Intellectual property rights (IPR), the catch-all term that covers copyright, moral rights, patents, design rights and trademarks, is an area prone to considerable confusion and misunderstanding. The rapid growth of global Internet trading has made the area even more complex while underlining the considerable value of these invisible assets to the companies that own them. Indeed, most CEOs, given a hypothetical choice between losing the company's entire physical assets or its IPRs, would plump for hanging on to the latter, as the business would have no real trouble restarting as long as its trademarks remained intact.
IBM capitalises hugely on IPR, reputedly making more out of licensing patents and associated technology than it does out of selling PCs, while other IT companies like Intel, Toshiba and AT&T are not far behind.
Copyright is a legally supported concept which recognises that the creator of an original work, or some third party, has rights over it once it's been released publicly. This should then facilitate some form of financial return, so rewarding the creator and providing support for future development. It's important to note that copyright does not apply to ideas but only to their expression, something that requires some skill and effort.
One widespread myth is that copyright doesn't apply to Internet activities. Similarly, employees are sometimes startled to find that they usually have no rights over the software development they've done for their company. Also, companies commissioning consultants, Web developers or bespoke software often assume that because they've paid for it, the copyright belongs to their company - a naive view, given the instances to the contrary that have been disputed and publicised.
With the growth of the Web, some publishers have taken to reproducing works electronically for which they only have printed rights, something the recent US Federal Appeals Court decided was illegal in the case of Tasini vs The New York Times. US court decisions aren't binding in other countries, but there's been a clear move over the past few years for the decisions of different national courts to be taken into account when considering disputes elsewhere.
Philip Atkinson, head of intellectual property (IP) for law firm Eversheds in Birmingham, says that IPRs are now very valuable and it's important that companies recognise this and act both to safeguard and to financially exploit such assets. "Selling software is actually selling the right to use it under certain conditions," he says. "And software publishers should take the trouble to licence carefully, taking account of the three elements of territory, period and market."
Atkinson also points out that there are complex tax implications in valuing IP which many, including accountants, just don't understand. He warns: "Companies not only have free access to the world's markets now, they also have free entry to the world's courts."
The next Budget is expected to bring in legislation that will go a long way towards harmonising many of the tax implications for IP in this country, remarks Andrew Bell, corporate tax specialist with PricewaterhouseCoopers, who works purely on high-tech issues. "Tax regulations concerning IP are complex and confusing and many companies unwittingly ignore them, while others act with undue caution to safeguard themselves. At present, for example, someone licensing IP from a different country might need to withhold UK tax on their payment overseas. It's probable that there will be a move towards recognising IP values based on the asset value shown in company accounts," he says.
One current high-profile area of conflict is the area of domain names, particularly where the so-called generic Top Level Domains (gTLDs) are concerned. Names in the classes denoted by .com, .org and .net are not dependent on territory, despite what many, particularly in the US, tend to think.
According to Francis Gurry, assistant director general of WIPO (world intellectual property organisation), the two main issues currently concerning that body are cybersquatting and reverse domain name hijacking. The former takes place when someone registers a domain name to which they have no reasonable right, with the intention of later holding someone with a legitimate interest to ransom. The second problem arises all too frequently when a large company tries to throw its weight about and force a domain name owner with a legitimate title to relinquish their rights.
The problem comes with the impossibility of mapping trademarks, specific to a territory or industry, on to domain names. "Acme", for example, might reasonably be trademarked in several different countries by several different businesses and even used by corner shops with no undue problem. However, only one organisation can hold acme.com or, for that matter, acme.co.uk.
This issue is here to stay until some other way of naming domains emerges. In the meantime, the message is that cybersquatting will be dealt with heavily while in other areas it's a case of "first come first served" among applicants with legitimate interests.
Another issue splitting the US and Europe is that of software patenting. In the US, big business has undue influence in lobbying, with the result that it's long been practice to allow patenting of software. Although this might seem superficially attractive, there are potentially serious consequences for consumers and innovative development.
There's a parallel here with the patenting of genetic material, particularly the so-called "killer gene" devised by Monsanto to prevent the seeds of its GM product being used for next year's crop - a move that can potentially tie small farmers and great swathes of third-world agriculture to large corporations.
All intellectual development builds on what went before; as Roman philosopher Seneca said: "The best ideas are common property" - and copyright needs to take account of the interests of both holder and user. The consequences of ignoring the rights of IP holders would be a serious loss of original work. But, riding roughshod over the rights of consumers, as many in the music, film and software industries frequently want to do, would have no less undesirable consequences.
This was first published in March 2000