Intellectual property rights. Imperatives for the knowledge industry

World Patent Information 22 (2000) 167±175 www.elsevier.com/locate/worpatin Intellectual property rights. Imperatives for the knowledge industry q Prabuddha Ganguli Hindustan Lever Ltd., Corporate Planning, 165±166 Backbay Reclamation, Near Churchgate, Mumbai 400020, India Abstract This paper provides a broad-ranging review in a global context of many aspects of developing changes in intellectual property rights (IPR) in response to the currently rapidly changing technological and information industries. As such, it covers such matters as knowledge ownership, the IPR framework, TRIPS and WTO in relation to developing countries, technology transfer and balance in a world-wide context, and developments in dealing with counterfeiting and piracy ± with particular reference to the Asia/Paci®c region. Brief snapshots are also provided of a number of speci®c and signi®cant IPR enforcement decisions and their implications. Further policy and practical matters also discussed include domain names and cyber squatting, traditional knowledge as prior art, bio-prospecting, and software patenting. Finally, a list of steps need to be considered in formulating IPR policy, with especial reference to India and countries in a similar situation, is set out. Ó 2000 Elsevier Science Ltd. All rights reserved. Keywords: Knowledge ownership; Licensing; TRIPS; WTO; Trade secrets; Technology transfer; Counterfeiting; Piracy; IPR enforcement; Infringement; Domain names; Traditional knowledge; Bio-prospecting; Software patents 1. Introduction With the world population approaching 7.3 billion by 2020, demand in priority areas such as food, shelter and health is on an exponential trajectory. The challenge for this century is to innovate with speed and convert the resulting innovations into utilitarian commodities for rapid di€usion in society. The drive is to evolve environmentally friendly and cost e€ective technologies that ensure conservation of natural resources, optimization on manpower and energy with simultaneous maximization of productivity. This will require concerted global real-time teamwork in the creation of new knowledge, exploitation of the cumulated human learning over the centuries and frameworks for sharing expertise, infrastructure and know how in a scale the world has not so far experienced. There will be newer ways of working and bene®t sharing among nations, corporates and individuals, all designed to enrich the quality of life under the most demanding societal dynamics. One of the decisive enabling features in this evolution of a knowledgeled future, is the thorny issue of ``knowledge ownership'' that will resolve controversies bordering on ``knowledge q Invited talk at the 14th NIAS ``Course on Globalization and Development'' for Senior Executives on 12 January 2000, at the National Institute of Advanced Studies, Bangalore, India. E-mail address: ramu.p.ganguli@unilever.com (P. Ganguli). prospecting'' and ``knowledge piracy''. It is in this context of an appropriate and balanced harmonized legal framework to deal with the de®nition and fair transaction of intellectual assets that the success and survival of a ``border-less knowledge world'' will be determined. The various tools of Intellectual Property Rights (IPR) were created to provide the take-o€ platform in such an e€ort [1,2]. IPR provide the formal basis for ownership of developed knowledge with bene®t sharing between ``partners in innovation'' to create niche domains of ``value added knowledge'' and ``wealth creation''. USAÕs annual licensing revenue in 1997 was $20 billion vs $200 million in 1980. It may be noted that IBM in 1998 had 2658 patents registered in the USA as against 1724 patents in 1997. The company made over $1 billion through licensing arrangements. Similarly Samsung Electronics earned around $400,000 from its IPR in 1998. It is expecting to generate royalties of more than $1 billion from its MPEG2 technology. IPR are already a part of the strategic options in the knowledge industry. To ensure sustained growth, enhanced pro®ts, market leadership many corporations have designed their project management systems for: · optimized use of inter/intra knowledge base; · strategic management of IPR; · external channels for knowledge and inventions as inputs; 0172-2190/00/$ - see front matter Ó 2000 Elsevier Science Ltd. All rights reserved. PII: S 0 1 7 2 - 2 1 9 0 ( 0 0 ) 0 0 0 4 8 - X 168 P. Ganguli / World Patent Information 22 (2000) 167±175 · internal expertise to manage research and collaborations; · clarity on knowledge ownership issues through mutually bene®cial licenses; · pooling of IPR as in the case of several companies who have formed patent pools of their DVD patents for mutual bene®ts. The emerging scene in the future will seek positive linkages between enhancing competition in society on one hand (discouraging monopolistic practices) and establishing legal ownership of innovations (with enforcement of acquired rights) on the other. Strongly inter-knitted societal, moral and ethical issues are already in¯uencing approaches to international trade involving technology management, ownership of knowledge and business processes. 2. The IPR armory The various aspects of IPR as they have developed are: · copyright and related rights (i.e., the rights of performers, producers of sound recordings and broadcasting organizations); · trademarks including service marks; · geographical indications including appellations of origin; · industrial designs; · patents; · protection of new varieties of plants; · protection of the layout-designs of integrated circuits; · protection of undisclosed information including trade secrets and test data; · control of anti-competitive practices in contractual licenses. The e€ective interplay between these IPR instruments and their enforcement provides possibilities of protection of intellectual assets resulting from all human endeavour. 2.1. TRIPS Agreement on intellectual property such as the Trade Related Intellectual Property Rights (TRIPS) which is integrated into the international trading system outlines the minimum standards for protection and enforcement of IPR in the member countries of the World Trade Organisation (WTO). The agreement leaves scope for the member nations to develop their IPR laws (but staying within the sprit of the agreement) to promote their national interests. The basic approach of any IPR system is to balance interest between various contrasting parameters (see Fig. 1). Fig. 1. Balancing of interests As we know, patents build fortresses around inventions. Trademarks establish and identify brands. Copyright provides protection to accompanying literature and designs registrations cover novelties in shapes, forms and ornamentation, which visually impact consumers. These tools of IPR are key components of strategy formulation and implementation in businesses. These assets preserve exclusive markets, maintain pro®t margins and provide market access and freedom to operate. IPR portfolio has now become an e€ective means for benchmarking of intellectual assets and innovative capabilities. This is being used extensively in todayÕs world of mergers, acquisitions, strategic alliances, collaborations, licensing arrangements and venture capital funding in all industries. Most IPR laws have developed to a reasonable extent in dealing with non-living materials and processes to produce them. However the laws deciding on proprietorship and trade of knowledge related to the ``animate'' or biological matter such as genes and DNA, microbes and biodiversity are still considered by many to be very rudimentary that need further re®nement. Similarly communication using the cyberspace and a range of novel storage and transfer media for information and knowledge coupled with high performing robotics have already posed unforeseen and dicult issues to be dealt with by IPR. Nations have been intensely debating on the ownership of national biodiversity and traditional knowledge of communities and the rights associated with such ownership [3]. The pre-TRIPS era (i.e., before 1995) saw the world divided into groups: (1) a set of nations allowing product and process patents in all ®elds of technologies without discrimination, and (2) another group with restrictive and discriminatory patent laws providing for process patents in all ®elds of technologies but not for product patents in selected ®elds such as foods, agrochemicals, drugs and pharmaceuticals, chemical entities, specialty materials, etc. Other features related to the term of patents, conditions for compulsory licensing, clauses such as whether importation would be consid- P. Ganguli / World Patent Information 22 (2000) 167±175 169 3. Trade secrets and undisclosed information Fig. 2. TRIPS compliance timetable. ered as working of patents, etc., varied at the national level. TRIPS brought such issues into focus. WTO members were expected to comply with the articles of TRIPS in a speci®ed time frame (see Fig. 2). One year was given until 31 December 1995, to all countries to comply with all the obligations of TRIPS. However, Developing Countries were given an additional 4 years i.e., until 31 December 1999, for compliance with all areas of TRIPS except in a few issues related to patents. Speci®cally in the area of patents, an additional 5 years, i.e., until 31 December 2004, was given to those countries granting process patents to change over to product patents in all ®elds of technologies. In the intervening period, Member States of the WTO availing of this concession were expected to make arrangements for a ``mailbox provision'' for ®ling of product patents and create a transitory legal framework for ``pipeline protection'' in speci®c ®elds such as drugs/pharmaceuticals/ agrochemicals. Several countries including India have initiated measures to achieve compliance with the conditions set by TRIPS. The Seattle inter-ministerial meeting in November/ December 1999 was convened to review the developments and provisions in TRIPS to carve the future shape of the agreement that is mutually bene®cial to its members. However the outcome was inconclusive. These matters will be on the agenda for the forthcoming review. An area that is attracting attention is the protection of trade secrets and undisclosed information. A survey conducted by the American Society for Industrial Security (ASIS) on intellectual property loss (which was participated in by Fortune 1000 companies and the 300 fastest growing companies in the US) reveals that $44 billion was lost due to known and suspected intellectual property losses during a 17-month period in 1996±1997 [4]. A loss of $44 billion was calculated based on the responses of only 12% of the survey participants. To guard themselves against trade secret theft, companies are encouraged to implement information protective measures, by clearly identifying trade-secret assets, practicing ``due care'' when it comes to persons who are authorized to have access to trade secrets, and making use of codes. Though employment contracts broadly cover clauses on con®dentiality of information most business houses and institutions do not take adequate care of information security procedures within their organizations. The emerging trend is that companies to protect themselves from legalities are requiring their employees to sign an invention assignment agreement in addition to con®dentiality agreements. This ensures a commitment from the employees to protect the companies intellectual property which includes all creative aspects of the employees' work, innovations, company sensitive information such as clients lists, ®nancial information, price lists etc., copyrights, trade secrets, trademarks. This is becoming crucial in times of mergers and acquisitions in ensuring proper transmission of IPR. Walmart had ®led a suit in a US Court against Amazon.com claiming that Amazon was attracting executives and employees of Walmart together with their consultants to access the trade secrets of Walmart. The case was settled in 1999. Under the terms of the settlement Amazon agreed to reassign some of its employees where their knowledge of Walmart's operations would not be used. Limits were also placed on the projects to which the former Walmart workers are involved in Amazon's operations [5]. Motorola on July 1999 ®led a lawsuit against ICS and several managers who left Motorola while working in its timing solutions operation to set up a new ICS operation [6]. MotorolaÕs complaint was that ICS did this to gain access to MotorolaÕs business and technical trade secrets and that the managers who left had breached ®duciary duties and misappropriated trade secrets. Though ICS and the ex-Motorola Managers denied the allegations, a settlement was reached on 27 March 2000, where Motorola agreed · to dismiss the lawsuit in exchange for the defendantsÕ agreement to make an undisclosed monetary payment; 170 P. Ganguli / World Patent Information 22 (2000) 167±175 · to refrain from using or disclosing Motorola con®dential information, and for limited time periods to refrain from using certain design technologies; · to restrict further hiring and solicitation of Motorola employees and · to grant Motorola certain rights to use certain ICS intellectual property. [http://www.motorola.com] ColorSpan vs Sentinel Imaging dealt with a case on infringement of Trade Secrets in which ColorSpan was awarded $2.2 million in damages in a 1997 judgement [7]. ColorSpan alleged that Sentinel had stolen part of its market of consumables for its wide-format inkjet printers by hiring two former ColorSpan employees who imparted trade secrets and customer information. 4. Inter-nation technology trade and IPR: a snap shot Recent data (see Table 1) from the ``1999 World Development Indicators'' show that the ``Balance of Technology Trade'' is heavily titled in favour of a few nations whose expenditure on R&D as % of GNP have been high [8]. In these countries the balance of payments of exports of high technology (measured as % of manufactured goods/services exported) is positive or a low negative. USA distinctly stands out as a nation with positive high technology trade balance. Japan had a sizable technology trade negative in 1995 but has considerably narrowed the gap in the last 5 years. One of the factors identi®ed towards contributing to enhancing the national technology trade balance is focused utilization and trading of a country's national intellectual assets. The IPR especially in the form of patents for innovations in high technology areas are often in the hands of developed countries. It is evident that the primary and immediate bene®ciaries of the programme of harmonization of intellectual property are likely to be the already industrialized nations which have a suitable infrastructure for science and technology and for IT based communication and information dissemination systems. Developing countries in Asia and the Latin America and several countries in Africa with inadequate infrastructure and expertise have been at a distinct dis- Table 1 Inter-nation technology tradea Name of the country Australia Austria Brazil Canada China Finland France Germany India Ireland Israel Italy Japan Korea, Rep Malaysia Mexico Netherlands Philippines Portugal Russian Fed. South Africa Spain Sweden Thailand UK USA a a Expenditure for R&D % of GNP High-technology exports Royalty and license fees Patent applications ®led* $ millions % of manufactured exports Receipts ($ millions) Payments ($ millions) Residents Non-residents 1985±95 1997 1997 1990 1997 1990 1997 1996 1996 1.7 1.5 0.6 1.6 0.5 2.5 2.4 2.4 0.8 1.4 2.2 1.1 2.9 2.8 0.4 0.4 2.1 0.2 0.6 0.7 0.7 0.9 3.4 0.1 2.2 2.5 6,415 11,975 5175 33,068 33,344 8797 68,655 112,243 2654 26,467 6870 32,747 152,431 44,433 39,490 29,692 57,082 6249 2185 3809 d.n.ia 13,452 21,969 17,758 95,755 197,657 49 24 18 25 21 26 31 26 11 62 33 15 38 39 67 33 44 56 11 19 d.n.ia 17 34 43 41 44 162 91 12 d.n.ia d.n.ia 50 1295 1987 1 38 62 1040 2866 37 d.n.ia 73 1086 1 14 d.n.ia 54 19 563 0 3055 16,635 295 185 32 d.n.ia 55 93 2046 3168 12 110 187 490 7303 252 d.n.ia 130 2085 18 26 176 73 211 1000 44 6901 33,676 826 287 54 d.n.ia d.n.ia 317 1629 3797 72 591 73 1959 6051 1364 d.n.ia 380 1751 38 117 d.n.ia 130 1022 743 170 3575 3136 1074 691 529 d.n.ia 543 504 2476 4694 150 4140 183 1004 9620 2413 d.n.ia 501 2455 158 285 11 258 1565 957 804 6332 9411 9196 2506 2655 3316 11,698 3262 17,090 56,757 1660 925 1363 8860 340,861 68,446 d.n.ia 389 4884 163 105 18,138 ± 2689 7077 203 25,269 111,883 34,125 75,985 29,451 45,938 41,016 61556 81,418 98,338 6632 52,407 12,172 71,992 60,390 45,548 d.n.ia 30,305 61,958 2634 71,544 28,149 ± 81,294 76,364 4355 104,084 111,536 Source: World Development Report, 1999. Data not indicated. P. Ganguli / World Patent Information 22 (2000) 167±175 advantage as receivers of technology from developed nations. Article 7 of TRIPS states: ``The protection and enforcement of IPR should contribute to the promotion of technological innovation and to the transfer and dissemination of technology to the mutual advantage of producers and users of technological knowledge and in a manner conducive to social and economic welfare, and to a balance of rights and obligation.'' Article 8.2 of TRIPS states: ``Appropriate measures, provided they are consistent with the provisions of the agreement, may be needed to prevent the abuse of IPR by right holders or the resort to practices which unreasonably restrain trade or adversely a€ect the international transfer of technology.'' It is clear that di€erent nations at diverse points in the development curve will have to identify their areas of focus and build niche areas of expertise so that they can barter their intellectual assets with other nations to appropriately service their national needs. These countries have to build up their capabilities despite the already existing wide phase lag. In addition to improving their economic conditions they will need to create enabling and supporting policies for protection of intellectual property to meaningfully participate in global trade. One also has to consider the costs and vulnerabilities associated with such a transition. Funding this change in developing and least developing countries will have to be generated partially from internal sources and largely through foreign direct investments (FDI) from developed countries. This mode of technology and know-how transfer will require local capability to receive and adapt the imported technology. Some preconditions e€ective transfer would be domestic innovative capacity, a market structure to support competition and a basic enforceable intellectual property system in the receiving country. One of the concerns expressed in most international fora is the possible misuse or overuse of IPR by the ``Technology Giving Country'' in the ``Technology Receiving Country''. A regulatory structure in the form of strong ``anti-trust'' laws or even appropriate ``compulsory licensing'' should be in place in the country receiving the technology. TRIPS have provisions to tackle these situations. The issue is whether countries at rudimentary phases of development have the capability and expertise to manage these complex issues on priority in the immediate and medium term. The other aspect is whether the developed nations would genuinely commit technology transfer and participate in the capacity building expertise with developing and least developed nations. The WTO and other international bodies will have to play the regulatory role to ensure global knowledge transfer and equitable sharing of bene®ts. Serious debates have erupted on whether WTO is a ``balance enabler'' of a club that is a threat to National 171 Sovereignty of member nations. The success and survival of WTO will be determined by its response to such challenges. It will need careful handling with active and concerned participation from all nations whether ``developed, developing or least developed''. 5. A social evil ± counterfeiting and piracy An area of growing societal evil and concern is trade of pirated and counterfeit goods. In addition to creating business losses this menace is intimately linked to the issues of non-standard products especially when it relates to items of human or animal consumption and health. About US$250 billion a year is lost by American companies from theft of intellectual property alone [9]. The International Intellectual Property Alliance (IIPA), an organization of US Trade associations whose 1350 member companies are dependent on copyright protection, estimates that in 1996 US copyright-based industries lost a total of US$10.7 billion to pirates outside the US. Of this amount, motion picture losses were US$1.8 billion, and sound recording and musical composition losses were US$1.2 billion. Computer programs and books account for the remaining losses [10]. It is estimated by the Anti-Counterfeiting Group (ACG) that UK alone is annually worth £300 million ($500 million) a year to counterfeiters and that the costs to the UK businesses in lost sales amount to about £6 billion a year in addition to the damage to brand value. Each year trademark theft causes £37.8 million in losses for the UK perfume and toiletries market [11]. Spanish companies estimate volume of losses from counterfeit to be approximately 25±35% of their national turnover [12]. In Brazil, estimates of counterfeit drugs total as much as 5% of the industry's yearly sales of about US$5 billion [13]. A government report shows that pirated movies and videos worth US$8.48 million was imported into New Zealand in 1998±1999. Revenues from pirated CDs in Germany exceed US$262.6 million in 1999 [14]. A study on global software piracy (see Table 2) released by the business software alliance and Software and Information Industry Association (SIIA), estimates that during 1998 of the 615 million new business software applications installed world-wide, 231 million (38%) were pirated (an increase of 2.5 million more applications than were pirated in 1997). In 1998 Asia's dollar losses were US$3 billion, down US$900 million from US$3.9 billion in 1997. Piracy-related revenue losses to the global software industry were estimated at US$11 billion. Such losses to businesses make protection of intellectual assets imperative using all the tools of IPR. Owners of intellectual property should also become more diligent and aggressive about policing and 172 P. Ganguli / World Patent Information 22 (2000) 167±175 Table 2 1998 BSA/SIIA Asia Paci®c software piracy study resultsa Asia/Paci®c region a Piracy rates (%) Piracy losses (retail US$ million) 1996 1997 1998 1996 1997 1998 Australia China Hongkong India Indonesia Japan Korea Malaysia New Zealand Pakistan Philippines Singapore Taiwan Thailand Vietnam Other Asia/Paci®c 32 96 64 79 97 41 70 80 35 92 92 59 66 80 99 86 32 96 67 69 93 32 67 70 34 88 83 56 63 84 98 83 33 95 59 65 92 31 64 73 32 86 77 52 59 82 97 74 128.3 239. 192.2 703.8 1449.5 1193.4 129.1 122.2 88.6 255.3 184.7 197.3 197.3 193.3 58.8 1190.3 752.6 596.9 515.5 582.3 197.5 121.5 82.6 79.3 29.3 20.3 21.8 23.1 20.4 22.7 70.7 49.2 31.1 56.6 56.6 58.3 117.0 136.9 141.3 137.1 94.4 48.6 15.2 10.1 10.3 49.1 32.0 16.7 Total Asia/Paci®c 55 52 59 3739.3 3916.2 2954.8 Source: IP Asia 1999; 11(5):13. enforcing their IP rights. It opens up wide possibilities in legal licensing of intellectual property, creates an environment for substantiating the validity of patents, trademarks, etc., encouraging innovations, enhancing sharing of value-added knowledge and integrating management of intellectual property in business processes. In 1999, the cloth designing company ``Tommy Hil®ger'' was paid $6.4 million by Wal-mart to settle a Trademark and Counterfeiting and Contempt Case in Canada. Tommy Hil®ger claimed that Wal-mart sold counterfeit Hil®ger tee-shirts and socks both on the internet and in stores [15]. It should be appreciated that IPR are not static legal structures but have to undergo directed metamorphosis to ®ne tune with the changing national and global socioeconomic, technological, trading and political developments. The unprecedented advances in science and technology have in some ways out-paced the legal structures thereby requiring a constant review to arrive at relevant and workable intellectual property laws in the present and future contexts. This ``constant transitional'' aspect makes its appreciation a must for researchers, business entrepreneurs, corporate houses and national policy makers and implementers. 6. Enforcing IPR The past decade has also seen a conscious global effort by owners of IPR to enforce them through ag- gressive litigation in courts. The courts worldwide are now taking more favourable views towards IPR holders and awarding fairly large damages in cases of infringement and counterfeiting. This is a positive development that will signi®cantly impact in world trade and judiciary and corporate governance. A few examples are included to illustrate a spectrum of involved issues: (i) Honeywell in 1993 won $96 million damages from Minolta for infringement of Honeywell's auto-focus technology for cameras. This judgement was e€ectively used by Honeywell to make several licensing deals with other camera manufacturers which brought in an additional $400 million. This demonstrates the spillover effects of con®rmed and established knowledge ownership [7]. (ii) Polaroid vs Eastman Kodak continues to be a historic judgement in 1990 when Polaroid won over $900 as compensation from Kodak for infringement of its patents related to instant cameras. $454 million was awarded as compensation and $455 million was added as interest. Kodak is also known to have moved out of the instant camera market after the case. This Illustrates the potentially disastrous impact on a Corporate for infringing someone else's IPR [7]. (iii) Hughes Aircraft vs US Government case running since 1973 was concluded in 1999 when the US government was ordered to pay $154 million to Hughes for infringement of a patented technology on controlling orientation of satellites. In this particular case, the US government invoked its privilege of invoking a compulsory license in the public interest. The court accordingly worked out the compensation to Hughes Aircraft [16]. (iv) SmithKline vs Fujimoto involved SmithKline Beecham (SB) and its Japanese subsidiary, SmithKline Beecham Seiyaku KK (SBS, based in Tokyo). The Tokyo District Court in 1998 ordered Osaka-based Fujimoto Pharmaceutical (Fujimoto) to pay Yen 3059 million and interest in damages comprising royalties and lost pro®ts incurred from the infringing sale of FujimotoÕs generic Cimetidine product Cylock. Cimetidine is the active ingredient of SBÕs successful anti-ulcer registered drug Tagamet. The period of infringement was from December 1986 until the expiration of SBs Cimetidine process patent on 5 September 1993. Breakup of $25.6 million is as follows: Yen500 million ($4.2 million) in royalties and Yen2.5 billion ($21 million) in lost pro®ts, based on a 15% pro®t rate [17]. (v) Hoechst Celanese v BP Chemical is an account of pro®t trial case that decided Hoechst was entitled to little more than a half million pounds. Hoechst had claimed that BP earned £136 million from its infringement of one of its patents for removing iodide impurities from acetic acid. The two BP plants where the alleged P. Ganguli / World Patent Information 22 (2000) 167±175 infringement took place were considered as two distinct businesses because di€erent methods were used to produce acetic acid at the plants. The costs in the two plants were also di€erent. One of them was loss making and therefore the court decided that nothing needed to be paid based on the earnings (if any) from that plant [18]. (vi) From the ®nancial information provided by BP regarding its earnings and costs, the court assessed BPs pro®ts from the other plant at £94.6 million. The court put the damages at 0.6% of the total pro®ts of the plants. Consequently Hoechst should receive 0.6% of £94.6 million i.e., £567,840. (vii) Fonar vs General Electric is an example demonstrating that size of a ®rm does not necessarily matter while enforcing IPR. Fonar had ®led several patents in 1970s related to magnetic resonance imaging techniques and machines for in situ and non-evasive detection of cancer and diseases in living bodies. Subsequently General Electric and Hitachi entered this market. Fonar ®led infringement suits against these companies. Hitachi settled out of court [19]. As the end of the suit, GE was ordered to pay $128.7 million to Fonar. Interestingly Fonar's annual revenue is only $17 million. Fonar claimed it lost pro®ts corresponding to 600 MRI machines it could have sold if GE had not infringed its patents. The Jury concluded that, inter alia, Fonar could have sold 75 machines and therefore awarded them lost pro®ts for 75 machines @ $371,000 per machine and royalty for 575 machines @ $65,000 per machine. (viii) Chanel Inc. reported that Los Angeles County State court has ordered a counterfeiter to pay the company $1 million in restitution [20]. (ix) Bags of New York Inc., a handbag manufacturer, has been ordered to pay nearly $800,000 to Sara Lee Corp. for willful and deliberate counterfeiting of Coach leather products. Coach is a division of Sara Lee [21]. (x) In February 1997, the Toyama District Court (Japan) awarded Kissei Pharmaceutical, Yen 1120 million ($9.3 million) in a litigation related to infringement of a pharmaceutical process patent. Kissei had successfully sued 14 defendants, including Boehringer Mannheim, Toa Wool Spinning and Weaving, Ohara Pharmaceutical and Towa Medicine over KisseiÕs process patent relating to Tranilast registered as an antiproliferative agent and marketed by Kissei as Rizaben (a registered trademark). This is another example of the spillover e€ect of an established infringement proceeding [22]. 7. New dimensions and issues for resolution As technology explores newer dimensions and uncharted paths in the coming decades, IPR will assume conducive forms to encourage innovation, knowledge sharing in a ®ercely competitive network. A preview of 173 the scenario in the next 10 years will involve many interlaced issues such as: (i) Domain names and trademarks; copyright in cyberspace. Steps have been initiated by nations by incorporating special clauses in their cyber laws that are being formulated. There are several court judgements in the last two years that discourage cyber squatting. This area needs rapid development through international cooperation. (ii) Rights on traditional knowledge, prior art, material transfer agreements and bio-prospecting. De®nition and scope of traditional knowledge in diverse forms (including folklore/oral transmission and traditional practices) needs to be arrived at. Present day IPR frameworks in practice tend to emphasise documented knowledge as prior art. Similarly, ownership of traditional knowledge needs to be legally de®ned, as this will play a vital role in determining the dynamics of protecting small innovations in communities and resolve debates on bene®ts sharing by corporations involved in bio-prospecting. Formalizing enforceable ``materials transfer agreements'' and legalities associated with them are key issues to be dealt with by the national policy makers. E€ective exploitation of provisions in IPR legislations such as ``Geographical Indications'', ``Petty Patents'' could assist the protection of innovations, distinct community practices, traditional art forms, designs, handicrafts etc. These need to be explored. (iii) Software and patents. The controversial issue whether software per say is patentable needs to be resolved. Software is protected by copyright in most parts of the world. However the 1998 judgement by the US Court on ``State Street Bank and Trust Co vs Signature Financial Group'' decision, held computer software for conducting methods for doing business to be patentable subject matter. In 1993, Signature received a patent for its data processing system for hub-and-spoke structured funds. The system simpli®es the calculating of net asset value (NAV) of funds participating in a hub-and-spoke system. Under the hub-and-spoke mutual fund structure, the hub receives and manages the assets that come in through di€erent spokes or distribution channels. In a July 1998 decision, the US appeals court decided using a mathematical formula with the aid of a computer is patentable when it produces ``a useful, concrete and tangible result'' such as a fund NAV. With software playing a crucial role in business processes their protection will become major issues in the coming years. (iv) Biotechnological inventions and moral issues and patents. Rapid advances in biotechnology have already put legal circles into a dilemma with respect to patentability of inventions and moral societal issues. A crucial feature of signi®cance in the future will be in 174 P. Ganguli / World Patent Information 22 (2000) 167±175 determining the ®ne di€erence between ``discovery'' and ``invention'' while deciding on ``patentable subject matter'', ``novelty'' and ``inventiveness''. For example, in the USA an isolated and puri®ed form of a natural product is patentable if it is found in nature in a nonpuri®ed form. Similarly in the European Patent convention a patent can be granted when a substance found in nature can be characterized by its structure or by other criteria, if it is new in the sense that it was not available to the public in that form. Such interpretations have also been extended to patent gene sequences, isolates of DNA, etc. One maybe can argue that if microorganisms or naturally occurring substances in plants and animals can be considered for patenting what about extension of this logic to the whole range of complex ores, marine reserves, etc.? Such issues need to be taken into consideration while framing national IPR policies. (v) Compulsory licensing options, border measures and parallel imports and exhaustion of IPR. The TRIPS agreement covers these features though not in a very elaborate manner. These issues are crucial deciders in the mechanics of world trade and will need to be looked into with extreme care, as they ought to balance public vs private interests and also protect consumer interests. (vi) Government control on export of technology. Instruments such as the special provisions of US 301 to control export of technology is an area of concern as it can create asymmetric imbalances in the transfer of technology, knowledge sharing and trade between nations. Under certain circumstances these in their operative form may be considered to be ``anti-competitive'' practices between nations. This list is not exhaustive but highlights a few key issues. 8. Accelerating into the future The growing demands of knowledge-centric societies will need a new national vision, outlook and commitment to prepare for the future that is to emerge. IPR among other priorities will dominate the course of a nation in the path of innovation and progress. This will require a con¯uence of diverse expertise, an enabling infrastructure, a systematic analysis of national strengths and weaknesses to identify the niche knowledge areas in which a country could excel as these would be the hook-up points for e€ective participation in global knowledge trade. International trade agreements such as the GATT will undergo considerable change with active and balanced participation of developed and developing and least developing nations to arrive at mutually bene®cial provisions that will in¯uence the conduct of nations. IPR will have to ®gure in the main agenda of national policy making. The following steps are being suggested, with particular reference to the situation in India: · constitute an integrated single window National IPR Commission to deal with IPR policy issues; · integrate national technology planning with IPR and trends in international technology trade; · implement a formal national IPR literacy mission; · set-up IPR training institutes to prepare technically quali®ed attorneys; · introduce an enabling national taxation policy to encourage innovation, building of IPR portfolio and its utilization in technology transfer and trade; · urgently modernize the IPR administrative structures in the country; · improve the infrastructure for access and e€ective use of IPR information. There is an urgent need to harmonise the patent classi®cation systems to ease and optimise processes in patent searching; · re-structure the judiciary and enforcement machinery for professional and speedy response to IPR issues; · training of corporate and institutional managers on e€ective management of IPR; · standardise models for valuation and audit of IPR; · evolve national taxation policies of development, use and transactions linked to IPR. Some of the trade designations included in this communication may be registered as trademarks in certain countries around the world. As this is a worldwide publication, it is not practical to comment on or acknowledge the position in each country more precisely. Editor's note Some of the trade designations included in this communication may be registered as trademarks in certain countries around the world. As this is a worldwide publication. it is not practical to comment on or acknowledge the position in each country more precisely. 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