Intellectual Property Protection in a Rapidly Globalising Economy

Intellectual Property Protection in a Rapidly Globalising Economy Asset or Liability? Presentation & Dialogue with Prof CC Hang Chairman, Intellectual Property Office of Singapore 7 April 2004

No. of Patents Granted to Residents (IMD World Competitiveness Yearbook 2003*) Rank Japan (1 st) No. of patents granted to residents 123, 978 US (2 nd) 83, 090 Korea (3 rd) 34, 052 Taiwan (4 th) 20, 094 Germany (5 th) 18, 328 Russia (6 th) 16, 340 France (7 th) 11, 290 UK (8 th) 4, 491 Italy (9 th) 3, 983 China (10 th) 3, 742 Singapore (45 th) No. of Patents granted to Singapore residents in 2003: 240 63 *Based on no. of patents granted to residents (average 1998 -2000)

No. of Patents Granted Per Million Population by the US Patents and Trademark Office (WEF Global Competitiveness Report 2003) Rank No. of patents granted per capita USA (1 st) 301 Japan (2 nd) 273 Taiwan (3 rd) 241 Sweden (4 th) 190 Switzerland (5 th) 189 Israel (6 th) 165 Finland (7 th) 155 Germany (8 th) 137 Canada (9 th) 109 Singapore (10 th) 97

No. of Patents Granted to Residents per 1000 R&D Persons (IMD World Competitiveness Yearbook 2003) Rank No. of patents granted per 1000 R&D persons Taiwan (1 st) 367. 7 Korea (2 nd) 263. 4 Japan (3 rd) 221. 6 New Zealand (4 th) 97. 6 South Africa (5 th) 95. 2 Thailand (6 th) 81. 3 Italy (7 th) 73. 8 Chile (8 th) 69. 4 Austria (9 th) 65. 6 France (10 th) 58. 0 Singapore (42 nd) 10. 7

Importance of IP – the IP Value Chain n n Creation Registration and Enforcement Exploitation Ownership Technological Success n Protected IP Exploitation IP Value Chain Creation and Acquisition Commercial Success Awareness IP-savvy culture and environment

Stac Electronics v Microsoft Corp n n 1993 – Stac Electronics (US) sued Microsoft (US) for software patent infringement The Stac patent involved software datacompression technology, used in Microsoft’s then-standard DOS operating system n Verdict: US$120 mil against Microsoft awarded in 1994 n Microsoft’s patent applications jumped from 6 to 60 per year!

Eolas Technologies v Microsoft Corp § 1999 – Eolas Technologies (US) sued Microsoft (US) for patent infringement § Eolas alleged that the Microsoft infringed on its patents when enabling Internet Explorer to use plug-ins and applets in the software § Verdict: US$521 mil against Microsoft awarded in 2003 § Microsoft has appealed and the case is pending

Priceline v Expedia n n Priceline (US) sued Expedia (US) in 1999 for infringement on it’s “nameyour-own-price” business model The dispute was subsequently settled out-of-court, with Expedia agreeing to pay royalties to Priceline

What is Intellectual Property (IP) n n Creation that is original and innovative Legally-protected in the form of • Patents • Copyright © • Trademarks. TM, ® • Designs • Layout-Designs of Integrated Circuits • Geographical Indications • Trade Secrets

Globalisation and Ecommerce – Challenges for IP protection n Ecommerce occurs globally ØIP can be used and licensed in many countries simultaneously, due to widereaching potential customer base via the internet § Global nature creates challenges in obtaining and enforcing IP rights in different countries

Global Challenges in Obtaining IP Rights n Differences on what can be patented ØE. g. In the US, business methods can be patented. E. g. Amazon’s “one-click” purchasing Ø e. Bay’s patent on information presentation and management in an online trading environment Ø ØBusiness methods are not currently patentable under the EU system

Different rules before patent can be granted n First-to Invent v First-to-File ØThe US uses the first-to-invent rule. Ø I. e. The first inventor who conceives and the technology or invention to practice. ØOther countries, e. g. the EU and Singapore, follows the first-to-file rule. Ø I. e. The patent is granted to the first person who files a patent application for an invention, regardless of who invented the technology.

Global Challenges in Enforcing IP Rights n n n Difficult to find the infringer and enforce IP rights that are violated on the Internet Unclear which country’s courts will have jurisdiction over disputes relating to ECommerce and IP Laws affecting IP vary from country to country so levels of protection may be different.

Trademarks and Domain Names n Due to the • higher costs of patenting • difficulty in obtaining patents in some instances n Companies ought to maximise their IP assets by obtaining strong protection for their Trademarks and Domain names.

Maximising your IP Assets n n n Globalisation is unstoppable – at the core nature of ecommerce IP assets needs to be maximised to overcome differences in global IP regimes IP must be used as a dynamic strategic tool to advance a company’s interests.

Strategic Use of IP Ownership n Market entry barrier n Cost saving n Source of income n Business expansion

Case Study 1– Preventing others’ IP from becoming your liability § Macronix International (Headquarters: Taiwan) • US$1 bil semi-conductor company founded in 1989 • Patent portfolio of 1200 patents worldwide § To avoid IP from becoming their liability, • In-house legal/IP team of 15 members, 13 of which are IP-trained • Defended itself against Atmel (one of top 10 semiconductor companies) in 5 US litigation cases. Won all 5 cases

Case Study 2 – Turning potential liability into mutual asset § Samsung Electronics (Korea) and San. Disk Corp (US) • Sued each other in California and Texas courts in 2002 over patent rights • Both sides found that it would be more beneficial to fight together rather than against each other • Dismissed the lawsuits and signed a seven-year extension to a deal that covers licensing and supply of flash memory technology

Case Study 3 – Profiting from IP n IBM (US) • In 1991, IBM was a net payer for the IP of others • IBM decided that it could and should adopt strategies to maximise its own IP assets • Embarked on an aggressive IP effort to ensure that patents were carefully mined, and all forms of IP were exploited through licensing • Close to 6, 000% growth in annual licensing revenue, from US$30 mil in 1990 to US$1. 8 bil today

Conclusion: IP protection – Asset or Liability? n n n Globalisation presents new challenges in obtaining and enforcing IP rights IP is an asset or liability - Depends on the extent of your company using IP as a strategic tool Proactive approach to IP ownership and use is imperative for IP to be an asset

Thank you