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Strat Innovation > IP > Flashcards

IP Flashcards

1
Q

IP

A

Refers to the output of a creative process ie. invention
This entails 3 things:
- ‘intellectual’ it is the product of the mind
- it is an intangible asset (not physically embodied) it may be ‘represented’ in a physical form (something written down) but it’s value is not limited by the physical form it takes
- in law, it is treated in the same way as tangible property

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2
Q

IP should be treated as property for a period of time because

A

In order to reward the risks and costs of undertaken innovation. But after time period, it should be treated as a commonly owned good

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3
Q

2 categories of IP

A

Institutional (formal)

Strategic (informal)

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4
Q

Formal method definition

A

In one way or another, receive official recognition that the innovation is the exclusive property of the inventor and that it may not be used for commercial advantage by others.

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5
Q

The main formal methods of IP protection are

A

Patents
Copyright
Registered designs
Trade marks

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6
Q

Patents

A

Gives a monopoly right to commercial use of a particular invention for a given period
(Can change between countries, patent board, independent patent board)
(Can be long, laborious, costly process)
Need some legal skills
Typically big companies cause so much

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7
Q

Copyright

A

Limits the right to copy a piece of IP
Increasingly used in lag 20-30 years - knowledge economy has caused this
Happy birthday song - used to have to pay to use it

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8
Q

Registered designs

A

Gives a monopoly right to use a particular design in particular context.
Gives monopoly to use a design

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9
Q

Trademarks

A

A distinctive sign; mark or logo which distinguishes the goods and services of one company from those of another eg apple, coke. These are clear trademarks - images, names, logo that’s are recognised as part of company

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10
Q

What does formal IP do

A

Each of those make the invention public but laws ensure that no one else can use or copy the invention
Each of these is giving temporary monopoly rights to the company
It violated the invention Can sue for civil damage
These are limited in time are expiring dates

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11
Q

Strategic (informal) definition

A

The alternative strategy is to keep the invention secret, at least until the invention is in a position to successfully commercialise the invention as a new product/service and maybe longer (in the case of a process innovation)

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12
Q

Informal methods of IP protection

A

Complexity
Lead time
Confidentiality agreements
And other strategies of secrecy

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13
Q

Complexity

A

Use a new and highly complex process that is hard to copy (tacit knowledge (hard to obtain knowledge, hard to write down what it is) (codified knowledge is easy and opposite to tacit - you want tacit here)

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14
Q

Lead time

A

Use the IP quickly before anyone else; first mover advantages
If first inventor, you can use this stuff to keep it in house, secret etc

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15
Q

Confidentiality agreement

A

Bonds the 2 parties to share the IP to prevent them sharing it with 3rd party.
Firms engage in JV, SA’s, share risks so Then share about how to do things
Airbus - made up of many businesses, they are a consortium (Uk partner is BA). Confidentiality agreements so they don’t go off and share info with booing

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16
Q

Other strategies for secrecy

A

Common theme throughout all is to keep invention a secret for as long as possible, or else ensure it’s too complex for rivals so if leaked rival gains no benefit

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17
Q

Which approach is most commonly used

A

Enormous difference between sectors (manufacturing we see formal IP, service sectors we see informal)
Enormous variation according to firm size
There is great variation in extent of protection nationally.
Two main areas where formal IP: software IT, pharmaceutical
Strategic protection is used overwhelmingly

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18
Q

Swann different approaches to IP protection in uk

A 
Lead time - 30% 
Confidentiality agreement -28%
Secrecy-28%
Complexity of design-24%
Trademarks - 19%
Copyright - 18%
Patents - 13%
Registration of design - 13%
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19
Q

Advantages of formal IP

A

Priced assurance to companies that they will be able to capture the economic value of their creative investment

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20
Q

Disadvantages of Formal IP

A

Owners of IP make extraordinary large gains
Problems of monopoly (social inefficiency) can arises if excessive protection and prevention of other firms exploring new opportunities through pre emotive patenting
Patenting thickets - prevents comp, happens in certain sectors,

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21
Q

Advantages of strategic informal IP

A

Do not create publicly protected monopolies

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22
Q

Disadvantage of strategic informal IP

A

IP remains secret, hence, firms do not learn from each other. This prevents diffusion of new ideas and incremental development

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23
Q

IP debates

A

Are tax credits an effective alternative means of supporting private sector R&D?
Does formal IP(patents) actually have a positive net impact on stimulating innovation or does it have a net negative impact?
If parenting R&D does have a net social benefit, what is the ‘correct’ level of reward to the innovating firm?

24
Q

Cumulative research

A

You didn’t create all that knowledge you built on others
To stand in the shoulder of giants
Think patents build on patents

25
Q

Licensing innovations and technology

A

IP rights allow for licensing (selling or leasing the innovation invention for royalty fees)
A different business model to commercialising an innovation developed in house

26
Q

The Darwinian sea

A

The struggle of inventions to become innovation from research, to new business.
Even if patents get past research and invention, if not a marketer, they could not become commercialised so would be a waste

27
Q

Benefits of licensing

A

Inventions do not have founder take final stars of innovation (manufacturing; marketing, distribution)
Firms with innovative capabilities but lack complementary capabilities (Eg in marketing, purchasing, merchandising, manufacturing, product support etc)
New small firms that lack financial resources, reputation and expertise - so can get into it this way
R&D industries heavily relies on licensing agreement

28
Q

Free open software

A

IPs not abandoned. Developers allow others to use it too
The original source code of the soft ware is made open to other developers
Software freely distributed

29
Q

Motivations for giving away free patents

A

Tesla motors, Toyota
Tesla motors was created to accelerate the advent of sustainable transport. If we clear a path to the creation of compelling electric vehicles, but then lay intellectual property land mines behind us to inhibit others, we are acting in a manner contrary to that goal
Tesla will not initiate patent law suits against anyone who in good faith wants to use our tech

They are trying to replace a previous type or market. Trying to build a new market. In future they won’t give away for free

30
Q

If broad protection is granted then…

A

A derivative or second generation product ill likely infringe the prior patent, so a licence on the original patent is required to market (Scotchmer)

31
Q

If innovation is a reduction in the cost of producing a good then the social value is the saved costs. If the innovation is an improvement to a product the social value is the difference in consumers WTP for the improved and unimproved products

A

Scotch man

32
Q

When research firms collect all the social value as profits …

A

Households still benefits but in their capability as shareholders not as consumers (Scotchman)

33
Q

2 problems of firms collecting the social surplus as profits Scotchman

A

1 sting patent protection leads to socially ineffective monopoly pricing
2 Firms in a patent race may overinvest in research if the patent is worth more that the cost of achieving it

34
Q

Broad patent negative (Scotchman)

A

Can lead to deficient incentives to develop second generation products.
When the licensing agreement is negotiated after a patent has been granted, research costs have already been sunk

35
Q

Who has week bargaining power?

A

A second innovator who can’t market the next generation product without a license has a very weak bargaining power.
Scotchman

36
Q

When is the incentive for the first innovator to develop a second generation product than for an outside firm?

A

Under broad patent
They will earn the entire profit
Scotchman

37
Q

In a licensing agreement first innovator will..

A

Earns share of the market value of each infringing later product
Scotchman

38
Q

Narrowing patent protection

A

Doesn’t offer much incentive for first innovator as wont be able to get licensing rewards etc
Might discourage first innovations from parenting and disclosing their technology - first innovators would rather develop second generation products than other company so don’t put the innovation out.
Scotchman

39
Q

The first innovators incentive to invest becomes weaker under a narrow patent product if

A

The second generation product is a substitute for the first. Competition between the two patent holders would erode their joint profit, transferring some as the social surplus or the combined innovations to consumers
Can lead to profit erosion
Scotchman

40
Q

Dark side of patents

A

Some firms have ceased to see patents as defensive weapons and have started using them as offensive weapons to distrust and threaten ongoing and future plans of competitors
There has been as escalation of patent litigation partly due to rises of parenting
Jaffe and Lerner

41
Q

When patent landscape becomes a thicket

A

Cross licensing to avoid litigation
-May trade rights to use each other patents
Cross licensing restricts competition
-raises question of whether patents have a useful function
Every company want the best portfolio
Stick the incentive to compete through new technology
May stifle entry because firms cannot build a large enough cross license portfolio or afford royalties
Jaffe and Lerner

42
Q

The development and commercialisation of new techs creates broad…

A

Social benefit.
It is therefore in our collective interests to have social, cultural and legal institutions that foster technological innovation
Jaffe and Lerner

43
Q

Patent system provides incentive..

A

As tech innovation is expensive
So more likely to get more money
Jaffe and Lerner

44
Q

If pharma company paid fees to test and develop a new drug…

A

When brought to the market competition drives down the price and the original company fails to recoup investment. It wouldn’t happen but it would be good for spcitey
Jaffe and Lerner

45
Q

Where is maintenance of a strong patent position essential in industries

A 
Semiconductor
Computers
Software
Biotech
Jaffe and Lerner
46
Q

3 tests that must be passed for patents

A

Utility - does the invention really do anything
Novelty - is the invention original
Non obviousness
Jaffe and Lerner

47
Q

How long does legal monopoly right last for

A

20 years

Jaffe and Lerner

48
Q

If someone is accused of infringement they have 3 choices

Jaffe and Lerner

A

1 agree to take a license and pay royalties
2 stop doing the alleged infringement
3 continue and wait for the patentees to move on

49
Q

Must earn return on research and cover costs of failures

A

I’m pharma 5000-1000 tested, 250 pre tested, 5 commercially viable
Jaffe and Lerner

50
Q

Cross licensing restricts competition - jaffe and Lerner

A

Collectively companies may be better to stop patenting, but no way to bring simultaneous change in behaviour
It can stifle comp by eliminating incentive to compete through New tech
At its worst companies can use cross licensing to join and control market

51
Q

Patent pooling

A 
Summit tech and visix 
Pioneer laser eye surgery
Both had patents on tech
And believed brother would infringe each other
So joined
Prevented third parties from licensing 
The FTC challenged this arrangement as being anti competitive. They dissolved partnership and did cross licensing
Jaffe and Lerner
52
Q

A problematic asymmetry arises when small firms bring new products to market

A 
Faces infringement 
But cause low tech base, disadvantage in negotiations
So can’t afford to pay
May be forced to forfeit technology 
Happened in case of Lexar and Sandisk 
Jaffe and Lerner
53
Q

Tax treatment of R&D is increasingly becoming more lenient and increasingly countries will win to the tax system away from direct grants

A

Hall

54
Q

Amazon (jaffe and Lerner)

A

They managed to patent to ability to buy something on the internet with one click. They said how the patent should never have been awarded because it has been argued to not need non obviousness and then say how the patent system may be issuing too many low quality patents

55
Q

Tax credits produces

A

A dollar for dollar increased in R&;D spending . Hall and vanreeden

56
Q

Martin Skreli

A

Bought the rights to AiDS drug darapim and raised the price from 13.50 to 750

Strat Innovation (3 decks)

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