THEME INTANGIBLE RESOURCES PLAN 1 Essence of definition

THEME: INTANGIBLE RESOURCES PLAN 1. Essence of definition of nonmaterial resources 2. Types of non-material assets 3. Estimation of cost of non-material assets

Intangible resources – the part of the potential of enterprise, which is capable to accelerate economical benefit during long period. Absence of material base of getting profit and indifference of size of future profit of it’s usage is typical for intangible resources.

Intangible resources Objects of industrial property -Invention -utility model -industrial design -Trademark -Sorts of plants and breeds of animals Objects of intellectual property -Patent -Copyright -Trade Secret - Software - Database -banks of knowledge Other intangible assets -Know-how -Rationalization suggestions - Goodwill

Industrial property is the concept which is used for description of absolute ownership rights on the certain intangible values Paris Convention for the Protection of Industrial Property of March 20, 1883

Invention is the decision of requirement specification, which foresees the presence of certain technical sign, differs an important novelty and provides the receipt of positive effect.

n n n Invention Conception (the light bulb) Reduction to practice (RTP) Diligence from conception to RTP 6

INVENTION Two elements to any invention: n n conception - an idea that is complete enough that the invention can be made by others; the “light bulb” paradigm reduction to practice - has the invention in fact been made/practiced? reduction to practice may be actual or constructive 7

INVENTORSHIP n n n first determine what the invention is; focus on the claims and what is patentable examine both conception and reduction to practice (i. e. , was conception complete? ) who did what, under who’s instruction, and at what time? you can have single, joint or co-inventors correction can be made at any time so long as there was no prior deceptive intent 8

If you do not document, someone can and likely will steal your invention!

Why Keep Records n n n For patent purposes it aids in writing the patent Establish a date of invention Not necessary to keep a lab notebook - unless your invention is valuable and how do you know that in advance? q q Usually never needed When needed, is desperately needed 10

Conception n Idea of a complete and operative method or means to solve a problem—in other words, the formation in the mind of the inventor(s) of the fully functional invention as it is to be practice in its final form. 1. In other words, you know what you’ve got, what you’re doing and where you’re headed. 11

INTERNATIONAL PATENTS n n n major difference is that whoever is “first to file” gets the patent, not the person to invent first also, there is no one year grace period for the inventors’ own publications (except CA and JP) Paris Convention gives you one year to file abroad in all signatory countries Patent Cooperation Treaty (PCT) is a vehicle to maintain foreign rights for relatively minimal cost (few exceptions such as Taiwan exist) certain types of claims may not be available overseas (diagnostics and therapies on the human body, engineered plants & animals) 12

The invention can be constructions (of technical constitution), technology (methods or processes), methods of receipt of new materials and creation of new products (chemical and biological matters).

n Industrial design is technical and esthetically beautiful design of product, which provides its novelty, originality and fitness to the industrial making.

n Utility models - it is models which after its structure foresees high-quality and quantitative transformations, connect with the changes of form, original appearance, placing of separate knots and details (constructions) of product. n Trademark - identifies a unique source of goods or services with a protected name, symbol or combination .

TRADEMARKS What is a Trademark? n n n A word, name, symbol, or device Used to identify the source of a good or service Can be used to identify the seller and/or the product (Coke® vs. Viagra®)

Brands make you feel good (or bad) 17

Adopting a New Brand Evaluating Existing Brands n Distinctiveness n Availability 18

Distinctive Marks Are Best 19

Proper Use of Trademarks n n Make them stand out Use ® and ™ symbols Identify them as your marks Use them to modify generic terms q q q Never use as nouns Never plural or make possessive Never use as verbs

Trademarks That Became Generic YO-YO CELLOPHANE ESCALATOR THERMOS 386 ASPIRIN (generic) vs. TYLENOL (still protected)

Trademark Infringement n n Likelihood of confusion (Dreamworks vs. Dreamwerks) Marks need not be identical to conflict Nature of products, buyers, channels are key Highly subjective, factual inquiry

n Breeding - application of genetic principles in animal husbandry, agriculture, and horticulture to improve desirable qualities. n Breed in animal husbandry, a group of agricultural animals of one species (cattle, horses, sheep, swine) requiring the same maintenance conditions and having similar physical and economically useful hereditary characteristics. A breed usually includes a large number of animals (as many as 5, 000 breeding females according to D. A. Kislovskii) to make it possible to select for and against traits within the breed, thus improving the breed further.

Intellectual property is a legal concept which appropriate a copyright and other rights on the products of intellectual activity.

FORMS OF INTELLECTUAL PROPERTY n n n Patent - gives the right to exclude others from making, using, or selling your invention Copyright - protects the copying of original works of print or art (book, movie, painting) Trade Secret - protection by virtue of secrecy (Coke’s secret formula) 25

Patents (a great idea) 26

PATENTS n n the three different kinds of patents are utility, design and plant patent only confers the right to exclude others; no right to practice your own invention remedies include injunction and damages (often measured by reasonable royalty) treble damages for “willful” infringement (which is hard to prove) 27

Patent Requirements In order to obtain a patent, the invention must: n q q q n Be unique (novel) Be useful (utility) Be non-obvious Be disclosed Be described so others can make it (enablement) These requirements are established through the patent application process. 28

PATENTABILITY n n claims (see examples) determine scope statutory subject matter includes machines, articles of manufacture, compositions of matter, processes (including new uses) q q Human beings (organs? ), raw DNA sequences, natural objects or organisms are excluded subject matter also includes printed matter (subject of copyright) and pure algorithms 29

Sample Claims “We claim…” (1) (2) (3) (4) A compound of the formula X. A pharmaceutical formulation for a compound of the formula X. A method of using compounds of the formula X to treat diseases 1, 2 … 10. A method of treating disease 2 comprising the steps (a), (b) and (c) 30

Copyright n Copyright protection originates in the Constitution q n to promote the progress of Science and the Useful Arts by securing for limited times to Authors and Inventors the exclusive right to their respective writings and drawings. ” Purposes q Limited monopoly provides incentives to create 31

What is Protectable? n n n Original work of authorship q Independent creation q Some amount of creativity Fixed in a tangible medium of expression q Physical record Examples: q Protectable: literary works, computer programs q NOT Protectable: titles, slogans, ideas, processes (use Trademark or Patent instead) 32

Rights n Exclusive rights to (or authorize others to) q q n Reproduce a work Prepare a derivative work Distribute copies Publicly perform or display a work Violation of one of the exclusive rights is the basis for infringement. 33

Trade Secret n Definition: A trade secret can be any information that derives independent economic value from not being generally known or readily ascertainable. Among the things that can be trade secrets are a formula, pattern, compilation, program, device, method, technique, or process. 34

Loss of Rights n Losing the rights of Trade Secret protection is very simple, the information becomes public (whether by choice, accident or malice) 35

Intellectual property is used for: — confession of creative job of man performances (inventions of science, technique, art and other types of activity); — description of property rights of man performances as creative job which correlates with the subjects of creative activity ;

— fixing after these subjects of personal non-property and property rights, related with development and use of the created intellectual products.

Objects of intellectual property: Under software we understand the programs (general software) and orientation on the decision of tasks of certain class (special software).

Software : n Model licenses q q n n Exclusive Non-exclusive Source code Object code May include third party elements May include “open source” software 39

Database - it is an aggregate of the systematized information from the certain sphere of knowledge, sufficient for the decision of theoretical and practical tasks on the basis of realization the logical operations. Bank of knowledge - it is a depository of knowledge, which consists of information and facilities of its accumulation, storage, update and use

Other intangible resources: Know-How – various knowledge or scientific and technical experience, industrial or other in character, which are not well-known, are not protected by right of industrial (intellectual) property and can be practically used.

Rational suggestions – new technical suggestions according improvement of technique and technology of production, methods of control, which assist in increasing of volume and quality of production.

Goodwill – is the main capital of firm, which doesn’t have material shape: Reputation of firm Prestige of brands Marketing position Regular clients, which can give additional profit to a firm by means of increasing its competitiveness.

Intangible assets – Value of products of industrial, and Intellectual property, other Similar rights determined by Object of ownership of Specific enterprise.

Kinds and characteristics of Intangible assets 1. Rights for natural resources using. 2. Rights for brands of goods and services 3. Rights for objects of industrial property 5. Copyright and similar rights 6. Goodwill 7. Other intangible assets

Classification of intangible assets according to time of their minimum life Groups Group 1 - the right to use natural resources (the right of subsoil use, other resource protection, geological and other information about the environment); Minimum time of usage According to the title document Group 2 - the right to use property (the right to use land, except the right to permanent use According to the title document of land, according to the law, the right to use the building, right on lease of premises, etc. ); Group 3 - the right to commercial designations (rights to trademarks (for goods and services), commercial (company) names, etc. ) except those acquisition costs are recognized as royalty; According to the title document group 4 - the right to industrial property (inventions, utility models, industrial designs, plant According to the title document, varieties, animal breeds, layout (topographies) of integrated circuits, trade secrets, but no less then 5 years including know-how, unfair competition, etc. ) other than acquisition costs are recognized as royalty; Group 5 - copyright and adjacent rights (right to literary, artistic, musical compositions, According to the title document, computer programs, programs for computers, compilations of data (databases), but no less then 2 years phonogram, video broadcasts (programs) to broadcasting organizations, etc. ) than those acquisition costs are recognized as royalty; Group 6 - other intangible assets (the right to operate, the use of economic and other benefits, etc. ) According to the title document

Features of legal protection of elements of intangible assets Patent - document which grant person or enterprise exclusive right for usage of device or labor-saving proposition. Copyright – is a system of legal rules, which define exclusive right of authors on their scientific, literature or art achievements or activity.

Patent owner has the monopoly right for industrial or other commercial usage of intangible resources and if it is necessary can forbid to use it without special permission.

Realization of ownership for material resources could be expressed: - By means of use of right for material resources by owner - By granting other person by such right

License agreement Agreement according which owner of device, trade mark etc. gives the right of usage his device rights for patents, know-how, trademarks etc. to other person.

License Permission to use intangible resources which provide the usage of object of industrial or intellectual property during period agreed in license agreement and for the payment (license fee) for it’s usage.

License fee Royalty Flat rate fee

Methods of estimation of intangible assets Cost price Purchasing cost Market cost

Expert methods of estimation of value of Intangible assets: Determining the current value Capitalization of profit Using both methods

Expert estimation of value of intangible assets: Пп ‑ balance profit of object of privatization after calculation of corporate tax with monthly indexation. Ск ‑ capitalization rate; Вб ‑ value of whole property system, Uah.