Copyright

Innovation must be protected, writes Jane Croft

Copyright and intellectual property

Recent “patent wars” between mobile phone makers Apple, Samsung, HTC and others over smartphone technology have highlighted the importance of businesses being able to protect their intellectual property rights.

Copyright law and patents are vital to a thriving knowledge-based economy. For small companies that have invested in research and development and want to protect their assets, copyright and design laws are in practice the most cost-effective method.

Larger companies are more likely to apply for patent applications, which are seen as a more effective and expensive form of protection, particularly in sectors such as media and information technology where advances can give them a significant advantage.

Disputes usually follow the invention of new technology. Up until the early 20th century such legal battles occurred after the emergence of the telegraph and the radio – and even over mechanical farm equipment.

Now, in another period of rapid technological change, patent wars are centred on makers of internet technology, pharmaceuticals, music and films.

A high-quality patent system is vital to limit expensive litigation and ensure intellectual property is not devalued. As James Dyson, founder of the Dyson technology company, wrote last year: “We need to recall the inspiration behind patents. They are a spur for invention. They reward an inventor’s investment with a fixed monopoly and in return they make their technology public.”

Keith Hodkinson, chairman of law firm Marks & Clerk, says there tend to be more patent disputes during a recession as companies experience pressure on their margins and seek to recoup income.

“Patent litigation usually follows big waves of innovation,” he says. “Also, if you have paid large sums to government – such as for 4G licences – you need to protect that investment.”

As countries move from being manufacturing hubs to knowledge-based economies, they become more interested in protecting their inventions. In 2011, a record number of international patent applications were filed – 181,900, up 10.7 per cent on 2010.

“As countries become more innovative they become more and more interested in intellectual property protection,” Hodkinson adds.

Fast-growing economies are beginning to appreciate the importance of legal protection for intellectual property. China introduced its first patent law only in the mid-1980s, but recently overtook Japan in terms of the number of patents filed.

The value of patents can be seen in the trend for buying patents from bankrupt companies such as Nortel, the telecoms group. Eastman Kodak’s digital imaging patents are expected to be among its most valuable holdings. When Google bought Motorola for $9.5bn last year, there was some interest in the estimated 25,000 patents the internet search company would inherit.

But the growing number of disputes has led many executives and the judiciary to complain about the hundreds of patent cases that have become a costly distraction for large technology companies. Some have pointed out that litigation threatens to stifle innovation. Companies known as “trolls” are being set up specifically to buy patents and mount opportunistic lawsuits against successful groups.