Innovation and Intellectual Property Flashcards
- Define intellectual property
Intellectual Property (IP) is a term that describes the application of the mind to develop something new or original. IP can exist in various forms; a new invention, brand, design, process, recipe or artistic creation. Intellectual property rights act to prevent others replicating the ideas of the inventor or creator. Acts as an incentive to innovate.
Define the following types of intellectual property classifications - Domain Names
A domain name is your online address on the internet. All computers on the internet have a unique identifying number - an Internet Protocol address. Because this address is difficult to remember, we use a domain name.
A domain name is promoted so that customers can easily find your specific goods or services. Each website has its own distinct domain name, allowing it to be distinguishable from other sites. For the most part, domain names are easy to remember because they are usually made up of a business name and a commonly understood term or language that their customers will recognise.
A domain name is registered with the Australian Domain Name Administrator and gives you a license to use the name for two years. A formal complaint can be made if you think someone is using your domain name. In 2008, the laws governing the domain names were changed in Australia. People registering a domain name will no longer have to have a company or business registered to prove a link between the name and business activity. People can register more than one related domain name.
Define the following types of intellectual property classifications - Patents
A patent is the legal right to be the exclusive producer or user of a newly invented process or product, for a finite period of time. Regulated by The Patents Act (1990). A patent lasts for 20 years in Australia. Patents are public records so a competitor can look at the patent to see how the patent works. A patent is granted after the inventor has registered and satisfied the conditions stipulated by the government. Ownership of the patent can then act as a barrier to entry since the patent prevents rivals from using the invention (without consent from the patent holder). Also entitled to sell the technology or invention to another business.
E.g. the Tetra Pak used for packaging drinks such as milk and fruit juice. Ruben Rausing came up with the tetrahedral container idea in 1943 and successfully patented it the following year. Today, Tetra Pak is the world’s largest supplier of drinks cartons.
Drawbacks of a patent: whole process is time consuming and bureaucratic. It can easily take three years from applying for a patent to having it granted. Also, most applications are rejected.
E.g. in 2006, Microsoft applied for almost 3,500 patents and less than half of these were approved.
There would be minimal incentive for innovation without patents since rival firms could simply copy the invention without the initial R&D costs.
Define the following types of intellectual property classifications - Copyrights
legal protection for artists and authors by preventing others from using or copying their published work without permission. Governments grant the permission to hold copyrights for a finite period of time. Copyrights are popular in the music, film, drama, art, photography, software and publishing industries. Copyright lasts for 70 years. There should be copyright notices on business websites, publication and products to remind people. Legislation – Copyright Act (1968) and the Copyright Amendment Act.
Define the following types of intellectual property classifications - Trademarks
a sign or logo that represents a business or a product belonging to that business. Protection is regulated by the Trade Marks Act (1995). Unregistered has TM, registered has the R(0) symbol. If the trademark is registered at a patent office, it acts as a barrier to rivals wanting to imitate the product name or symbol. Suggestive trademarks are used to give customers a suggestion about the nature or characteristic of a product, e.g. the Apple Nano (small). A descriptive trademark is used to show a direct link between the brand and the product, e.g. Pictionary and Monopoly board. Arbitrary trademarks are purely random and meaningless names, e.g. Kodak cameras and Apple computers.
Define the following types of intellectual property classifications - Trade Secrets
A trade secret can encompass any information with the following characteristics;
a. It is not generally known or readily accessible;
b. It has commercial value because it is secret;
c. The owner has taken reasonable steps to keep it
secret. 1
Therefore, unlike patents, the scope of trade secrets is virtually unlimited. Trade secrets extend to such diverse categories as: formulas; know-how; contract terms; software; customer lists; marketing, finance, or strategy information; and information about suppliers, competitors, and other industry participants Commercial value encompasses potential as well as actual value. Therefore, trade secret protection also applies to commercialized experimental work and unreleased products or strategies. Moreover it can cover combinations of elements, each of which is in the public domain. The ultimate criterion being the information’s value and not its actual use, trade secrets can even protect “negative know-how”, e.g., erroneous research approaches or results of failed experiments.
e.g coke cola – secret recipe.
Define the following types of intellectual property classifications - Design
A design refers to the features of shape, configuration, pattern or ornamentation which give a product a unique appearance, and must be new and distinctive. Design registration is intended to protect designs which have an industrial or commercial use. A registered design gives you, the owner, exclusive rights to commercially use it, licence or sell it.
A design is what gives a product a unique visual appearance – legislated by The Design Act (1906) and the Design Act (2003), regulates the protection of designs.
Outline the process for Australian intellectual property registration
After the international application is filed, we will perform a check to ensure that all requirements under the Madrid Protocol are met. An ‘unable to certify’ letter will be sent to remedy any formality issues in the application, this letter will not include a request or for any fees outside of the $100 handling fee.
When the international application is in order it will then be certified, a notification of certification will be issued and the application is sent to the International Bureau (IB).
State the organisation responsible for intellectual property registration.
IP Australia - Government organisation providing legal information and registration material for trademarks, patents, designs and intellectual property.
Taking action to protect your IP –
If a business has intellectual property and another business seems to be using it, the first thing to try is to discuss it with them. Make sure the other business is aware that they are using protected IP and ask them to stop. If an informal approach does not work a more formal one is required. A ‘letter of demand’ uses the threat of legal action to try and stop the use of protected IP. If a written warning doesn’t work, court action is the next option. A temporary injunction can be applied for them to immediately stop the use of the IP. If successful, the temporary injunction gives a business time to demonstrate to the court the legal rights of the business, the damage done by the unauthorised use of IP and apply for a final injunction.
Penalties include up to five years’ jail and fines of $50,000 for an individual and $250,000 for a company.
If copyrights are successfully defended, it means that the pirated goods become the property of the holder of the copyrights. The infringer will have to pay for any damages to account for income earned and profits made with the copied goods and hand over all of the remaining products.
Define and explain the concept of ‘innovation’
Innovation is the process of commercially pioneering new ideas and creations in the production process. It can refer to both radical and incremental changes. Examples of innovation include;
- Discovery of new production processes - Henry Ford, discovered and applied the benefits of mass production and mechanisation to the automobile industry. Similarly, online banking in the early 21st century transformed the finance industry.
- Successful exploitation of creative ideas – Sir James Dyson is renowned for inventing the bag-less vacuum cleaner, helping to turn Dyson into a multi-million dollar business. Sabeer Bhatia, inventor of Hotmail, sold his email idea to Microsoft for $400 million in 1997.
- Introduction of new products – Apple’s iPod revolutionised the way in which music is delivered to customers (many commentators attribute the global decline in music CD sales to Apple iTunes as customers switch to buying music online). The multimedia Apple iPhone also transformed the mobile phone market.
• Entering new markets – Ferrari has long faced the dilemma of wanting to sell more cars without damaging its image of exclusivity.
Some industries, such as pharmaceuticals, rely more on innovation than others. Nevertheless, innovation can give any business a large competitive advantage and hence most businesses will tend to devote their time and resources to research & development.
Explain the following types of innovation - process
Process innovation – changes in the way production takes place. Process innovation aims to improve the method of production. For instance, toothpaste was originally made and sold in jars until Colgate introduced toothpaste in tubes in 1908. Using online transaction, introducing credit to customers, or restructuring the hierarchy of a business are further examples of process innovations.
Explain the following types of innovation - product
new creations or the radical development of existing products. Examples include the introduction of new products, improved functionality, improved ease of use and better reliability or performance. Product innovation is common in the industries with high research and development expenditure, such as pharmaceuticals, consumer electronics, telecommunications and movies.
Explain the following types of innovation - cost reducing innovation
– improved processes that reduce production costs. This has two effects on businesses: the ability to increase supply and the scope to enjoy higher profit margins. For example, the microchip revolution helped to reduce costs across all industries. The internet has also enabled many businesses to cut operating costs.
Incremental innovation
refers to minor improvements to products or work processes. For example, car manufacturers might work on developing safer and more energy efficient vehicles.
