Intellectual Property Rights
Series Introduction
March 2016
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Contents
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Intellectual Property Rights ........................................................................................................................................ 1
1.1 Background............................................................................................................................................................. 1
1.2 Types of IPR ........................................................................................................................................................... 1
1.3 IPR economics ....................................................................................................................................................... 4
1.4 Upcoming publications ........................................................................................................................................ 4
Intellectual Property Rights
1 Intellectual Property Rights
1.1 Background
Europe Economics is pleased to introduce its new series of Research Notes on Intellectual Property Rights
(IPR). In this introductory piece, we present the different types of IPR that are currently available in Europe
and provide some basic IPR-economics. Then we present a list of the topics that we will be covering in the
rest of the series.
1.2 Types of IPR
According to the World Intellectual Property Organisation (WIPO):1
“Intellectual property (IP) refers to creations of the mind, such as inventions; literary
and artistic works; designs; and symbols, names and images used in commerce.”
The European Commission views protection of IPR as a vital component of establishing a genuine Single
Market in Europe. The Commission recognises the importance of safeguarding intellectual property both in
fostering innovation as well as developing employment opportunities and enhancing competitiveness.2 Among
the two categories of intellectual property: industrial property3 and copyright4, we will be focusing on the
following types of protection:
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patents;
industrial design rights;
trademarks; and
copyright.
The first three types of rights form part of the broader industrial property category while copyright is often
treated as a separate branch of IP. The core difference between the two branches concerns the type of
protection that they offer and, by extension, the associated legal treatment.
Industrial property applies to inventions, while copyright applies to artistic works. Reflecting this core
distinction, inventors are covered by a wider protective net which excludes any use of their invention if it is
unauthorised. This wider net is also cast upon independent uses of the same invention even if the invention
took place in complete isolation from the original inventor’s work. On the other hand, copyright only
protects a specific, materialised form of an expression of an idea — not the idea itself.
The wider protective net associated with the protection of inventions, however, comes with a trade-off
reflected in its shorter duration – which is in most cases around 20 years, versus 70 years after the author’s
death for copyright – and also the more complicated process that the inventors need to go through in order
to establish their IPR.
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2
3
4
http://www.wipo.int/about-ip/en/, seen on 16/03/2016.
http://ec.europa.eu/internal_market/intellectual-property/index_en.htm, seen on 16/03/2016.
According to WIPO: Industrial Property includes patents for inventions, trademarks, industrial designs and
geographical indications.
According to WIPO: Copyright covers literary works (such as novels, poems and plays), films, music, artistic works
(e.g., drawings, paintings, photographs and sculptures) and architectural design. Rights related to copyright include
those of performing artists in their performances, producers of phonograms in their recordings, and broadcasters
in their radio and television programs.
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Intellectual Property Rights
1.2.1 Patents
According to WIPO:5
“A patent is an exclusive right granted for an invention, which is a product or a process
that provides, in general, a new way of doing something, or offers a new technical
solution to a problem. To get a patent, technical information about the invention must
be disclosed to the public in a patent application.”
Patents represent only one of a number of possible ways through which inventors can appropriate the benefits
of their inventions. Alternative methods of appropriation include for example, trade secrecy, first mover
advantage, product distribution techniques, complementary assets, prizes and contracts.
In order to establish a right for patent protection in Europe, interested parties have two options to choose
from. The options are to register a claim at the national level, through National Patent Offices (NPOs) or
alternatively, through the regional European Patent Office (EPO).
The European Patent Convention enabled applicants to seek patent protection through filing a single
application, in an area which now consists of 38 European countries.6 The EPO accepts applications centrally
in three official languages; English, French and German. An applicant to the EPO has the ability to choose
which of the 38 Member States of the EPO it requires protection in. Once the patent is granted by the EPO,
the patent proprietor then has the possibility to choose which of the countries the patent should be validated
in. Once validated the European patent turns into a set of legally equivalent national patents.7 It should be
made clear at this stage that the EPO does not offer a pan-European patent for the geographic area it covers;
rather, it provides a bundle of national patents for a number of states for which the patent proprietor
validated its patent.
1.2.2 Industrial design rights8
According to the European Commission’s definition:9
“Industrial design rights protect the appearance of a product, which results from
attributes such as its shape, colours or materials. The EU has harmonised industrial
design protection across EU countries and introduced the Community design that offers
unitary protection across the EU through a single procedure.”
Design — the distinctive colour and shape of a product — is an important feature of many manufactured
goods. Designs attract consumers and mark out a product in ways that allow its innovative design features
to be treated and protected as intellectual property.
In the EU, there are some 3.4m firms in design-intensive industries, employing 23m people, adding around
€1.7trn of value to the EU economy.
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9
Definition taken from WIPO website, visited on 17/03/2016: http://www.wipo.int/patents/en/.
In addition to the 38 Member States there are two extension states (Bosnia-Herzegovina and Montenegro). Source:
http://documents.epo.org/projects/babylon/eponet.nsf/0/e6ce616afbb87afac125773b004b93b5/$FILE/EPO_EuroPat
ente13_en.pdf.
EPO: “Under Article 2(2) EPC, a European patent shall, in each of the contracting states for which it is granted, have the
effect of and be subject to the same conditions as a national patent granted by that state, unless otherwise provided in the
EPC.”
Part of this content is taken from our report for the European Commission, looking at the Economic Review of
Industrial Design in Europe.
Definition taken from DG GROWTH website, visited on 17/03/2016:
http://ec.europa.eu/growth/industry/intellectual-property/industrial-design/protection/index_en.htm.
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Intellectual Property Rights
Policymakers at national and EU level have provided a number of tools that these firms have available to
protect their designs. The Unregistered Community Design applies automatically within Europe but offers a
relatively limited scope of protection for designs. Depending on the characteristics of the design, a variety of
registered protection options are available, including registered Community industrial designs, registered
national industrial designs and registered trademarks at Community and national level. While trademarks can
only be used for some types / aspects of designs (e.g. logos) they are an alternative to registered industrial
designs in such cases.
Yet despite this range of available tools, only a minority of designs are protected (e.g. as low as 15 per cent
in the UK; and only a little higher, at 22 per cent, in Spain). It is of interest to consider why this is.
Furthermore, amongst those designs that are protected, it is of interest to understand more precisely the
breakdown of different protection methods sought, including whether particular sorts of firms protect in
particular ways, and why firms choose the protection methods they do.
1.2.3 Trademark
According to the European Commission’s definition:10
“A trade mark is a sign which distinguishes the goods and services of one company
from those of another. As indicators of business origin, trade marks can be words,
logos, devices or other distinctive features, or a combination of these. They can also be
referred to as 'brands'.”
The current EU trademark framework offers two ways of registering a trademark; a national level registration
and a ‘Community trade mark’ (CTM), offered at the Office for Harmonisation in the Internal Market (OHIM).
These two alternative types of registration are not mutually exclusive solutions; rather, they are
complementary in nature and can both be registered in parallel. Naturally, the difference between the two
arises in the geographical area that they cover, with CTMs granting an EU-wide exclusive right to the owner,
as opposed no national rights which span a narrower, more focused geographical area.
Starting in 2009, the European Commission initiated a review of the European trademark system based on a
research study highlighting the potential for effectiveness gains. Four years later, in 2013, the review
developed into a concrete modernisation proposal aimed at streamlining registration and improving
conditions in the areas of accessibility, efficiency, costs and complexity. Last year, this process culminated
into a provisional political agreement on reforming the system between the three EU institutions.
1.2.4 Copyright
Copyright refers to the protection of creative, artistic work as it may be captured in different media such as
books, songs, films or even computer programmes. It is important to clarify that what is being protected is
the form of artistic expression as opposed to the underlying idea itself. This is the first differentiating point
between copyright and industrial property; copyright law covers right owners from the unauthorised use or
copying of the author’s work, in its originally expressed form. From this statement, it also becomes clear that
the ‘right owner’ is not necessarily the original author of the protected work.
The protection of creators’ work is established upon the work’s creation and there does not need to be a
specified process for its registration – unlike, for example, with patents. Most importantly, the rights
conferred upon a right holder can be classified into two categories: economic rights and moral rights.
Economic rights are concerned with the financial position of the owner and the monetary rewards that can
be generated through the use of their work by others. On the other hand, moral rights cover the personal
10
Definition taken from DG GROWTH website, visited on 17/03/2016:
http://ec.europa.eu/growth/industry/intellectual-property/trade-mark-protection/index_en.htm.
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Intellectual Property Rights
dimension existing between a creator and their work, a link which they are meant to preserve, if the creator
demands so.
Based on the principle established by these rights, the right holder can, depending on the situation, prohibit
or authorize the following uses:11
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its reproduction in various forms, such as printed publications or sound recordings;
the distribution of copies;
its public performance;
its broadcasting or other communication to the public;
its translation into other languages; and
its adaptation, such as a novel into a screenplay.
The foundations of copyright law in the European Union are based on a set of ten Directives aiming to
harmonise the rights of authors, performers, producers and broadcasters across EU Member States.12 These
Directives have been designed with the ultimate objective of reflecting the obligations generated for Member
States under their participation in several international treaties.13
1.3 IPR economics
Intellectual property rights are a way to introduce some structure and coherence when it comes to creativity
and inventions. They aim to reward innovation by giving IP holders rights to be remunerated for the use of
their IP but also limiting particular uses of their IP. Offering such rights to IP holders aims to motivate them
to engage in innovative, creative activities by providing a framework within which they can exploit and control
their economic rights.
At the same time, the presence of such a framework enables the wide dissemination of ideas which is critical
for fostering innovation and creativity. What any IPR policy essentially seeks to achieve, is obtaining the
optimum balance between the following conflicting considerations:
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the monopoly-like powers granted to an IPR holder, seeking to motivate their participation; and
the wide availability of information regarding IP protected material and the potential exploitation of such
material by third parties.
As different forms of IPR are governed by separate institutional frameworks and, most importantly, provide
a different type of protection, different economic implications ought to be taken into account, depending on
the type of IPR under consideration. Our series of Research Notes will explore some of the most substantial
economic issues pertaining to different areas of IPR.
1.4 Upcoming publications
As part of our IPR series we will be publishing a Research Note on a different topic on a monthly basis. Our
first note will be made available to the public and will be accessible via our monthly newsletter. For the
following notes of the series, however, access will require subscription; for more information on how to
subscribe you can follow this link. A list of the topics that will be covered in the upcoming months is presented
below:
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13
The patent premium puzzle: Disentangling patent value from the invention it covers.
This material is taken from a WIPO publication seen on 16/03/2016:
http://www.wipo.int/edocs/pubdocs/en/intproperty/909/wipo_pub_909.pdf.
This paragraph is based on information from the European Commission’s website, seen on 16/03/2016:
https://ec.europa.eu/digital-single-market/en/eu-copyright-legislation.
These treaties include the Berne Convention, the Rome Convention, the WTO TRIPS agreement and WIPO’s
Copyright and Performances and Phonograms treaties.
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Intellectual Property Rights
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Brexit: Implications for parallel trade and other IP issues in UK vs EU.
3D Printing: Could 3D printing undermine industrial property as downloads did to copyright?
Standard essential patents: Striking the right balance between implementers and innovators.
Unitary patent / Unified Patent Court: The devil is in the details.
Growth contribution of intellectual-property-intensive sectors: How different types of IPR interact.
Spare parts: Should they be eligible for protection?
Patent trolls: Just another unsuccessful nickname?
Copyright harmonisation: Are we there yet?
Patenting fees: Are they a tool comparable to Central Bank monetary policy?
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