IP and You

The Trial of the largest known Trojan Horse computer crime has started

noreply@blogger.com (Kenneth Yip) — Wed, 12 Aug 2009 16:07:00 +0000

The trial of the largest known so far Trojan Horse computer crime in China has started in the Xuzhou City of Jiangsu Province on 12 August 2009.

According to the news reports, there are 11 suspects in the trial. The suspects created a Trojan Horse program named “Tender” to steal userid and password of online game players. There were about 40 online games affected including games from QQ and NetEase.

Tender were mainly placed in online game related websites. When online game players visited the infected websites, Tender would be automatically installed in their computers. Some of the infected websites were hacked by the suspects. However, some infected website owners worked with the suspects and installed Tender intentionally.

Tender stole userid and password when the online gamers logged in to play online games. The suspects then transferred the virtual currency and weapons from the online gamers to the accounts of the suspects. The suspects would sometimes also stole the online gamers’ bank account information.

The scale of Tender:

Suspects involved: about 110 suspects involved in the development, distribution, and money laundering.
Investigation: the police investigation spaned 16 different provinces.
Online game affected: about 40
Infected websites: about 1800
Amount involved: RMB 30,000,000
Number of password stolen: about 8 million

How can Hong Kong SAR Government assist innovation based companies and professionals in HK?

noreply@blogger.com (Kenneth Yip) — Sat, 30 Aug 2008 14:13:00 +0000

Legislation

1. Allocate more wireless spectrum for private and commercial use. This will encourage local and international technology companies to develop and market wireless technologies in Hong Kong. The only restriction should be the power level.

Law enforcement

2. Continue supporting Intellectual Property Department (IPD) and Customs to protect the interest of intellectual property holders.

3. Review patent invalidation proceedings in Hong Kong. Currently, patents can only be invalidated in High Court which is extremely costly and time consuming. In UK and China, the relevant patent laws provide routes of lower legal costs to invalidate patents through the respective Patent Offices. Consequently, the quality of Hong Kong patents can be improved, presently the local innovative industry being unduly threatened by ambiguous short-term patents that have never been examined on patentability.

Administration

4. Encourage government departments, companies and the public to build on others' innovations. If licensing fee is required for using others' innovations, IPD, Hong Kong Trade Development Council (TDC), Hong Kong Productivity Council (HKPC), and Hong Kong Applied Science and Technology Research Institute (ASTRI) should assist by providing expert opinion and financial assistance. For licensing fee that is beyond the authoritative budget of the above organizations, Innovation Technology Commission (ITC) should provide necessary administrative and financial assistance.

5. Encourage HKPC, ASTRI, R&D centres and universities to innovate with the private sector. A company can license intellectual assets from these organizations for the most 0.5% of the intellectual asset development cost. If a company is willing to pay 20% of the development cost, the company can have exclusive right of the intellectual assets for 2 years. If there is more than one company willing to pay 20% of the development cost, the fee will be determined by an auction.

6. Establish Hong Kong as a trading hub for innovations based companies.

a. Further simplify working visa granting process for scientists, engineers, doctors and lawyers from overseas and mainland China.

b. Establish Hong Kong as an arbitration and mediation centre for regional innovation related disputes.

c. Further expand the testing, characterization and certification ability of Hong Kong Science and Technology Park (HKSTP), Hong Kong Cyberport Management Company (Cyberport) and HKPC.

d. Provide administrative and marketing support, through Investment Hong Kong, TDC and ITC, to attract international standard organizations to establish offices and certification centres in Hong Kong.

7. Assist companies to establish legal rights on their innovations.

a. Establish a voluntary copyright registration electronic submission system. The system should be free of charge. This could foster development in trading of copyright based innovations and reduce ownership uncertainty.

b. Provide financial assistance for design registration. Appoint HKPC to administrate financial assistance and provide technical expertise to companies. HKPC will fund the legal cost and drafting cost for one design registration per company per year.

c. Provide financial assistance for patent application. Appoint HKPC to administrate financial assistance and provide technical expertise to companies. HKPC will fund the legal cost and drafting cost for one local patent per company per year.

8. Lower patent application cost.

a. As there are not enough patent professionals and no patent examination system in Hong Kong, Hong Kong companies have to go overseas in order to establish their patent rights. Comparing to Singapore and Shanghai, this dramatically increases patent application cost in Hong Kong by 50% to 100%. Hong Kong should follow Singapore's patent practice. This can be achieved by (1) establishing a patent examination office in Hong Kong, (2) encouraging more qualified Hong Kong residents to work as patent professionals, and (3) attracting foreign qualified patent agents to work in Hong Kong.

b. As a transition stage to establish a professional team in IPD specializing on patentability examination, reference can be made to Macau's patent practice, in which patent searching is carried out by PRC State Intellectual Property Office (SIPO). The local patent registrar (i.e.: IPD) shall consider the search report and written opinion issued by SIPO and make its own decision in granting a relevant Hong Kong patent . Under the current Hong Kong patent system, a short-term patent is granted irrespective of the patent search results, hence causing ambiguities in presuming the validity of a "granted patent". Eventually, it makes local innovative companies very difficult to exploit their patent rights, e.g.: suing infringers, licensing the patented technologies.

c. When the number of patent professionals increases in Hong Kong and there is no need to go overseas for patent application, the cost of patent application will decrease. However, in order to supervise the quality of patent professionals in Hong Kong, the government should (1) establish a patent agent qualification system in Hong Kong and (2) provide subsidized training program for the patent agent qualification exam.

9. Enlarge the scope of SERAP program to seed stage. Conditional funding should be given to technology professionals who have not quitted their full-time job. Funding should then be provided once the technology professionals start working full-time in the start-ups.

Education

10. Encourage universities to use innovation licensing revenue as one of performance indicators for university professors.

11. Encourage the public and companies to write more songs and make more movies, by giving HK residents and companies free license for RTHK audio and video archives.

12. Educate the public the limitation of Hong Kong short-term patent and China utility patent. This could eliminate a lot of unnecessary disputes and increase the public awareness on the importance of invention patent.

13. Create internship/secondment programs in university research labs, HKPC, ASTRI, Cyberport and R&D Centres that companies can send their technology professionals to these organizations for training. During the secondment period, the technology professionals will be paid by these organizations to conduct R&D activities on projects assigned by these organizations.

Copyleft – another approach of licensing copyrighted materials

noreply@blogger.com (Kenneth Yip) — Wed, 11 Jun 2008 13:16:00 +0000

In May 2008, Nine Inch Nails, an American industrial rock band and Grammy Awards winner, released their music album for free on the Internet in MP3 format. Everyone is free to download the MP3 files from the website of Nine Inch Nails. Nice Inch Nails licenses the songs to the public under Creative Commons Attribution Non-Commercial Share Alike license.

Why would such a well-known band give out its music for free? What is Creative Commons Attribution Non-Commercial Share Alike license?

What Nine Inch Nails does is simply answering to the changed market needs of copyrighted materials and riding on the wave of copyleft movement. Nine Inch Nails chooses not to “reserve all rights”, but instead to “keep some of the rights”.

What is copyleft?

“Copyleft is a play on the word copyright and is the practice of using copyright law to remove restrictions on distributing copies and modified versions of a work for others and requiring that the same freedoms be preserved in modified versions.”

“Copyleft is a form of licensing and may be used to modify copyrights for works such as computer software, documents, music, and art. In general, copyright law allows an author to prohibit others from reproducing, adapting, or distributing copies of the author's work. In contrast, an author may, through a copyleft licensing scheme, give every person who receives a copy of a work permission to reproduce, adapt or distribute the work as long as any resulting copies or adaptations are also bound by the same copyleft licensing scheme.”[1]

For example, a professional photographer using a copyleft license scheme could elect to give permission to education institutions to make copies of a copyrighted work without paying any royalty fee. Such that a professor could freely photocopy a photo, which was created with a copyleft license, to students without worrying any legal issues. At the same time, the copyright holder could charge a per use royalty fee from any commercial use of the photo.

How could copyleft help your clients?

Most lawyers are accustomed to telling a client that whoever uses the client’ copyrighted work must pay a licensing fee. However, in today competitive business environment, there are too many songs, photos, movies, articles, software, computer games, and other copyrighted works for the public to choose. In intellectual property licensing business, a copyrighted work does not worth much if no one wants to license

Value of a copyrighted work usually decays rapidly. For example, if a movie is not a hit when it is first released to cinema, the movie will seldom become a hit when its DVD is released. On the other hand, if a movie is successful, its DVD release will have a higher probability to be successful as well. The same can be said for the music and software industries.

The key for a successful licensing business is to have a copyrighted work becomes popular in a short period of time, and then take advantage of the popularity to generate licensing revenue. Copyright owners have learnt that if they can loosen certain rights of a copyrighted work, their copyrighted works could have a higher probability to attain higher popularity in a shorter time frame.

A copyleft license could be the key to help your clients.

In the case of Nine Inch Nails, the band allows everyone to download the song for free for personal use. When the songs become a hit, Nine Inch Nails can then license the songs for mobile phone ring-tone or for karaoke use. The band could also allow foreign signers to adapt the songs for different languages. Finally, the band can sell more concert tickets when they have a world-wide tour.

Another example, a software company could allow home users to download, install and use its software for free. However, the software company could charge a per-user licensing fee for installation, use or customization made by a business user. If a home user finds the software satisfactory, the home user may urge the IT department at work to purchase the same software. A no-cost download becomes a revenue generating opportunity.

These two examples demonstrate why adopting copyleft could be a win-win-win for the copyright owner, a commercial licensee and the public.

There is, however, a gap. Declaring copyright ownership is easy. Putting a copyrighted notice and the line “All Rights Reserved” will do all the work. To develop a copyleft license is a bit tricky, especially for those small or independent copyright owners.

Creative Commons – a popular copyleft license

Creative Commons tries to bridge this gap. Creative Commons is a non-profit organization found by Professor Lawrence Lessig from Stanford University. It was officially launched in 2001. Its main goal is to expand the range of creative works available for others to legally build upon and share.

Creative Commons has released six copyright licensing agreements for copyright owners to choose. The licensing agreements stated what kinds of rights a copyright owner keeps and gives up.

The original non-localized Creative Commons licenses were written with the U.S. legal system in mind, such that the wording could be incompatible within different local legislations and render the licenses unenforceable in various jurisdictions. To address this issue, the licensing agreements have been ported to accommodate local copyright and private law. As of February 2008, there are 43 jurisdiction-specific licenses, with 8 other jurisdictions in drafting process,

The six licensing agreements all require a licensee to attribute the licensor, i.e. the copyright owner. However, the licensing agreements differ in the restrictions related to (i) derivative work, (ii) share like and (iii) commercial use.

Derivative work - if a licensor allows derivative work, a licensee can create a new copyrighted work by remixing, tweaking and building upon the original copyrighted work.

Share alike – if a licensor demands share alike, a licensee must license his/her derivate work under the same Creative Common licensing agreement.

Commercial use – if a licensor restricts the use of the copyrighted work for non-commercial use, a licensee is forbidden to use the copyrighted work for commercial use.

In order to facilitate simple adoption of these licensing agreements, graphical icons, similar to the copyright notice, ©, are developed.

must attribute the licensor
non-commercial use only
no derivate work is allowed
share alike

The features of the six licensing agreements are listed below:

Attribution - Licensee can distribute, remix, tweak, and build upon the original copyrighted work, even commercially, as long as the licensee credits the licensor of the original copyrighted for the original creation.

Attribution Share Alike - Licensee can distribute, remix, tweak, and build upon the licensor’s work even for commercial reasons, as long as the licensee credits the licensor and license the licensee’s new creations under the identical licensing terms.

Attribution No Derivatives - Licensee can redistribute, commercial and non-commercial, as long as the copyrighted work is passed along unchanged and in whole, with credit to the licensor.

Attribution Non-commercial - Licensee can distribute, remix, tweak, and build upon licnesor’s work non-commercially. Although the licenee’s new works must also acknowledge the licensor and be non-commercial, the licensee is not required to license the licensee’s derivative works on the same terms.

Attribution Non-commercial Share Alike - Licensee can distribute, remix, tweak, and build upon the licensor’s work non-commercially, as long as they credit you and license their new creations under the identical terms. Licensee can also translate, make remixes, and produce new works based on the licensor’s work. All new work must carry the same license, such that derivatives will also be non-commercial in nature.
Attribution Non-commercial No Derivatives - This license is the most restrictive, only allowing redistribution. This license is often called the “free advertising” license because the licensee can download and distribute licensor’s work with others as long as the licensee mentioned the licensor and link back to the licensor, but the licensee cannot change the work in any way or use the work commercially.

Creative Commons in Hong Kong

Thanks to Professor Yahong Li and Professor Alice Lee of University of Hong Kong, the draft of Attribution-Non-commercial-Share-Alike licensing agreement has been localized for Hong Kong in December 2007. The draft can be downloaded at http://creativecommons.org/international/hk/translated-license.pdf. Hong Kong legal community is encouraged to comment on the draft. All comments can be sent to cc-hk@lists.ibiblio.org.

According to Professor Li and Professor Lee, the biggest challenge was to adapt the US definitions of “adaptation” for the Hong Kong version. Once the draft is finalized, the final version will be modified for other five licensing agreements of Creative Commons. A Chinese will then be followed.

Criticism

The arrival of Creative Commons at Hong Kong provides a new path for licensing copyrighted works. However, Creative Commons cannot solve all problems. The major criticisms towards Creative Commons are:

Lack of enforcement - if a licensee does not comply with the terms stated in a Creative Commons license, Creative Commons does not offer any assistance in enforcing the license.
Unverifiable attribution - if a rogue claims ownership over other’s copyrighted works and releases the works with a Creative Commons license, there is no mechanism to verify and alert the real copyright owner. An innocent third party, who believes he can use the copyrighted work because of the Creative Commons license, will then infringe the copyright of the real copyright owner.
Only useful for third-tier copyright owners - some argue that only third-tier copyright owners will rely on Creative Commons licenses to promote their work. First-tier and second-tier do not have incentive to give out their copyrighted works for free.

These criticisms are valid, but not only applicable to Creative Commons licenses. Any private licensing agreement between a licensor and a licensee will have similar problems:

i. enforcement - a licensor most of the time has legal rights to go after an irresponsible licensee. It is a matter of business decision whether it is economical to do so.

ii. attribution – a licensee should always conduct due diligence to verify the authenticity of the licensed intellectual property.

iii. usefulness – those at the top will always have the ability to write their own cheques and more bargaining power regardless in licensing agreement negotiation.

Those currently at the middle and bottom of the pyramid could leverage Creative Commons licenses as an alternative path for to move to the top. At the same time, the pool of intellectual property will be enriched by their effort.

Other Copyleft Licenses

Creative Commons is not the only licensing agreements that try to bridge the “all rights reserved” and “no respect”. Another popular copyleft licensing agreement is GNU General Public License (“GPL”). GPL is mainly used by the software development community.

GNU is similar to Attribution-Share Alike of Creative Commons. The main purpose of GPL is to let software developers continuously improve a piece of software. A licensee is required to put a copyright notice and credit to the original author name or licensor. Derivate work must also be licensed under GPL. Commercial use is allowed.

Under GPL, a compiled binary software, which is derived from another GPL licensed software, must also be distributed along with its software source code. This is why this approach is also called “open source software”. This ensures that any improvement made on the software be disclosed and shared.

However, there are cases that licensees did not oblige to the source code distribution term after enhancing the original source code licensed under GPL.

One of the most well known cases was about a WiFi router produced by Linksys, a Cisco System subsidiary, in 2003. The Linksys WiFi router was suspected of containing a compiled binary software that was originally licensed under GPL. This would make Linksys disclose any improvement made on the software available to the public. Linsys initially denied such accusation. Later, Linksys bowed to the negative publicity and decided to release the source code of the Linksys WiFi router under GPL. Once the source code is made available to the public, computer hobbyists have been developing new features for the Linksys WiFi router since then. These new features help the Linksys WiFi router become one of the most popular WiFi routers ever.

Conclusion

As more and more copyrighted materials can be digitalized and copied perfectly, new business models have been developed to satisfy the market needs. Conventional licensing agreements have to be modified to meet the market needs.

All rights reserved approach is not the only licensing solution. Some rights reserved public licensing agreements, like Creative Commons, provide an alternative approach for copyright owners to explore new revenue streams and improve popularity of their works.

Now, it is the time to assist our clients on to take advantage of this new market dynamics.

This article is released under the Creative Commons Attribution-Share Alike License.

[1] http://en.wikipedia.org/wiki/Copyleft

FAQ for Defensive Publishing

noreply@blogger.com (Kenneth Yip) — Mon, 16 Jul 2007 09:22:00 +0000

What is defensive publishing? - Defensive publishing is to disclose your invention to the public domain, such that no one could apply a patent for your invention.

When to use defensive publishing? - The rule of thumb is (1) if you do not want to file a patent for your invention for whatever reasons AND (2) you do not want to keep the invention as a trade secret for whatever reasons, then you should use defensive publishing.

Why should I not file patent applications for all of my inventions? – Filing a patent application is expensive. The usual price for patent attorney fee in drafting a patent is between US$ 5,000 to US$ 10,000. Then you also need to add official fee charged by a patent office. This can also be another US$ 1,000. When the patent application moves to prosecution stage (answering a patent examiner’s question or appealing a patent examiner’s reject), you may be required to spend another US$ 5,000 easily.

Also, not all inventions can be granted with a patent. If the prior-arts are very similar to your invention, you invention may not satisfy the novelty and inventive step requirements.

Why should I not keep all of my inventions as trade secrets? – If your competitor files a patent application, which is almost identical to your trade secrets, your competitor could still be awarded with a patent. This is because your trade secret is not considered as a prior-art. Please be noted that different jurisdictions have different definitions of trade secret. It is very possible that your undisclosed invention will not be considered as a trade secret while cannot be used as a prior-art in the court.

How to use defensive publishing to confuse my competitors? - To mislead your competitor on your product development plan, you can publish inventions that you will not commercialize. Your competitors may think that you are going to move to a new market. They may throw resources to try to compete against you in that new market. This make your competitors stretch their resources thin and fight many battles at the same time.

You can also publish without disclosing your true identity. Your competitors may not pay attention to your invention because it is difficult for them to link the publication to you. Then, you can have more lead time.

Can I publish myself? - Yes. As long as your publication is accessible by the public, you satisfy the prior-art requirement. However, your publication date can be easily challenged by your opponent if there is no third-party proof. For example, you posted your publication at your company website but no search engine crawled the publication. Then, how can you prove to the court the publishing date that of your publication?

What to look for from a defensive publishing vendor? -To ease the publication hassle, a few companies, like IP.com and Research Disclosure, could do the leg work for you. There are a few things that you should look for in deciding the suitable defensive publication vendor. (1) Speed - you want to publish you work instantly without any delay. A publication delay of one day means your competitor has one more day to file a patent application. (2) Price - it is almost 4 decades after the birth of Internet. It should not cost more than US$50 to publish a document because publication is not restricted to print medium anymore. (3) Accessibility- if a patent examiner can locate your publication, the patent examiner can decide easily to reject your competitor's patent application if it is similar to your idea disclosed in your publication. If your competitor can access your publications, they may decide not to compete against you directly.

Understand the patent business from a baby chair

noreply@blogger.com (Kenneth Yip) — Sat, 07 Jul 2007 10:49:00 +0000

(source: http://www.bumbo.co.za/images/colors.jpg)

A patent number printed on a baby chair could tell you a lot about the patent business. In this article, I will use a baby chair example to explain about patent system and how to leverage a patent.

Introduction

Last week, my wife bought a baby chair for our baby. The baby chair is a marvelous invention from Bumbo. Unlike traditional baby chair, there is no strap and no roll-over worry. My wife told me that the sales lady informed her that the baby-chair is so revolutionary that got a patent on it. As an IP manager, my immediate instinct was to check out the bottom of the chair to see if there is a patent number.

No surprise, there was a series of number. It said "“World Patent number: PCT: ZA/ 1999/00030".

(Source: http://www.bumbo.co.za/images/baby_sitting_3.jpg)

Patent Sherlock Homes

For patent professionals, you can skip this paragraph. For others, I will explain how to discover information from a series of PCT patent number.

First, go to the PCT search webpage of World Intellectual Property Organization (WIPO) at http://www.wipo.int/pctdb/en. Enter "ZA/1999/00030" as the application number. The result will then appear.

Click on the linkand you will see the bibliographic data of this patent application. You can verify that the inventor is Buitendach, Johan, Nicolaas. The title of the invention is "baby chair". You can also read the abstract there. Now, click on the "National Phase" tab. You can see the "official code" column. There are AU, CA, CN, JP, US and ZA. They are the short forms of Australia, Canada, China, Japan, the US and South Africa respectively. This indicates that the same patent application was submitted to at least these six countries through the PCT system. We do not know whether the patent application was also submitted to any additional countries. The only way to find out for sure is to ask the owner of this IP.

Let's try to dig more information from the "National Phase" tab. The links for both US references number were not working. The other two from China and Canada were working fine. Interest readers could click on both links to check the status of the patent applications. A China invention patent was granted on July 21, 2004 with patent number 99816616.2. The Canada patent application is still under review.

What about the US patent applications? As the link was broken, we need to spend a bit more effort to find out the status. From my experience, using inventor's last name to find a patent or patent application is the quickest method. Let's go to United State Patent and Trademark Office (USPTO) patent search website at http://patft.uspto.gov/netahtml/PTO/search-adv.htm (please note that patent application website is http://appft1.uspto.gov/netahtml/PTO/search-adv.html). Enter "IN/BUITENDACH" to search for patents that have inventor called BUITENDACH. You should then see that there is only one result. The patent number is 6,626,487 and was granted on Sept 30, 2003.

We have just demonstrated how to use a PCT number to dig out information of this baby chair invention. Of course, this investigation is not complete yet. But it is enough for most readers to glimpse how IP professionals search for patent information and the link between different patent systems.

World patent does not exist - at least for now

What is PCT after all? PCT stands for Patent Cooperation Treaty. It is an international treaty signed by 137 states. By submitting a patent application to WIPO using PCT, a patent application owner could "seek patent protection for an invention simultaneously in each of a large number of countries". Also, there is an additional 18 months window for a patent application to decide which specific country he/she want to file the patent application with. As a result, the patent application owner has in total a period of 30 months to file the patent application in other countries.

The patent application owner still needs to deal with each patent office directly. The plan to file just one patent applications and has it to be enforced in all countries is still in its infancy. Government officials from different countries are still negotiating and working together on how to come up a "world patent". However, PCT is a major step to realize the future "world patent".

Sorry, Bumbo. There is no world patent yet. You should call it "International Patent Application Number".

Go after the copy-cat?

Let's go back to the baby chair itself. Amazed by this invention, I tried to find out how others feel about Bumbo baby chair (yes, my wife should do it before she bought the baby chair:).

A baby-chair from Prince Lionheart is remarkably similar to the Bumbo baby chair. As I have not seen the Prince Lionheart version, all my comments below are based on pictures I saw from the Internet and marketing brochures.

(Source: http://www.princelionheart.com/site/products/new_products/n_bc_7101_bg.jpg)

The Prince Lionheart version is remarkably similar to the design disclosed in Buitendach's patent. The only differences that I can find from the market brochure are: (1) the pommel (or knob) of the Price Lionheart version is much larger, and (2) the downward slope supporting a baby's leg. I believe Bumbo has a strong patent infringement case against Prince Lionheart.

Then I searched in Google using the keywords "Bumbo Prince Lionheart Patent" to check if Bumbo has filed a lawsuite against Prince Lionheart. There was only one article from a South Africa publication about Bumbo's reaction. I was surprised not to discover more articles about the IP dispute between these two companies.

Strategy

Unless both companies are negotiating behind the doors, I suspect Bumbo is taking a wait-and-see strategy because:

Bumbo is a small and startup company that tries to preserve its financial resources for marketing its product, rather than initiating an expensive patent war.
Buitendach's patent application is still under review in some countries, such as Canada. Bumbo cannot enforce its patent rights until a patent is granted. For sure, Bumbo can take legal action now at China, the US and South Africa.
Prince Lionheart only introduced their baby chair last year. There is still not much to ask for for revenue loss.
Bumbo can leverage Prince Lionheart marketing power to educate the public.

It is not always true that you need to go after the infringer immediately. The ideal situation is that (1) the infringer makes huge profit, (2) the infringer does not eat your market share, (3) and you can have the court to help you get all the retrospective royalty and damage payment. Of course, there are many risks if you wait too long for the ideal situation to occur. For example, you may lose market share or you does not file a lawsuit within a required period.

Bumbo could threaten retailers, who carry Prince Lionheart baby chair. This, however, would not be a wise move. These retailers are usually retailers of Bumbo baby chair. You do not want to file a law suit against your customer if they have been giving you a lot of business, right?

Conclusion

There are a lot to tell from a patent number. I have only discussed only the PCT system. There are also a lot to learn about Public-PAIR system provided by the USPTO. Leaders of companies that rely on IP (nowadays, which companies do not rely on IP?) should have a well-thought game plan the moment they have developed valuable IP.

Bumbo filed a patent in South Africa originally. Then file in other countries through PCT discriminatorily, i.e. only the largest markets. As it is still a small company, they should not rush to start a patent war against a potential copy-cat. I will be surprised if Bumbo will not take legal action against Prince Lionheart in the next three years. However, brining your competitor to the court is only of many legal actions. Turn your competitor into a royal licensee could be a more lucrative legal action.

Should we update the law for semiconductor layout protection?

noreply@blogger.com (Kenneth Yip) — Fri, 29 Jun 2007 10:03:00 +0000

Abstract

Semiconductor industry is a significant part of global economy. WTO, the US and China have enacted legislations to protect semiconductor layout design work. This paper discusses these legislations and their differences. In addition, the author analyzes why these legislations are outdated and offer little use. The author suggests encouraging semiconductor manufactures to protect and even to police semiconductor layout design works submitted by their customers and infringers.

Introduction

Importance of semi-conductor

Semiconductor plays a significant role in our daily life¹. Semiconductor chips have embedded in almost all kinds of products, from microwave oven to traffic lights to computers. Some said human civilization could advance in unprecedented speed in the past few decades is mainly to the invention and adoption of semiconductor².

Over the next five years to 2008, IDC expects the worldwide semiconductor market to grow at a compound annual growth rate of 12.5 percent, rising from US$160 billion in revenue in 2003 to US$282 billion in 2008.

On a separate survey, Semiconductor Industry Association (SIA) reported worldwide sales of semiconductors rose to $16.28 billion in March 2004, from the $15.58 billion reported in February 2004 and a 32.3 percent increase from March of2003. SIA also reported global sales of semiconductors grew to $48.8 billion in the first quarter of 2004 compared to $36.4 billion in the first quarter of 2003.

Semiconductor industry growth will “create opportunities for new applications that will spawn new industries and it will ensure the continued vitality of many of the information technology industries. Semiconductors have had this unprecedented impact on the economy because the industry has provided its customers with exponential increases in performance per unit expenditure of resources for several decades.”³

This is why intellectual property of semiconductor is a key element in the intellectual property industry, legislation and lobbying. This paper focuses on how WTO, China and the US protect semiconductor layout design, which is a crucial processing of making semiconductor chips, their comparisons and where should the intellectual protection goes from here.

What is a layout?

A layout in semiconductor could have many meanings for semiconductor design engineers. It can refer to an electronic diagram, a process to connect elements in a chip, a manual process to place components on a chip or a film developed for lithography process.

In this paper, the WTO definition of semiconductor design work will be used. The US Copyright Law called semiconductor layout design as “mask work” because of historical reason.

Mask

The manufacturing of a mask ready for semiconductor chip manufacturing is a much sophisticated process comparing to the manufacturing process two decades ago. This is because the size of semiconductor transistors has shrunken significantly. The toleration and resolution of a mask becomes very strict.

Figure 1 shows, from a very high level, how a design schematic turns into a semiconductor chip. Once a silicon layout is created from a design schematic, a mask could be manufactured. The mask is a piece of film that has the silicon layout printed on it. Then a laser or electronic beam will project the silicon layout on a silicon wafer.

Figure 1. Semiconductor Lithography⁴

Infringement

It can be noticed that shall the design schematic, silicon schematic or the mask is not protected technically or legally, an infringer could easily⁵ reproduce silicon chips. The access of design schematics and silicon schematics usually could be controlled within a semiconductor design company. The mask, however, could be transferred among the semiconductor design company, mask manufacture and the silicon chip manufacturer. This is where an infringer could steal or infringe the intellectual property on the mask.

Semiconductor Layout Protection

Many countries have enacted legislation to protect semiconductor layout work. This is due to three reasons:

to comply with WTO membership requirement
to protect their domestic semiconductor layout design companies
to promote protect their domestic semiconductor manufacturing companies

The third point is probably the main driver why China, Japan, and Korea agree to the semiconductor layout work protect originated from the US.

WTO

In May 1989, World Intellectual Property Organization (WIPO) adopted a treaty on integrated circuits at Washington, D.C., USA. Some refer this treaty to “Washington Treaty”¹. The Washington Treaty did not enter into force until WTO included an agreement² (“WTO Agreement”) on Trade Related Intellectual Property (TRIPs) that cross-referenced the Washington Treaty.

The WTO Agreement requires all WTO members to establish legislations to protect semiconductor layout-design.

Layout Design

WTO Agreement defined the design to be “three-dimensional disposition, however expressed, of the elements, at least one of which is an active element, and of some or all of the interconnections of an integrated circuit, or such a three-dimensional disposition prepared for an integrated circuited intended for manufacture.”

Registration

There is no specific layout design registration requirement under WTO Agreement. A member of WTO can choose to have (i) no registration required, (ii) voluntary registration required or (iii) mandatory registration required.

If there is no registration required, a semiconductor layout design usually enjoys automatic protection when it is created. In a voluntary registration system, a designer can choose to register the layout design or not. The advantage of registration for the inventor is to establish a priority date. A designer must register the layout design in order to enjoy the protection in the mandatory registration system.

There are pros and cons when a member of WTO adopts one of these three registration schemes. A more detailed analysis will be discussed later.

Duration

The protection required under WTO Agreement is at least ten years. WTO Agreement stated that the ten year period is calculated from the first date of registration.

Infringement

WTO Agreement considered the follow two situations as an infringement to the holder of the semiconductor layout-design if authorization of the holder is not seek:

reproducing, whether by incorporation in an integrated circuit or otherwise, a protected layout-design in its entirety or any part thereof, except the act of reproducing any part that does not comply with the requirement of originality; and
importing, selling or otherwise distributing for commercial purpose, a protected layout design or an integrated circuit in which a protected layout design is incorporated.

WTO Agreement identified three exceptions that certain reproduction and selling are allowed.

for the purpose of evaluation, analysis, research or teaching
for the preparation of a second and original layout design
if a layout design is independently developed

The main purpose of these exceptions is to allow continual innovations on semiconductor layout design. This theme is similar to those exceptions in copyright, patent and industrial designs.

China

China enacted its own semiconductor layout design work legislation, Regulation on Integrated Circuit Layout Design Protection (“China Regulation”), in March 2001. The act became effective on October 1, 2001. Basically, the law follows closely with the WTO Agreement.

Layout Design of Integrated Circuit

The definition of integrated circuit is “semiconductor integrated circuit, that is, a product, in its intermediate or final form, which uses semiconductor material as its chip, in and/or on which two or more elements, at least one of which is an active element, and some or all of the interconnections are integrally formed and which is intended to perform a certain electronic function.”⁶ The layout design work is defined as a “three-dimensional disposition of the two or more elements, at least one of which is an active element, and some or all of the interconnections of an integrated circuit, or such a three-dimensional disposition prepared for the manufacture of an integrated circuit.”⁷

Priority Date

The China Regulation does not state explicitly how to determine priority date. In Article 12, it indicated that the term of protection under the China Regulation starts “from the date of filing an application for registration or from the date on which it was first commercially exploited anywhere in the world, whichever expires earlier”.

Registration

Layout design works must be registered with the intellectual property administration department of the State Council of China in order to enjoy the China Regulation protection. According to Article 8, any unregistered layout-design shall not be protected under the China Regulation.

Duration

The China Regulation offers a ten year protection to layout design work from the first date the protection starts.

Exceptions

China Regulations allows “reverse engineering” exception to foster innovation, include “reproductions for the purpose of evaluation, analysis, research, or teaching -- it is legal to create and sell an original layout design based on the aforementioned evaluation and analysis of the protected layout designs.”⁸

Another exception is in cases of national emergency, Chinese government could license the layout design work compulsorily⁹ with reasonable compensation to the layout design work owner.

Enforcement

China Regulation, like many other legislations and contracts in PRC, try to promote consultation between the owner of the semiconductor layout design and infringer first before escalating the disputes to the judiciary system. “The intellectual property administration department of the State Council (“SIPO”) may, upon the request of the parties, mediate in the amount of compensation for the damage caused by the infringement of the exclusive right of layout-design. If the mediation fails, the parties may bring a law suit before the people's court in accordance with the Civil Procedure Law of the People's Republic of China.”¹⁰

SIPO has the authority to issue order to stop the infringement, confiscate or destroy the infringing products. It also has the power to impose penalty but no power to award compensation.¹¹

USA

In the US legislation semiconductor layout design is called "mask work". The concept of mask work to layout design is the same to the semiconductor industry: especially the US does not restrict a mask work to its technical definition, such as a film with printed circuits on it as discussed earlier.

Mask

The definition of semiconductor under the US Copyright Law is a product¹²:

having two or more layers of metallic, insulating, or semiconductor material, deposited or otherwise placed on, or etched away or otherwise removed from, a piece of semiconductor material in accordance with a predetermined pattern; and
intended to perform electronic circuitry functions;

A "mask work" is a series of fixed or encoded related images:

having or representing the predetermined, three-dimensional pattern of metallic, insulating, or semiconductor material present or removed from the layers of a semiconductor chip product; and
in which series the relation of the images to one another is that each image has the pattern of the surface of one form of the semiconductor chip product;

Priority Date

Under US Copyright Law, Chapter 9, Article 902(al), a layout design enjoy protection on the date the layout design is (i) registered (the date of application, deposit of identify materials and fee submitted to the US Copyright Office) or (ii) first commercially exploited anywhere in the world, whichever occurs first.

Article 902 (a2) gives the President of the US Copyright Office the power to extend the protection to layout works from nations, which also have comparable priority scheme in their semiconductor layout work legislations.

Registration

The US adopts a mandatory system to protect layout design. It mandates designers to submit their layout design for registration in order to enjoy protection. Designers has a two-year window from the first date when the layout design work is first commercially exploited anywhere in the work.

Duration

The US Copyright Law offers a ten year protection to layout design work from the first date the protection commenced as described in Registration.

Exceptions

Although the owner of the layout design work enjoys exclusive rights in his work, there are exceptions to those rights in order to promote fair use and innovations. Exceptions to those rights, listed in Article 906, are:

reproduction of layout design work solely for the purpose of teaching, analyzing, or evaluating the concepts or techniques embodied in the layout design work or the circuitry, logic flow, or organization of components used in the layout design work; or
distribution of a product that incorporates the results created from (1) in an original layout design work which is made to be distributed

Enforcements

The US applies civil action principle to enforce owners' rights of semiconductor layout design works. Under Article 910, the owner is entitled to institute a civil action for infringement against the alleged infringer. Shall the infringement is from a product imported from aboard, the owner could obtain a court order to restrict the import. Violations of the court order could result seizure of the imports.

However, the court may ask the owner to post a surety bond in case the infringement is proven to be unjustified to compensate the loss suffered by the alleged defendant.

Comparison

Legislation

The WTO agreement and legislations enacted by China and the US are similar. There is not much difference.

One of the most controversial legislations is that China has the right to utilize a layout design work in national emergency.

Enforcement

The US supports a transparent and standardized court procedure that makes their judicial system accessible. In China, the judicial track has proven to be 'problematic' for a number of reasons: first, lack of professional training of Chinese judges and legal officials; second, official corruption; third, 'outside pressures', such as threats to judges; fourth, Chinese judges have no security of tenure; fifth, there are few penalties for non-enforcement of court rulings (refusing to obey a court order is not a crime in China and there is also a lack of infrastructure to enforce the rulings).

In the case of layout designs in China, all disputes are handled out of the central office in Beijing. This may be advantageous to foreign layout design rights holders because provincial authorities may be more concerned about the local economic effects of shutting down a counterfeit operation, while the central government is more likely to focus on the long term economic benefits that arise from IP protection.

Registration

Under Article 15 of the Chinese law, “In case the layout design applied for registration contains sensitive information of national security or of great importance to the country and needs to be held confidential, the information will be handled according to relevant regulations of the State.” This comes down to the question of how China would interpret the phrase “of great importance to the country”. China does recognize that the protection of IP is in its self interest. Chinese entrepreneurs will only be successful if they are able to earn a return on their research efforts, profits that will be greatly reduced if their products are copied.

Problem with the current mask-work protection

In the US, the numbers of semiconductor layout design works registered were 352, 508, and 558 in 2003, 2002, and 2001 respectively¹³. The number was 758 in 1999. This trend shows that the current semiconductor layout design work legislation is not respected by the semiconductor designers and their companies. The legislation must be amended to reflect the current status of semiconductor design.

The semiconductor industry dynamics has changed dramatically in the last two decades. There are three major driving forces shaping the semiconductor industry and making current legislations outdated and inadequate – (i) mark manufacturing, (ii) fabless design, and (iii) design methodology.

Mask Manufacturing

A piece of mask allows semiconductor circuits to be projected on semiconductor wafer. Projection through the mask using laser or electron beam allows mass production of semiconductor chips possible.

Currently, the state-of-art semiconductor fabrication is going to 90 nm width. 90nm is a major technical challenge because the width of a circuit on the chip is very close to the visible light wavelength. This makes mask fabrication process more expensive. Lasers and electron beams are used to reduce diffraction to ensure the projection on the semiconductor wafer is within the tolerance. This involves huge amount of capital investment in purchasing expensive equipment. This raises the entry barrier.

The number of qualified mask manufacturers has been decreasing. Those who are still staying in the industry are those having long term perspectives and more unwilling to help others in manufacturing masks for infringed semiconductor chips.

Fabless Design

In 1980s, the semiconductor fabrication industry was not as capital intensive as nowadays. The term “fabless design” was not even invented. Almost all semiconductor design companies took the vertical integration business model that they manufactured what they designed. There was almost no semiconductor fabrication only company. Companies like Intel, Texas Instruments, Motorola, and IBM all have their semiconductor fabrication facilities.

Figure 2. Texas Instrument Semiconductor Fabrication Sourcing¹⁴

The semiconductor industry business model has evolved dramatically. It changes from all-in-one vertical model to a multi-horizontal model. A semiconductor design company, especially those in low-volume and new comers, nowadays outsource mask production, fabrication, testing, packaging and backend designs to third parties, which are specialized in their own fields. Some may purchase intellectual property cores from other designers to shorten the development time and risk.

Semiconductor fabrication becomes so specialized that even the major traditional semiconductor companies are outsource a large portion of their manufacturing to semiconductor manufacturing companies, such as Taiwan Semiconductor Manufacturing Company Ltd. (TSMC) and Semiconductor Manufacturing International Corporation (SMIC). Texas Instruments and Motorola have announced to outsource some of their semiconductor factorization process to Chinese semiconductor fabrication companies¹⁵.

The semiconductor manufacturing companies has no incentives to assist semiconductor layout design infringers. Infringers are usually pundits who are small and have no capital. A semiconductor manufacturing company would have to risk its reputation when assisting an infringer. Once its reputation is ruined, it would be almost impossible to receive any manufacturing order any more.

Semiconductor manufacturing companies are offering practical protections that semiconductor layout design legislations have been trying to offer.

Design Methodology

The major force that makes current semiconductor layout design protection obsolete is probably the semiconductor design methodology. In the past, when the number of transistors inside a semiconductor chip was small, it was possible to layout the semiconductor chips manually. As the semiconductor industry has evolved to millions of transistors being manufactured in a semiconductor chip, semiconductor designers have been increasingly relying on abstract models to simplify designs and make the designs more manageable.

These abstract models, such as algorithms, synthesizing codes, schematics, netlist, and test vectors, can be created in many different stages of semiconductor design. These abstracts models are created electronically and be transferring electronically with a stroke on a keyboard.

When a pundit steals or copies an original abstract model from an owner, the pundit could eventually develop a semiconductor chip that is very different from the original abstract model. Without assistance from whistle bowler, it would be very difficult to collect evidence against the pundit.

There is still solution on this. Since state-of-art semiconductor chip designs must obey rigorous design rules and conditions suggested by semiconductor manufacturers, a semiconductor chip developed by a pundit must still display certain technical characteristics of the original design. Semiconductor manufacturers could act as a referee or a policeman to ensure their customers are playing fairly. The assumption is that a semiconductor manufacturer values its reputation as its the most important asset.

Conclusion

The importance of protecting intellectual property of semiconductor layout design work is obvious. The current WTO, the US and China legislations try to protect intellectual property by focusing on the layout design work. Unfortunately, this approach has not much value nowadays. Semiconductor designers, manufacturers and legislators should work together to update legislations to reflect the new trends in semiconductor industry.

[1] S. McIntosh – “If current annual semiconductor growth trends continue, it has been predicted that by the end of the first decade of the 21st century, electronics will be the biggest industry after agriculture.”, Conquering Semiconductor’s Economic Challenges by Increasing Capital Efficiency, Proc. 1997 IEEE Int. Symp. On Semiconductor Manufacturing, pp. 1-3, 1997.

[2] Mr. Kastenmeier in the The House Report on the Semiconductor Chip Protection Act of 1984 presented on May 15, 1984 illustrated the official view on the semiconductor industry – “Integrated circuits, better known as semiconductor chips, have revolutionized our entire way of life. Semiconductor chips are used to operate microwave ovens, cash registers, personal and business computers, TV sets, refrigerators, hi-fi equipment, automobile engine controls, automatic machine tools, robots, printing presses, cardiac monitors and pacemakers, X-ray imaging and scanning equipment, blood testing equipment, word processors and printers, telephones, and many other medical, consumer, business, and industrial products. New and better uses for chips are emerging regularly and society is rewarded with a corresponding enhancement of life. More than perhaps any other invention, the semiconductor chip has brought us into the information age.”

[3] Erich Bloch, Dr. Ralph Cavin, The Economy, Federal Research and The Semiconductor Industry, Semiconductor Industry Association, March 8, 2000

[4] Gerhard Schlueter, Klaus-Dieter Roeth, Carola Blaesing-Bangert, Michael Ferber, Next generation mask metrology tool,

[5] “Easily” is relative. Mask manufacturing for 0.6μm and for 90 nm semiconductor layout designs involves fundamentally different technologies. The more advanced a mask manufacturing process, the more difficult to infringe. More detailed analysis will be discussed in later sections.

[6] Regulations on the Protection of Layout-Designs of Integrated Circuits, Chapter I, Article 2 (1)

[7] Regulations on the Protection of Layout-Designs of Integrated Circuits, Chapter I, Article 2 (2)

[8] Daryl G. Hatano, China’ Semiconductor Chip Protection Law – A Work in Progress, December 4, 2003

[9] Regulations on the Protection of Layout-Designs of Integrated Circuits, Chapter I, Article 25

[10] Regulations on the Protection of Layout-Designs of Integrated Circuits, Chapter I, Article 31

[11] Grace C. Chen, Protecting Your Semiconductor Technology: An IPR Road Map, www.usembassy-china.org.cn/ipr

[12] Protection o/Semiconductor Chip Products, US Copyright Office

[13] Copyright Law Administration, Copyright Registration, US Copyright Office, 2001-2003

[14] K. Ritchie, Manufacturing and Process Technology, http://www.ti.com/corp/docs/investor/analyst/ritchie/ritchie.pdf

[15] http://www.motorola.com/mediacenter/news/detail/0,,3432_2843_23,00.html

A peek into China patent system and practice by reading Centron Telecom IPO prospectus

noreply@blogger.com (Kenneth Yip) — Sat, 23 Jun 2007 07:46:00 +0000

A peek into China patent system and practice by reading Centron Telecom IPO prospectus

There are many initial public offerings (IPO) going on in Hong Kong. As an IP manager and an investor, I naturally pay special attention to IPO of technology companies. One of the companies is Centron Telecom (星辰通信). Although the intellectual property section in the prospectus of Centron Telecom is not large, there are many subtle observations that can be useful to understand how Chinese companies manage their intellectual properties.

The five patent applications

In the prospectus, Centron claimed that they have five pending patents. These five pending patents were listed in page VI-11. I copied the section here.

Centron Patent Applications (source: page VI-11, Centron Telecom Prospectus)

All five patent titles seem related to wireless communications. Four of them also have the keyword CDMA in it. However, let's get deeper.

The fifth digit of a China patent application number indicates the type of the patent application. 1 is for invention. 2 is for utility model. 3 is for design. Among these five patent applications, only the first one is an invention application. The last one is a design application. The other three are utility model.

Invention patent could last for 20 years in China while utility model and design could only last for 10 years. Readers from common law system may find the utility model strange. It is, however, based on continental law system, like Germany and Japan. Utility model patent application must be related to physical objects.

As a result, we can safely conclude that the second to the fifth patent applications are related to physical designs of wireless devices. Most likely, they are about repeater structure and repeater interface of a few particular designs. This makes me a bit uneasy about how innovative Centron Telecom is.

File patent applications just for IPO?

The most interesting discovery is the filing date. All five patent applications were filed on February 8, 2007, just about four months prior to the IPO. Is it a conincidence that all inventions happen at the same time? Did the IPO underwriter advice them to do so?

This act has many implications. I do not believe there is no innovation in Centron Telecom. Neither do I believe that the management pays no attention to intellectual property protection. I think that it is because of business priority. Most companies in China used to compete in price and most of them are manufacturers. They work very hard to lower the per unit cost. Their R&D department, if exist, does not have must power in company politics.

By the time the company decides to go for IPO, the company is told that investors want to know if the company is a "technology" company with bring future or just another low-cost manufacturer. In order to satisfy investors, the company rushes to file a few patent application that the R&D department has been advocating for a long time.

Of course, what I said in the last two paragraphs are pure speculative. What I worry the most is if this kind of practice will still be common to most technology companies in China.

Competitors Comparison

Wireless coverage solutions market share (source: page 63, Centron Telecom Prospectus)

According to Centron Telecom, Combra (HKG:2342) and Grentech (NASDAQ:GRRF) are the two leading competitors. Their Chinese names are 京信通信 and 国人通信 respectively. As a diligent investor, I decided to conduct a quick due-diligence.

I entered the names of both companies in the search engine of State Intellectual Property Office of PRC (SIPO). Here were the search results:

Combra - 44 invention patent application, 42 utility model patents applications, and 24 design patent applications
Grentech - four invention patent application, seven utility model patents applications, and 13 design patent applications

The ratio of invention patent application for Combra, Grentech and Centron is 44:4:1. For utility patent application, the ratio is 42:7:3. It is a huge difference.

Two tiers systems

This quick due-diligence brought me a huge relief. This shows that technology companies in China are aggressively pushing the technology envelop. Each company has different road maps.

Some focuses on innovation. Some focuses on cost. Some focuses on brand image. The leaders and the runner-ups, like many industries in the US and Europe, may not want to choose the same path to success.

In terms of innovation, in the wireless communications coverage equipment industry, we can see that there are two tiers. This trend, I believe, will continue. It is difficult to say which tier is better for an investor. However, as an IP manager, I can sleep comfortably. This is because Chinese companies are going to spend more on intellectual property application, registration and protection. This translates to a better career prospect for me.

Disclosure: (1) I subscribed Centron Telecom IPO. (2) I have no financial interest in Combra or Grentech.

談談稻香的知識產權 (1)

noreply@blogger.com (Kenneth Yip) — Fri, 15 Jun 2007 06:51:00 +0000

正在進行招股的稻香，在他的招股書風險聲明中說他們在中國的“稻香”商標 (trademark) 品牌申請被拒絕。因為，另一所公司北京稻香村食品集團經擁有“稻香村”這商標。由于““稻香”跟“稻香村”很相似，所以稻香不能擁有“稻香”這商標。盡管“稻香村”商標已彼国家工商行政管理总局商标局取消，但稻香難再申請“稻香”商標。而在書英文版第109頁的知識產權一段中，除了商標外，沒有再談其他的知識產權 (intellectual properties)。

我不單是管理知識產權的，也是稻香的擁躉。但當我讀完稻香的書，不禁有點兒失望。為什麼稻香這麼遲申請商標？為什麼稻香沒有其他知識產權，如口號 (slogan)，專利 (patent)，外觀設計 (design patent) 等？這并不是小題打造。要是稻香何憑這IPO 在中國大展拳腳，擴展食物加工廠，物流中心，稻香也要把自己的知識產權意識提高，使自己更具競爭力。

讓我們把稻香和其他世界知名的集團的比較。我選擇了必勝客 (Pizza Hut)，Morton，Outback。因為他們都有上市，而且在香港也有分店。

要專利來作什麼？

在 Google Patents Search，只有必勝客有 25 個專利。 Morton 和 Outback 在他們的年報也沒有提及專利。似乎專利對飯店沒有大用途？讓我們嘗試研究專利在飯店行業的角色。

菜式是差不多不可能申請專利。就算一道菜的用料是創新的，但要說服專利局用料的配搭不是“顯而易見”是絕不容易的。

烹調方法是可以申請專利的。必勝客就有四個薄餅制作方法的專利，4367243， 5256432, 5720998，6327968 ， 6843167 。而 4367243 是必勝客最早的專利之一。試想想如果必勝客沒有專利的保衛，而被競爭對手控告侵權，后果可以很嚴重。必勝客可能要賠償專利人，也可能在一段時間內不能再制作薄餅。相反若稻香被對手就一種烹調方法控告，稻香大可不再用那一種烹調方法。所犧牲的，最多是幾道菜式。食物菜式愈是被標準化，擁有專利的重要性愈迫切。

美國專利 5256432 - "Method of making pizza with a pizza toppings disk"

調味料也是可以申請專利的。但飯店通常不會為調味料申請專利，因為調味料不是他們的專長。調味料供應商就不同。他們根據不同的材料份量，處理方法，制作過程申請了很多調味料的專利。籍著這些專利，他們一方面為他們的研究取得保護，另一方面賺取版稅。

很多公司專注菜單電腦系統的設計和推廣。他們擁有專利來保護他們的知識產權。但飯店很少申請菜單電腦系統的專利，因為這不是飯店的專長。

必勝客還為他們制作薄餅的設備和保暖袋申請了15個專利。

食物要外觀設計嗎？

盡管專利法沒有禁止為食物申請外觀設計,但外觀設計要求被保護的對象是工業產品，并可以被復制出來。飯店的設計，餐具，桌子等是可以申請外觀設計的。在美國必勝客有11個外觀設計的專利，Morton ， Outback一個也沒有。

必勝客為他們飯店的外型申請了一個外觀設計專利（D202878）和不少與薄餅餐具有關的外觀設計專利（D287795， D536578，D504056）。

美國外觀設計專利 D504056 - "Ladle"

總結

和必勝客相比，Morton ， Outback 在專利方面的成績差很多。有興趣的可以把必勝客（屬于 YUM! 集團），Morton ， Outback股票成績比一比。這可能是跟管理層有關，也可能是商業運作根本就是不一樣。我認為專利成績是取決於管理層對專利的認識和知識產權認同。

如稻香想他朝可以和必勝客的成績相比，今天就要用大膽地不單在菜式和服務上創新，也要在其他的配套，如烹調方法，設備，飯店的設計上再下一番功夫，并申請專利來保護他們的知識產權。

遲一點，我們會再談談稻香的商標。

Pepsi's "Blue Storm" marketing campaign created a hurricane for itself

noreply@blogger.com (Kenneth Yip) — Fri, 08 Jun 2007 06:52:00 +0000

PepsiCo (NYSE: PEP) is found liable for infringing a trademark of a small Chinese beverage company.

The "Blue Storm" Trademark

A small Chinese beverage firm Wild Blue (author's own translation) registered the "Blue Storm" trademark in China in May 2002, see Fig 1.

Fig 1. "Blue Storm" trademark registration by Wild Blue

However, PepsiCo used the same words "Blue Storm" as a marketing campaign slogan starting in the summer of 2005. PepsiCo put "Blue Storm" on its soda can, poster and TV commercials. One of the advertisements, see Fig 2, of this marketing campaign featured four pop stars from China, Hong Kong and Taiwan dressing in blue and has the words "Blue Storm" at the bottom. PepsiCo also put the slogan on its bottle.

Fig 2. PepsiCo "Blue Storm" poster (source: sina.com)

This could be a free advertisement for the small Chinese beverage firm. Unfortunately, PepsiCo "Blue Storm" marketing campaign was too successful. Distributors and retailers in were well aware of the PepsiCo marketing campaign and understand the importance of trademark IP rights. They assumed "Blue Storm" was a trademark owned by PepsiCo. They refused to carry beverage from Wild Blue as they were afraid of trademark infringement. In one occasion, a retailer called the police. The police seized products from Wild Blue until Wild Blue showed the "Blue Storm" trademark registration certificate.

Court Decisions

With no choice, Wild Blue decided to defend its intellectual property rights and brought PepsiCo to the city court of HangZhou. In the first court decision announced in December 2006, PepsiCo successfully argued that the use of "Blue Storm" was not an infringement. PepsiCo claimed that they did not use "Blue Storm" as a trademark, but merely as a marketing theme. They also claimed that consumers were not confused.

Wild Blue appealed the decision. On 24 May 2007, ZheJiang Senior Court, a provincial senior court, accepted the appeal from Wild Blue The court ruled that the use of "Blue Storm" words on a can was equivalent to trademark use. PepsiCo was ordered to (1) pay damage to Wild Blue RMB 3 million, (2) stop using "Blue Storm" in all activities related to manufacturing, sales, advertising and marketing, and (3) publish statements in media to clear the confusion created. The ruling is in Chinese and can be found here.

It is not clear yet if PepsiCo will appeal the decision from the Zhejing Senior Court.

Implication

How could this happen? Either (1) PepsiCo staff forgot to check the trademark registration, (2) its legal advisors did not believe that it was a trademark infringement, or (3) its business manager believed that Wild Blue would take legal action. Nevertheless, it reflects that corporations, both domestic and foreign, have to educate their staff continuously about the relationship of IP and their work. I believe Chinese companies are beyond the stage of being IP ignorant. They are at the stage of "IP confused". They may not know when to involve their legal counsel to make business decision. Legal counsels should help their companies or clients by proactively engaging in their daily business activities.

Unfair treatment? The author of this article used the keywords "Pepsi infringement" in Chinese and English to search related news about this case. There are 1,020 hits reported by Baidu (the leading search website in China) and 5 hits reported by Google. 4 of the 5 hits from Google are unrelated to this case. Why did the foreign media not report this case? Could this news not be interesting enough? May be foreign journalists do not believe PepsiCo could make such mistake? There is a growing feeling in China that the western countries are using IP to oppress development in China.

IP Enforcement Distributor and retailers in China are very aware of IP related issues now. As this case demonstrate, they do not want to carry goods that may infringe others' IP rights. They may even report cases to local authority. Also, small companies are ready to fight as David fought against Goliath. They are not shy to take legal action any more.

Afterthought

The table has turned. Chinese companies and Chinese government have learned many hard lessons on intellectual property. It will not be surprised that Chinese companies will launch series of patent lawsuits against foreign companies in China soil.

水印(Watermark)

noreply@blogger.com (Kenneth Yip) — Thu, 17 May 2007 06:29:00 +0000

在2004年的奧斯卡,有一位評判就因為把奧斯卡分發他的電影借給好友欣嘗而惹上了美國聯邦調查局。原來他的好友原來是造盜版的! 美國聯邦調查局根據電影中的水印追縱到哪位評判。奧斯卡在每年派發給評判的ＤＶＤ影碟（２００５前是用錄影帶）中是加上了水印技術。每位評判收到的DVD都有不同水印﹐好比每張ＤＶＤ都有自己的指模﹐就可減少奧斯卡的ＤＶＤ成為盜版源頭的機會。

達文西密碼裡，雅克·索尼埃在蒙羅麗莎的畫像上用平人看不見的墨寫了神秘信息給自己的孫女。同樣,你可以利用水印在別人不易察覺下,無聲無色下把信息傳送開去。

另外,我們香港每張紙幣都有水印以別真偽．所以可以說,水印是無處不在．但你可能會問水印是有趣的玩意, 但我公司和娛樂事業，版權事業，國家機密一點也談不上關係，那麼水印技術與我公司又有何相干？沒錯，你可能不須用水印分別真偽，但你有沒有想過用如何保護你客戶名單？從事顧問行業和市場調查的,有沒有憂慮過如何保護你的調查報告不會免費流入坊間?

在這裡我會介紹利用水印的原理來管理商業上的知識產權風險．

利用假資料

客戶名單往往是一所公司最寶貴而又在內部最公開的商業秘密．每當一位營業經理離職時，你最頭痛的是不知道那位營業經理有沒有把客戶名單帶走．事實上那位營業經理可能已經在幾個月前已把名單印列出來，電郵出去，或用快閃記憶卡儲存下來。　儘管世界知識產權組職條約和各國都有立法來保護客戶名單等這一類的資料，但當要在法庭上舉証則是一件很困難的事情. 因為那位營業經理可辯駁那批名單是他自己逐一搜尋回來的。

水印的技術可以派上用場．在半導體和軟件設計上，資深的工程師會在他們的設計上放進水印. 這些水印本身就是一些沒有用或多餘的資料,不會影響半導體和軟件的運作．假如工程師發現有疑似盜版時，工程師可分析水印，來知道疑似盜版的真偽．

同樣你可在客戶名單中加進水印．這種水印其實只是一些不存在或假的資料．例如在客戶名單中加進一個假的客戶地址﹐如中環上亞厘畢道7號(即禮賓府)２２樓Ｂ室. 但大家都知道禮賓府五層高也沒有﹐更莫說２２層高。當那位離職的營業經理要在法官前證明禮賓府有２２層高時，他已經百口莫辯．這種利用水印的方法方便你在法庭上舉証﹐從而令已或準備離職的職員不敢明目張膽地侵犯你的商業秘密。

找出源頭

另一個在市場調查時常遇到知識產權的問題是如何保護調查報告或顧問報告中的知識產權．因為同一份高價值的報告，很多時候會發送給不同的顧客．當你發現你的報告在坊間流傳時，你是很難找出源頭。但我們也可以利用水印特點﹐在每份報告中放進不同的水印來分別不同顧客的報告。例如:

顧客甲的報告有：“這隻股票有９０％的可能性升到＄１０．７”
顧客乙的報告有：“這股票升到＄１０．７的可能性有９０％”
顧客丙的報告有：“這股票到＄１０．７的機會有９０％”

如坊間流傳報告中, 有“這股票升到＄１０．７的可能性有９０％”這一句的話,你就可以大膽地假設源頭是顧客乙。在一篇文章中放進多個由不同詞彙和位置組合的句子，就可以製造出多個獨特的水印來保護你的知識產權．雖然不可阻止翻印，但至少讓侵權者知道你可把他們找出來。

萬試萬靈?

水印也不是萬試萬靈,因為當有幾個版本放在一起作比較時,水印的位置就會有機會顯示出來,尢其是在數碼化的資料,當水印被找出來時,侵權者也可輕易地把水印除掉。水印在多媒體發揮比較大,因為可以方便地放進一些雜亂無章的訊號來作為水印。單純文字的資料沒有太多的空間來放進水印。

水印系統也要經常保持更新和機密.如上文的禮賓府例子,我們就要定期更換假資料來方便日後追縱源頭這些工序大部份時間是要用人手處理的。

總結

話說回來,水印仍然是一種很有效的知識產權工具。只要附少少心思和勞力,就可以把你公司寶貴的商業秘密加上多一層保護,何樂而不為?