WHY FIRMS APPLY FOR PATENTS

Critically evaluate different motives why firms apply for patents?

Critically evaluate different motives why firms apply for patents?

Introduction

Intellectual property infringement has been a concern as long as intellectual property rights have been protected. In fact, instances of patent infringement were documented in the 19th century during the Industrial Revolution, when American law did not grant reciprocity to intellectual property developed in other countries. Early manufacturing in the United States was based on technology patented in Britain, without any compensation being paid to the legitimate foreign patent holders (Shipley, 2007, 15). At the time, this was condoned by the government in the United States.

Patents are granted to protect the opportunity of individuals and organizations to recoup their investment in inventions. Patent infringement occurs when the creator or user of an invention refuses to acknowledge the priority of the patent holder. The high cost of enforcing patents deters many holders from pursuing legal action, and many pirates take advantage of this.

Why Apply for Patents

Piracy of intellectual property remains a prevalent concern in the United States and abroad. Detection remains difficult (and is often not attributable to the source), and enforcement continues to be costly (Rosen, 2008, 19).

Piracy is tempting for many reasons, not the least of which is the ease with which it can take place. In addition, many people do not consider it theft since it does not involve obvious victims—owners of intellectual property are deprived only of the exclusivity of their rights, not of the rights themselves.

What pirates need to remember is that it is the system itself that creates the value of the intellectual property they steal. In other words, the value of copyrights, trademarks, and patents relies on the system of providing exclusive rights in exchange for investments in intellectual property. While the practices of these pirates do not constitute theft in the traditional sense, their actions do have significant financial consequences and do serve to undermine the system of intellectual property rights in general (Lindsey, 2003, 978).

As has been seen, the tension between encouraging competition and encouraging innovation has resulted in two bodies of law, antitrust and intellectual property. Writ large, the same tension has been taken into the international arena through various treaties. The WTO, founded by the General Agreement on Tariffs and Trade (the GATT treaty), is aimed at increasing competition worldwide by encouraging countries to lower duties and taxes so as to allow imports to compete in domestic markets, thus forcing domestic products to lower prices and improve quality. In conjunction, the World Intellectual Property Organization encourages countries to protect the copyrights, patents, and trademarks of imported products. Both organizations recognize that these goals are more difficult for developing countries than for already industrialized nations (Sorce, 2007, 77).

Misuse of IP continues to be a booming, if illegal, industry, as demonstrated by Nicole Piquero: In the United States, it has been estimated that the motion picture industry lost $1.25 billion between 1998 and 2002 due to piracy; worldwide estimates of the ...