The term ‘intellectual property’ is of nineteenth-century coinage.1 Until relatively recently, it was difficult to render in languages other than English. A course in intellectual property law would probably include a range of statutory and some common law rights, regulating activities as diverse as artistic expression, the manufacture of pharmaceuticals, the development of computer programs, the breeding of agricultural crops and the marketing of T-shirts. An intellectual property lawyer asked to describe her subject is more likely to produce a list of legal regimes than a concept giving them coherence. She will happily describe the law of copyright, patents, and trade mark. The patient enquirer might learn of designs, moral rights, passing off, and breach of confidence. Warming to her subject, the lawyer might even mention performers’ rights, artist’s resale right, utility models, semiconductor topography protection, designations of origin, geographical indications and traditional specialities guaranteed, database rights, and plant variety rights. But the term ‘intellectual property’ is unlikely to be mentioned and the enquirer might be left with little notion of what, if anything, holds these legal regimes together.
Despite the lawyer’s reluctance, it is essential to examine both the concept of intellectual property and the reasons why a legal system might incorporate such a concept. We are increasingly told that the wealth of nations, at least in the so-called ‘information age’, consists of ‘intangible assets’. By this term, I do not mean intangible property in the legal sense. Rather, I mean all that either currently or potentially constitutes the subject matter of an intellectual property regime. These are the intangible products of human creativity, ingenuity and effort. It is frequently argued that these assets represent the future of the developed economies and that their adequate protection by the intellectual property regimes is essential to national, regional, and even global, prosperity. We are also told that the creators of such assets have a strong moral claim to them, and that developed legal systems should recognize this claim. A tendency towards the increased legal protection of them is exacerbated by the increased European and international harmonization of both intellectual property law and the mechanisms for its enforcement. If the protection afforded by intellectual property regimes is to be regarded as so important, then intellectual property lawyers might be expected to hold both a robust concept, and a defensible justification, of the rights that constitute their subject.
To offer a core concept of intellectual property, to consider various justifications for the recognition of intellectual property rights, and to expound their operation in particular areas of activity are the purposes of this book.
Chapter 1 of this book offers a core concept of intellectual property. That concept does not cover all the regimes, statutory or common law, that will make an appearance in either intellectual property courses or the book itself. Many of those regimes, such as the statutory regime protecting the moral rights of authors or the common law and equitable actions for passing off or breach of confidence, are not proprietary in nature. However, they have an important function in offering protection to the owners of intellectual property complementary to that provided by the proprietary regimes. At the conclusion of this chapter we shall also briefly consider the relationship of the law of intellectual property and the law of unfair competition.
The second chapter of this book considers several justifications for the grant of intellectual property rights: justifications focused variously upon the activities of the creator of an intangible asset, its would-be user and the community in which the creator operates. None of these justifications offers a single over-arching theory of intellectual property law. Nevertheless, together they comprise the theoretical basis upon which intellectual property rights are granted, and an understanding of their relative strengths is essential to the on-going development of the law in a coherent and principled way. Because this discussion of the justification of intellectual property rights introduces concepts to which we shall refer in our treatment of the substantive regimes, it is placed before that treatment. However, the arguments considered in Chapter 2 are somewhat abstract and need to be tested by reference to the substantive law. For this reason, newcomers to the law of intellectual property may wish to defer reading that chapter until they have finished the rest of the book.
The third, fourth, fifth and sixth chapters of the book focus on the substance of the intellectual property regimes. In doing so, they adopt a compromise between the two most common approaches to the exposition of intellectual property law. The first, and most common, of these approaches expounds the law of intellectual property in a way structured around the various regimes of protection, rather than around the subject matter that they protect. Writers who adopt this approach devote chapters to the law of copyright, patents and so forth. The advantage of their approach is simplicity and comprehensiveness. A single intellectual property regime might afford rights to control the use of intangibles that would rarely be considered related, and the history of the individual regimes has been shaped by the exigencies of sometimes quite disparate areas of undertaking. Likewise, what the businessperson might regard as a single intangible asset may be protected by many different intellectual property regimes. The difficulty with this approach, however, is that it is dependent upon categories important only to the law and not to those who create and use protected subject matter. For this reason, a smaller group of writers adopt the contrary approach. They build their exposition around the types of intangible asset that the intellectual property regimes collectively protect. They write about the protection of the arts or of innovation and from there move to a discussion of the law of copyright or patents. The difficulty with this approach is that it involves identifying discrete areas of activity that might be the subject of protection. For this reason it has been criticized for taking categories that the law is helping to construct as if they were given features of our social life.2 A compromise between these two approaches is therefore adopted in Chapters 3–6. Each of these chapters focuses on a core type of intangible asset and the intellectual property regime that has that asset as its paradigmatic concern. Each chapter also introduces other proprietary and non-proprietary regimes important to the protection of the paradigmatic asset. In this way the book adopts an approach dictated neither solely by the structure of the various intellectual property regimes, nor by the shape of the intangible assets for which protection is often sought.
Chapter 3 is built around the intangible assets central to the activity of the creative industries: book and music publishing, the performance and film industries. The intellectual property regime for which ‘creative assets’ are paradigmatic is the copyright regime, including those rights sometimes known as ‘neighbouring rights’. Chapter 4 is built around what might be called ‘technology assets’. These are core to the business of the technology-based industries and are paradigmatic for the law of patents. Chapters 5 and 6 are built around general ‘marketing assets’ and ‘information assets’. These are important to all types of undertaking. However, the former is particularly important in the fields of advertising and merchandising and the latter in the field of pure and applied research. The intellectual property regimes for which those assets are paradigmatic are the law of trade mark and the database right respectively.
Inevitably, this structure presents it own difficulties and complexities. First, it has already been suggested that these claims regarding the paradigmatic assets protected by each regime are contentious both in light of their history and their current range. Second, although the focus of these first two chapters will be on the proprietary regimes, their nature and justification, any logical exposition of the law relating to the protection of marketing and information assets begins with the non-proprietary actions for passing off and breach of confidence respectively. Finally, a structure such as this means that the exposition of some regimes will be split between chapters. Thus copyright is primarily dealt with in the chapter concerning creative assets, but copyright in computer programs will be dealt with in the chapter concerning technology assets. The law of UK design right will be dealt with in the chapter concerning technology assets, but the law of UK and Community registered designs and the law of Community design right will be dealt with in the chapter concerning marketing assets. As we shall see, the law of designs is particularly ill suited to an approach based around anything other than legal categories and a case could be made for treating each of the designs regimes in the chapters on creative assets, technology assets and marketing assets. A justification of the approach to designs protection adopted here is offered in Chapter 4. Notwithstanding these difficulties and complexities, the structure adopted in this book provides a satisfactory compromise between an approach built around purely legal or factual categories.
The focus of Chapters 3–6 will be on UK law, and the law of the EU as it directly applies in the UK. However, the impact that various foreign and international standards have had on the development of that law will be evident throughout. Intellectual property law has been in the vanguard of European and international harmonization. The Berne Convention for the Protection of Literary and Artistic Works (1886) (the ‘Berne Convention’) and the Paris Convention for the Protection of Industrial Property (1883) (the ‘Paris Convention’) are now over 100 years old. The Agreement on Trade-Related Aspects of Intellectual Property Rights (1994) (‘TRIPS’) was a departure from the usual reluctance of the World Trade Organization to see trade sanctions used to enforce particular legislative standards. The European Commission has seized upon the need to create a common market for an extensive programme of intellectual property harmonization. This tendency to harmonization is problematic. The justifications for intellectual property law outlined in Chapter 2 are far from robust in all cultural and industrial contexts. It is highly unlikely, for example, that the international harmonization of intellectual property standards can be shown globally to ‘contribute to the promotion of technological innovation and to the transfer and dissemination of technology . . . in a manner conducive to social and economic welfare’ as art 7 of TRIPS asserts.3 Indeed, there is a real concern that the harmonization of intellectual property law works to widen global inequalities and to concentrate the power of the so-called ‘knowledge economy’ in the hands of a ‘multinational knowledge elite’.4 Perhaps more surprisingly, the trend towards harmonization has also reduced neither the importance, nor the complexity, of rules relating to the conflict of laws in this field. Even in Europe, there is sufficient divergence between the intellectual property systems to fuel fierce disputes over forum and applicable law. Nevertheless, the progress of European and international harmonization is steady and, although our focus will be on UK law, its influence will be evident throughout this book.
In describing the law in Chapters 3–6, much of the intricate complexity of the statutory regimes will, of necessity, be omitted. Thus, our focus will be on current law, even where, as is the case in relation to UK registered designs law, many existing rights will be determined under law now generally repealed and operating only on a transitional basis. In each case it will be assumed that the relevant subject matter is qualified for protection under UK law and the rules as to qualification will not be addressed. In addition, although there will be some introduction to the concept of ‘secondary’ liability and to intellectual property remedies in this chapter, Chapters 3–6 will focus on ‘primary’ liability and will not deal with questions of remedies. They will also omit any discussion of formal requirements for dealing with the rights.
Finally, Chapters 3–6 will not examine restrictions on the exercise of intellectual property rights that arise because of other legal norms, such as the norms regulating free movement or competition in the EU. This is an important exclusion. The law of free movement of goods has given rise to the concept of ‘exhaustion’, whereby an intellectual property right cannot be used to prevent the importation of legitimately marketed goods from one country of the European Economic Area (‘EEA’) into another. ‘Exhaustion’ will briefly be considered in relation to copyright and patents and more fully in relation to the parallel importation of trade marked goods. However, the complexities of EU law in this area are largely excluded. Similarly, in some areas the way that rights operate in practice is strongly influenced by conventional licensing arrangements and the restrictions that competition law might place on such arrangements. Indeed, the European Court of Justice (‘ECJ’) has made it clear that a refusal to license intellectual property rights can constitute an abuse of dominant position.5 However, the impact of competition law on intellectual property management is outside the ambit of this book.
Chapters 3–6 will instead focus on three aspects of the major intellectual property regimes: subject matter; the allocation of the first ownership of rights; and the scope of protection. These three aspects of the major regimes should suffice to give the newcomer a strong sense of the shape and purpose of the most important intellectual property systems.
Before developing a core concept of intellectual property, at least the four major regimes should briefly be outlined. These will be introduced here and then explored more fully Chapters 3–6.
The law of copyright is largely governed by the Copyright, Designs and Patents Act 1988 (‘CDPA’). Copyright protects ‘works’:6 literary, dramatic, musical or artistic works, sound recordings, films, broadcasts, and the typographical arrangements of published editions.7 The concept of a literary work is much broader than it might at first appear and includes, amongst other things, computer programs.8 No formality is required for protection of a work except that it be recorded, either in writing or otherwise.9
The owner of copyright, initially the author of the work or her employer,10 has the exclusive right to use the work in any one of a number of ways. The protection afforded to works of different description varies but, in general terms, only the owner of copyright can undertake any of the following actions in relation either to the work or to a substantial part of the work:11 copy it; issue copies of it to the public; rent or lend it to the public; perform, show or play it in public; communicate it to the public; and make an adaptation of it.12 In the case of literary, dramatic, musical or artistic works and films, the concept of the ‘work’ extends beyond its literal elements. Thus the plots of literary or dramatic works are protected. The extent to which the concept of a work extends beyond the literal elements that comprise it is controlled by the idea-expression dichotomy: the notion that copyright protects the ‘expression’ of ideas and not ‘ideas’ themselves. This concept is not to be found in the CDPA, but has been important to the case-law13 and has been given expression in both the WIPO Copyright Treaty (1996)14 and TRIPS,15 to which both the UK and EU are signatories. Copyright may be infringed either by using the work in one of the ways reserved to the copyright owner or, as ‘secondary’ infringement, undertaking various acts that facilitate infringement or involve dealing with infringing copies.16
Copyright is subject to a considerable range of exceptions to infringement and compulsory licences. Many of these cover very specific situations such as the copying by an artist of a work of which he is no longer the copyright owner.17 Others are much more general in their application, such as the provisions covering ‘fair dealing’ for the purposes of private research and study,18 criticism, review and news reporting.19 Indeed, there exists a common law defence to refuse protection on the grounds of ‘public policy’ and, although it will only apply in ‘very rare circumstances’,20 the Court of Appeal has said that those circumstances are incapable of precise categorization or definition.21
Copyright in a literary, dramatic, musical, or artistic work usually lasts for 70 years from the end of the year in which its author dies.22 The period of protection for other types of material varies.
Patent law protects inventions that are new in that they have not been made available to the public, involve an inventive step in that they are not obvious to a person skilled in the art, and are capable of industrial application.23 In order to secure protection, the inventor, or some other person entitled to the invention such as her employer, must make an application for a patent to be granted.
An inventor working in the UK has three possible routes to the registration of a patent. First, she can make an application for a UK patent issued under the terms of the Patents Act 1977 (‘PA’).24 This application must be made to the UK Intellectual Property Office (‘UKIPO’). If it is successful, the inventor will be granted a patent effective throughout the UK.
Second, the inventor can make an application for a European patent under the terms of the European Patent Convention 1973 (‘EPC’). This application may normally be lodged with either the UKIPO or the European Patent Office (‘EPO’) in Munich.25 If it is lodged with the UKIPO, it is forwarded to the EPO for processing. If the application is successful, the inventor will be granted, not a single patent effective throughout the Contracting States of the EPC, but rather a bundle of national patents, each taking effect as, and subject to the jurisdiction of the courts of, the particular Contracting States designated in her application.26 Much of the substantive law of patents in those countries is harmonized under the terms of the EPC, though the extent to which the interpretation of that law varies between the Contracting States is a matter of considerable contention.
Third, the inventor can make an application to either the UKIPO, the EPO, or the International Bureau of the World Intellectual Property Organization (‘WIPO’) in Geneva under the terms of the Patent Cooperation Treaty 1970 (‘PCT’).27 Applications filed with the UKIPO are forwarded to the EPO, which is the relevant PCT International Search Authority. An international application does not result in the issuing of a patent. Rather, it establishes the formal validity of, and a priority date for, the application. Establishing an early priority date for an application is important because that is the date at which the novelty and inventiveness of the technology it discloses will be assessed. An international application results in a search report outlining relevant prior art documents (against which novelty and inventiveness can be assessed) and, at the applicant’s election, a preliminary assessment of patentability. The applicant then has a period to pursue national patents in any of the Contracting States designated in her international application.
Once a UK patent is issued, the patentee can prevent others from using the invention in a wide variety of ways. For example, where the invention is a product, the inventor can prevent others from making, keeping, disposing of, offering to dispose of, using, or importing the product.28 Where the invention is a process, the inventor can prevent others from using the process, from offering it for use where it is obvious that its use would infringe the patent, and from disposing of, offering to dispose of, using, importing, or keeping products obtained directly by the process.29 For these purposes the invention is as it is described in the patent claims and specification, although the interpretation of the patent claim and specification is often problematic. ‘Indirect’ infringement of a patent can occur when a person with actual or constructive knowledge supplies the means for infringement of a patent.30 This is a type of ‘secondary’ liability.
Like copyright, patent is subject to a range of exceptions to infringement and compulsory licences. The number of exceptions to infringement is not as numerous as those in relation to copyright,31 but the patent regime does provide for compulsory licences in the context in which the patent is not being worked.32
A patent lasts for 20 years from the date of the patent application as long as prescribed renewal fees are paid.33
A registered trade mark can consist in any sign that is capable of being represented graphically and of distinguishing the goods or services of one undertaking from those of another.34 This includes not only signs that might commonly be thought of as trade marks, but also such ‘signs’ as sounds35 and the shapes of consumer products.36 Even a particular odour could in theory be a trade mark if an appropriate means could be found to represent it graphically.37 An application to register a trade mark may be made by anyone who is using, or authorizing the use of, the mark or intends to do so.38
A person who is using a trade mark in the UK has three possible routes to its registration. First, she can make an application for a UK trade mark issued under the terms of the Trade Marks Act 1994 (‘TMA’). This application must be made to the UKIPO.39 If it is successful, the applicant will be granted a trade mark effective throughout the UK.
Second, she can make an application for a Community trade mark (‘CTM’) under the terms of the Trade Mark Regulation.40 This application may be lodged with either the UKIPO or with the Office for Harmonization in the Internal Market (Trade Marks and Designs) (‘OHIM’) in Alicante.41 If it is lodged with the UKIPO, it is forwarded to OHIM for processing. If the application is successful, the applicant will be granted a trade mark effective throughout the EU. Actions relating to infringement of a CTM, certain actions for compensation, and counter-claims for revocation or for a declaration of invalidity lie within the jurisdiction of the Community trade mark courts of first and second instance. These are national courts designated by the Member States of the EU. All other actions lie with OHIM from whence there is an appeal to the ECJ. The law governing UK trade marks and Community trade marks was harmonized by the Trade Marks Directive.42
Third, an applicant may apply to have her trade mark protected under the Protocol Relating to the Madrid Agreement Concerning International Registration of Marks (1989) of which the UK has been a member since 1995 (the ‘Madrid Protocol’). Under the Madrid Protocol, an applicant for either a UK trade mark at the UKIPO or a CTM at OHIM may also apply for protection in the Contracting States of the Madrid Protocol. The office in which the application is made forwards it to WIPO which enters the relevant mark in the international register43 and informs the Contracting States designated by the applicant that this has been done. The designated States then have a fixed period within which to object to the registration on grounds permissible under the Paris Convention.44 If they fail to do so they are under an obligation to protect the mark in the same way as if the mark had been registered in their own offices.45 These take effect as national registrations and are subject to the jurisdiction of the national courts.
The owner of a registered trade mark can prevent others from: (i) using an identical sign on goods or services identical to those for which the mark is registered (for example, using the word ‘Coca-Cola’ on soft drinks); (ii) using a similar sign on goods or services identical or similar to those for which the trade mark is registered such that there is a likelihood of confusion on the part of the public (for example, using the word ‘Coca-Cola’ on spirits or the word ‘Poca-Cola’ on either soft drinks or spirits); and (iii) using an identical or similar sign on any goods or services such that the use of the sign takes unfair advantage of, or is detrimental to, the distinctive character or repute of the trade mark (for example, using either the word ‘Coca-Cola’ or the word ‘Poca-Cola’ on hair-care products or in a pornographic cartoon).46 The second of these categories of protection constitutes the traditional ambit of trade mark law: protection against the deceptive conduct of a rival trader. The third category (and in some circumstances even the first), is a more recent type of protection that is not dependent upon proof of consumer confusion. Protection against detriment to the distinctive character or repute of a mark is often known as protection against ‘dilution’ of the mark. Because the precise scope of this term is contested, it is largely avoided in this book. The protection of trade marks against uses not involving consumer confusion will be referred to here as protection against ‘allusion to’, or ‘the allusive use of’, a mark. ‘Use’ of a sign for all three categories of protection is broadly defined to include affixing it to goods or packaging, offering goods or services under the sign, importing or exporting them under the sign, and using it on business papers or in advertising.47 A trade mark can also be infringed by a type of ‘secondary’ infringement where a person such as a printer applies a registered trade mark to labels, packaging, business paper, or advertisements and the like with actual or constructive knowledge that the use of the trade mark is unauthorized.48
The rights of a trade mark owner are subject to exceptions which cover use in comparative advertising,49 use of another registered trade mark,50 various types of descriptive use,51 and local use of a trade mark that has preceded its registration by someone using it in a wider geographical area.52
Trade mark rights are of indefinite duration, although registration is in periods of 10 years.53
The law of database right is largely governed by the Copyright and Rights in Databases Regulations 1997 (‘Databases Regulations’). Database right protects collections of independent works, data or other materials which are systematically arranged and individually accessible.54 No formality is required for protection but there must have been a substantial investment in obtaining, verifying or presenting the contents of the database.55 Database right is a national system of protection and claims for the infringement of the database right are subject to the jurisdiction of the UK courts.
The database right enables the maker of a database to prevent the extraction or re-utilization of a substantial part of its contents.56 The maker of the database is usually the person who takes the initiative in creating, and assumes the risk of investing in, the database or her employer.57 Although there are no notice formalities associated with the right, where copies of the database bear the name of its maker and the date of its first publication, rebuttable presumptions arise that the name given is that of the maker and owner of the database right and that the date of first publication is accurate.58 Repeated and systematic extraction or re-utilization of insubstantial parts of the contents of the database may amount to the extraction or re-utilization of a substantial part.59 Re-utilization means making the contents of the database available to the public by any means.60
The database right is subject to only a restricted range of exceptions.61 These cover public lending62 (though surprisingly not on-the-spot reference use in a library),63 the illustration of teaching or research,64 use in circumstances in which it is reasonable to assume that the right has expired65 and various public purposes such as use in judicial proceedings or a Royal Commission.66
The database right lasts for 15 years from the end of the year in which the database is first completed, but, if it is published within that period, extends to 15 years from the end of the year in which it is first published.67
It can be seen from this brief summary that the rights traditionally categorized as intellectual property have very different features. This is why writers on the subject usually eschew offering a single concept around which all, or even most, of the rights can be organized. But the rights do share common features and a core concept of an intellectual property right can be developed. An intellectual property right is a right: (i) that can be treated as property; (ii) to control particular uses; (iii) of a specified type of intangible asset. In addition, intellectual property rights normally share the characteristics that they are: (i) only granted when the particular intangible asset can be attributed to an individual creator or identifiable group of creators, the creator(s) being presumptively entitled to the right; and (ii) enforced by both the civil and criminal law. Each of these aspects of the concept of intellectual property merits separate consideration.
The intellectual property statutes all provide that the rights they confer are personal property.68 But it is important to identify precisely the object of the relevant property right. That object has often been described in two erroneous, but politically powerful, ways.
First, there have been some who have claimed that intellectual property is property in the intangible asset itself: for copyright in the relevant work, for patent in the relevant invention, for trade mark in the mark, and for database right in the database.69 This position reflects the intuition of the owners of intellectual property rights who are likely to speak of ‘their’ works, inventions, marks, or databases. It also reflects much discussion of intellectual property policy. In Chapter 2 we shall see that those who seek to justify the intellectual property rights often rely upon arguments first advanced to justify rights to control tangible property. Their concern is to demonstrate that the creator of an intangible asset ought not simply to benefit from the use of the intangible, but should be able to control it. This focus on control over the use of the intangible might again suggest that the rights do, or at least should, entail property in the intangible assets themselves. Finally, this description of intellectual property seems to find some statutory support in the Databases Regulations which provide that ‘[a] property right subsists . . . in a database’.70
Nevertheless, it is arguably neither accurate, nor helpful, to think of intellectual property rights as rights of property in the intangibles themselves. This categorization is inaccurate because the statutory intellectual property rights do not presumptively exclude others from the enjoyment of the relevant asset, but from its use in one of a broadly or narrowly defined range of ways. It is true that copyright currently gives the owner of copyright in a work control over most of its commercially significant uses. It is also true that patent grants such broad rights to control the use of an invention that the distinction between property in the invention and property in the right to control particular uses of the invention may seem academic. But a presumptive right to exclude others from enjoyment of the work or invention is not implied by the structure of even these regimes. Section 60(1) PA introduces a list of potentially infringing uses of an invention with the words ‘. . . a person infringes a patent if, but only if, . . . he does any of the following things’. Section 16(1) CDPA introduces a similar, but more specific, list with the words ‘[t]he owner of the copyright in a work has . . . the exclusive right to do the following acts in the United Kingdom’. Interestingly, the CDPA and PA adopt more careful language than the Databases Regulations. They provide that it is copyright and patents which are personal property and not the works or inventions that are their subject matter.71 Moreover, we shall see that the best understanding of the law of account of profits for breach of an intellectual property right seems to reflect an understanding that property is in the legal right itself.
The description of intellectual property as rights in intangible assets is unhelpful for the same reason that it is inaccurate. It glosses over important questions about which uses of those assets ought to be controlled by the owner of the relevant rights. In a politically powerful way, it suggests that any new commercially valuable uses of protected subject matter ought, by default, to fall within the control of the intellectual property right owner. It casts the burden of proof that they ought not to do so upon the shoulders of those who would reserve them to the public domain. Thus, for example, some American writers refer to the fair use defence in US copyright law as the fair use ‘privilege’.72 But each new potential use of an intangible may raise new questions for the justification of the intellectual property rights and merits fresh consideration.
Second, there have been some who, repudiating the idea that intellectual property is property in the intangible assets they protect, have claimed that it is property in a monopoly.73 The concept of intellectual property rights as monopoly rights is just as politically powerful as the idea that they are rights of property in their subject matter, and just as analytically unhelpful. Having defined intellectual property in these terms, Penner recognizes that treating them in this way ‘may appear to be a slippery slope which would lead to all property rights being defined as rights to monopolies of some kind’.74 This problem arises because of the way in which the word monopoly has been used. A monopoly, at least in the sense that lawyers use the word, does not exist simply because the law allocates control over a particular resource to just one party.75 If that were the case, then it would be right to refer to all property rights as monopolies. The word ‘monopoly’ usually signifies a relationship between a supplier and a market for particular goods or services: that is, that the supplier has undue power over the supply of those goods or services to the relevant market. Whether intellectual property rights confer this type of monopoly will depend upon the market in which the product or service to which it relates is to be offered. A patent over a breakthrough technology for which no substitute can be found may conceivably afford its owner monopoly power. Copyright in a novel is extremely unlikely to do so.
It will be clear, then, that it is at least as analytically unhelpful to describe an intellectual property regime as property in a monopoly as it is to describe it as property in the subject matter that it protects. It is at least as politically charged because monopolies are assumed to be harmful. They entail significant deadweight losses. Labelling intellectual property rights as monopolies has the opposite effect to labelling them as property in their subject matter. In a way that may be unjustified, it stacks the argument against those who assert intellectual property rights and argue for their expansion.
The concept of an intellectual property right that is proposed here thus avoids these two notions of property in an intangible asset itself and of property in a monopoly. The concept identifies the object of the relevant property right as the legal right itself. It is the legal right itself over which the intellectual property owner, in the terminology of the property theorists, enjoys an open-ended set of use-privileges, control powers and powers of transmission. She can presumptively use, or not use, the legal right in whatever way she wants: she can license, sell or devise the legal right on whatever terms she chooses. This understanding of intellectual property also reflects common usage when we speak, for example, of ‘licensing copyright’ or ‘assigning a patent’. Described in this way, an intellectual property right might seem like a chose-in-action and a lively debate in the Law Quarterly Review at the end of the nineteenth century touched upon the issue of whether intellectual property rights ought to be so categorized.76 Intellectual property rights sit uneasily within the category of choses-in-action. Until there has been an infringement, the holder of the intellectual property right has no right of action to recover money or property, yet it is clear that there is property in an intellectual property right that is never infringed. Nevertheless, in that intellectual property is property in a legal right, the analogy with choses-in-action is clear.
An intellectual property right entails control over the use of an intangible asset. But there are important differences in the degree of control afforded by the various intellectual property regimes. That degree of control is sometimes referred to as the ‘scope’ of the right, although those who use that term rarely take into account the full range of factors that are relevant.
(a) Factors determining the scope of an intellectual property right
There are five factors relevant to determining the scope of an intellectual property right. The scope of a particular intellectual property right ought, of course, to be identifiable and to reflect its underlying purposes.
Rights against imitation and rights against independent creation
First, the scope of an intellectual property right is determined by whether it affords rights only against imitators of the protected asset, or also against independent creators. The law of copyright offers rights against imitators, though imitation may be innocent in the sense that it is subconscious.77 The law of database right adopts a similar position in that the right does not prevent the independent creation of identical databases. The law of registered designs and patents can be used against independent creators. So too, in normal circumstances, can the law of trade mark. This distinction is not without importance. A playwright who independently devises a plot is able to use it without fear of suit. An inventor who independently creates a new drug may find herself prevented from using it by an earlier patentee. The reasons that patent law, in particular, operates as a right against independent creation concern the economics of innovation and are briefly considered in Chapter 4.
In some senses, the terminology of ‘imitation’ and ‘independent creation’ is not altogether satisfactory. The relevant distinction is more closely described as one between ‘derivative’ and ‘non-derivative’ use. But ‘derivative’ is a term of art in US copyright law, and the terms ‘imitation’ and ‘independent creation’ are therefore adopted to avoid confusion.
Uses reserved to the holder of the right
Second, the degree of control a particular right affords is determined by the range of uses of the asset that is reserved to the holder of the right. These range from the more specific to the very general. Use of the intangible in one of these ways may give rise to what is often called ‘primary’ liability.
An important exclusion from the ambit of this book is a discussion of so-called ‘secondary’ liability. Secondary liability arises from activities that do not involve use of the intangible asset itself, but that facilitate or encourage its use by others in an infringing way. Thus copyright might be infringed by the importation of infringing copies,78 by possessing or dealing with an infringing copy,79 by providing means for making infringing copies,80 by permitting the use of premises for an infringing performance,81 and by providing apparatus for an infringing performance.82 A patent may be infringed by supplying the means for putting a patented invention into effect without the consent of the patent owner.83 A trade mark may be infringed by someone who ‘applies a registered trade mark to material intended to be used for labelling or packaging goods, as a business paper, or for advertising goods or services’.84 This provision would cover, for example, the activities of a printer commissioned to produce potentially infringing material. Secondary liability should be distinguished from primary liability (either individually or as a joint tortfeasor for infringement arising from the joint use of an intangible in one of the range of ways reserved to the holder of the right). It should also to be distinguished from the type of joint liability that arises from procuring a primary infringement by incitement.85
Scope of the intangible asset
Third, the scope of an intellectual property right is determined by the ambit of the protected intangible asset. Intellectual property rights clearly capture the use of intangible assets identical to those protected: the reproduction of an author’s precise work, the use of an invention clearly described in the patent specification, the use of a sign identical to a registered trade mark on goods identical to those for which it is registered, or the use of the whole of a protected database. But problems arise when only part of a protected intangible has been used, or when an intangible has been used that is not quite identical to the protected work, invention, sign or database. This may happen strategically, because a user seeks to avoid infringing the relevant intellectual property right. But it may also happen quite apart from this strategic purpose, particularly in contexts of independent creation. In these circumstances the question of the ambit of the protected intangible becomes paramount. Few intellectual property questions are more difficult to determine. If the law casts the ambit of the protected intangible too wide, it risks unjustifiably interfering with the liberty of the defendant. If the law casts the ambit of the protected intangible too narrowly, it risks frustrating the purposes of the intellectual property regimes outlined in Chapter 2 by failing to secure the protection that those purposes require.
Defences and compulsory licensing
Fourth, the degree of control a particular right affords is determined by the range of defences that are available to infringement of the right, and by the situations in which an intangible is subject to compulsory licensing. A compulsory licence is any statutory right to use material the subject of an intellectual property right, without the consent of the right holder, but dependent upon the payment of a reasonable fee.
The range of available defences and compulsory licences varies widely between the different intellectual property regimes, but a defence or compulsory licence is likely to be available if one or more of three criteria apply. First, a defence or compulsory licence is more likely to be recognized if the transaction costs of licensing the use of the relevant intangible are prohibitive. In Chapter 3 we shall see that this problem is partially overcome in the copyright field by arrangements as to collective licensing. But in contexts in which this is not feasible, high costs in identifying a rights holder and obtaining a licence may be good ground for recognizing a defence or compulsory licence. Another reason for recognizing a defence or compulsory licence is if the would-be user has a strong claim to the use of the intangible, particularly one grounded in a right recognized by the general law. A distinction here must be drawn between so-called ‘negative rights’, such as the right to free speech, and so-called ‘positive rights’ such as the right to health or education. While the former have to some extent been used to ground intellectual property defences and compulsory licences, the latter have only done so to a more limited extent. Finally, a defence or compulsory licence is more likely to be recognized if doing so is unlikely seriously to undermine the purposes of the intellectual property regimes outlined in Chapter 2.
Once it has been established that a defence or compulsory licence should be recognized, the choice between the two depends upon the strength of the case for unimpeded use. If a defence is thought appropriate because the case for unimpeded use is particularly strong, the further question is whether the defence should be cast in general or more specific terms, a distinction that we shall first encounter in our discussion of the copyright defences in Chapter 3. If a compulsory licence is thought appropriate, the difficult problem of setting a ‘reasonable’ fee for the particular use arises and tribunals are often charged with this task. An alternative to the grant of a compulsory licence has been suggested to be the refusal of injunctions,86 though this simply shifts the pricing problem to a court in the assessment of damages.
Duration
Fifth, the degree of control a particular right affords is determined by the duration of the right. In the systems sketched in the preceding section, this varies from 15 years for the database right, to 70 years from the death of the author for most copyright works, and a period of indefinite duration for many trade mark rights. The duration of protection is, in relation to many of the intellectual property regimes, a product of historical legacy and the harmonization of different legal systems with its tendency to strengthen rights. Whether the current periods of protection are in some cases too long is an issue that is often raised by academics, but regarding which few policy-makers would have the stomach to effect real change. Like the other four criteria, duration is an essential part of determining the scope of the intellectual property regimes and identifying the extent to which they achieve, or hamper, the purposes that underpin them.
(b) Vagueness in the scope of the intellectual property rights
It is important to recognize that there is real difficulty in discussing the current scope of the various intellectual property rights, a difficulty that shall become apparent as we address the individual regimes. This difficulty arises from many of the rules determining the scope of a protected intangible, and from some of the rules as to defences and compulsory licences. Those rules are surprisingly, sometimes perplexingly, vague. They are vague to an extent that would never be tolerated in rules determining the boundaries of physical property and that make it difficult to determine the extent to which the intellectual property regimes achieve the purposes outlined in Chapter 2.
Take copyright and patents as examples. Whether or not copyright in a work has been infringed depends upon the very malleable tests of whether a ‘substantial part’ of the work has been taken, whether the ‘expression’ of the work has been taken or merely its underlying ‘idea’, and whether one of a range of relatively flexible defences applies. Similarly, the issue of how patent claims ought to be read is one of enormous complexity, particularly when it is sought to interpret a patent claim and specification so as to cover technology which is somehow ‘equivalent’ to that which it explicitly describes.
This uncertainty in the scope of the rights has been criticized by some, and seen as necessary, or even desirable, by others. Some economists have argued that uncertainty about the scope of intellectual property rights gives rights holders an unjustifiable advantage over those who want to use intangible assets similar to those potentially protected. Given the risk of unpredictable litigation, a second author or inventor is likely to steer well clear of the copyright work or the patented invention.87 Other economists have argued that uncertainty, at least when linked to delay in litigation, works against rights holders, and is even in the public interest, by encouraging imitation in the period in which the potential strength of protection is unknown.88 Similarly, some legal philosophers would argue that vagueness in the scope of rights such as copyright and patents is problematic for the achievement of the rule of law. It gives insufficient guidance to the creators and would-be users of intangible assets and creates problems of process in the application of the legal regime. Other legal philosophers would argue that a certain amount of vagueness in the scope of copyright and patent is probably inevitable and even desirable, as long as the vague tests which determine that scope are applied according to sufficiently principled and clearly articulated criteria.89
The truth probably lies somewhere in the middle. It is difficult to imagine that an intellectual property regime marked by the precision of the theodolite would be effective to achieve the purposes outlined in Chapter 2. But it is also clear that excessive vagueness is undesirable. The challenge for intellectual property policy-makers and judges is to avoid these two extremes.
Intellectual property protects intangible assets, but only intangible assets of particular types. There are many intangibles that are not protected by one of the intellectual property regimes and whose use by a rival can only be prevented, if at all, by personal actions such as the action for passing off or for breach of confidence. Examples of such assets might be the format of a particular television show or the fictional characters that are the subject of so much valuable merchandising.
The term ‘intangible asset’ is adopted here in preference to two common alternatives. First, there is a tendency amongst business people to adopt the term ‘intellectual property’, or more commonly ‘IP’, for any intangible asset. This is because of a growing assumption that all valuable intangible assets should be the subject of intellectual property protection. This can only lead to confusion, and the term is here reserved for the rights capable of ownership under the statutory intellectual property regimes.
Second, the subject matter of the intellectual property regimes is sometimes referred to collectively as ‘ideas’. Thus Harris labels the various types of intangible asset protected by the intellectual property regimes ‘ideational abstractions’, by which he seems to mean simply ‘ideas’. By using this language, Harris is making the point that a work, or invention, or trade mark or database is only the same work, or invention, or trade mark, or database as one that resembles it ‘by virtue of a mental abstraction’.90 However, the term ‘ideas’ is unhelpful as a cipher for the subject matter of the intellectual property rights. Such use tends to obscure an important commitment of the law, the commitment that ideas ought to be free to circulate. This commitment is usually expressed in the context of a debate as to whether ‘ideas’ or ‘information’ ought, as such, to be regarded as property. In general, the law is committed to the principle that they ought not to be. Legal fields as diverse as theft, breach of confidence, fiduciary duties, taxation, and government appropriation, evince this commitment with varying degrees of consistency. In Chapter 6 we shall see how close the law of breach of confidence and the database right come to abandoning it. But each of the major intellectual property regimes struggle to identify subject matter for protection that is consistent with the notion that ideas, in general, ought to be free, and it is because of this underlying commitment that the term ‘intangible asset’ is to be preferred over ‘idea’ or even ‘ideational abstraction’. The term ‘intangible asset’ is broadly understood, but avoids these two difficulties.
The form that an intangible asset must take to constitute the subject matter of an intellectual property right is determined by two things.
First, it is determined by the core concept of the subject matter of the various regimes: for copyright by the concept of a work, for patent by the concept of an invention, for trade mark by the concept of a sign, and for database right by the concept of a database. However, just as there is a surprising vagueness about the scope of many intellectual property rights, there is also a surprising vagueness about the range of intangible assets to which they attach. It might be expected that the statutory regimes would be careful to delimit the subject matter that they protect. However, few of the intellectual property regimes are built around clear conceptions of their subject matter. Again, take copyright and patent as examples. The protection of copyright is thrown around ‘works’ and yet there is very little discussion of what might constitute a work. For example, the UK legislation provides that a literary work is ‘any work . . . which is written, spoken or sung’,91 but it is unclear whether an idle conversation could constitute a ‘work’. Opinion varies as to whether the concept of a work entails, for example, purposive creative activity. Similarly, the protection of patent law is thrown around ‘inventions’ and yet most patent regimes lack a clear concept of what might properly constitute an invention. This has been important in international discussion of art 27 of TRIPS which provides that patents shall be available ‘for any inventions . . . in all fields of technology’. Questions have arisen as to whether this article mandates, for example, patents for methods of doing business or surgical techniques. These things seem far from the traditional subject matter of patent law, and are excluded from protection in Europe, but it is difficult to explain their exclusion without reference to some conception of invention linked to the underlying justifications of the patent system as a whole.
Second, the form that an intangible asset must take in order to be protected is determined by the formalities required under each of the relevant regimes. These range from the simple requirement that a work be recorded in some way in order to attract copyright,92 to more complex requirements regarding the formal disclosure of an invention that must be satisfied for grant of a patent.93 In particular, some systems of protection involve registration and some do not.
Registration systems have a number of purposes.94 First, they avoid the problem of over-protection by ensuring that only those intangibles that a creator herself regards as worth protecting are protected. Second, they give notice to anyone who wants to use a particular asset that it is protected and in whose name. This is particularly true where registration is notified on products incorporating the asset with symbols, not requisite to protection in the UK, such as ©, 
, and™. They thereby reduce the search costs of those who would use a particular asset and thus reduce the overall burden of giving it protection. Third, they create boundary signals so that transactions are promoted and innocent infringers are not unfairly surprised, particularly by liability under regimes that protect against even independent invention. They therefore ensure that liability is kept ‘within tolerable limits’.95 Fourth, in the context of patents, they force the disclosure of technology that might not otherwise be disclosed, so that it is available for general use when the patent expires.
However, not all registration systems achieve these purposes. Consider the case of copyright registration systems, long since abolished in almost all jurisdictions. An absence of formalities for copyright protection is required by the Berne Convention for the Protection of Literary and Artistic Works 1886,96 but is regretted by many commentators. US law continues to give as much effect to notice and registration provisions as is compatible with the Berne Convention.97 Nevertheless, copyright registration and notice systems never effectively achieved all the purposes outlined in the preceding paragraph. As to the first of those purposes, it is simply not the case that there will be a coincidence of those works that are worth protecting and those works that are registered. If registration before a potentially infringing act is requisite to protection, many valuable works will lose protection through their creator’s ignorance of the legal requirements. This proved a problem in relation to registered designs. Before the introduction of the designs right, many designers, such as fabric artists, were losing protection altogether because of their failure to register their work. As to the third of the purposes that copyright registration is said to serve, a copyright registration system only poorly communicates boundary signals. In relation to the old UK copyright registration system, Sherman and Bently claim that: ‘[T]he non-reductive nature of the copyright work meant that it was not possible to represent the intangible property or to reduce it from the physical format in which it was manifest’.98 A copyright registration system can only involve the deposit of the work itself. What Sherman and Bently go on to show is that the registration system did emerge as an effective means of proving ownership (that is, of achieving the second of the potential benefits outlined above).99 However, it may be thought that the reduced ownership search costs achieved by a registration system are outweighed by the possibility that really deserving works could inadvertently remain unprotected.
Moreover, even in regimes such as patent in which they do more effectively achieve their purposes, registration systems create problems of their own. Even in these contexts, registration systems may unfairly prejudice those creators who are ignorant of the legal requirements. This issue has been important to discussions of the desirability in the law of patent and registered designs of registration ‘grace periods’, periods in which public disclosure can be made before registration without entailing a loss of rights and which we shall consider in Chapter 4. Registration systems also raise questions of priority and prior user rights. Registration systems are useful features of some intellectual property regimes, but the question as to when their utility outweighs the problems that they create requires careful attention.
To summarize the first three parts of our concept of intellectual property, an intellectual property right is a right which can be treated as property, to control particular uses, of a specified type of intangible asset. This conceptualization captures the essence of all the core intellectual property rights. However, two further characteristics are also typical. They are: (i) that most intellectual property rights are only granted when the particular intangible asset can be attributed to an individual creator or identifiable group of creators, the creator(s) being presumptively entitled to the right; and (ii) that they are enforced strictly by both civil and criminal penalties.
The major intellectual property regimes are built upon the assumptions: (i) that the form of a particular intangible asset is the result of an act of creation; and (ii) that someone responsible for that act can be identified. One important exception may be the law of trade mark, though even in trade mark policy the assumption that the owner of a mark has ‘created’ the mark, or at least the goodwill associated with it, is becoming increasingly powerful.
That a particular intangible asset has been ‘created’ is seen as important in discussions of the major intellectual property regimes because most of the principal justifications for the recognition of intellectual property rights assume that the first owner of intellectual property rights has added something new to the life of her community. Of course, adding something ‘new’ to the life of a community does not entail its creation, and it would be possible for an intellectual property system equally to reward the creators and the first importers of intangible assets. Indeed, at its inception, the UK patent system was equally concerned to reward those who imported new technology as those who devised it. Until very recently, aspects of the treatment of foreign inventors in US patent law suggested a similar concern.100 Nevertheless, it is a concern to reward ‘creators’ that now motivates the intellectual property regimes of the UK.
These assumptions that a particular intangible has been created, and that its creator is identifiable, are deeply problematic. Of course, they have been radically challenged by some intellectual property theorists who, drawing on the work of the post-modern critical theorists, reject the notion that anyone can create anything.101 But even the most conservative intellectual property theorists must admit that these assumptions create real difficulties in the law, difficulties that have been worked out differently in each of the intellectual property regimes.
(a) The assumption regarding an act of creation
The assumption that an intangible asset can be linked with an act of creation gives rise to problems regarding parallel and cumulative creation. The problem of parallel creation arises in contexts in which independent creators arrive at essentially the same intangible without reference to one another. As we have seen, some intellectual property systems provide rights against independent creators, some provide rights only against imitation. In addition, where rights are dependent upon registration, rules as to priority must determine whether it is the first to create an asset or the first to register it that takes the intellectual property right.
Equally difficult as the problem of parallel creation is the problem of cumulative creation, creative activity that builds upon existing material. Since at least the creation of the world, nothing has been created ex nihilo. It is often difficult to identify the extent to which a creator is simply reproducing the work of those who have gone before, rather than adding to it. But if the intellectual property systems are keen to reward creative activity, distinguishing between mere reproduction and cumulative creation is vital. If intangible assets, even the most creative, also draw upon the well known, then the challenge is to identify just how creative an intangible must be before it can be protected. In copyright, we shall see this question addressed through the uncertain law of originality. In patent it is addressed through the complex rules as to novelty and inventive step. In database right, the relevant test concerns investment in obtaining, verifying or presenting the contents of the database. The assumption is presumably that only that which is somehow new and a contribution will require or attract this type of investment. Each of these standards attempts to distinguish the mere reproduction of that which is already in the public domain, from creation, including cumulative creation. Each attempts to identify how much ‘value added’ an intangible must represent to be worthy of protection.
(b) The assumption regarding an identifiable creator
Just as problematic as the assumption that a particular intangible can be attributed to a particular creative act, is the assumption that the creative act will be attributable to an identifiable person. Three difficulties arise.
First, an intangible may be the work of more than one individual person. This gives rise to the challenge of allocating responsibility for, and rights over, either separate parts of the joint creation or the joint creation as a whole. For example, this has become an issue for those seeking to protect computer programs, because computer programs are very often the product of real collaboration. Rules must be settled for the rights that joint creators enjoy as against one another, and individually and collectively as against third parties.
Second, even where an intangible asset is the work of one individual, the law sometimes allocates ownership of the asset to her employer, often a group of people acting together as a corporation. The issue of employer and corporate ownership of intellectual property is briefly addressed in Chapter 2.
Third, situations arise in which it has been suggested that intellectual property protection should be available and yet no individual, or even group of individuals, can fairly be regarded as responsible for the creation of the relevant intangible. Two important groups of intangible have proved particularly problematic. One of these is now protected by the establishment of an alternative, non-proprietary, statutory regime. The other is as yet largely unprotected.
The first group of intangibles includes geographical indications and designations of origin. These are names that associate a particular foodstuff or beverage with a particular region, place or country, such as Roquefort cheese or Newcastle Brown Ale. In the case of geographical indications the association is one of reputation. In the case of designations of origin the association arises because the quality or characteristics of the foodstuff are somehow associated with the geographical environment. These indications or designations can be protected as ‘collective’ or ‘certification’ trade marks.102 They have also been protected to a limited extent under the law of passing off.103 However, trade mark is not altogether adequate for these types of indication or designation. Thus EU law provides sui generis protection for geographical indications relating to certain classes of agricultural products and foodstuffs104 and for designations of origin for wines105 and spirits.106 We shall briefly consider these regimes, and a related one concerning traditional specialities guaranteed, in Chapter 5. While this protection is not proprietary, it does create a system for the protection of a particular intangible asset. A crucial feature of the Community system is that anyone whose products fall within the ambit of the indication or designation is entitled to use it.107 The significant thing about geographical indications and designations of origin is that they are protected without an identifiable act of creation and without an identifiable creator to whom control over their use can be assigned.
The second group of intangibles consists in the intangible cultural resources of indigenous peoples, including both their artistic resources and their useful knowledge. Claims have been made that indigenous peoples ought to be able to prevent others, particularly those from outside the relevant people group, from engaging in activities such as the use of the traditional designs or the use, at least without payment, of traditional knowledge regarding the healing property of plants. One area in which intellectual property law has made attempts to protect such intangible cultural assets is that of the copyright protection of traditional designs. In one Australian case, copyright was found to protect works including those designs and their reproduction by third parties gave rise to damages for the cultural harm done to the artists in their relationship with their community.108 In another case, an artist using traditional material to create a copyright work was found to owe a fiduciary duty to the people group of which he was a part in relation to his use of the copyright.109 However, these cases barely represent an adequate approach to the protection of traditional designs, let alone other types of traditional knowledge. As one case put it ‘copyright law does not provide adequate recognition of Aboriginal community claim to regulate the reproduction and use of works which are essentially communal in origin’.110 The existing intellectual property regimes have not usefully secured appropriate protection for intangible cultural assets because the relevant people group is usually unable to point to a particular act of creation of the asset, or to a particular creator in whom any rights should vest. In the case of intangible assets of this type there is often not even an organized group in whom it is obvious that rights might vest. Indeed, the question of who ideally should be able to prevent whom from using such assets is fraught with difficulties about the allocation of cultural power.111 Not all intangible assets over which the law might wish to allocate control are the product of an act of creation attributable to an identifiable creator.
In this section we shall sketch the primary features of the injunctive and monetary relief available for the infringement of an intellectual property right. Before doing so, however, an important feature of intellectual property enforcement should be understood.
(a) Enforcement and property
Three features of the enforcement of the intellectual property rights seem to reflect their categorization as property. They reflect a concern not merely to remedy wrongful behaviour but to ensure that the owner of intellectual property can fully enjoy her right to control the use of its subject matter.
First, liability for the primary infringement of intellectual property rights is generally strict. Three important qualifications need to be made to this claim: (i) only liability for primary liability is generally strict, secondary liability is not; (ii) liability for infringement by offering to use a patented process is not strict, though liability for use of a patented process is;112 (iii) for other kinds of primary infringement, damages and an account of profits may not be available if the defendant can prove that she had no reasonable grounds to believe that the relevant subject matter was protected. Thus damages will not be available for demonstrably innocent infringement of copyright,113 registered design,114 UK design right,115 and patent.116 The one anomalous exception to this rule is that damages may be available for even an innocent passing off or infringement of trade mark.117 An account of profits will not be available for demonstrably innocent infringement of patents,118 and to compound the anomaly, for innocent infringements of passing off and trade mark.119 Of course, the practical importance of these exceptions ought not to be overplayed as notice of claimant’s rights, the first stage in any process of enforcement, can turn an innocent infringer into one fixed with the knowledge that that particular subject matter is protected.
Second, in civil suits a very wide range of remedies is available to protect intellectual property rights. Intellectual property rights do not give rise to proprietary remedies in the sense that the holder of the right acquires any type of proprietary interest in infringing articles. However, the range of remedies available to protect intellectual property does include many that give effective control over such articles. The intellectual property regimes are variously protected by injunctions,120 declarations,121 procedures for the seizure by customs officers of infringing articles,122 a procedure for the seizure of infringing copies by a copyright owner as a self-help remedy,123 orders for the delivery up of infringing articles,124 orders for the destruction of infringing articles,125 orders for the forfeiture of infringing articles,126 damages,127 and accounts of profits.128 In providing for this range of remedies, the CDPA129 and the TMA130 both make explicit reference to the proprietary nature of intellectual property rights. Moreover, we shall see below that the law of monetary relief for the infringement of intellectual property rights is best understood if we remember the focus of the regimes on giving control over the use of an intangible, rather than merely the profit flowing from its use.
Third, intellectual property rights are sometimes protected by criminal, as well as civil, sanctions. Intellectual property infringement is sometimes loosely referred to, even by the judges, as ‘theft’.131 But, in fact, of the statutory regimes, only copyright132 and trade mark133 provide criminal penalties for infringement. Even the penalties for copyright and trade mark infringement are relatively new. The first criminal penalties for copyright infringement were introduced in 1902134 and for trade mark infringement in 1988.135 It seems that, although intellectual property protection might often be rhetorically equated with theft, the law is reluctant to regard it as such. This is not surprising if part of the function of the criminal law is to signal moral condemnation136 and, as many studies suggest, the public do not regard intellectual property infringement as morally blameworthy.137 It must also, if only in part, reflect an ambivalence towards the justifications offered for intellectual property, justifications explored in the following chapter. The European Commission has recently launched a draft directive designed to strengthen criminal penalties for intellectual property infringement throughout the EU and it will be interesting to see how that proposal fares against mounting opposition.138
(b) Outline of the civil remedies for infringement
We turn then, to sketch the most important civil remedies for infringement of intellectual property. In doing so, it is natural to begin with the equitable orders. Much criticized orders relating to the discovery and preservation of evidence, such as Norwich Pharmacal,139 Anton Filler140 and Mareva141 orders have long been essential to intellectual property practice. These respectively relate to compulsory disclosure by third parties, the search of premises for the seizure of evidence, and the freezing of assets pending trial: they are now known as ‘orders for disclosure’, ‘search orders’ and ‘freezing orders’ and are available under rr 31 and 25 of the Civil Procedure Rules 1998.142 These orders have been important to intellectual property practice because intellectual property ‘piracy’, as large-scale commercial infringement has come to be known, requires a speedy and decisive response. However, more generally, interim relief has been important to intellectual property enforcement because industries dependent upon intellectual property protection tend to be ones in which the pace of change is very quick. This affects the development of intellectual property law because it means that many decisions relied upon for propositions of law are actually applications for interim injunctions: they are applications in which the claimant, under American Cyanamid Co v Ethicon Ltd, itself a patent case, need only show a ‘serious question to be tried’.143 Final injunctions, though of course discretionary as equitable remedies, tend to be granted in intellectual property cases as a matter of course if there is any chance of persisting infringement.144
Monetary relief in intellectual property cases is more complex. We have already seen that damages are not normally awarded against innocent infringers. Where they are awarded, the general principle is, of course, that damages should compensate the claimant for her loss. Damages for consequential loss are recoverable, though subject to the same rules as to remoteness and causation as they are in any tort.145 However, all this allows for a variety of possible measures of even direct loss, none of which has been treated with particular care in the intellectual property cases. One measure of direct loss that is sometimes used is the loss of profits that a claimant has experienced because of the sale of infringing articles made by the defendants. This may be particularly apposite in the context in which the claimant and defendant are in direct competition, but will often be difficult to establish. Another measure of direct loss is the licence fee that would normally be charged by the claimant (or by a notional willing licensor), for use of the intangible by the defendant (or a willing licensee). In General Tire & Rubber Co v Firestone Tyre & Rubber Co Ltd,146 a patent infringement case, Lord Wilberforce distinguished between three categories of case: those in which a loss of profits can be shown; those in which there is a ‘normal, or established, licence royalty’;147 and those in which no loss of profits or normal royalty can be shown in which case the relevant damages will be measured as the licence fee that would have been charged had the claimant and defendant been a willing licensor and licensee. In that it is possible to generalize, these latter two measures have become the standard approach to measuring direct loss in the intellectual property cases.
An interesting question arises concerning the award of the normal or reasonable licence fee. It is difficult to see in what sense damages of this type can be said to be compensatory. The licence fee measure is not only available in contexts in which the claimant’s use means that a licence to a third party is impossible (such as when the making of a film from a book means that the copyright owner cannot license the film rights to anyone else). In such circumstances it is clear that compensation would be for the lost opportunity of an alternative licence arrangement. The licence fee measure is also available for the loss of the opportunity to license the use of the intangible by the defendant herself (for example, even when the claimant can license the intangible to an indefinite number of people). Similarly, in cases in which the claimant would certainly not have granted the licence, the courts do not measure the damage she has suffered (perhaps damage to her licensing business, or her own use of the intangible, through this unauthorized use). Rather, they again award the reasonable licence fee.148 These seem to be situations in which the claimant has, if anything, failed to make a gain rather than made a loss. For this reason, some writers classify these damages as restitutionary, arguing that the licence fee is a proxy for the benefit to the defendant of using the intangible. In paying the reasonable licence fee the defendant is making restitution of her unjust enrichment.149 However, this cannot be the case because the licence fee measure is available even in circumstances in which the defendant has made no actual gain through use of the technology (for example, because there is a freely available substitute or because the activity in which the technology was employed was loss-making).
A better approach, therefore, seems to be that suggested by Stevens. He claims that these damages are neither compensatory, nor restitutionary, but rather monetize the value of the right that has been infringed.150 This seems right because, if the reasonable licence fee were not available, there would be circumstances in which there had been flagrant infringement of an intellectual property right and compensation not available. Such a result would be incompatible with those justifications of intellectual property that stress the importance of giving the owner of the right control over the use of the intangible, and not merely the profits that might flow from its use. Of course, were compensatory damages not possible in contexts of a flagrant breach, exemplary damages would, in theory, be available.151 However, there is no reported case involving intellectual property in which they have been awarded. In the fields of copyright, rights in performances and UK design right, there is also a statutory basis for additional damages calculated with reference to the flagrancy of the breach and any advantage to the defendant accruing from it.152 But again the award of these damages is not common, and their purpose is not clear from the cases. The better alternative seems to be to continue to award the reasonable licence fee measure, accepting the Stevens categorization of it.
An alternative type of monetary relief is constituted by the remedy of an account of profits. Restitution lawyers again tend to classify this relief as restitutionary, though on the ‘disgorgement’ rather than the ‘restitutionary’ measure.153 The defendant is required to disgorge the benefit that she has acquired by means of her wrongful behaviour, to surrender her unjust enrichment. This categorization is again problematic. In particular, it is difficult to account for the rather peculiar sense of ‘benefit’ that is adopted in the most recent intellectual property cases. Imagine that a company infringes a patent in the production of a product on which, overall, it makes a profit, but only the same profit as it would have made had readily available non-infringing technology been used. Imagine that the same company infringes a patent in making a product on which, overall, it makes a loss, but less of a loss than it would have made had it not relied upon the patented technology. It seems clear that in the first case the defendant company has received no benefit from its infringement, and that in the second case it has. But in the leading case of Celanese International Corp v BP Chemicals Ltd,154 Laddie J held that in the first situation a profit had been made that could be apportioned to the claimant, while in the second situation no profit had been made and no account of profits was possible. This approach is hard to justify if unjust enrichment is the basis of the remedy.
An approach to the account of profits more consistent with the restitution theorists’ focus on benefit was advocated by the defendants in Celanese International Corp v BP Chemicals Ltd. They proposed what has been called an ‘incremental’ approach, an approach that requires an account of the difference in the profit actually made by the defendant and the profit that she would have made had she not relied upon the protected technology. The only difficulty with this approach is that, in the perhaps more frequent case in which the defendant’s activities have been profitable, it allows her, with the benefit of hindsight, to claim that she would have made just as much profit from using unprotected technology, when she will normally have used the protected technology because she thought that in doing so she would maximize her profits. It may therefore be seen to encourage a certain type of unhelpful, and disingenuous, speculation on her part.
As an alternative to the restitutionary approach, there may again be explanatory power in the approach adopted by Stevens.155 It may be that in assessing an account of profits the courts are not concerned to reverse an unjust enrichment at all. They may be simply identifying those profits which are traceably attributable to the infringed right. That is, they may be looking to see what money, in the defendant’s hands, actually represents the legal right that has been infringed. This account has three benefits: first, it is consistent with the view that the intellectual property right is property, and property that can be traced into particular assets; second, it accounts for the actual decision in Celanese International Corp v BP Chemicals Ltd; and third, it avoids the speculation inherent in the incremental approach. It is, on this basis, a much more convincing account of the current law.
Having sketched the most important intellectual property remedies, it is worth noting that many of the economic effects of the intellectual property regimes flow, not from the availability of those remedies, but from the enormous expense of intellectual property litigation. Indeed, the expense of patent litigation is such that in some countries it has given rise to so-called patent ‘trolls’. These are companies that collect patents, often of uncertain value, for the purpose of extracting royalties through threats of legal proceedings that it is cheaper for a cowed defendant to settle than to fight. Indeed, the patents/156 trade mark,157 UK design right,158 and registered designs159 regimes contain an implicit recognition of this problem. They provide a cause of action that can be brought by anyone aggrieved by a groundless threat of action for secondary infringement, or for primary infringement beyond a narrowly defined core of activities in each case. Such threats can seriously disrupt the business of traders who are not even potential competitors of the rights holder. They can also unduly harm the business relationships of a competitor before she has had a chance to argue that her activities are not infringing.160 The expense of intellectual property litigation is a real burden on the ability of various regimes to achieve their purposes and it is therefore something to which we shall return in Chapter 2.
Having outlined a core concept of intellectual property, and before we turn to its various justifications, one further taxonomic question should be addressed. This is the relationship of the law of intellectual property with the so-called law of ‘unfair competition’. While the law of unfair competition is strictly outside the scope of this book, it will be apparent that the shape of a given jurisdiction’s unfair competition law will profoundly affect the interpretation of its intellectual property law. This is most obviously true as regards the law of trade marks but it is also, as we shall come to see, true of almost all of the intellectual property regimes. The concept of ‘unfair competition’ and the relationship between unfair competition and intellectual property law therefore merits preliminary consideration.
‘Unfair competition’ is a nebulous term that means very different things to different writers. Its relationship with the norms of ‘competition’ or ‘anti-trust’ law are also variously described. The leading English language exponent of unfair competition law argued that together the two groups of norms preserve what he called ‘competitive conduct: struggle according to game-like rules by means of constructive effort subject to the natural conditions of the market’.161 This description may be thought to beg more questions than it answers. But for the present purposes it is sufficient to note three things.
No common law jurisdiction knows a general norm against unfair competition similar to that contained in art 3 of the German Gesetz gegen den unlauteren Wettbewerb (‘UWG’). That article prohibits acts in the course of trade that are unfair and that distort competition by harming competitors, consumers, or other market participants. This clause was enacted when the UWG was revised in 2004. Its predecessor, enacted in 1909, was art 1 UWG which simply prohibited acts that were contrary to ‘guten Sitten’ (‘honest practices’). These general clauses are parallelled in most major civil law jurisdictions. Under these clauses, a type of common law develops, the norms of which to a greater or lesser extent track the norms of the more specific forms of action known in the common law world.162 One important respect in which the norms developed under these clauses differs from those of the common law of England relates to availability of general rights of action against misrepresentation, denigration, or misappropriation.
In addition to denoting the type of general norm enshrined in art 3 UWG, ‘unfair competition’ is increasingly used as a taxonomic label for groups of norms of interest to both intellectual property lawyers and competition lawyers. The characteristic of those norms is that they remedy harm done to one competitor by another. They are therefore to be distinguished from norms relating to consumer protection, though there may be considerable overlap between them: the Unfair Commercial Practices Directive, a consumer protection measure, prohibits misleading and aggressive commercial practices for the benefit of consumers, but notes in its recitals that this will also ‘indirectly [protect] legitimate businesses from their competitors who do not play by the rules in this Directive and thus guarantees fair competition in fields coordinated by it’.163 The harmonization of unfair competition norms has been on the agenda of the European Commission since the early 1960S, but has yet to be achieved.164
Taxonomies of unfair competition law vary widely in the norms that they include. In particular, the division, if any is appropriate, between the norms of competition law and the norms of unfair competition law is often contested. Lawyers in common law countries tend to see these as two distinct fields of regulation: lawyers in civil law countries tend to see them, in a popular metaphor, as two sides of the one coin. A survey that most lawyers could accept was offered by WIPO in 1994.165 In that survey, and others like it, four types of norm are included that are of particular interest to intellectual property lawyers and that often appear in discussions of intellectual property. These are norms against misrepresentation, denigration of a competitor or her products, violation of a competitor’s trade secrets, and misappropriation of her intangible assets.
The UK approach to the enforcement of these norms has been piecemeal. There have been three principle mechanisms. First, the self-regulation of competitors has been an important control on activity such as advertising. Advertising is regulated by industry groups such as the Advertising Standards Authority (the ‘ASA’). The ASA enforces the self-regulatory advertising code of the Committee of Advertising Practice, known as the British Code of Advertising, Sales Promotion and Direct Marketing.166 This code applies to advertising in all media except television and radio. It includes norms such as ‘[a]ll marketing communication should be . . . honest and truthful’, ‘marketing communications . . . should not discredit or denigrate the products . . . of competitors’, ‘[m]arketers should not take unfair advantage of the reputation of trade marks, trade names or other distinguishing marks of organizations’ and in general that ‘marketing communications should respect the principles of fair competition generally accepted in business’. In relation to television and radio advertising, the ASA maintains and hears complaints under the advertising codes of the Broadcast Committee of Advertising Practice, known as the BCAP Radio Advertising Standards Code and the BCAP Television Advertising Standards Code.167 The ASA undertakes this responsibility on behalf of the broadcasting and telecommunications regulator, the Office of Communications (‘Ofcom’). The standards contained in the radio and television codes are broadly similar to those contained in the British Code of Advertising, Sales Promotion and Direct Marketing.
Second, trading standards, including standards against activities such as misleading advertising, are enforced through a complicated matrix of criminal and civil actions usually enforced by administrative authorities. These include the trading standards departments of the metropolitan borough and county or regional councils and the Office of Fair Trading. While the focus of the work of these bodies is consumer protection, complaints can be brought by competitors.
Third, there are a limited range of common law actions that can be brought by competitors to combat the relevant types of unfair competition. Against misrepresentation, the torts of passing off and injurious falsehood might sometimes be available. Against denigration, the tort of defamation might in even more specific circumstances be made out. Against the violation of trade secrets, the action for breach of confidence offers protection that, though once quite specific, is now much broader. In that any action is to be taken against the misappropriation of an intangible asset without misrepresentation, it must in theory be taken under one of the specific statutory intellectual property regimes.
In short, therefore, unlike many civil law systems, neither English, nor UK, law includes general rights of action against misrepresentation, denigration and misappropriation at the suit of a trade competitor. The extent to which it includes such a right against the violation of trade secrets is a moot point, the answer to which shall become apparent as we explore the developing law of breach of confidence in Chapter 6. The lack of a general action at the suit of a trade competitor against at least misrepresentation and misappropriation has often been criticized as a defect in UK law. Commentators have therefore been interested in developments in this area in two other common law countries. First, there is s 52 of the Australian Trade Practices Act 1974 (Cw) which precludes misleading or deceptive conduct in the trade or commerce. This action applies in a broad variety of contexts and can be brought, amongst others, by consumers, by competitors, and by a special government authority.168 Second, the law of several US states contains a tortious action that was arguably first formulated as an action of general application against the misappropriation of intangible assets, though it is clearly not one now. It is worth pausing to consider this latter action, given that actions against misappropriation potentially parallel the operation of the statutory intellectual property codes.
The action against misappropriation traces its history to the decision of the Supreme Court in International News Service v Associated Press.169 In this case, INS had been banned from gathering information from the front on the progress of the First World War. Instead it bought copies of newspapers published on the east coast of the US that contained dispatches from the front supplied by Associated Press. It would paraphrase the dispatches and, taking advantage of the time difference between the east and west coasts of North America, publish stories based on them in its own west coast papers. These were published in competition with papers containing the original dispatches. This behaviour involved no infringement of copyright or breach of confidence. However, the Supreme Court found that it constituted tortious behaviour involving ‘reaping without sowing’ and allowed an injunction from the court below to stand enjoining INS from using the news collected by Associated Press ‘until its commercial value as news [had] . . . passed away’.170
A misappropriation action of this type is often seen as a desirable addition to the law for three reasons. First, it allows the judges to give reliefin situations in which they perceive that there has been unfair imitation of an intangible asset not (yet) covered by one of the statutory intellectual property codes. Second, without such a cause of action, the judges are in any case likely to try and protect such assets under one of the existing regimes, distorting concepts such as that of a copyright work or a patentable invention. They may also stretch other common law actions such as the action for passing off. We shall see in Chapters 3 and 4 a tendency to broaden the protection of copyright and patent to cover assets such as compilations of information and business methods, assets that many would regard as better protected by a tort of misappropriation. We shall see in Chapter 5 how the requirement of misrepresentation has been vitiated in some types of passing off case so as to give the action the practical effect of a tort against misappropriation. Many would regard these developments as distortions of the law that would have been better avoided by the development of a tort of misappropriation. Third, applying a tort of misappropriation in contexts of unfair imitation can lead to the award of flexible remedies fashioned by the court to achieve justice in the individual case. Forcing the facts of such a case into the constraints of the statutory intellectual property codes may well lead to inappropriate remedial responses: for example, forcing the facts of International News Service v Associated Press so as to offer protection on the basis of copyright might unduly have hampered the availability of news in a way that the injunction awarded in the case, though criticized for its ambiguity, did not.
However, as we shall see in Chapter 2, the principle against reaping without sowing, sometimes known as a principle against unjust enrichment, cannot be used to ground a workable cause of action. In particular, there is a danger that any imitation of any intangible asset could be rendered actionable on that basis, and thus the careful limitations on the scope of the statutory intellectual property rights become effectively otiose. For this reason the US courts have recently been quick to point out that the decision in International News Service v Associated Press is no longer authoritative as it is based on a now abandoned authority of the Supreme Court to formulate common law principles in cases decided on state law.171 And where the decision has spawned state law doctrines, these have been applied extremely cautiously. As early as 1929, Judge Learned Hand sought to limit the application of the case to ‘situations substantially similar to those then at bar’,172 and this approach to the case has been largely adopted since. So even in the US, which of all common law countries has been most open to a tort of misappropriation, the doctrine turns out to be one of very specific application.
This map of the law of unfair competition as comprising of clusters of norms against misrepresentation, denigration, and misappropriation, raises interesting questions about its relationship with the law of intellectual property. Two things are immediately apparent.
The first is that, at least traditionally, regimes such as copyright and patents on the one hand, and trade mark on the other, might have been located on very different points of the map. Copyright and patent offer protection against the misappropriation of particular types of intangible asset. In its origins, trade mark was different. In particular, consumer confusion was originally requisite for infringement: with the exception of the action for importing a reference under the Trade Marks Act 1938,173 the action for infringement of trade mark was essentially a type of action against misrepresentation. Indeed, until they were weakened by the Trade Marks Act 1938 and then abolished by the TMA, there were even restrictions on the assignment of a trade mark lest the use of the mark itself become a source of confusion regarding the origin of goods. However, as already suggested, this distinction is breaking down. With the newer forms of protection, particularly against use of a sign that takes unfair advantage of, or causes detriment to, the distinctive character or repute of a registered mark, trade mark protection now also partially inhabits those regions of the map of unfair competition law concerned with misappropriation and denigration. In addition, the range of intangible assets protected by trade mark is expanding, as a more flexible approach is adopted to the subject matter of trade mark rights. The distinction between trade mark and the other intellectual property regimes is becoming less clear. This issue is explored more fully in Chapter 5.
The second thing to note about the relationship between intellectual property and the law of unfair competition is that many would baulk at including copyright, and even patent, within the map of unfair competition at all. Just as for some it seems odd to think of trade mark law as intellectual property law analogous to copyright and patents, for others it might seem odd to think of intellectual property protection as a type of protection against unfair competition. We shall see that in the civil law traditions that spawned the concept of unfair competition, copyright is, at least rhetorically, ‘droit d’auteur’, offering protection to the relationship between an author and her work, and far from the more mundane commercial concerns of unfair competition law. Even in the common law countries, copyright operates in many situations that have nothing to do with competition between traders: we shall see that the distinction between copyright and droit d’auteur systems is often overstated. However, it has already been suggested that copyright is sometimes used in the UK as a substitute for a general action against misappropriation. In at least some of its applications it resembles that part of an unfair competition law regime. One of the characteristics of the justifications for intellectual property protection offered in the following chapter is that they can be combined with some flexibility to justify the quite different ways in which the same intellectual property regime can operate in the different contexts in which it applies. In the same way, taxonomies of intellectual property, and especially of its relationship to the law of unfair competition, can never be entirely comprehensive. The various intellectual property regimes have proved too protean for that.
Armed then with a concept of intellectual property and with a general idea of its relationship to the law of unfair competition, we turn to consider its justification, and then, more specifically, to the protection of creative, technological, marketing, and information assets.