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Using Intellectual Property Rights Strategically in the IT Industry

Global Intellectual Property Rights: Knowledge, Access and Development  Intellectual Property Rights in the Global Economy The Role of Intellectual Property Rights in Biotechnology Innovation  Intellectual Property Rights and the Life Science Industries: Past, Present and Future

Ever since semiconductors or 'the chips' were invented, the world has never been the same. The way businesses are run has been revolutionized. Coupled with this change is the challenge forced upon by the globalization of business. Information Technology (IT) is a relatively new industry that deals with the manner in which information is created, processed, stored and used. This article attempts to explain and unravel the complexities and misunderstandings in this area of technology, and also show how to use the reservoir of knowledge strategically.

In the IT industry there are two fundamental aspects; the first being hardware and the second, the operating systems or software. The protection of proprietary rights in the creation or development of hardware is generally governed by Patent Rights and Industrial Design Rights whereas the creation and protection of software is typically governed by Copyright. Subsequently, the branding of the hardware, the software and the services related with them falls under Trademark Law.

The creation, development or design of hardware and software are brought about by persons, referred to as inventors (for the technology embodied in hardware), designers (for the design of the final appearance of the hardware) and authors (those writing the software program). What proprietary rights are owned by such inventors, designers or authors? Do the rights belong to the creator or to his/her employer? What if a company commissions an outside third party to create a work -- either hardware or a software program? Who then owns the proprietary rights -- the company which gave the order or the company/individual who created the work? On the other hand, what if the work was jointly created -- both by the company and an outside party?

Assuming the work created proves to be useful and appears to have high commercial value, the owner may then want to consider granting rights to others to fully exploit the work commercially. Should the owner sell the Intellectual Property (IP) Rights or should he/she grant licenses? What should be the terms of such sales or licenses? What sales value or royalty rates can it demand? Often, it may be necessary to use third party rights to produce a new product or system, or to enter a new market. How should a company acquire the right - Should they do it by way of purchasing the company owning the right, purchasing just the patent or copyright, or by obtaining a license?

The type of IP policy or strategy an IT company adopts should also be looked at. Having a strong IP policy enables the company to identify all the IP rights it owns and make strategic decisions to exploit the rights so as to derive maximum value from them. Alternatively, the company may merely be satisfied to use IP Rights to defend its position in light of external threats from competitors. Should a company use its IP Rights as a sword or shield against its competitors?

When faced with a technical challenge, companies source for different avenues to find technical solutions. Sometimes, the company may identify the need in the market for a particular product or system. What should it do? Should it start from ground zero, to conduct its own research, or should it find out what is available "out there" and start from there? All patents and industrial design rights have a fixed life. After that the technology or the industrial design falls into the public domain, and anyone is at liberty to use the technology. Companies keen to develop new technologies or products or systems are strongly encouraged to conduct a "technology mining" exercise of at the patent databases.

Competition in the IT industry is very high. Before introducing any new product or system into the market it would be prudent to ascertain that the new product or system does not infringe third party rights. Such infringement of third party rights can have serious consequences, ranging from being restrained from introducing the product/system to paying of damages and costs, not to mention the damage to its goodwill and reputation in the industry. In some countries infringement may attract criminal punishment. Therefore, it would be necessary to obtain a Freedom-To-Operate (FTO) opinion before introducing a new product/system into the market.

The IT industry is governed by several pieces of legislation in Malaysia (and generally in other World Trade Organization (WTO) countries as well). The expression of a software program per se in a tangible medium is protected under the Copyright Act 1987. Copyright law does not protect the structure or architecture involved in the software program. The latter aspect is protected by the Patents Act 1983. For a software program to enjoy patent rights, it must be shown to have a "technical effect" or that the software program is incidental to the operation of a hardware. Of course, hardware in the IT industry is protected by Patent Act 1983. The external appearance of any hardware, if it appeals to the eye, would be protected under the Industrial Designs Act 1996 (or as Design Patents in the US). Layout of the electronic circuits, PCB boards are protected under the Layout-Designs of Integrated Circuits Act 2000.

The branding of hardware, software or the services provided by a company would be governed under the Trademark Act 1976. This act covers both trademarks for goods as well as service marks. Apart from the above legislation, in Malaysia there are specific acts to deal with cyber-crimes, such as tampering with decoders, interfering with electronic signals, and so forth.

The issues raised in this article are just initial steps to enable players in the IT industry to be aware of the necessity to adopt appropriate IP strategies in order to remain competitive in the globalized world. Any further action should be taken with the guidance and assistance of proper legal or IP counsel.

Visit IPVALLEY for more information. 
Source : Ezine

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