual property refers to creations of the mind or intellect. Creators can file an application to be assigned the exclusive ownership of their creations, which can be inventions or discoveries; artistic works including literature and music; and symbols, names, phrases, designs and images used commercially.
What are the most important types of intellectual property rights?
Like any property right for tangible goods and assets, IP rights let creators (IP owners) benefit from their own creative work and the upfront investment in time, money and other resources. IP rights include patents, industrial design rights, trademarks and copyright:
- Patents ensure that inventions cannot be commercially made, used, distributed or sold without the patent owner’s approval. Inventors can file a patent application for a product or a process (that provides a new way of doing something, or that offers a new technical solution to a problem). To be granted the patent, the applicant must credibly demonstrate that the invention is novel, original and useful (in short: creative), and that it introduces an “inventive step” that a person with average knowledge of the technical domain cannot deduce.
- Industrial design rights protect new and original (but non-functional) ornamental or aesthetic aspects (such as shapes, patterns, lines, or colors) of an industrial product or handicraft. They are applied to a wide range of products, including technical and medical instruments watches, jewelry and other luxury items; house wares, electrical appliances, vehicles, architectural structures,; textiles and leisure goods, among others.
- Trademarks are distinctive signs that signal to customers that certain products or services are made or provided by a trusted company or individual, not by a counterfeiter. Trademarks may include words, letters and numerals, drawings, symbols and three-dimensional signs, such as the shape and packaging of goods (think of the shape of a Coca-Cola bottle, the logo and the ribbon).
- Copyright protects the literary and artistic “works” of authors, artists and other creators. These include novels, poems, plays, reference works, newspapers, advertisements, software, databases, films, music, choreography, paintings, drawings, photographs, sculpture, architecture, maps, technical drawings, web content, TV and sound recordings, among others.
Other IP rights are geographical indications (such as “Swiss” or “Made in Germany”) including appellations of origin (e.g., “Bordeaux”, wine, “Champagne”, “Prosciutto di Parma”, “Habana” cigars) as well as trade secrets (in some jurisdictions only).
Why should innovators secure their intellectual property?
Innovators and content creators deserve financial compensation for their often substantial upfront investments of time, money and other resources, as well as a reputational reward for their creativity. They can monetize their intellectual property either by marketing it directly or by licensing or selling it to others.
IP rights also protect consumers and society from criminal counterfeiters and “cheap” copycats eager to free-ride on innovations without investing their own time, money and brainpower.
Moreover, patents in particular expand the total body of technical knowledge and stimulate further creativity and innovation, as patent owners need to publicly disclose information on their inventions in exchange for protection.
How about creators who openly share work, such as open source software, with others for free? Clearly, such “open creation” is noble; however, these creators run the risk that others will monetize all or parts of their inventions and creations, and maybe secure the IP rights for themselves.
My personal view is this: the more you can monetize your novel, original and meaningful creations, the more money you have to invest in future creative project, the more additional innovations you can produce, the more additional money you make to invest and grow, and the more serious other business players will take you. That is, provided all others play by the rules of IP laws.
The dark side of intellectual property
Does investing in securing IP rights mean that you’re always protected? Unfortunately not. Why?
- First, as with any physical assets, some people like to take from someone else what they want without paying for it. As Steve Jobs noted: “Stealing things is everybody’s problem. We [Apple] own a lot of intellectual property, and we don’t like when people steal it. So people are stealing stuff and we’re optimists.”
- Second, you may not be able to enforce your IP rights for various reasons. Smaller players may lack the deep pockets and screwed IP lawyers to fight a lengthy IP infringement lawsuit with several levels of appeals against a multinational or large local corporate player.
- Third, in developing countries with corrupt or nationalistic judiciary, even reputable multinational corporations regularly lose lawsuits against local parties that blatantly violated IP rights.
As such, being right and having done everything right to protect your intellectual property still doesn’t mean that you’re protected against bullying and unfair practices.
How do the different IP rights connect to the modern innovation typology?
Copyrights and patents typically relate to products or other value offerings (value innovation). In contrast, trademarks and industrial design rights are mostly linked to innovation types that leverage value offerings through magnification, such as brand design and packaging design (leverage innovation). Finally, copyrighted works may either relate to a value innovation (products, solutions) but may also be magnifying leverage innovations (such as advertisement campaign designs).
This article will be part of a new book that I am currently working on, The Beginner’s Guide to Innovation (targeted for publication in 2Q.2018 by Motivational Press). Intellectual property protection is also one of many other topics that we touch upon in Thinkergy’s executive innovation training The Creative Class. Let us know if you’re interested to learn more about our trainings or my upcoming book.
© Dr. Detlef Reis 2017. This article was published in parallel in the Bangkok Post under the same title on 31 August 2017.