Intellectual Property

India is a member of the World Trade Organisation (WTO) and a signatory to the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs). In the last few years India has modified its IP laws to ensure adequate protection for IP owners. Both the legislature and the judiciary are active in enacting and enforcing IP rights.

Patents

Pursuant to the TRIPs Agreement, India has amended its patent legislation on three occasions. The Patents Amendment Act 2005 and the Patent Rules 2005 have incorporated several changes to the patent legislation to fulfil India’s WTO obligations to allow, for example, product patents. Some of the key changes introduced by the act are outlined below.

Introduction of product patents

The act introduced product patents for inventions relating to food, drugs and chemicals by replacing the process patent regime which existed under the old Patents Act.

Restrictions on new use

The act provides that the mere discovery of a new form of a known substance that does not enhance the known efficacy of the substance cannot be patented. It must involve one or more inventive steps resulting in a new product or one new reactant to fit the criteria of patentability.

Software patenting

The act does not provide for the patenting of a computer program which is an algorithm per se, or mathematical methods or business methods.

Exclusive marketing rights

The act repealed the provisions concerning exclusive marketing rights and mailbox applications as a result of the introduction of the product patent regime. However, there are transitional provisions in this regard.

Pre-grant and post-grant opposition

The act provides for both pre-grant and post-grant oppositions. Furthermore, it specifies a time period for both – one year from the date of publication in the case of post-grant opposition and six months in the case of pre-grant opposition.

Compulsory licensing

Previously, compulsory licensing was confined to India. However, the act now provides for compulsory licensing for the export of pharmaceutical products to countries that do not have the requisite manufacturing facilities. For this, the recipient countries should also provide for compulsory licensing or should issue a notification to that effect.

Patent infringement

The new act provides that an applicant enjoys the same rights and privileges as a patent holder in the period between publication of the application and grant of the patent. However, infringement proceedings can be initiated only after the grant of a patent.

Request for examination

Under the act, when an application is published, a request for examination must be filed within 36 months of the date of priority of the application or of the date of filing of the application, whichever is earlier (as specified under the Patent Rules 2005). In the case of WTO or mailbox applications, the deadline to file the request for examination is 36 months from the date of application or date of priority, or 12 months from January 1 2005.

Publication of applications

Eighteen months after the date of application or the date of priority, whichever is earlier, all patent applications are published as per the provisions of the act and the rules. The act provides for expediting publication upon request.

Assignment

Under the old act, it was mandatory to register with the patents office all transactions concerning a patent (eg, assignments, mortgages, licences, shares in the patent, creation of any interest in patent) within six months of the date of execution of the document concerning the transaction. The new act requires only that such transactions be executed in writing, and sets out no registration requirements.

Approval for foreign filing

The act requires an Indian resident to obtain written permission from the controller of patents six weeks prior to filing a foreign patent application, unless a corresponding application is filed in India.

Implications

The new act clarified various ambiguities that existed under the earlier patent law and simplified some of the procedural requirements.

In cases of patent infringement, an infringement suit can be filed. A court may grant an injunction, award damages, direct an account of profits to be produced or order seizure, forfeiture or destruction of the infringing goods, materials and tools used to create the infringing goods.

Trademarks

India enacted the Trademarks Act 1999 and the Trademarks Rules 2002 (effective September 15 2003) to ensure adequate protection for domestic and international brand owners, in compliance with the TRIPs Agreement. Pursuant to the Trademarks Act, service marks can be registered. The act states that a trademark includes the shape of goods, their packaging and colour combinations. Further, the Trademarks Act gives protection to well-known trademarks and provides for the registration of convention applications, for which the priority deadline is six months. The term of a trademark has been increased to 10 years, renewable upon expiration.

As a measure to protect international proprietors, the Trademarks Act has defined a ‘well-known mark’ as a mark well known to a substantial segment of the public using such goods or receiving such services. Further, the Trademarks Act has increased the grounds on which trademark infringement can be claimed, such as likelihood of confusion, likelihood of dilution or disparagement of a registered trademark, comparative advertising and spoken use. The term ‘use’ has been expanded for the purpose of ascertaining infringement. If a trademark is not registered in India, a foreign trademark owner can initiate a passing-off action against the potential infringer.

The Trademarks Act provides statutory protection to well-known trademarks, which were protected under the common law.

The Trademarks Act defines a ‘well-known trademark’ as follows: “‘Well-known trademark’, in relation to any goods or services, means a mark which has become so well known to the substantial segment of the public which uses such goods or receives such services that the use of such mark in relation to other goods or services would be likely to be taken as indicating a connection in the course of trade or rendering of services between those goods or services and a person using the mark in relation to the first mentioned goods or services.” (Section 2(1) of the Trademarks Act.)

Furthermore, this definition should be read in conjunction with Sections 11(6) to 11(10) of the Trademarks Act, which specify the relevant factors to be considered by the registrar of trademarks when determining whether a particular mark is well known.

Relevant factors to be considered

While determining whether a trademark is well known, the registrar should consider any relevant facts, including the following:

•   the knowledge or recognition of the alleged well-known mark in the relevant section of the public, including knowledge obtained as a result of promotion of the trademark;

•   the duration, extent and geographical area of any use of that trademark;

•   the duration, extent and geographical area of any promotion of the trademark, including advertising or publicity and presentation at fairs or exhibition;

•   the duration and geographical area of any registration or any publication for registration of that trademark, to the extent that it reflects the use or recognition of the trademark; and

•   the record of successful enforcement and the extent to which any court or registrar has recognised the trademark as well known (Section 11(6) of the Trademarks Act).

These criteria are not exhaustive, but are indicative and illustrative guidelines to assist the registrar in determining cases. The decision will depend upon the facts and circumstances of each case.

Based on the foregoing, it will be the responsibility of a trademark owner to prove that the mark is well known. One way to prove this would be by demonstrating the degree of knowledge or recognition of the mark in the relevant section of the public using consumer surveys or opinion polls. In addition, awareness of a trademark in India can be proved by promotion of the mark through advertising in print and electronic media.

In a recent case in which a foreign trademark owner that had filed a trademark application initiated action against an Indian party whose trademark application was pending registration for the same mark, the Supreme Court observed that the mere fact that the foreign mark owner had not been using its trademark in India would be irrelevant if it were the first in the world market. In deciding the case, the court also observed that the intention of the foreign proprietor to use the trademark in India will be a decisive factor in such situations (Milmet Oftho Industries v Allergan Inc, MANU/SC/0512/2004).

In a suit alleging trademark infringement or passing off, a court may grant an injunction, award damages, direct an account of profits to be produced or issue an order requiring delivery of the infringing labels and marks for destruction or erasure. In addition, in respect of an infringement or passing-off action, a court can grant an ex parte injunction along with an interim order for discovery of documents, preservation of infringing goods or other evidence. Furthermore, the court can restrain the defendant from disposing of or dealing with assets in a manner that may adversely affect the plaintiff’s ability to recover damages or avail of any other pecuniary remedies that may be finally awarded to the plaintiff in the suit.

The Trademarks Act has implemented criminal remedies over and above the civil remedies that were previously available. It has also given more powers to the courts. As a result, applying false trademarks or trade descriptions and selling goods or providing services with such descriptions is an offence under the Trademarks Act. Any police officer (not below the rank of deputy superintendent of police or equivalent) can search and seize articles bearing infringing trademarks or labels without a warrant. Further, the Trademarks Act has increased the punishment for these offences to a term of not less than six months up to a maximum of three years. Moreover, offenders may be subject to a fine of between Rs50,000 (US$1,087) and Rs200,000 (US$4,348).

In India, if a trademark owner does not use a trademark in respect of the goods or services for which the mark has been registered, it may lose its rights over the trademark. This is even more significant since the introduction of service marks registration. The Trademarks Act provides for removal of a registered trademark for continuous non-use for a period of five years and one month in respect of the goods or services for which it was registered.

As a result of these new grounds for infringement, in a recent case the Delhi High Court prohibited Colgate Palmolive India Ltd from broadcasting an advertisement that disparaged a similar product sold by Dabur India Limited. The court held that an advertisement which was contrary to honest practices in industrial or commercial matters, and which also challenged the reputation of the registered trademark of the plaintiff, amounted to infringement of the plaintiff’s registered trademark under the provisions of the Trademarks Act. The court also held that even an indirect reference to another proprietor’s trademark in a disparaging advertisement would constitute infringement of that trademark.

Domain names

As a result of the Internet’s popularity, the Indian courts have dealt with a large number of domain name disputes in the last few years and the courts have consistently applied the law relating to passing off to domain name disputes.

In a recent case the Supreme Court of India held that domain names are subject to the legal norms applicable to other intellectual property. While restraining a subsequent proprietor from using another proprietor’s registered domain name, the Supreme Court considered various definitions under the Trademarks Act and held that a ‘domain name’ is a word or name that is capable of distinguishing the subject of trade or service made available to potential users of the Internet. Satyam Infoway Ltd, a leading IT services company and one of India’s largest internet service providers, has been the registered proprietor of several domain names, including ‘sify.net’, ‘sifymall.com’ and ‘sifyrealestate.com’, since June 1999. It claimed that the word ‘sify’ was a word invented by using elements of its corporate name. Another company, Sifynet, which started an internet marketing business using the domain names siffynet.net and siffynet.com in June 2001, was restrained from using these domain names (Satyam Infoway Ltd v Sifynet Solutions Pvt Ltd, 2004 53 SCL 26 (SC)).

Copyright

In India, copyright exists only in the form or expression of a work and not in the idea. The term of copyright is the lifetime of the author plus 60 years from the calendar year following the year of the author’s death.

India is a signatory to both the Berne Convention and the Universal Copyright Convention. Therefore, in the event of copyright infringement of a work that is not copyrighted in India, authors in member states of the aforesaid conventions will benefit from protection on a reciprocal basis in India.

A copyright holder is entitled to the remedies of injunction, damages and account of profits against an infringer. A sub-inspector of police who suspects the infringement or possible infringement of copyright can seize all copies of a work and the materials used to make infringing copies without a warrant, and produce them before a magistrate.

If a person knowingly and for gain or in the course of trade or business infringes or abets in the infringement of the copyright in any work or other right conferred by the copyright law, he is liable to be imprisoned for a term of between six months and three years, and to pay a fine of between Rs50,000 (US$1,037) and Rs200,000 (US$4,150). Where an offender uses an infringing copy of a computer program, he is liable to be punished with imprisonment of between seven days and three years and a fine of between Rs50,000 (US$1,037) and Rs200,000 (US$4,150). If the offender proves that the infringement was not for gain or in the course of trade or business, the court may not impose imprisonment but can order a fine of up to Rs50,000 (US$1,037).

If a person knowingly makes or possesses plates to make infringing copies, or publishes a sound recording or video film without the required particulars, he or she can be fined and imprisoned for up to two years.

Most multinational companies actively pursue these criminal options. As a result, software piracy in India has fallen from 90 per cent to 60 per cent, and music piracy has also been reduced.

Copyright comes into existence together with the work, and registration of a copyright is the only clear evidence of acceptance of a copyright.

Although the Indian courts do not usually award very high damages, the Delhi High Court recently awarded damages of about Rs2 million (US$46,500) to the Microsoft Corporation in a software piracy case, which is one of the highest damages awards in this type of case. In addition, the court permanently stopped the defendants from carrying out any infringement or passing-off activities of Microsoft products, copyrights or trademarks. The court also ordered the defendants to deliver up all pirate copies of Microsoft software, including the equipment used to copy the software and all other infringing materials in the defendant’s possession.

Furthermore, in awarding damages the court observed that it would be futile to direct the defendants to render accounts because they were carrying on this business surreptitiously. This is a new trend in the Indian judiciary, as opposed to the usual practice of issuing directions to render accounts, which are generally ineffective as the infringers do not maintain proper accounts. This case is a landmark in India’s software piracy case law, not just because of the very high damages awarded, but also because the court decided the case very quickly and based on evidence adduced by affidavits; this is unusual as litigation proceedings are generally lengthy in India.

Although India does not have specialised IP courts, Indian civil courts are pro-IP rights owners and have handed down landmark rulings in trademark and patent cases. Further, on September 15 2003 India set up the Intellectual Property Appellate in Chennai, which decides registration-related matters involving IP rights.

Ending the Monopoly of Ideas: Compulsory Licensing in Intellectual Property

The term ‘intellectual property’ seems innocuous. If property just is ‘intellectual,’ how important could it be? The truth is that intellectual property law is easily one of the most destructive forces in our economy. Nearly one-fourth of scientists responding to a survey by the American Association for the Advancement of Science, the largest general scientific body in the world, reported that patents were hampering their research.[1] In the European Union, over €60 billion are wasted every year on research and development of products that are already protected by patent law.[2] An experiment using a virtual world to simulate the effects of the US patent system found that the “participants were more likely to innovate when there was no intellectual property system at all, or when they could open-source their innovations and share them with people.”[3]

Virtually every business that holds a dominant position in its field has gotten there not simply through good business practices, but also through the advantages afforded to them by intellectual property law. In 1998, Google filed patent number 6,285,999 on the “PageRank” system, laying the foundation for them to become the dominant force in internet search.[4] Monsanto has used its patents to control 95% of the soy and 80% of the corn markets, respectively. It used this power to increase the price of each by 28% and 25%, respectively, from 2008 to 2009.[5] “Patent pools” led to monopolies that had to be broken up using antitrust laws in the airplane [6], computer, and motion picture industries.[7]

Our society has not always been like this. In 1790, the year the US Patent Office first came into being, only three patents were granted.[8] Patents had to be deemed “sufficiently useful and important” by the three-person Patent Board, comprised of the Secretary of State, the Secretary of War, and the Attorney General. By July of 1836, only ten thousand patents had been granted.[9] In 2009 alone, 167,350 utility patents, the most common type of patent, were granted. IBM was granted 4,914 of these, a 17% increase over the previous year. Microsoft was granted 2,906, a 43% increase over the previous year and a 400% increase over 2003. Fifty companies received 29% of all patents granted in 2009.[10]

Patent and copyright terms have also expanded dramatically. The original US patent term was for fourteen years, should the Patent Board approve it. The patent term is now twenty years. “Under certain circumstances, patent term extensions or adjustments may be available.”[11] The original US copyright term was for fourteen years with an option to renew the copyright for another fourteen years if the author was still alive. The current copyright term is now for the life of the author plus another seventy years. For works of corporate authorship, the copyright term is now one hundred and twenty years after creation or ninety five years after publication, whichever endpoint is earlier. This means most works will be copyrighted for over a hundred years. Trademarks, which didn’t even exist in federal statute until 1905, are in force as long as they are in use.[12]

This isn’t even to mention all the costs associated with the intellectual property bureaucracy. The US Patent Office has approximately six years of patent applications, over one million filings, waiting to be evaluated.[13] Approximately, seven out of ten patents were approved at the start of the 2000’s. Today, the number is less than half.[14] The average patent lawsuit will cost between $3 million and $10 million to litigate, and take between two to three years.[15] This amounts to a litigation cost of, at the minimum, $15.6 billion a year.[16] Merely getting a patent approved can cost $10,000 for a domestic filing and $100,000 for an international filing.[17] This amounted to a cost of $25.8 billion in 2009.[18] This isn’t even to mention that, according to Barack Obama, the paper-based tracking system of the Patent Office is woefully “outdated.”[19] As far as I know, nothing has been done to correct the situation.

Clearly, there is a problem. Our system is bogged down in waste and innovation is stifled. How do we correct it? Is the solution simply to eliminate intellectual property rights? I don’t believe so. Piracy during the 1800’s was a profound source of frustration for many authors [20] and inventors.[21] It also doesn’t make sense that people shouldn’t be rewarded for their creative work. Rewarding creators helps encourage more creation, something most people want.

The solution is to eliminate the ability of one person or entity to have the sole right to use a piece of intellectual property, while still rewarding the original creator of the intellectual property. The system that does this is compulsory licensing. In this system, every piece of intellectual property can be used in a derivative work, yet the original creator of the work is still compensated. The rate of compensation is either determined by the parties privately, or if an agreement cannot be reached, by a court.

The government sometimes uses compulsory licensing in antitrust cases, but only when it considers a firm’s dominance to be a problem.[22] Moreover, when the government does use compulsory licensing, they do not use the market to determine rates. They simply determine the licensing rate themselves. In 1953, a district court used this power to order General Electric to license its light bulb patent for “free,” a price General Electric surely was not happy with.[23] There have also been times when the government only allows a small handful of companies to license a piece of intellectual property. It is not open to the market at large.[24]

The next step to solving our intellectual property crisis is to eliminate the Patent Office and to replace it with a single repository for intellectual property that people want protection for. This idea was actually put forth by Jefferson in a 1791 bill, but unfortunately, it did not pass.[25] Without the government deciding what ideas are able to be protected, private firms spring up to search the registered intellectual property and inform individuals if they believe an idea or invention infringes upon something already registered. This eliminates long wait times, as people could presumably pay for faster searches. Plus, if a company does not perform well, it will presumably go out of business.

The elimination of the Patent Office may not even affect the number of intellectual property infringement law suits. Even with the Patent Office, there are still over 5,000 patent, copyright, and trademark suits every year.[26] The Patent Office also does not ensure that only “sufficiently important” creations receive protection, as was in its original mandate. Well, unless you consider “the bird diaper,” “the pat on the back apparatus,” and the “initiation apparatus,” a “harmless” way to initiate a candidate into a fraternity by shocking him with electrodes, to be “sufficiently important.”[27]

These solutions are simple, but achieving them is difficult, because they would mean the government doing less. The government, and the powerful parties who benefit from government intervention into the economy, typically do not like the government to do less. Intellectual property law has also historically been a very important tool for government-sponsored censorship, an important tool of the state. This side of intellectual property law has started raising its ugly head again in recent years. Laws and treaties such as the ACTA treaty,[28] Britain’s Digital Millennium Copyright Act,[29] and Canada’s Copyright Modernization Act [30] all threaten to bring millions people across the world under the heel of a digital dictatorship. Clearly, our intellectual property system must be reformed before any more damage is done.

A commonly cited beginning to modern intellectual property is when Fillipo Brunelleschi was granted a three year patent for a barge with hoisting gear that carried marble along Italy’s Arno river in 1421.[31] This patent was given not only for technological innovation, but also because Brunelleschi was working on one of the most important projects of the day: building the dome on the Santa Maria del Fiore. This was like the Super Bowl to the people of Florence. People would gather to watch the dome being built. Santa Maria del Fiore was “the great spiritual center of the city,” and it “served as the venue for diplomatic visits, housed important political events, and welcomed within its walls many of the cultural, spiritual and intellectual leaders of the time.”[32] It had remained without a dome for over 100 years. Thus, the granting of the first patent had a decidedly political aspect to it.

The first patent in England was given by Henry VI in 1449 to John of Utynam for a technique on manufacturing stained glass.[33] This was the start of a long tradition whereby the Crown issued monopolies to “favoured persons,” or to people willing to pay. The granting of monopolies became a key source of revenue for the Crown. Soon, monopolies covered a whole range of known goods, such as salt,[34] and the right to provide services, such as the use of inns, ale houses and gold and silver thread.[35] The Statute of Monopolies of 1623 curtailed some of these abuses by stating that the Crown could only issue letters patent (a.k.a. monopolies) to the inventors or introducers of original inventions for a fixed number of years,[36] but the system was still far from without its flaws.

The most significant monopoly granted by the Crown from an intellectual property standpoint was the one given to the Stationers Company. In 1557, the Stationers were given a monopoly over printing in all of England. The Stationers Company was not a “company” so much as a guild. There was no stock to be owned. There were only positions of power to be attained within the guild. The guild was comprised primarily of bookbinders, booksellers, and printers,[37] although text writers and lymners (or illustrators) also played a role.[38]

At the head of the Stationers Company was the master, the principal officer. Below him were the upper and under warden. The master and wardens were given plenary powers of search at any time “in any place, shop, house, chamber, or building of any printer, binder or bookseller whatever […] for any books or things printed, or to be printed, and to seize, take, hold, burn, or turn to the proper use of the foresaid community.”[39] The master and upper and lower wardens were elected from the “Court of Assistants” and held their positions for a year.

The Court of Assistants was the real seat of power. They arbitrated disputes, collected dues, and decided admittance into the Company. They were supposed to be elected from the general body of the Company, which included apprentices and yeomanry, for a limited term, but in 1557, the year the Stationers were granted their monopoly, nine of the most senior members of the Company formed a court of eighteen assistants. They took control and membership in the court became for life unless the member was formally dismissed or retired.[40]

Although censorship may not have benefited the printing industry as a whole, it was clearly a motivation for Queen Mary in issuing the Stationers a monopoly. According to Lyman Patterson, “The charter itself, however, is dominated by the idea of suppressing prohibited books, and Mary’s motive in granting it, whatever the source of the initiative involved, was to obtain an effective agency for censorship.”[41] The Stationers became a de facto police squad.

The penalties for violating censorship rules were harsh. If someone was found importing a book from overseas, they could lose all their possessions and be put in prison. No book could be printed without examination by the Privy Council. No book of scripture could be printed without examination by the King, one member of the Privy Council, or a bishop. “If a person other than an allowed printer set up or worked at any press, he was to be set in the pillory, whipped through London, and suffer any other punishment deemed proper.”[42]

Despite all this, there was still a sizeable black market for books. “Only between sixty and seventy percent of London-printed books were regularly entered in the registers, and the proportion of printed books entered fluctuated violently from year to year.”[43] Even with the threat of public whipping, imprisonment, and the taking all of one’s possessions, a black market still arose to meet a demand. Some things never change.
As a British colony, America abided by the same intellectual property laws as Britain. There was no Stationers Company, but books did have to be licensed. There also was an “informal cartel” of publishers who colluded “to keep prices artificially high.”[44]

After the revolution, America continued to follow British intellectual property law closely. America copied much of Britain’s intellectual property law verbatim, and even used the same time limits for intellectual property protection. (Luckily, Britain didn’t sue for copyright infringement.) In fact, America followed British intellectual property law so closely that a misreading of British law led America to legalize the pirating of foreign books. The original British law had forbid “the importation, vending, or selling” of books in a foreign language printed beyond the sea; it didn’t legalize piracy.[45] America’s law was a constant thorn in the side of British authors, such as Dickens, who thought they were losing a fortune in America through piracy.[46]

As time went on, intellectual property law began to grow in importance in America. From 1860 to 1890, over 500,000 patents were issued for new inventions, ten times the number in the previous seventy years.[47] By 1904, more than two hundred copyright bills had been introduced into Congress.[48] Yet even with this growth, a popular movement never gathered enough steam to move intellectual property law from its foundation. Despite some minor disturbances, intellectual property law continued to grow into the monstrosity it is today.

Like with any good story (one that is not a tragedy anyway), there have been a few glimmers of hope. The first came in the rulings of Judge Learned Hand when he defined the concept the “web of expression.” The second came when Congress amended the Copyright Act in 1909 to allow for compulsory licenses in the music industry. When these two concepts are combined, I believe they lay the groundwork for where intellectual property law needs to go.

As Siva Vaidhyanathan writes, “No jurist or legal scholar has had a greater effect on the business and content of American culture than Judge Learned Hand. For most of his career, Hand served on the US Second Circuit Court of Appeals in New York City. A student of William James and George Santayana at Harvard, Hand was passionate about matters of freedom, creativity, and intellectual progress. […] Hand played a part in most of the major copyright decisions of the day.”[49]

Hand thought that the plot of a story itself could not be copyrighted, but that the “value added” to it could. Hand’s central point was that when judging the extent of infringement between works that tell similar stories, one must distill the “very web of the author’s dramatic expression.” This “web” he defines as “the sequence of the confluents of all these means (plot, character, means of revelation, setting, themes), bound together in an inseparable unity.”[50]

Hand broke down the whole down to its parts to help see what was original and what was not. This is exactly what needs to be done in all intellectual property cases. As Mark Twain said, “As if there was much of anything in any human utterance, oral or written except plagiarism. […] [S]ubstantially all ideas are second-hand, consciously and unconsciously drawn from a million outside sources.”[51] We all are dependent upon past ideas for present ones. The question is how much. Hand’s framework helps guide us for making those decisions.

It’s been shown that Steamboat Mickey, the first Mickey Mouse film, relied heavily on Steamboat Bill, Jr., a film by Buster Keaton, who was enormously popular at the time.[52] Did Walt Disney rely exclusively on Keaton’s material? No. Should we barred from seeing Walt Disney’s film because he relied on Keaton’s material? No. But we could have been. That is the situation we are currently in. We are in an “all or nothing” scenario: a judgment of guilty means a work that is “too” derivative and cannot be seen or profited from. A judgment of not guilty means it can. We need to move to a system where both the original creator and “second user” are compensated according to what they each contribute to a derivative work.

The second glimmer of hope was Congress’s amendment to the Copyright Act in 1909 to allow for compulsory licenses in the music industry. This was strictly to allow greater freedom of expression in the music industry. As Lawrence Lessig writes, “Congress was quite explicit about its reasons for granting this right. Its fear was the monopoly power of rights holders, and that that power would stifle follow-on creativity.”[53] It has worked. The music industry allows far greater rights to “second comers” than any other artistic field.

If a person wants to create a derivative work from a book, he or she must get permission from the original author. The original author may allow for derivative works to be created, but may require the “second comer” to sign over any profits, as is the case with the Star Wars franchise.[54] The only problem with the compulsory licensing in the music industry is that is that Congress determines the rate instead of letting individuals try to determine it first.[55] The author of a song may want to license a song to a celebrity at a lower rate, because the author might feel the celebrity may make them more money in the long run than the typical recording artist. The original author simply does not have the freedom to do that.

Why should compulsory licensing be good for the music industry and not good for every other field? Clearly, it shouldn’t. All genres of art and all scientific creations would benefit from compulsory licensing. An active “second user” culture can also lead to an even greater appreciation of the original product. In Japan, there is something called doujinshi, which is “second user” manga. There are over 33,000 “circles” of doujinshi creators across Japan. Two times a year more than 450,000 Japanese gather to exchange and sell doujinshi. According to Lessig, “[I]n the view of many, it is precisely because [doujinshi] exists that Japanese manga flourishes.”[56]

Some people may see a problem with compulsory licensing. They may ask, “If a person is able to use intellectual property at will, what is to keep that person from modifying an original creation just a slight bit and selling at a severely reduced price, thereby undercutting the competition?”

There is a solution to this. The “second user” is able to change the price only in accordance with how much they contributed to the derivative product. Let’s say either the originator and “second user” agree, or a judge decides, that a “second user” contributed 10% to the derivative product. Let’s say the “second user” contributed a new drum track to a song. If the original song was being sold for $5, then the “second user” would have the right to sell the derivative version for anywhere between $5 plus or minus 10% (i.e. $4.50 to $5.50.) 90% of the revenue generated from the derivative product would still have to go to whoever owned the rights to the original product.

Another objection someone may bring up is, “What if it is not in a company’s interest to release a piece of technology? Like let’s say something crazy happened, like Chevron owned the patent on the battery for the electric car.[57] What is to keep them from pricing a product so high it effectively removes the product from market?”

The government may be forced to have them re-price it. This can be done within limits. In the scenario painted, the intellectual property owner is pricing their product so high that if they decrease the price, they would actually make more. Because at a lower price, the owner would sell a higher quantity. The government could mandate the owner lower the price until the point when he or she stopped making more money through increased quantity sold. That is point is where the company is making the maximum amount of profit for that product.

I do not see a better scenario than this. We are being forced to either allow the domination of society by one individual, or the domination of the right to price this product by society. The rights of society must be respected too. This is not historically unprecedented. Before the ratification of the US Constitution, five of the original thirteen states, Connecticut, South Carolina, North Carolina, Georgia, and New York, all contained intellectual property-related price-control provisions in their state constitutions.[58] If the original party loses money by lowering the price, the party who initiated the suit could be liable for the losses.

Once this price is set, individuals or companies could license the intellectual property in its entirety. This would allow for competition based on production quality and customer service. If a company is able to charge more for an product based on superior brand recognition and/or customer service, that company should be able to keep whatever they earn beyond the price set by the original company.

I believe these provisions eliminate the need for time limits on copyright and patent protection. Time limits seem to be built upon the belief that intellectual property law causes prices to be higher and for there to be less competition than there should be. My suggestions, however, eliminate these concerns. Why, after all, after a certain point should a publishing house profit from an author’s work rather than the author’s estate, or to whomever the author ascribed the rights of his or her work?

We need to change to a compulsory licensing system and eliminate the Patent Office. Current intellectual property law and bureaucracy leaves us as peasants, looking up at the one dome being built in the city. Intellectual property law that has been reformed under the guidelines I have outlined will unleash the creativity of human spirit, and help fill the skyline with as many domes as we desire.

Source:http://www.globalresearch.ca/ending-the-monopoly-of-ideas-compulsory-licensing-in-intellectual-property/19959