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Intellectual Property and Incremental Innovation in OECD Countries - An Overview

This presentation provides an overview of the relationship between intellectual property (IP) and incremental innovation in OECD countries. It discusses the challenges faced by small and medium-sized enterprises (SMEs) in protecting their incremental innovations through patents, and explores alternative forms of protection such as utility model (UM) and trade secrets. The presentation concludes with recommendations for balancing protection and competition in the context of incremental innovation.

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Intellectual Property and Incremental Innovation in OECD Countries - An Overview

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  1. Intellectual Property and Incremental Innovation in OECD CountriesAn Overview14 September 20097. Annual WIPO Forum on IP and SMEs in OECD countries Geneva, Switzerland Christoph Spennemann, Legal Expert, IP Team Division on Investment and Enterprise UNCTAD

  2. Overview of Presentation • SMEs and incremental innovation • Incremental innovation & patent protection • One alternative: utility model protection • Trade secrets protection • Conclusions

  3. SMEs and incremental innovation • Large SME presence in industries that depend on cumulative/incremental innovation • E.g. toy manufacturing; clock & watch making; optics; microtechnology; micromechanics • Lower standard of inventiveness than in high tech industry (e.g. biotech; ICTs) • Inventions easy to copy

  4. Incremental innovation and patent protection (1) • Risk of free riding  need for protection • Patent system • Effective protection • Cost factor • Low degree of inventiveness  should the patent system be adapted?

  5. Incremental innovation and patent protection (2) • Example US: lower standards of patentability since 1980s • Many small scale innovations become patentable • US Federal Trade Commission in 2003: balance too far in favor of exclusive rights; competition is needed for innovation • US Supreme Court in KSR/Teleflex (2007): tighter standard of non-obviousness

  6. One alternative: utility model (UM) protection (1) • Objective: rapid & inexpensive protection of sub-patentable inventions • Common traits (no TRIPS standard) • Exclusive rights for inventor • Mostly registration instead of examination • Novelty & industrial application requirements apply

  7. One alternative: UM protection (2) • National laws differ in important respects • Protected subject matter: technical solution to a problem (products & processes); or limitations to three-dimensional forms • Novelty standards vary (worldwide, national) • Inventive step requirement does not always apply; standards vary • Term of protection: 6 – 25 years

  8. National experiences in UM protection (1) • Germany: continued high use of UMs; but R&D investment by SMEs decreasing since 1998 (as of 2006) • Japan: high use until 1980s; strong decrease • 191,000 applications/year in 1980s • 8,000 in 2003 • Industry unhappy with modified UM regime • Registration instead of examination  legal uncertainty • Shorter terms of protection • Less focus on incremental innovation

  9. A different approach:trade secrets (TS) protection (1) • Minimum standards in Article 39.2, TRIPS Agreement • Any information that is • Secret • Has commercial value due to its secrecy • Subject to reasonable efforts to keep it secret

  10. TS protection (2) • Protection against misappropriation through unfair commercial means • But no protection against independent development or discovery through honest commercial means  no exclusive right • Reverse engineering possible, as opposed to patents and UMs  promotes follow-on innovation & competition

  11. Conclusions • SMEs depend on protection of small scale innovation • Patents often inappropriate (inventive step; cost; effect on competition) • Utility models appropriate alternative, but domestic laws need to correspond to industry needs • Trade secrets offer tool to balance protection and competition

  12. Contact Christoph Spennemann Legal Expert Intellectual Property Team Division on Investment and Enterprise (DIAE) UNCTAD E-mail: Christoph.Spennemann@unctad.org Tel: ++41 (0) 22 917 59 99 Fax: ++41 (0) 22 917 01 94 http://www.unctad.org/tot-ip

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