Student Handouts Prof.

Henry, ISG

International Business Law and Its

Environment, 10e

Chapter 17
Protection and Licensing of
Intellectual Property

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Introduction

• Companies build intellectual property

portfolios to build a better bottom line
• Google buys Motorola with 17000 patents
• A patent gives company monopoly rights
• Kodak sells patent portfolio for $525M
• Litigation for infringement can end up
invalidating a patent

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Student Handouts Prof. Henry, ISG

Litigation

• See Apple Inc v Samsung Electronics

Co. Ltd (2013) case
• Jury award of $1 billion challenged by both
parties
• Judge reduces award and urges Parties to
appeal
• Judge orders new trial on half of damage
awards
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Reasons for Intellectual Property

Transfer Agreements

• Grant a license (royalty) for intellectual

property right (IPR); limited permission
• U.S. provide IPRs to foreign manufacturer
which then reexports to U.S.
• Transfer technology for sharing in joint
venture

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Intellectual Property Rights:

Transfer Arrangements

• Right to Use and Conditions of Use

• Geographical restriction: within a nation is
common. Field of Use restriction: limits use
and applications. Output Restrictions
• Competitive Circumstances
• Licensee may demand exclusive rights in
exchange for investment
• Confidentiality and Improvements
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Intellectual Property 2
Student Handouts Prof. Henry, ISG

International Protection (Slide 1 of 8)

• Paris Convention (1883)

• First international intellectual property
treaty
• National treatment for foreign
applications (TRIPS agreement now
provides enforcement mechanism)

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International Protection (Slide 2 of 8)

• Patents
• 1970 Patent Cooperation Treaty-
streamline application procedure, files
international claim with WIPO
• Scope of Patentable Subject Matter: See
the Diamond v. Chakrabarty (1980) case
in which the Supreme Court allowed
patent for living organisms
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International Protection (Slide 3 of 8)

• Trademarks
• Since 1996, EU Community Trademark
Regulation
• Madrid Protocol: centralized filing for
trademarks, WIPO enforced, U.S. has not
signed
• European Union Intellectual Trademark Office
(EUTM)
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Intellectual Property 3
Student Handouts Prof. Henry, ISG

International Protection (Slide 4 of 8)

• Domain Names
• ICANN adopted Uniform Domain Name
Dispute Resolution Policy
• Complaints submitted electronically to WIPO
• See the Mobile Communications Service v.
WebReg, RN (2006) case; respondent
registered domain name in bad faith

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International Protection (Slide 5 of 8)

• Copyrights: Berne Convention

• National treatment but does require
MINIMUM substantive laws
• Copyright symbol and date provides
protection all over the world
• WIPO Copyright Treaty: (2002): computer
programs are protected as literary work
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International Protection (Slide 6 of 8)

• Copyrights: Berne Convention (cont’d)

• See the TVBO Production Limited v.
Australia Sky Net Pty Limited (Australia,
2009) case; defendants were guilty of
copyright infringement by retransmission

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Student Handouts Prof. Henry, ISG

International Protection (Slide 7 of 8)

• TRIPS (effective Jan. 1, 2000)

• Requires every member of WTO to abide
by Paris and Berne conventions
• Seeks to remedy some of the weaknesses
of the Berne and Paris conventions:
• Sets minimum standards of protection from
member nations
• Enact provisions consistent with TRIPS 
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International Protection (Slide 8 of 8)

• TRIPS (cont’d)
• 20 year patent- all fields of technology, new,
involving an inventive step (non-obvious) and
are capable of industrial application
• Problems: escape clause- to protect order,
public morality, human or animal or plant life
or to avoid serious prejudice to the
environment

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Doha Declaration on TRIPS

and Public Health (Slide 1 of 4)
• The Declaration provides for the
extension of the transition period until
January 1, 2016 during which least
developed countries would be exempt
from providing patent and trade secret
protection for pharmaceuticals 

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Student Handouts Prof. Henry, ISG

Doha Declaration on TRIPS

and Public Health (Slide 2 of 4)
• 2003 TRIPS council allowed any WTO
member country to export
pharmaceuticals made under
compulsory licenses; Many problems!
• War of “Geographical Indications”
• A “mark” in one nation may be a generic
in another 
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Doha Declaration on TRIPS

and Public Health (Slide 3 of 4)
• War of “Geographical Indications”
(cont’d)
• Standardization is slow, and requires factual
analysis and context
• See the New Zealand-Comite Interprofessionel
due Vin de Champagne v. Wineworths Group,
Ltd. (1991) case; prohibited use of word
“champagne” in New Zealand

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Doha Declaration on TRIPS

and Public Health (Slide 4 of 4)
• Geographical Indications under the
Doha Development Agenda:
• (a) Create a multi-register for wines and
spirits
• (b) Extend the higher or enhanced level
of protection accorded to wines and
spirits under TRIPS to other products

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Student Handouts Prof. Henry, ISG

Nonenforcement of IPR Laws

• TRIPS mandates what each member’s

laws must say
• But it is one thing to enact laws, but
another to enforce them
• Non-enforcement of TRIPS was a problem,
resulting in restricted technology transfer. So
countries ultimately signed TRIPS

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Mechanics of IPR Transfer Regulations

• Prior Approval Schemes

• Notification-Registration Schemes
• Risks?

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The Gray Market

• Licensor sells to licensee who sells to

buyer who re-imports to compete with
original licensor
• Stimulated by international currency fluctuations
• See the A. Bourjois & Co. v. Katzel (1923) case.
U.S. Supreme Court granted injunction to protect
the trademark and stop importing similar French
products
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Student Handouts Prof. Henry, ISG

Franchising: Licensing Outside

the Technological Context
• Observations
• (1) Exclusive rights, marketing quotas,
franchisors balancing interests
• (2) Trademark Protection
• (3) Competition Laws
• (4) Repatriating Profits
• (5) Franchise Tax Laws
• (6) Language Politics
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Antitrust Considerations

• See the CSU et al. v. Xerox Corporation (2000)

case
• Xerox refused to sell patented parts and license software
• Antitrust laws do not exclude patentees rights to exclude
others
• Defendant must either prove the patent was obtained
through fraud OR demonstrate the infringement suit is on
a sham to cover interference with a business relationship
with a competitor

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Conclusion

• Licensing permits a firm with IPR to

increase revenues
• But local legislation my supersede the
“law” of the franchise contract
• TRIPS should greatly standardize and
improve inconsistencies among
members
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