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Introduction

FUNDAMENTAL ISSUES

New technologies are posing fundamentally new issues for intellectual property systems. The very nature of some new technologies requires a type and degree of protection to which the intellectual property system must adapt. This, in turn, may involve changes in legal doctrine, in rights granting, and in rights enforcement. In the United States, development of legal doctrine can take place directly, through legislation, or incrementally, through the courts; rights are granted through administrative organizations, such as the Patent and Trademark Office, and they are enforced through licensing agreements and, ultimately, through litigation. Because of the technical and legal subject matter involved and the far-reaching economic consequences, the process of adaptation is complex, involves many parties, and is inherently political. It is often a case of human institutions playing "catch-up" with advancing technology.

The fundamental question addressed in this section is how well the intellectual property system is adapting to the many new technologies that are emerging. Is it developing the appropriate new doctrines and mechanisms fast enough? Are they economically effective and efficient in encouraging innovation? Are some approaches to adaptation more successful than others?



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Global Dimensions of Intellectual Property Rights in Science and Technology Introduction FUNDAMENTAL ISSUES New technologies are posing fundamentally new issues for intellectual property systems. The very nature of some new technologies requires a type and degree of protection to which the intellectual property system must adapt. This, in turn, may involve changes in legal doctrine, in rights granting, and in rights enforcement. In the United States, development of legal doctrine can take place directly, through legislation, or incrementally, through the courts; rights are granted through administrative organizations, such as the Patent and Trademark Office, and they are enforced through licensing agreements and, ultimately, through litigation. Because of the technical and legal subject matter involved and the far-reaching economic consequences, the process of adaptation is complex, involves many parties, and is inherently political. It is often a case of human institutions playing "catch-up" with advancing technology. The fundamental question addressed in this section is how well the intellectual property system is adapting to the many new technologies that are emerging. Is it developing the appropriate new doctrines and mechanisms fast enough? Are they economically effective and efficient in encouraging innovation? Are some approaches to adaptation more successful than others?

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Global Dimensions of Intellectual Property Rights in Science and Technology EXISTING INTELLECTUAL PROPERTY PARADIGMS One of the major issues is whether existing intellectual property right (IPR) paradigms, such as patent law and copyright law, can accommodate the new technologies. There are advantages to using existing legal frameworks to protect new technologies. The copyright and patent laws encompass an expansive and flexible subject matter and a historical body of principles and precedents. In the past, they have enabled the courts to meet the challenges of new technology by applying traditional principles without the need for repeated legislative action. Moreover, there are existing international treaties in both the patent and the copyright areas that, with modification, could be used to secure international protection for technologies. The new technologies that pose the most troublesome issues for the intellectual property system are those that require protection but that do not fit easily within the existing intellectual property paradigms. For example, developers of computer programs and semiconductor chips, two of the most economically valuable modern technologies, have a great need for intellectual property protection because their efforts require considerable skill and creativity, but the results of their efforts can be appropriated easily once the product is marketed. It has been argued, however, that software and chips are generally too "functional" to fit in the copyright paradigm, as traditionally defined, and not "nonobvious" enough to be patentable. Similarly, incremental innovations in many technologies may be of critical economic importance, but they may not meet the requirements of intellectual property protection within existing paradigms. Because of historical experience, many observers see it as natural for copyright law and patent law to expand beyond their traditional concepts to provide protection for the new technologies. Other observers, however, are concerned that there are limits beyond which the existing paradigms cannot be stretched without distorting the very purpose of the law. In this view, as pointed out by Pamela Samuelson in Chapter 12, the traditional purpose of copyright law, which is to promote dissemination of knowledge, is distorted when decompilation is an infringement of copyright. Similarly, Samuelson notes the concern that the overlap of patent and copyright protection in computer programs, especially as the scope of copyright is expanded, "would undermine important public policy goals of the patent system, which generally leaves in the public domain those innovations not novel or nonobvious enough to be patented." In the United States, IPR law presents a problem for technologies such as computer programs and semiconductor chips because it basically assumes that something is either a writing (protectable by copyright) or a machine (protectable by patent), but cannot be both simultaneously. These new technologies challenge this fundamental assumption, because they have

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Global Dimensions of Intellectual Property Rights in Science and Technology aspects of both—many see computer programs as involving both authorship and invention. This not only makes it difficult to draw meaningful boundaries between patents and copyright, it also raises the question of whether alternative intellectual property paradigms should be explored. In other countries, the dichotomy between copyright and patents is not so strong, and other intellectual property paradigms, such as utility models and industrial designs, exist and are widely used. SUI GENERIS APPROACHES Sui generis approaches are an alternative to existing intellectual property paradigms. Sui generis forms of IPR are unique property rights designed to protect a specific new technology that does not fit easily within existing IPR categories. They have the advantage of specifically recognizing the special issues posed by new technologies and tailoring protection to the specific problem. Moreover, developing a sui generis law allows the problem to be dealt with as a whole, rather than piecemeal in the courts. It can also avoid potential harm to the technology and to the law itself from applying an inappropriate legal framework. Sui generis approaches have a number of disadvantages, however. They require legislative action, and, as pointed out by Morton David Goldberg in Chapter 14, it can be difficult to design a law that is flexible enough to maintain the desired balances and degree of protection in the face of continuing change in the technology and industrial structure. Moreover, both John Barton (see Chapter 11) and Goldberg note that it may be harder to undo errors in sui generis laws. Another factor weighing against a sui generis approach is the need to negotiate new treaties on emerging technologies for which there is little consensus as to the appropriate form or degree of protection. There is concern that sui generis laws make IPR law more complex, confusing, and uncertain. INTERNATIONAL ADAPTATION The international dimension adds another level of complexity to adapting intellectual property systems to new technology. A key difficulty is trying to achieve international consensus on an IPR approach to new technologies when there is often no consensus within countries on the appropriate approach and when the economic interests of different nations may dictate a different balancing of interests in the IPR law. These seem to be the issues that are holding up agreement on specific IPR rules in the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) negotiations. Computer programs may provide an example of the difficulties. The

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Global Dimensions of Intellectual Property Rights in Science and Technology United States has persuaded many countries to follow its lead in using copyright protection for computer programs. Yet according to Pamela Samuelson (see Chapter 12), the details of just what copyright protects beyond exact copying of program code in the various national laws remain unclear. Some countries are also following the United States on the patentability of software, but again standards of patentability are unclear. Sui generis approaches pose their own issues when they move to the international arena. In Chapter 14, Goldberg notes that the sui generis treatment of semiconductor chips in the United states has been difficult to project into the international arena, and he points out that, if copyright had been used, existing treaties could have been employed to secure international protection. In the absence of a treaty, the United States has sought to internationalize the Semiconductor Chip Protection Act of 1984 through reciprocity with countries that protect U.S. mask works on the same basis. Goldberg indicates that this "arm-twisting" approach has brought some positive results, but it may have engendered resentment among other countries that now hinders cooperation in multilateral efforts to harmonize worldwide protection of chip topography. SMALL BUSINESS Small businesses pose special issues in IPR discussions because they are important sources of innovation in many rapidly moving fields and they have special needs with respect to IPRs. In biotechnology, for example, most of the major innovations have been made by small firms. The ability to get intellectual property protection for living organisms in the United States was a key factor in enabling new biotechnology firms to attract the investment necessary to grow and survive. Some argue that the cost of IPR litigation often bars the use of the system by small companies; if they are able to—or must—use it, litigation diverts funds from research and innovation. Thus, it is argued that high litigation costs work against small businesses and hence new technologies. Although this may be more a result of the general character of U.S. litigation and not of IPRs in particular, the conditions surrounding the emergence of new technologies are probably conducive to high levels of IPR litigation. As Eugene Gordon shows in Chapter 15, when the economic stakes are high, there is more incentive for large firms to use IPRs to stifle small firms. Moreover, when a technology is new, the validity of IPRs may be uncertain and hence more likely to be litigated. Thus, it is important in designing IPRs for new technologies to consider their possible impact on small, innovative firms. It is also important to remember that solutions to IPR problems that require a long time may leave many failed start-up companies in their wake.

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Global Dimensions of Intellectual Property Rights in Science and Technology NEED FOR POLICY ANALYSIS Thoughtful study and analysis can help in the process of adapting IPR systems to new technologies. Barton, in Chapter 11, suggests several instances in which analysis of the economic and innovation incentives of IPR laws and alternatives is needed—for example, when opposing doctrines are at a standoff, as in the controversy over whether a patent should extend to the progeny of patented life form. He also argues that identification of the point at which a gene becomes patentable should be subject to thoughtful analysis before decisions are made on the patenting of genome sequences. Similarly, in Chapter 12, Samuelson suggests that a better understanding of the nature of the innovation process in the software industry and the conditions that have promoted progress in that industry could provide a basis for policy decisions on software patenting. Barton, in his examination in Chapter 11 of different approaches to adapting IPRs to new technologies, concludes that the European process for adapting IPRs to biotechnology, which involved standing study groups, was more effective at defining critical issues and subjecting them to debate than was the U.S. process, which involved primarily the courts and the Patent and Trademark Office. The keys to the European success were that repeated expert meetings produced substantive proposals that were then subjected to external criticism by all affected parties and the study groups were given enough time for staff work to help identify the new, "hard" issues. ORGANIZATION OF THE SECTION The chapters in this section discuss the special challenges to IPRs raised by new technologies and how the intellectual property system has adapted to those challenges. In Chapter 11, Barton evaluates the effectiveness of the IPR adaptation process in the case of three new technologies: biotechnology, computer programs, and integrated information networks. Barton suggests that routinized processes for the reform of IPR law are needed to deal with new technologies and that those processes should be international. He calls specifically for standing study and reform groups with an international composition to consider the issues and suggest appropriate responses on an ongoing basis. In Chapter 12, Pamela Samuelson provides a detailed case study of the adaptation of intellectual property law to computer programs. After a historical review, she discusses the current legal approaches to protecting computer programs and the controversies surrounding the appropriate protection for the functional, as opposed to the written, aspects of computer programs. Samuelson argues that computer programs directly challenge existing IPR paradigms, and she expresses concern that attempts to protect computer

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Global Dimensions of Intellectual Property Rights in Science and Technology programs under copyright and patent law may subvert the intent of the laws and harm the development of the technology. In Chapter 13, George B. Rathmann presents a case study of the role of IPRs in the commercialization of biotechnology, which was accomplished in the United States through the formation and growth of many small, start-up companies. In this context of high technical risk and financial uncertainty, patents played an important role in attracting the large amounts of investment that were needed over many years. The Chakrabarty decision in the United States, which made living organisms patentable, was particularly important to launching the industry. Other patent issues that were more troublesome included the need for process protection and the slowness with which patents were issued. Rathmann warns that as rocky as the road was for biotechnology firms in the United States, what is coming up on the world scene may be much more difficult. He refers particularly to problems faced by U.S. biotechnology firms in protecting their technology in Japan. In Chapter 14, Morton David Goldberg discusses the history of semiconductor chip technology and the sui generis intellectual property law Congress passed to protect the mask works used in making chips—the Semiconductor Chip Protection Act of 1984. He focuses on three serious shortcomings in the law: its narrow definition of the technology, its broad exception to proprietor's rights in the area of reverse engineering, and the difficulty of internationalizing protection. According to Goldberg, these shortcomings, together with the substantial change that has occurred in the technology and in the industry's structure, seriously weaken the protection given to innovators and potentially weakens the incentive for investment and innovation in the technology. Chapter 14 illustrates the concerns that many intellectual property practitioners have with sui generis approaches. In Chapter 15, Eugene I. Gordon discusses IPR issues as they affect the field of optoelectronics. This field does not appear to pose fundamentally new issues for the intellectual property system in the way that biotechnology and computer programs do. Rather, it highlights IPR issues associated with fields that are rapidly advancing and exhibit high levels of entrepreneurship and new start-up companies. Gordon focuses on patents and proprietary information, an aspect of IPRs not covered elsewhere in this volume. By examining two case studies, Gordon illuminates the following problems: (1) the ability of large companies to use the threat of IPR litigation to stifle small companies and (2) the inefficiencies that result when the validity of patents is uncertain. The chapters in this section describe the adaptation of IPRs to new technologies as a process fraught with complexities and challenges. The challenges posed by each new technology are different. Some technologies, such as optoelectronics, pose issues that apparently can be addressed and resolved within existing IPR regimes. Other technologies, including ''hy-

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Global Dimensions of Intellectual Property Rights in Science and Technology brids" of writing and machines (such as computer programs and semiconductor chips), as well as economically valuable incremental innovations, pose a more fundamental challenge to the adequacy of the existing IPR paradigms. There are sharp differences on the advisability of modifying existing IPR laws versus creating sui generis IPR laws to accommodate new technologies. As shown in this section, both approaches have their advantages and disadvantages. Unfortunately, there is a lack of policy analysis that would allow the effectiveness of the approaches developed so far to be evaluated more systematically. Will the intellectual property system adapt to new technology in the future? Can IPR reform processes be designed to achieve international consensus on IPRs and encourage the development and commercialization of new technologies? These and other fundamental questions remain in need of further thoughtful study.