ipr 4 moral and ethical rationales

Why does the IPR system exist?Natural Rights and Moral Rationales

Straight-talking by Professor Birgitte Andersen

W I T H I N S I G H T S F R O M T H E W O R L D O F P H I L O S O P H E R S &

T H E 2 1 S T - C E N T U R Y C O N T R O V E R S I E S

September 2021IPR Series No 4

Natural rights and the social contract Moral rights and the social contract Circumstantial rewards The social origin of inventions First mover and the inventor’s head-start profit Inventive activity is inborn from childhood. Accidental inventions Trivial inventions Traditional Knowledge Rights versus Privileges

Business leaders and entrepreneurs Researchers and technology centre managers Investors, policymakers and regulators

Foreword Reading this Booklet on “Why do the IPR system exist?” provides you withan opportunity to gain knowledge from the world of philosophers onNatural Rights and Moral Rationales which led to the existence of theIPR system, including evidence from the 21st century controversies.

You will acquire an IP tool kit on the rationales for IPRs, and knowledge ofits underpinning constraints, which you can use whether you are workingas an IPR system designer, or involved in IP enforcement for policy,regulation, corporate governance, law, or even if you are our nextgeneration philosopher!

This Booklet includes the moral philosophy and political economy aspectsof:

1.2.3.4.5.6.7.8.9.

10.

The booklet includes evidence from moral and economic philosophers,political economists, and economic historians. It also unlocks access tospecialist knowledge from leading academics and industry experts,applicable for:

“The gain from intellectual protection is far from axiomatic, and wecannot develop systems based upon theoretical logic alone. Whetheryou are working as an IPR system designer, or involved in IPenforcement, for policy, regulation, corporate governance, the law, oreven if you are our next generation philosopher, you must state yourclear aims and objectives with respect to what you wish to achievefrom IPR systems and watch if this is really achieved”.

PROFESSOR BIRGITTE ANDERSEN

iNatural Rights and Moral Rationales for IPRs

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TABLE OF

CONTENTS

Economic incentives to invent, create and

innovate, as well as motivating the direction of

each activity

Production and trade rights versus

development rights

The 'patents as tariff-protection' analogy

debate: the industrial development rationale

Technological divides and emerging markets

Institutional divides and low-income countries

Administration and enforcement costs

Inferior to direct government stimuli

Disincentives created by the inventor’s

monopoly profits

Arbitrary technological trajectories

The problem of patent scope

‘Law of Nature’ and Patent Scope

University science and patent scope

Libraries, communication and international

unification

Typology l: The Political Expediency and

Economic rationales

Typology ll: The IP Controversies

Typology III: Rationales for categorising and

organising IP

Foreword

Table of contents

Introduction

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Round-up: The Political Economy of IPR

References

The Author

Contact details

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Natural Rights and Moral Rationales for IPRs

Natural rights and the normative theory of the social contract Moral rights and the positive theory of the social contract The problem of ‘circumstantial’ rewards The social origin of inventions First mover advantage and the inventor’s head-start profit Inventive activity is inborn from childhood. Accidental inventions Trivial inventions Traditional Knowledge Rights versus Privileges: which ones are IPRs?

Introduction Have you ever asked yourself “why does the IPR system exist?” Or alternatively, why have IPRs increased in scope, length ofprotection, and global use over time? Or perhaps, since it was inventedabout 400 years ago, why has the Intellectual Property Rights systemremained such an area for dispute and controversy?

Drawing upon moral and economic philosophers from politicaleconomy and economic history, I will now address the rationales forIntellectual Property Rights – why we have the system in the first place.

Emphasis will be on the Natural Rights and Moral Rationales. The focus will beon Social Contract Theory and the Natural and ‘Positive’ Theory of Rights. Thisconcerns the rights to claim IP, and the inventors’ right to reward from itsexploitation. We will address the moral and ethical considerations underpinningthe intellectual property rights system.

In this booklet, you will also learn about the debates and IP controversiessurrounding the IPR system. These are extremely important for both the designersand users of any Intellectual Property Rights system.

There is another philosophy – based upon “Political Expediency and Economic IncentivesRationales” – which focuses on the Economic Incentive Theory to stimulate innovation,competition, efficient resource allocation, and industrial development. This theory is notnecessarily about doing the right thing ethically, but simply about building capitalistsystems. It is believed that IPRs stimulates economic behaviour, to obtain economicprogress and welfare goals. This utilitarian philosophy and functionalist approach areconsidered in booklet No 5. in this IPR Series.

The IPR rationales and controversies we will address in this booklet inrelation to the Natural Rights and Moral Rationales include the followingtopics:

1.2.3.4.5.6.7.8.9.

10.

1Natural Rights and Moral Rationales for IPRs

One of the biggest IPR use cases for legal enforcement agreements isthe 1995 Trade-Related Aspects of Intellectual Property Section(TRIPS) of the World Trade Organization, which enforces intellectualproperty worldwide. Most economies (or around 164 countries) globallyare governed by it.We have seen a bending of patent term limits to extend areas ofprotection beyond science-based principles. This includes businessmethod patents on the Internet, which has no technical inventive stepbut simply about computer implementation of business processes.Such patents are now officially recognized and accepted in the US, andsimilar patents have been granted by the European Patent Office(EPO) under controversial grounds.

By the end of the Booklet, you will have a full ‘typology’ on natural andmoral rationales for the intellectual property rights system, and anoverview of its associated controversies.

This will provide you with an understanding of your businessenvironment and the political economy of IPRs surrounding us all.

I will focus on the formal, proprietary IPRs. This includes patents –designed to protect the inventor from exploitation of their knowledge –embodied in industrial, product and process innovations. Protection ofcreative expression will also be addressed in relation to the formalcopyright.

First some food for thought:

DEEP DIVE: THE STRENGTHENING OF THE IPR SYSTEM GLOBALLY

Capturing value from intellectual capital and knowledge-based assets hasbecome the new mantra. The battles of the 21st century are not forcontrol of raw materials, but for control of the most dynamic strategicasset, namely ‘productive knowledge’.

Finding ways in which institutions can help firms with this increasinglyimportant practice has become an explicit agenda for many governments.

Meetings among industry experts, national governments, internationalagencies (such as the World Intellectual Property Organisation and WorldTrade Organisation), as well as IP consultants seem to indicate thatincreased privatisation and recognition of a firm's intellectual capitaland knowledge-based assets will enable firms to better capture the valuefrom their productive knowledge assets – in turn generating increasedeconomic and social welfare. Here are some examples:


What does the future hold?

Robots are now being filed as officialinventors in patent applications, basedupon inventions made through machinelearning. This could result in a principlechange to the foundation of patentprotection. How might we judge thelegitimacy of copyrights or authorship onAI-composed music?

Currently, inventors or creators can beeither individuals or corporations. But canit be a robot? A question for ourphilosophers!

This historical tightening of IPR policy isobviously based upon some inherent‘philosophy’ on what we hope to achieve.

So now let us turn to the philosophersexplaining our brave ‘new and old’ world ofintellectual property capitalism, and to thepolitical economy of IPRs which surroundus all.

We also saw the ratification of the 1984 Bayh-Dole Act in the US,creating property rights around publicly funded academicinventions. Proponents believe this new law creates superiorincentives for transferring science and technology from universitylaboratories to the private sector. Similar acts have since been adoptedin most developed economies. Financial frameworks were introduced in the 1980s, whereunprofitable firms could be listed on the Nasdaq index if they couldreport their intangible assets.IP protections today include exclusive rights on areas close to whatcould be termed a ‘discovery’ – as opposed to a pure invention –such as methods to obtain genetic sequencing in humans, animals,crops, and other plants. In order words, the gap between discovery(which does not merit a patent) and invention (which can be patented)is closing. The length of protections is ever-increasing. During my tenure at theUniversity, the patent protection term in major western countries hasmoved incrementally from 14 to 17 to 20 years; mainly due to thesigning of the TRIPS agreement. Copyright terms have also beenextended, from 50 to 70 years of protection beyond the life of theauthor.

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Image: Canva License


1) The ‘natural rights theory of the social contract’Granting exclusive rights to inventors for their inventions in terms ofexclusive IPR protection can be regarded as a ‘social contract’ that theinventor receives from the government if the inventor agrees to disclosehis or her idea or creative expression.

But how did this social contract come about?

First, there was English philosopher John Locke [1632-1704], perhapsbetter known as the Father of Liberalism (1980). He argued for a ‘naturalrights theory of the social contract’.

In this context, ideas are protected under the principle of natural law – inthe sense that somebody’s idea is a ‘natural right’. It follows thatgovernments do not create property rights, but are the institutions thatserve as their objective guardians.

Another philosopher, Marcellin Jobard [1792 -1861] took this a step further.He was known as one of the greatest campaigners for intellectual propertyrights in the nineteenth century. He was a prolific advocate of ‘perpetualpatent protection’. He believed that the IPR system provided the solutionto protect human creativity from unfair exploitation, introducing theterm ‘monautopoly’ (meaning monopoly of oneself).

Basically, in accordance with the ‘natural rights theory of the socialcontract’ everyone has a permanent and absolute natural right to the soledisposal of themselves and their work.

JOHN LOCKEEnglish philosopherknown as the "Father ofLiberalism"1632-1704Image: Public domain

MARCELLIN JOBARDBelgian lithographer,photographer andinventor1792 - 1861Image: Creative Commons (CC BY-SA3.0 Unported)


https://en.wikipedia.org/wiki/English_people

https://en.wikipedia.org/wiki/Philosopher

https://en.wikipedia.org/wiki/Liberalism

https://en.wikipedia.org/wiki/en:Creative_Commons

Thus, Bentham’s theory is that it would be immoral for the law to alloweveryone to use the works of an inventor without their consent,compensation, or equivalent in return.

In proportion to what they cost to develop and How useful they are to society

2) The ‘positive theory of the social contact’ and moral rights But this normative aspect of the social contract was further contested by a‘positive theory of the social contact’.

The first advocate of this theory was political philosopher Thomas Hobbes[1588-1679], who argued that there is nothing natural about a right if weneed the power of government to enforce it (1968). Hobbes went on todeclare it impossible for the government to enforce intellectual propertyrights without implementing their views on the notions of rights andwrongs, justice and injustice. So, to claim that the right is ‘natural’ is acontradiction in terms. IPRs in his view are a necessity of government, toavoid ‘war of all against all’ over intangible IP assets.

The utilitarian philosopher Jeremy Bentham [1748- 1832] introducedethical principles or morals into IPR theory and laid the responsibilities inthe hand of the government to identify and enforce such. In this context, itis not only society’s duty to protect the inventor, but also to secure theinventor a fair share of the reward when exploiting the inventor’s knowledgeand ideas.

The rationale is basically that justice requires society to compensate andreward its people for their inventions:

THOMAS HOBBESEnglish politicalphilosopher 1588 – 1679Image: Public domain

JEREMY BENTHAMEnglish philosopher, jurist,and social reformer1748 - 1832Image: Public domain


https://en.wikipedia.org/wiki/English_people

https://en.wikipedia.org/wiki/Philosopher

Economic climate and investment confidenceOther inventors making complementary inventions in the ‘region’ ofthe invention. E.g. the invention can be part of a wider innovationsystem of complementary inventions, as we have seen over time inrelation to the application of digital economy of software and hardwarepatents, or with the emergence of complex product systems, where oneinvention feeds into multiple products, or one product contain multipleinventions owned by multiple corporations.

3) The problem of ‘circumstantial’ rewards We have now established the moral rationale of IPRs – that societycompensates and rewards its people for their inventions.

But is it really realistic that the monetary value of an idea protected by theIPR system is entirely related to development costs, or how useful theyare?

Isn’t the monetary value of an IP circumstantial and indeed also aproduct of the external environment?

Circumstantial and external elements include:

You may notice these external elements are analogous to housing markets,where valuation over time depends on what is happening in the area thehome is located, as opposed to solely the costs you invest in building orrenovating it.

The belief that society or the market economy ensures that the ‘rewardsystem’ is generating rewards based upon a so-called ‘true value’ of aninvention – or solely the value or effort created by the inventor – is doubtful.

PATENT FORMULAby The Everett CollectionImage: Canva License


https://www.canva.com/everettcollection

4) The social origin of inventions There is another critical argument challenging the IPR system – anargument that is very much alive today as well as historically. This is thecontroversy surrounding government-granted rights of ownership forsocially grounded inventions, ideas and expressions.

The social origin of inventions argument was put forward by Britisheconomist Arnold Plant in his paper, "The Economic Theory ConcerningPatents for Inventions" (1934), which is considered a classic. A basicargument is that technological inventions are mostly a social creationto which we ‘all’ contribute, and therefore, no one person or firmshould be able to claim the property. For example, ideas build uponideas of others and creativity builds upon creativity of others. Allowingprotection for socially created inventions undermines the moral andeconomic compensation rationales for IPR protection.

SIR ARNOLD PLANTBritish Economist 1889 – 1978Image: Public domain

We attend the same conferences,research about the same things, and usemethods we all share. We participate inthe same cultural spheres, and ourexpressions and musical compositionsbuild upon the expression of others.

If innovations or creativity really have a‘social origin’ the next novelty on the roadcan be stumbled upon by a range ofinventors.

Would it, therefore, be unfair for thecollective to reward those ‘lucky’ enoughto be first to submit the technologicalsolution of sufficient novel character forIPR protection?

Will it just be a race to be the first to filean application at the patent office?


DEEP DIVE: THE SOCIAL ORIGIN OF INVENTIONS EXAMPLES

The question of priority of invention between the two has been controversialfrom the very beginning. But, as is often claimed, Bell and Grayindependently invented their telephone designs as an outgrowth of theirwork on acoustic telegraphy.

The Telephone

The official record states that Alexander Graham Bell filed his patentapplication on the 14th of February 1876, describing his method oftransmitting sounds just few hours before Elisha Gray filed his application.Bell was fist to file and granted the patent (also shown below).

But Gray claimed that he invented the phone first and already had a moredeveloped invention. According to Gray's account, his patent caveat was infact taken to the US patent office even a few hours before Bell's application,shortly after the patent office opened, but remained near the bottom of theinbox and wasn’t taken to the examiner until later. He later filed anunsuccessful lawsuit against Bell. There are other conspiracy theoriesaround Bell’s patent, involving the patent examiner Zenas Wilber and Gray'svery own patent attorney William D. Baldwin.

ALEXANDER GRAHAM BELLFILING PATENT PAPERWORK1876Image: Canva license

INVENTOR ELISHA GRAYPRESENTING THE CAVEAT FORHIS TELEPHONE 1876Image: Canva license


The Smartphone

Another example is the morerecent case of Samsung versusApple. The brutal war forsmartphone dominance took placeover a 7-year patent battlebetween the American and SouthKorea corporations. Apple filedsuit against Samsung in early2012, accusing it of infringingseveral patents. Samsungresponded with counterclaimsagainst Apple. While the fightinvolved many smart phonefeatures and many patents, thepublic battle was ultimately aboutwhether Samsung copied Apple’sdesign in the early days ofsmartphones.

APPLE IPHONE 6 PLUS VERSUS SAMSUNG GALAXYImage: Canva license

Bell’s granted patent is clearly one ofthe most valuable patents of all timeand carved out the start of thetelecommunications revolution, withthe Bell Telephone Company. Thiscompany expanded globally throughits subsidiaries, including theAmerican Telephone & TelegraphCompany (AT&T), which laterbecame the parent entity of the BellSystem. AT&T was the world’slargest telecom business fordecades.

Perhaps one could argue thatAlexander Graham Bell was thehistorical version Mark Zuckerberg,the founder of Facebook, whoinvented the next generation of peer-to-peer telecommunications network.

THE MASTER TELEPHONEPATENT, 174465Granted to Bell, March 7, 1876Image: Public domain


In the end, both companies were found guilty ofinfringing each other's patents and ordered topay damages. While Samsung was thought tohave lost the fight on key aspects of the designof the phone, the overall settlement to Apple wasstill much lower than any anticipated.

The view on the social origin of inventionsproposes that the IPR system decreases themoral rights for most subscribers to thesystem. As a consequence, inventors andcreators may even be denied access toinventions they have contributed to – or will haveto pay a royalty – when other parties havepatented them first.

To ensure access and minimise such costs,Columbia University Professor Richard Nelsonand University of California Berkeley lawProfessor Robert Merges argued for‘compulsory licensing’ under certaincircumstances (1990).

Professor Lee Davis from Copenhagen BusinessSchool instead proposes an alternativeapproach. She argues that if the government areto reward inventors with cash prizes rather thantemporary monopolies, inventive behaviourwould still be stimulated and access wouldremain after public disclosure (Davis, 2002).

The idea of cash prizes is not a new concept,serving as an option during the early days ofpatent rights negotiations historically. The cashprize system should naturally be large enough tosupport commercialization.

RICHARD R. NELSONAmerican Economist(Evolutionary economics)1930 -


5) The innovator’s head-start profit Consider this: could an innovator’s first-mover advantages be enough protection?

Stanford and Yale economists RichardLevin et al. (1987) and Wesley Cohen etal. (2000), as well as UPenn’s EdwinMansfield (1986) published findings thatproved as much; a head start oncommercialisation of an idea is indeedenough to yield profit from the invention,and that patents in those cases are notneeded to induce the development.

Is there really a need for government tocompensate or reward inventions in thefirst place?

The crux of the issue concerns the speedof imitation or ‘catching up’. The fasterthe speed of technology imitation orcopying, the more protection is needed toensure reward to the inventor. The slowerthe speed, the less IPR protection isneeded to ensure reward to the inventor.

The evolutionary economist JosephSchumpeter [1883 - 1950] developed a fulltheory of the innovator’s head-startprofit around business cycle theory.The theory argues that if an inventor isreally ahead of other inventions, the timeinterval before competition catches upand imitations become viable shouldalready secure the inventor profits andrent for their contributions. Over thebusiness cycle of technologicalinvention and adoption, the ideadiffuses, and profit margins decline.

JOSEPH SCHUMPETERAustrian Politicaleconomist (Creativedestruction)1883 - 1950Image: Creative Commons (CC BY-SA3.0 Unported)



On the other hand, University of CaliforniaBerkeley management theorist professor DavidTeece evidenced that often, to be a closefollower behind the first mover can be theoptimal position, as the invention is trial-tested and market development is moremature.

DAVID TEECENew Zealand-born US-based Organizationaltheorist1948 - Image: Creative Commons (CC BY-SA4.0 Unported)

Book-publishing or pre-recorded music, where imitation is easy to copy atalmost zero costs, would need stronger protection under ‘the theory ofinnovator’s head-start profit’ principle. However, large rewards from firstmover advantages can especially be obtained without IPR protection whentechnologies are very complex and specialised, as with certain specialistengineering solutions. Another example where IP the first-mover can receive excessive rewards,is when the inventor or developer create an ecosystem where consumersbecome ‘locked-in’ to their particular innovations, such as updatingcomputer software – e.g. Microsoft Widows – and where switching toalternative options are almost impossible.

Let’s consider a couple of examples:

COMPETITIONby PressmasterImage: Canva License



6) Inventive activity as inborn from childhood There is also an argument that inventive activity is inborn fromchildhood – and that, for that reason, IPRs are more than enough andunnecessary to induce invention.

This argument was put forward by philosophers Frank William Taussig[1859 - 1940] and Arthur Cecil Pigou [1877 - 1959].

In many cases inventors are driven by a natural curiosity. But historyhas proven that to invent the ‘new’ thing or develop a market from yourinventions require significant financial resources, talent, collaboration,and specialisation. Just look at the invention of the COVID-19 vaccine,renewable hydrogen fuel cell solutions to combat climate change, or theinvention of space technology.

However, consider if electronic inventions for the Internet (which do notrequire the same amount of chemical, mechanical, or transport resources)are easily facilitated simply by applying a great degree of inborn curiosityand human ‘animal spirit’.

Would this be the case of Mark Zuckerberg who launched Facebook fromhis dormitory room in 2004?

What about 1975 Harvard drop-out Bill Gates, who joined computerhobbyists at the time, to start his own company, which eventually becameMicrosoft?

ARTHUR CECIL PIGOUEnglish Welfareeconomist 1877 - 1959Image: Public domain

F. W. TAUSSIGAmerican Economist(modern trade theory)1859 – 1940Image: Public domain


7) Accidental inventions Are inventions always the result of great effort? What if they are simplyaccidental? There is the argument that the IPR system is too ‘general’,compensating and rewarding inventions equally, whether made withgreat effort, accidentally or even trivial. We will now consider a couple ofaccidental inventions.

DEEP DIVE: ACCIDENTAL INVENTIONS EXAMPLES

Accidental inventions include cornflakes, developed in 1894 by Will andJohn Kellogg, who had accidentally allowed some wheat to go stale whileexperimenting with vegetarian food. To fix the problem they tried rolling itflat and baking it. As it gained popularity, they tried it with maize, which waseven better and gave us our beloved corn flakes.

Cellophane was invented in 1900 by Swiss chemist JacquesBrandenberger, who was trying to make a waterproof tablecloth andsprayed a coating of it onto fabric. The cellophane was too stiff and insteadthe coating peeled off, which gave him the new idea: being resistant to air,oils, greases, bacteria, and water makes it useful for food packaging.

But how accidental is accidental?

Inventions don’t just drop down from the sky. Technological history hasrevealed that inventions are generally not accidental, but that scientistsspecialise in R&D, using a great deal of resources. Even in the case ofcornflakes and cellophane, R&D and great effort had been used, despitethe inventions working differently than expected.

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Image: Canva License Image: Canva License


https://en.wikipedia.org/wiki/Air

https://en.wikipedia.org/wiki/Oil

https://en.wikipedia.org/wiki/Fat

https://en.wikipedia.org/wiki/Bacteria

https://en.wikipedia.org/wiki/Water

https://en.wikipedia.org/wiki/Food_packaging

The phone is an extraordinary invention.

But it has sometimes been referred to as being an accidental invention.This is because Alexander Graham Bell’s deaf mother and wife were partlythe motivation for him to experiment with a new medium of communication,using special vibrations. Instead, it became an invention where peoplecommunicate through audial means. In 1876 Bell was awarded the USPatent for his invention.

Nevertheless, it has since been argued that the origin of the telephonecannot be regarded as accidental. However, also, in this case, it was theresult of continuous hard work and determination which paved the way fora new era of telecommunication.

ALEXANDER GRAHAMBELL Scottish-born inventor,scientist, and engineerwho is credited withinventing and patentingthe first practicaltelephone.1847 - 1922Image: Canva License

"WHEN ONE DOORCLOSES ANOTHER

DOOR OPENS;

BUT WE SO OFTEN LOOKSO LONG AND

REGRETFULLY UPON THECLOSED DOOR, THAT WEDO NOT SEE THE ONESWHICH OPEN FOR US"

Quote of Alexander Graham Bell, first published inJanuary 1935 in The Winona Times of Mississippi


8) Trivial inventions Patent law – at least in principle – does not allow inventions to bepatentable if they are ‘obvious’, meaning discoverable at low cost. Butthis is where controversies have been reported in the 21st century.

In a sense, patents have been granted on existing ideas. The onlydifference is that patents are now implemented via computers and theInternet.

Should new technology combinations be granted patents, when theinventions are trivial, when the business process idea is well known, orwhen marginal progress is made with very little effort?

Also, can they be considered novel, just because they are implemented onthe Internet? Many do not even show a technical inventive step, simplyserving as electronic commerce implementation systems. In that sense,they are pure business-method inventions. Business methods were hencerenamed as “Pure Software”.

Activist groups advocating against patenting this brand of software usedtheir “No Software Patents” campaign to amend the directive on computer-implemented innovation proposed by the European Commission inFebruary 2002. The campaign was a set of conferences, demonstrationsand advocacy activities.

'No Software Patents' activists near European Parliament during the EU Software hearing

During the EU Software Hearing between 2002 to 2005, companiessupplying technical solutions reported to the European Commission that itwas impossible to safeguard themselves against patent infringementbecause they were so trivial and broad. I attended several of the meetingsand the exchange of views was frank and confrontational.


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Webshop: Selling things over a network using a server, client and payment processor, or using aclient and a server - EP803105, EP738446 and EP1016014Order by cell phone: Selling over a mobile phone network - EP1090494Shopping cart: Electronic shopping cart - EP807891[CDs] [Films] [Books]: Tabbed palettes and restrict search - EP689133 and EP1131752Picture link: Preview window - EP537100Get key via sms: Sending key to decrypt bought data via mobile phone network - EP1374189View film: Video streaming ("segmented video on-demand") - EP633694Copy protection: Encrypt file so it can only be played on authorised devices - EP1072143Credit card: Pay with credit card on the Internet - EP779587Adapt pages: Generate different web page depending on detected device - EP1320972Request loan: Automated loan application - EP715740Secure card payment: Secure online credit/debit card payment with PIN code - EP1218865Send offers: Send offers in response to request - EP986016Delivery: Ship items to the correct pick-up point of the used delivery service - EP1181655Support system: Support system based on answers to questions - EP915422Preview chapters: Use of TV as metaphor for selecting different video fragments - EP670652Image: Reduce page loading time by automatically reducing image quality - EP992922Related results: Show related results if customer likes the current ones - EP628919Rebate code: Allow rebate codes to be entered by customers - EP929874Web-to-Print: Generation of prepress formats or printouts from low resolution templates via theInternet - EP852359 and EP1169848

TRIVIAL INVENTIONS EXAMPLES (MOVING KNOWN BUSINESS PROCESSES ONLINE)

FFII Presentation for European Parliament on the desperate situation of Business Methodspatents in Europe. (EU software hearing 2002-2005). FFII argues this is still commonpractice, in 2020s.

Image: Creative Commons (CC BY-SA 3.0 Unported)https://webshop.ffii.org/

Many micro-electronics “inventions” have simply concerned moving business processesonline – such as the

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The US decided to protect business methods inventions, whichinclude the Amazon.com one-click system and eBay’s auction patent.The argument for allowing patents on inventions with no technicalcriteria for an inventive step was to support the Internet revolution. Many knowledge-intensive service companies felt that their inventivestep was business process-driven and crucial for them to securemarket positioning using Internet applications, but technicalrequirements would make them dependent on the tech-companies todevelop an inventive step alongside their business process invention,which in most cases was not necessary. The European Union decided not to harmonize within the union andwith the US, due to strong opposition from many European companies,European software developers, and several EU countries opposed tosupporting patents on business methods inventions, unless they candocument demonstrable technical progress or inventive step. The argument against patenting such pure business methodsinventions was first that without technical criteria for patent protection,any new idea can in principle be granted a patent, at the discretion ofthe patent examiner’s personal judgement. This often results in anacceleration of trivial patents awarded, as well as infringementsuits, since the inventive step is hard to define without cleartechnical criteria. Another argument against patenting is that many business methods –although not all – are developed with very little R&D effort, and manycontain such a broad patent scope that it would be difficult forentrepreneurs to do business on the internet, as all features of theirso-called ‘web-shop’ would be patented. The Foundation for Free Information Infrastructure (FFII) gave apresentation to the European Parliament during the EU softwarehearings, demonstrating how serious the situation had become (seepicture: “Your webshop is PATENTED”). The FFII detailed how theEPO allowed many trivial inventions to be grated patents, despitelacking an inventive step. Most of those patents were never enforced, just as IBM gave awaytheir trivial ‘out of office’ patent to the commons in 2017.Both the EPO and the USPTO have been accused of being out oftouch; the EPO specifically was accused of granting patents whichdidn’t satisfy the minimum requirements of Europe’s inventive steprequirement.

During the early internet revolution, the IP protection of computer-implemented inventionswas debated in national contexts:

The patenting of ‘trivial’ patents in the digital economy remains a continuedbattle.


9) Traditional Knowledge Traditional communities are storehouses of historical knowledge.Unfortunately, these local communities or individuals often lack theknowledge, institutions or the means to safeguard their intellectualproperty from exploitation in an IPR system.

Traditional knowledge communities, existing outside of western capitalistsocieties, often have different cultural values and belief systems and don’tfeel the need for an IPR system – a western idea – mainly from the USand Europe.

When considering natural and moral rights in relation to a fair rewardsystem, the formal patent system and copyright system is biasedtowards protecting scientific knowledge. The IPR system is accused ofincentivising, and to some degree allowing, the exploitation of ‘practicalnon-scientific knowledge’ – developed and tested by thesecommunities for centuries.

DEEP DIVE: TRADITIONAL KNOWLEDGE APPROPRIATION

Traditional communities ranging from the Brazilian Amazon, to AustralianAboriginal communities, to Indigenous peoples in Asia and Africa – havedeveloped methods for selecting rice plans and breed rice varieties overthe course of thousands of years.

They also know which plant mixtures cure which diseases, how to healwounds, or how to develop natural cleaning powder for teeth. Traditionalcommunities have tacit knowledge passed down through lived experiencesand rituals.

For experienced scientists, it isn’t difficult to find an explanation once thepractical invention is tested over centuries or thousands of years. Theprocess is called reverse engineering, but a more succinct term for thisexploitation is biopiracy.

Once patented, traditional communities are deprived of the right tocommercialize, import, or offer for sale their own communal inventions.


The case of Basmati:

From the 1970s and well into the 21st century, upwards of 20 claims weremade at patenting offices regarding basmati and other rice varieties. Theseclaims concerned the granting of patents on methods for cultivating a riceplant for breeding and propagation – processes already known forcenturies in India, Thailand and other regions. Biopiracy of traditionalknowledge is now challenged in courts, which are sometimes won by theIndigenous peoples or community advocates, as in the case of Indianbasmati rice.

The case of Turmeric:

Another example is the case of turmeric, a fragrant spice used forflavouring in Indian cooking. Turmeric also has properties making it aneffective ingredient in medicines, cosmetics, and dyes. As a medicine, ithas been traditionally used for centuries to heal wounds and rashes.

The USPTO granted a patent for the use of turmeric in wound healing inthe mid-1990s, but revoked the patent in 1997, after ascertaining that therewas no novelty and the traditional knowledge had been known in India forcenturies.

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The case of the Maasai Warriors

The Maasai represent one of the most powerful images of Africa (Kenyaand Tanzania). However, 80% of the Maasai live below the poverty line,despite their knowledge, cultural expressions and techniques are usedaround the world on products as shoes, hats and scarves, jewellery design,accessories, textiles and traditional techniques.

Their traditional knowledge could be worth billions of dollars over the longterm. According to a specialist advocacy group, Light Years IP ofWashington, DC, more than 1,000 companies, among them Louis Vuitton,Calvin Klein and Ralph Lauren, Jaguar Land Rover, have used Maasaiimagery, designs or technology to sell their brands exploiting the value ofthe “Maasai brand” at more than US $10 million a year.

This brings up the issue of ethical fashion, as the fashion industry hasoften struggled to embrace an ethical business model. Working withindigenous communities requires responsibility, as argued by UNSecretary-General Ban Ki-moon described in an initiative on RebrandingAfrica (2012) - cited in L'Uomo Vogu 2012, HuffPost Life 2012, Guardian2013):

“Africa does not need charity — Africa needs investment and partnership. [.] Joiningforces with civil society and private sector, including non-traditional players, likethe fashion industry, has become indispensable. Sustainable development is my toppriority.”

MAASAI WARRIORSImage: Unsplash License Photo: Pawan Sharma


https://unsplash.com/@pawan9472?utm_source=unsplash&utm_medium=referral&utm_content=creditCopyText

If it’s developed in a research lab where the scientific knowledgebecomes known, or Through centuries of empirical trial-testing of ‘what works'.

Ethical fashion initiatives include Fashion4Development (a global campaignthat uses fashion-based initiatives to support the United Nations' widerissues in helping Africa) and the UN's International Trade Centre (ITC)Ethical Fashion Initiative. Now the Maasai are fighting back by attemptingto IP protect and trademark their name, designs and techniques.

Institutional factors

Unfortunately, not all such cases reach the courts, and not all cases aresupported due to a lack of formally documented evidence from theIndigenous communities to satisfy the standards of institutionalcourts.

Communication and language of traditional communities aresometimes a barrier. Currently, many countries are developing traditionalknowledge libraries to catalogue their ideas in order for governments toprotect and safeguard them.

There are many similar examples of the clashes between traditionalknowledge and the patent system from the rubber industry, cosmetics,medicines, and textiles. Patenting of genetic material contained in theAmazon region is another example.

Consider this: if communities have developed practical inventions overcenturies, should the western IPR system be allowed to patent thoseideas for profit-seeking benefits? Where should the boundaries be setbetween traditional knowledge and scientific inventions?

It has been claimed that land, forests, oceans, and the atmosphere havealready been colonized, with the western powers beginning a new race toclaim rights on the knowledge within the traditional communities ofindigenous people, simply by adding a very minor scientific explanation tocreate a patent and claim exclusive rights.

Of course, it is useful to find scientific connections behind usefulknowledge and to codify and share knowledge for the greater good – forexample, better rice varieties and wider access to medicine. But ourproperty systems must reward all inventions, irrespective of:

Traditional knowledge is vital background knowledge for scientificresearch in the first place.


In an attempt to correct itself, the agreement of the Trade-RelatedAspects of Intellectual Property Rights (TRIPS) of the World TradeOrganisation (WTO) is making special cases around the treatment oftraditional knowledge to ensure a just reward system, but it remains anarea for exploitation if further action is not taken.

The protection of traditional knowledge is also clashing with thecopyright industries. Cultural expressions have formed part of thecommons for thousands of years.

The case of Aboriginal art

Aboriginal art has become synonymous with Australian souvenir productlines (such as boomerangs, stones and prints) containing visual imagesand native designs of Aboriginal art and culture. Often, they are even fakedesigns and have no meaning even to the inherent culture.

The manufacture and sale of Aboriginal souvenirs, including counterfeits,has meant that Aboriginal artists are denied economic opportunities tobenefit from their cultural expression.

Such cultural appropriation has also meant that Aboriginals are deprivedof the ability to control their cultural expression in accordance withtheir traditional cultural protocol and respect.

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ABORIGINAL DESIGNBackground: Getty ImagesCanva License


Consequentially, buyers are also cheated as they are not purchasingwhat they think they see.

After criticism and campaigns by rights groups, the Australian court hasrecognized the limitations of existing copyright law and called for a lawreform.

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There are many similar examples of exploitation of traditional knowledgethrough the use of the copyright system.

In the 1990s and 2000s, UNCTAD (United Nations Conference on Tradeand Development) held music industry workshops on copyrights in theCaribbean, South America, Africa and Asia, to support local communitiesand advise them how to protect their inherent music cultures againstexploitation by foreign multinationals, and how to support localgovernments in developing national industries around music – such as thebudding afrobeat movement in Nigeria or Cuban salsa.

National governments and the WIPO are now paying attention to moralrights with respect to the protection of cultural expression, tied to theparticular identities of local regions that have been passed down throughgenerations.

Image: PixabayCanva License


10) Rights versus Privileges: Which ones are IPRs? Today, the belief that the IPR system can be grounded on natural andmoral rights is contested. Rather, many believe that they representprivileges. They argue that we need to pay more attention to how socialcontracts of IPRs emerge and evolve and that the IPR system at anytime is based upon a particular constellation of political power.

Nobel Prize winner in Economic Sciences and former Chief Economist ofthe World Bank, Joseph Stiglitz, has stated in his book on “MakingGlobalization Work” (2006) that,

JOSEPH STIGLITZInstitutional Economist(Nobel Prize)1943 - Image: Creative Commons (CC A-SAlike 2.0 Generic). Fronteiras doPensamento

“TRIPS imposed on the entire world thedominant intellectual property regime of theUnited States and Europe, as it is today. Ibelieve that the way that intellectual propertyregime has evolved is not good for the UnitedStates and the EU; but even more, I believe it isnot in the interest of the developing countries.”

The controversies here are mainly inrelation to patents on pharmaceuticaldrugs and their impact on world health,TRIPS’ requirements for patentability "inall fields of technology" includingsoftware, and the protection of traditionalknowledge across the world.

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https://creativecommons.org/licenses/by-sa/2.0/deed.en

Organisational theorists professor Fritz Machlup and professor EdithPenrose (1950), commented much earlier on the political economy of IPRs,arguing that the term ‘intellectual property RIGHT’ as opposed to‘intellectual monopoly PRIVILEDGE’ - was a very deliberate choice onthe part of politicians working for the adoption of patent law in thenineteenth century.

This period of western civilization heavily favoured liberty and equality,with societies strongly opposed to privileges and monopolies of anysort. Therefore, arguments for natural or moral rights were used.

FRITZ MACHLUPAmerican-Austrianeconomist1902 - 1983

EDITH PENROSEAmerican-born BritishEconomist &Organisational theorist1914 - 1996


Round up: The Political Economy of IPR Today we take the IPR system for granted – we don’t question the valuesand theoretical logic underpinning it. The moral and ethical rationales forthe IPR system is set out in the tables below, which also include a typologyof the IPR controversies.

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Natural Rights and Moral Rationales

The inventor or creator has natural and moralrights to claim the intellectual property by law.

The inventor or creator has the moral right tocompensation and reward when their ideas(protected by patents) and creative expressions(as protected by copyright) are used inmanufacturing or trade, (i) in proportion to whatthey cost to develop and (ii) how useful they areto society.

The social contract reads that an inventor orcreator discloses their ideas (protected bypatents) and creative expressions (protected bycopyright) in public libraries, in exchange for agranted protection right.

Ideas can be freely used in R&D. But a licensewould have to be paid to the inventor or creator(or subsequent owner of the IP) ifcommercialisation happens by other partiesembodying the ideas or creations

IPR Foundations

Natural and MoralRights

Social ContractTheory

Typology l: The Natural Rights and Moral Rationales


IP Critics

The problem of ‘circumstantial’ rewards: Thevalue of an IP produced by the market iscircumstantial (based upon economic climate andinvestment confidence) and does not reflect thetrue value of the inventors’ creation.

The social origin of inventions: Ideas buildupon other's ideas and is, therefore, a co-creation. However, the patent or copyright officegrants one entity (person or company) the full IPRight. Most participants of the IPR system aretherefore deprived of benefitting from theinvention they have collectively contributed to.

The innovator’s head-start profit: First moveradvantage of a true inventive step (beforecatching up by market competitors) is more thanenough for the inventor to gain economiccompensation or profit from the idea.

Is inventive activity inborn from childhood?No economic IPRs stimulus policy wouldtherefore be necessary.

Accidental inventions: How accidental are they?

Trivial inventions: In today's digital age, trivialideas (often related to electronic-commerce) aregranted patent protection on the basis ofcomputer implementation, although the idea iswell-known (not a new invention).

Traditional Knowledge: (i) Patenting is granted on inventions that havebeen trial tested over centuries, just by adeveloper adding the scientific formula to explainscientifically what works. (ii) Copyright systems privatise the creativecommons of indigenous people. (iii) The IPR system incentivises privatisation ofthe public domain for commercial advantage.

IPR controversy fields

The problem of‘circumstantial’ rewards

The social origin ofinventions

The innovator’s head-start profit

Is inventive activityinborn from childhood?

Accidental inventions

Trivial inventions

Traditional Knowledge

Typology ll: The IP Controversies


IP Critics

Rights versus Privileges: IPRs systems set‘the rules of the game’ and shape stakeholderrelationships and world order. Are we grantingan ‘Intellectual Property Privilege’ as opposed toan ‘Intellectual Property Right’?

IPR controversy fields

Rights versus Privileges

Continued - Typology ll: The IP Controversies

IPR systems are not neutral; they set the rules of the game in whichindividuals and organisations interact, and in which the relationshipsbetween corporate leaders and stakeholders are configured. The IPRsystem also underpins how the rate and direction of technologicaladvances are shaped, spread and enforced, and it governs ourinternational systems of trade agreements.

The IPR system was naturally grounded on moral and economic principles– about doing the ‘right thing’, ethically. The typology for this concepthas been set out in this booklet. However, too often the system does notperform in accordance with its underpinning theoretical rationale.

This is because system designers have not considered the reality oftechnological inter-dependence, the social origin of innovation, andhow this affects strategic interactions and collaboration in competitivemarkets.

The specific nature of scientific knowledge meriting IP protectioncompared to traditional or other forms of knowledge remain a matterof controversy, and so does the issues surrounding relative power-relationships in bargaining situations, the opportunity costs of usingthe IPR system as a political instrument, and indeed many other factors.

As the ‘positive theory of the social contract’ argues, it is virtuallyimpossible for governments to enforce any IPR system withoutimposing their views on the notions of rights and wrongs, justice andinjustice. It is not uncommon for philosophers and economic historians toargue how the design of IPR law and practice has implications on wealthdistribution in society.

IPR systems must therefore be considered at the political level and thesupra-national level and updated each time new emerging technologiesreshape our business models or concepts of science and creation.


I hope that you have enjoyed this overview of the moral and economicphilosophers from the political economy and the economic history of IP.

Whether you are involved in IP enforcement for policy, regulation,corporate governance, the law, working as an IPR system designer, or ifyou are our next great philosopher, you must state your clear aims andobjectives with respect to what you wish to achieve from IPR systems, andwatch if these are really achieved. This is already a strictly monitoredarea for ‘monopolies, competition and mergers commissions’, andethical councils. The gain from intellectual protection is far from axiomatic,and we cannot develop systems based upon theoretical logic alone.

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The aforementioned fact that robot-produced machine learning can besubmitted as an inventor on patent applications for Artificial Intelligenceillustrates new areas for our philosophers and policymakers to consider.This next frontier of IP readjustment comes just a few years after oursystem was updated to take into account the digital revolution and IP onthe Internet.


Andersen, B. (2012) ‘Intellectual property rights’ Encyclopedia ofApplied Ethics. Section on Economics/Business. Elsevier publishers,2012 Andersen, B. (ed.) (2006): Intellectual Property Rights: Innovation,Governance and the Institutional Environment. Edward Elgar:Cheltenham. Andersen, B. (2004) If 'Intellectual Property Rights' is the Answer, Whatis the Question?' Economics of Innovation and New Technology, vol13(5), 417-442Andersen, B. (2003) "The Rationales for Intellectual Property Rights inthe Electronic Age", in: Jones, D. (ed.) New Economy Handbook, SanDiego: Elsevier Science & Academic Press, pp.985-1024.Cohen, Wesley; Nelson, Richard; and Walsh, John (2000). ‘ProtectingTheir Intellectual Assets: Appropriability Conditions and Why U.S.Manufacturing Firms Patent (or Not).’ NBER Working Paper No.w7552Davis, Lee. “Should We Consider Alternative Incentives for BasicResearch? Patents vs. Prizes”. Paper for the Druid Conference onIndustrial Dynamics. Copenhagen, Denmark. 2003EU’s hearing on “Industrial Property” and "The Economic Impact ofPatentability of Computer Programs" (2002-2005)Levin, Richard; Klevorick, Alvin; Nelson, Richard; and Winter, Sidney(1987). Appropriating the Returns from Industrial Research andDevelopment Brookings Papers on Economic Activity, 3.Machlup, Fritz and Penrose, Edith (1950): ‘The Patent Controversy inthe Nineteenth Century’, Journal of Economic History, X (1), May, 1-29.Mansfield, Edwin (1986). ‘Patents and Innovation: An Empirical Study’.Management Science 32, 173-181Mergers, Robert and Nelson, Richard (1990): ‘On the ComplexEconomics of Patent Scope’, Columbia Law Review, 90 (1), January,839-961.Mergers, Robert and Nelson, Richard (1990): ‘On the ComplexEconomics of Patent Scope’, Columbia Law Review, 90 (1), January,839-961.Plant, Arnold (1934): ‘The Economic Theory Concerning Patents forInventions’, Economica, 1., February, New Series, 30-51.Stiglitz, Joseph E. (2006): Making Globalization Work: The Next Stepsto Global Justice, Pengiun Books, London

References


Straight-talking by Professor Birgitte Andersen

"Today, we live in an era of straight-talking – where open, honest, and adirect approach in speech or writing isvalued and appreciated, and often hasthe bigger impact.

‘Straight talking’ is not seen as a vitalasset by contemporary academia orhigher education, but I subscribe tothe view that the designers, managers,and users of the IPR system willbenefit enormously from such anapproach. This will create faster,clearer and better criticalunderstanding of the essentials of theeconomics and governance of IPRs. "

BIRGITTE ANDERSENDanish born British BusinessEntrepreneur, AcademicProfessor, and expert advisor. PhD Economics

CEO at Big Innovation Centre since 2011, a London based think-tank andinnovation-communications consultancy, which is also the Secretariats for the UKParliament All-Party Parliamentary Group's for Artificial Intelligence (APPG AI) andBlockchain (APPG Blockchain).

Professor of Economics and Management of Innovation, University of LondonBirkbeck College, joined in 2000 to launch a post-grad Electronic Commerceprogramme across the departments in the School of Business, Economics andInformatics. Nominated by Birkbeck's Student Union (2021) for bestlecturer/seminar teaching.

An international expert in business model innovation and corporatecompetitiveness, Intellectual Property (IP) governance and emerging technologies.Published in renowned academic journals and government policy reports. Used bythe media (featured on BBC World, Bloomberg, Al Jazeera, SKY).

Has led several pan-European framework programmes, and advised economistsand policymakers of national governments in and beyond Europe including OECD,UN and WIPO. Has served as an expert defence witness in the UK courts onmatters of IP use on the Internet. Was Rapporteur for the EU Commissionrepresenting the EU Expert Group on Knowledge Transfer and Open Innovationand sat on the EU Expert Advisory Panel for Horizon 2020 – Societal Challenge:Europe in a Changing World – Inclusive, Innovative and Reflective Societies.Appointed (since 2018) on Arab League Expert Group on Digital Transformationregarding the Digital Government Strategy for the Arab World.

The Author


Contact detailsBig Innovation Centre

Registered in England and Wales No. 8613849 at14-16 Dowgate Hill | London EC4R 2SU | United Kingdom

[email protected]

All rights reserved © Big Innovation Centre. No part of this publication maybe reproduced, stored in a retrieval system or transmitted, in any form

without prior written permission of the publishers.


http://www.biginnovationcentre.com/

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