The Legal Aspects Of A Global Business

Published Date: 02 Nov 2017

Explain the different types of intellectual property rights, giving practical examples and legal authorities to support your answer.

Intellectual Property (IP) exists in many different forms and constitutes any original piece of work. There is a large collage of information that comes under the category of IP which extends all the way from architectural drawings, schematics, literature and even computer databases.

Patents: A patent grants an inventor exclusively rights to manufacture, use, sell and import an invention for a limited period of time. In order for a patent to work the invention has to be disclosed to the public.

A patent can only be registered to a specific territory or country. An inventor must decide which countries the patent is to be registered as the idea can be exploited by people in all the remaining countries. The Europe Union allows an inventor to register patents simultaneously in a number of European counties otherwise known as a community patent. The United Kingdom grants patents for within and other European countries.

Patents in the United Kingdom are governed by the Patent Act 1977. This act provides guidelines for which inventions are patentable while identifying the procedure for obtaining and maintain them.

Patentable inventions should meet the following criteria:

Have a novelty

An inventive step

Industrial application

Not excluded by the Patent Act

Apple filed a case against HTC for the infringement of 20 patents related to iOS. Apple stated that HTC had copied some functions that were specifically designed and pioneered by Apple as part of their iOS operating system. HTC settled outside court agreeing to pay Apple $6 to $8 in licensing fees for each smartphone HTC ships in 2013. Apple will make an estimated total of 30 million to $180 million to $280 million in licensing fees.

Designs: An industrial design right protects against the copying of the visual design of objects which includes shape, texture and decoration and does not correspond with utility.

An industrial design is the process of creating a shape, configuration or composition of pattern or color, or combination of pattern and color in three dimensional forms containing aesthetic value.

The design has to meet the following to qualify for protection:

New

Not a method or principal of construction

Contain individual characteristics

Shape unrelated to its function

Not have a shape or configuration similar to another object

A design can be protected from copy using the following:

Copyright or protection in a country outside UK

UK registered design (Design Act of 1949): Registered in the IP Office in Newport.

EU Registered design: Registered in the Office for Harmonization of the Internal Market (OHIM).

Unregistered design (Copyright, Designs and Patent Act 1988)

Designs that have not been registered in the UK or in the EU are also automatically entitled to protection.

UK: Protection against the release of these products is 15 years while marketing for these products is restricted up to 10 years.

EU: Protection for up to 3 years with additional protection for designs against unintentional copying.

Apple sued its component supplier Samsung on April 15, 2011 in the United States District Court alleging that several of Samsung's Android phones and tablets, including the Nexus S, Epic 4G, Galaxy S 4G, and the Samsung Galaxy Tab, infringed on Apple’s IP the shape and style of their phones and tablets.

Samsung counter-sued Apple on April 22, 2011 in European courts alleging Apple infringed Samsung's patents for mobile-communications technologies.

Samsung prevailed after a British judge ruled Samsung's Galaxy tablets were not "cool" enough to be confused with Apple’s iPad. [27] In July 2012 British judge Birss came to the decision that Apple had to publish a disclaimer on their website stating that Samsung had not copied the design of their iPad.

Trademarks: A trademark is a recognizable sign, design or expression which identifies products or services of a particular source from those of others [1] [2] [3]. Trademarks are not limited in terms of validity and continue to provide protection as long as the owner continues paying the associated fee.

Trademarks are governed by the following in the UK and EU:

UK: Trade Marks Act 1994

EU: Council Regulation EC 40/94

A trademark has to meet the following criteria to get registered:

Proof that owner used it

Proof that unauthorized use caused confusion

Disputes as to whether proprietor has used it in the region

The Trade Marks Act of 1994 has allowed the registration of sounds smells and shapes which associate the goods to the owner. The limitation to this rule is that these cannot be a part of the natural makeup of the goods themselves.

Abercrombie & Fitch (A&F) and Hunting World both sold clothing, hats and shoes 'Minisafari' and 'Safariland' respectively. A&F stated that HW had infringed upon their trademark with the use of the word "Safari". HW filed a counterclaim that Safari is a generic word.

The court ruled that the descriptive nature of the word Safari conveyed an immediate descriptive idea of the characteristics of the goods. The purely descriptive use of the word 'Safari' did not infringe upon the A&W trademark and dismissing the complaint.

Copyright: A copyright is an IPright that provides the creator exclusive right to original work for a limited time. The Copyright applies to a wide range of creative, intellectual and artistic form or works [4] [5].

A copyright is not registered to a central body and is protected by the Copyright, Designs and Patents Act of 1988.

A copyright does not cover the idea or the information and instead looks at the form or manner in which it is expressed. In order for a copyright violation or infringement to take place a large portion of the work in question has to have been copied [6].

Henry Wheaton a reporter compiled the opinions of the Court complete with annotations and summaries of the arguments. Due to the size of the volumes most lawyers could not afford to buy these volumes. Richard Peters copies the concept without informing Henry while eliminating the arguments and other extraneous material to reduce the number of volumes. Peter’s actions ruined the market for Wheaton's more expensive books.

Wheaton sued in Pennsylvania and lost in the circuit courts he had not registered registering a copyright and so could not receive protection. Wheaton then appealed the case to the Supreme Court. The Supreme Court which based its common law on the British common law stated that Wheaton’s unpublished writing was protected and congress created giving Wheaton and other creators a special protection for their original work.

Database Right: A database right is an amendment of the Copyright, Designs and Patent Act 1988 to include the protection databases. The amended act provides protection to tables or compilations by classifying them as unique works if they contain originality.

The protection provided by this act extends to 15 years from the creation of the database or a major revision.

A database has to meet the following requirements to be protected by the Database Right:

Constitute the authors own intellectual creation

Constitute a substantial investment for the creator

Owner is an individual or corporation

The database can be protected in the following ways:

Database Copyright

Database Right (limited to the content of the database)

Sony’s PlayStation Network was hacked between April 17 and April 19, 2011, [1] forcing Sony to turn off the PlayStation Network on April 20.

The information stolen during the hacking / attacking of the network was the personal details from approximately 77 million accounts used to play games online. The personal information also included credit card information which posed a serious financial threat to all the registered users.

Sony ended up facing a lawsuit for inadequate protection of the user account information on their servers.

Confidential Information: Confidential information is any information that has a value for the owner and can be sold, licensed or given away which is why it should be protectable against unauthorized use.

There are different types of confidential information:

Formulas

Trade secrets

Prices

Delivery dates

Personal information i.e. bank account numbers

Confidential information must be protected to ensure that the owner does not lose the competitive advantage of keeping this information secret. In the case of a company this could be the way they manufacture their product and have spent time and money developing. Alternately a supplier would benefit from keeping prices and delivery dates secret from their competition.

WikiLeaks is an international, online, non-profit [28] organisation which publishes secret information, news leaks, [29] and classified media from anonymous sources. [28][30]

In early December 2010 US senators Joe Lieberman and Dianne Feinstein invoked the 1917 Espionage Act for the leakage of confidential information and urged its use in prosecuting Julian Assange.

Identify and demonstrate areas where electronic communications actually and potentially interfere with the ownership and exercise of IPrights.  Use examples to support your explanation of the legal and practical issues.

 

Introduction

The technological evolution of the 1990’s has created a wave of technologies that allow for electronic communication using signs, signals, writing, images, sounds, data as a part of our everyday existence. IPrights have evolved over time to remain relevant to the social requirements. A collage of members from the legal profession has helped build newer laws to restrict access to IPover these new technologies.

The Market

The market share of sales using electronic mediums such as the internet, emails, blogging, streaming, peer-to-peer among others are has grown from 1.8 billion Euros in 2005 to 8.3 billion Euros in 2010 [7]. This has in turn increased the amount of copyright information there is available over these electronic mediums.

The increase in the amount of electronic mediums to distribute information that is unique and has financial value associated to it has also led to an increase in the unauthorized use of this information. Technologies like compression for music and movies, peer-to-peer and streaming have played a direct hand in the illegal distribution of music, movies and tv shows that would otherwise have been purchased.

The Problem

In the past the existence of print media and the printing press brought about the need to create copyright laws to protect information that was published. Print media brought two effects to society as a whole.

Think creatively and divulge creative insights

Think of their creative expressions as property.

The press gave us a medium to express our creative insights while giving us the opportunity to initiate the concept of copyright into our legal systems and later develop doctrines on IP. The tangible nature of print media made all these developments natural and enforceable.

In our current technological age IP is no longer sold solely in a tangible form. The creation of technologies such as video and audio and later compression has given rise to mediums such as radio, television and streaming of this media. Furthermore, the invention of alternate file and information distribution mediums such as peer-to-peer, streaming and newsgroups among others has made the process of monitoring information and content being provided to users more complex and in some cases impossible.

Napster was co-founded by Shawn Fanning, John Fanning, and Sean Parker in 1999. [8][9][10][11][12][13][14][15] Napster was initially designed to be an independent peer-to-peer file sharing service. It allowed people to share music in a compressed or MP3 form with other participants. Napster did not regulate the type of content being shared between participants and they began using it to share music illegally. The sheer volume of the music being shared caused the music industry to take notice of it. Music labels and artists began to take legal action against the company and the original service was shut down by court order in 2001. Napster survived as a brand after the company's assets were liquidated and purchased by other companies through bankruptcy proceedings. It now functions as an online music store for Rapsody in which users have to pay for an online subscription.

Napster may have caused copyright infringements by allowing the sharing of music illegally. But it also helped increase the distribution of music and thus the market share for music labels. It also helped develop a new concept to distribute music and developed an online market for the music industry. This is the dilemma that most people come across when discussing the issue of IP rights. IPrights safeguard the rights of the owners of creative content. But at the same time they dampen creativity and reduce the availability of creative content available to people.

YouTube is a video-sharing website created by three former employees of PayPal in February 2005. The site allows users to upload, view and share videos using Adobe Flash Video and HTML5 technology.[16] Youtube’s user-generated video content includes movie clips, TV clips, music videos and amateur content such as video blogging, short original videos, and educational videos. In February 2007 Viacom asked Youtube to takedown 100,000 videos as they violated the Digital Millennium Copyright Act (DMCA) copyright regulations. Youtube was forced to take down 60 to 70 videos under the auspices of copyright infringement. [17]

Youtube later created a system called "Content ID" to compare all videos uploaded ensuring violations could be caught by matching new files those already on it. A violation directed the owner to choose between blocking the video, monitoring use or add advertisements. [18] [19] 

Youtube had a similar impact as Napster in terms of copyright infringement. It initially caused copyright infringement due to user-content posted on it. But the event provided an overall advantage to the music industry providing a new medium for the distribution for music. Additionally by creating a system to fight against copyright infringement it assisted in the creation of safeguards to protect IP.

Intellectual property Vs Freedom of Speech

IP must be protected against unauthorized use or copyright irrelevant of the tangible or intangible nature. IP mandates developed in the advent of the print media continue to be updated to provide control over the distribution of unauthorized content without suppressing freedom of speech as a whole.

Google Books (previously known as Google Book Search and Google Print) is a service from Google Inc. initiated 2004 to make works that are no longer in print commercially available.[20] Google faced copyright lawsuits between the years 2005 to 2009 from publishers globally claiming that Google was digitalizing books without the permission of authors. Among those filing the lawsuit were The Authors Guild of America and the other the Association of American Publishers. Publishers maintained that Google had no right to copy full text of books with copyrights into its own database. Google maintained it only made full copies of work in the public domain. Copyright books were only copied in part as searchable summaries. [21]

In order to resolve these legal issues Google decided to take more care to ensure that they verified copyright of books to be digitalized under local laws of the country in which they were published.

Copyright law tries to protect IP from being stolen by applying uniform controls in a one fit approach. The correct approach would be to apply controls on the basis of the type of Intellectual Content in question. Some of the ways available in the market to protect IP without violating the rights of users is:

Use of Encryption to ensure only the correct recipient can access the media

Youtube’s Content ID method to ensure copyright material is not shared

Subscription fee that financially covers the right for multiple uses of the media

Conclusion

The European Union and other commissions need to form a commission with members of the public to provide a platform for research into this issue. The commission should engage other members of the public in discussions regarding the future of Intellectual Property Rights (IPR) by the use of public forums and research articles. This will allow them to gain the opinion of the public with regard to the issue and develop a fresh understanding of the public view of the problem.

Taking into consideration our current understanding of IPR and the different cases we have seen in the world the one conclusion we can reach is that a uniform approach to solving the problem will never work. Instead the problem has to be tackled on the basis of the kind of IP in question. Further distinction can be made for the impact of the infringement of this IP. Not all infringement cases warrant the effort of the European Union to come up with solutions. Furthermore, any rules that are laid to deal with a specific type of case must then be uniformly carried out for all such cases. Only if the action taken against IPR is consistent will there be a chance to form a proper framework for the alleviation of IPR.

Summarise one legal case which relates to the interference described in b) above. Show how the outcome of that case has affected subsequent behaviour by those in the industry.

Introduction

China is currently the world’s largest growing economy with most countries referring to it as an industrial powerhouse. The Chinese economy has been growing by 10% over the past 30 years. [22] The growth has allowed them to manufacture a large number of the world’s consumer products. This has also provided them the knowhow to produce a large number of consumer products. This knowhow can be classified as IP as it has been provided by companies to local industries and workers within the country in order for them to manufacture the product.

In the last few years a large number of the world’s violations against IPR have taken place in organizations associated with China. This includes software piracy, consumer product forgery among others. The Washington-based Business Software Alliance estimates that 91% of the software in use in China in 1999 is stolen or pirated. [23]

The problem

There are a large number of companies that have faced losses in revenue due to the unauthorized duplication and distribution of their products. These include some of the following examples: [24]

Procter & Gamble US S 150 million a year

Henkel US S 150 million a year

Kao (Japan)

Volkswagen (Shanghai)

Yamaha – 5 out of 6 bikes are counterfeit

The local Chinese market is filled with counterfeit versions of popular products such as Tide detergent, Budweiser beer, and Marlboro cigarettes. [25] The center of the counterfeit industry is the city of Yiwu a five-hour train rides from Shanghai.

Steps taken by the Chinese Government

The Chinese government has recognized the problem and has been taking steps to control the production and sale of counterfeit products that infringe on IPR.

These steps are as follows:

Assured prospective partners that it will put in place a transparent, open and fair legal system to protect investors [26]

Facilitated 53 foreign companies to create China Anti-counterfeiting Coalition to discuss this issue with Chinese officials. [27]

Strengthen IPR to show solidarity towards the EU-China IPR Co-operation established in October 1998 [28].

Amended their 15- year old patent law

Expediting the time taken to get for protection for IPR by removing a six- month revocation procedure and no longer requiring the submission of foreign search and examination results.

Issues faced by the Chinese Government

The Chinese government’s efforts to curtail IPR have led to a decrease in the amount of piracy and product forgery that takes place. The steps taken have yielded some result but this is very limited in comparison to the amount of IP Infringement that takes place there. The Chinese government currently faces issues with the enforcement of IPR policies as:

Penalties for violations are minimal, funding for enforcement agencies is extremely low, and it is exceedingly rare for LPR offenders to be imprisoned.

As a result, the violation of IPR has continued virtually in full force.

China’s vast size in terms of geography and population and lack of law enforcement

Reluctance of local officials to tackle the counterfeiting problem economic benefits.

Conclusion

Admission into the WTO will require China to make changes which it has thus far been unsuccessful in implementing. It remains to be seen how extensive the abatement of IPR violations will be, but some improvement is likely. If IPR are protected, the fears of many western firms may be alleived and they will be more enthusiastic in investing in China. Protecting IPR will benefit not only foreign companies operating in China, but Chinese industries as well. The products of domestic firms will be protected, and multinational corporations will be more willing to share trade secrets with their joint-venture partners. Beijing’s efforts, if successful, will be a long-awaited and welcome relief to foreign and domestic investors.