1 Introduction

1.1 To the audience

This reader presents an introduction on the use of know-how and intellectual properties (IP) and its benefits for students in science, engineering, medical and business courses. The basic concepts and definitions of IP will be treated and also their use and purpose will be described.

The different topics of IP are explained with an example relevant to your background.

Those interested will find additional information in the appendix links by following the links.

1.2 Every day IP

Chances are that you are using products or services appropriated by a variety of intellectual property rights (IPR) on a daily basis, eg. brands, designs, patents, copyrights.

Many of the products that you will buy or use daily are from a certain brand. Such a brand makes you recognize the product and the manufacturer. For example the brand Coca-Cola for cola. On the other hand manufacturers and organisations use their brands to market their products and services.

Next to brands, organisations have their tradenames registered at the Chamber of Commerce.

The book you are reading or the music you are listening to are works made by an author or musician. These makers would like to be rewarded for the efforts put into the making of their work. You are therefore not allowed to copy this work without their permission since it is copyrighted.

In the development and production of bicycles and cars there are many proprietary technologies. Manufacturers of these product would like to earn back their investments in research and development by using patents.

When you are already developing products yourself now or in the future and when involved as entrepreneur or manager you will have to work with different kinds of IP. As a student it is therefore useful to acquire sufficient knowledge of IP for your future career. Even during studies you it can be worthwhile to use them for many reasons, for example for design assignments.

1.3 Why do IP rights exist?

Several hundred years ago the use of intellectual property rights was hardly known. At the beginning of the book printing technology it became possible to copy and disseminate works of literature far more easily. From that moment authors and publishers started to feel the need to appropriate the rights for the production and distribution of these works. With new technologies during the Industrial Revolution mass production in large quantities became feasible for products and devices. This gave rise to a growing interest by manufacturing companies to appropriate trademarks, logos and patents for their products and inventions.

The modern patent in Venice

During the fifteenth century, Venice was a rich and flourishing city. One of the reasons for this prosperity was the stained glass produced on the island of Murano.

This was a rare and expensive product that became an important economical asset for the city.

However, the formula for making coloured glass was known only to a few people: the glassmakers of Murano.

The Senate of Venice began to worry about the possibility that the glassmakers might die or flee to other countries, thus losing this precious secret.

To avoid such hypothesis, Venice offered the glassmakers to train some apprentices sent by the city. However, the glassmakers refused because accepting the offer would have meant that they loose their monopoly and create potential competitors.

Understanding Murano’s concern, Venice offered, in exchange for the secret, an exclusive right for a limited time to guarantee the glassmakers monopoly. The document granting this right was called a “patent”, from the Latin verb “patere”, meaning to make known.

Thanks to this, the craftsmen accepted the offer and Venice managed to keep the secret, so that we can still enjoy the beautiful coloured glass of Murano today.

In 1474, Venice published the first patent statue in history, to regulate the matter. See figure 1.

The general concept behind the use of intellectual property rights is that the creator or manufacturer can apply for a temporary exclusive right hence appropriating their (often intangible) assets and stopping competitors. By doing so the IP owner acquires the possibility to exploit the production of these assets which are otherwise easily copied or manufactured by competitors. So, on the one hand intellectual property rights incentivize persons and innovators who invested both time and money to develop a new product. While on the other hand competitors cannot copy the product and sell it at a cheaper prices without making such investments.

Consumers of those products which have been appropriated with intellectual property rights may have to pay a higher price. Without these intellectual property rights competitors would have been able to sell the products at a lower price. For society at large the introduction of IPR is not only to have all products available at the lowest prices, but to have access to new products and innovations. While using IPR innovative companies are temporarily in a position to charge higher prices thus enabling a return on (earlier made) investments. This is shown in figure 2.

1.4 Well known IP

Companies, entrepreneurs, authors, engineers, developers, scientists and inventors can use a variety of IPRs like copyrights, trademarks, patents, trade names, logos, designs, databases, plant breeders, integrated circuit layout and trade secrets.

Some of the well known IP rights are:

Copyright

Will give the creator (author) at the end of the creation automatically global protection for original works like text, music and images. Copyrights limit free distribution of the work.

Trademarks

After registration, the trademark owner receives the exclusive right to use the trademark for certain goods and services. A trademark right can be used to take action against competitors who want to exploit the same or similar trademark in the same market.

Patents

After the application, registration and examination of a patent, others can be excluded from the commercial exploitation of the patented invention.

Tradenames

Trade and company names are used to make a company known to customers in the market and ensure a reputation and thus customer loyalty. Another company may not cause confusion with its trade name by using a trade name that is too similar to a previously registered trade name.

Designs

After registration, the design holder receives the exclusive right to use the design. A design right can be used to take legal action against competitors who wish to exploit a similar design.

1.5 Frequently used IP for innovations

This document will not describe the legal aspects of IP. See the links to several articles of different laws in Parts of Patent law. We will describe how to use IP, and more specifically for innovations. An overview of the importance of the different IP rights for innovations can be seen in the following table.

From: Scotchmer (2004) Table 9.1, page 260.

Source: Cohen, Nelson, and Walsh (2000), table 1. Note: Each number is a mean response, representing the percentage of product innovations in the row category for which the type of protection in the column is deemed “effective”. The response categories are <10%, 10%–40%, 41%–60%, 61%–90%, >90%.

In general we can see that secrecy (including what we call know-how) is one of the most frequently used appropriability mechanisms. At the same time patents are important in the sectors drugs and medical equipment.

Other IPRs (for example trademarks or designs) are less frequently used for innovations, but are of course very important for sales and marketing.

1.6 An example

In this section we introduce the example which will be elaborated in next chapters.

The main example is a clothes peg. This clothes peg is invented by Bertrand Barré en Francis Lepage (Figure 3) from France.

Clothes pegs exist already for a long time in different implementations. See as an example the article in A better clothespin. One could therefore conclude that improvements to clothes pegs are not possible anymore, because everything is already known. Still new developments in clothes pegs are made. These developments are however not so extensive as in the past.

The clothes peg of the example is used for delicate laundry. An imprint on the delicate laundry is to be avoided. However, the normal known clothes pegs, made of wood, leave imprints on the laundry. Fixing the laundry on a drying line, so that it does not fall off, is an important requirement of clothes pegs. These somewhat competing requirements are solved in the example, by using soft material on the clothes peg at the place where the laundry is contacted. The chosen solution is depicted in figure 4. The red part (near number 11) is the soft material.

A patent application is filed for this newly developed clothes peg. This patent application can be read in WO 01/31108. This patent application is used as the example for the explanation of patents.