Monday, August 14, 2006

Making money from your intellectual creations

By Grace Q. Bangaoil

Young, bright, all dressed up, and nowhere to go for employment. Lucky are those who took up nursing for they have gone abroad. But, cheer up, young man (or woman), for all is not lost-if you roll up your sleeves and use your God-given brains. Why not try to make good money from your intellectual creations? Better yet, make big bucks from the creations of others?

A decade ago, nobody would have taken you seriously if you went to the bank and tried to mortgage your "intellectual property" as a security for a loan or project financing. Intellectual property became a part of the business lingo only when it was popularized by the establishment of the World Trade Organization in 1994 which required all its member countries to adopt laws to protect intellectual property rights (IPRs) and to make sure that these will not hamper free trade. What qualifies as an intellectual property or an intellectual property right is defined by the document called Agreement on Trade Related Aspects of Intellectual Property Rights, dubbed as the "TRIPS", which was attached to the document that established the WTO. Thus, when the Philippines joined WTO in 1994, it committed itself to recognize and protect IPRs within the Philippine territory.

The recognized intellectual properties or rights in the Philippines are copyright and related rights (artistic and literary creations including computer programs), trademarks and service marks, geographic indications (like the label "champagne" for sparkling wine from Champagne, France), industrial designs, patents, lay-out designs or topographies of integrated circuits (usually in microchips), protection of undisclosed information or trade secret (like the Coke formula, KFC fired chicken recipe, among others), and certificate of new plant variety. The common denominator of all forms of intellectual properties or property rights is that they are monopoly or protection granted by the state to the creator for a specific number of years as reward or incentive to further create. If you want to dig deeper into this subject, get yourself a copy of the Intellectual Property Code of the Philippines. And if you are a lawyer or agent wanting to make this area your bread-and-butter, go to the website and download the implementing rules and regulations.

Many artistic and creative people are making a little, or moderate, or simply huge amount of money from copyrighted works. For instance, you may earn some money called "royalty" from every sale that the bookstore makes from your book. If you are a smart computer programmer and you devised an office software which you were able to sell to companies, you might get a moderate and reasonable royalty payments. However, you probably get oodles of money from your intellectual creation if you are a mega-buck musical composer and your masterpiece becomes so popular that the kids are singing it all over the archipelago. Ironically, in our country it is the performers, sound producers and broadcasters who make the real bucks in this game, although, they too enjoy protection for their "related rights" which are distinct from copyright.

On the other hand, it is the businessmen who usually make money from trademarks (including trade names) or service marks which are visible sign that distinguish the goods or services from those offered by others. So what's in a name? Big bucks, according to corporate entities who fight it out in the courts just to have an exclusive right over a certain mark or name. Would you rather, for example, drink San Miguel Beer or Beer na Beer? There would also be a big difference if you hold your grand wedding reception at a restaurant called Shangri-la somewhere in Quezon City instead of holding it in a certain swanky hotel in Mandaluyong or in Makati. Actual use of the name or mark generates goodwill or business reputation that determines the price the market would pay for this intellectual property. Owners of popular marks or names make money not only from the usual sale, but also by allowing others to use the marks or names for a certain period. This is part of a business arrangement called franchising. Names and marks become valuable by making them well-known through advertisement, promotion and sale, and by associating them with a certain quality or uniqueness over a period of time. Registration of the name and mark is a must. Many a legal battle came about because someone else registered the name or mark ahead of the one who really used and developed it.

Related to marks would be the "geographic indications" which are very popular among wine and beverage producers in Europe. A sparkling wine produced in California, for example, has no right to be called "champagne" because the latter refers only to sparkling ones produced in a place called Champagne in France. Ditto with the name "Cognac" which is only applicable to the brandy produced in that French province. We have yet to device a registration system that would fully recognize our own geographic indications. This might be possible soon since the extension of geographic indication to products other than wines is one of the amendments being proposed to the WTO by developing countries. Who knows-- someday, our exporters would be able to sell in the international market a product bearing a geographic indication that is, ah, proudly Filipino?

Industrial designs are protected because of their new and ornamental or special appearance that make them commercially valuable. Examples would be designs of jewelry, watches, handicrafts and others. Industrial designs add value to the product. Although industrial and manufacturing companies usually have their own industrial design departments, an enterprising individual may also create industrial designs and sell the same to small and medium scale businesses that cannot afford to employ designers. He must make sure, however, to have his designs registered with the Bureau of Patents.

The most difficult intellectual property to obtain is the patent which is granted to inventions which may either be a product or a process. For an invention to be granted a patent protection, it must be new, involves inventive step, and industrially applicable or useful. Patent can be used as a "sword" to exclude or prevent others from profiting from the invention, or as a "shield" to fend off legal claims to the invention. By obtaining a patent for his invention, an inventor enjoys full property rights over his creation which are effective all over the country for a period of 20 years. In exchange, he must sufficiently disclose his invention to the government so that it can be used for further search and development.

It is very rare to find an inventor who is also a good businessman or who has sufficient capital to mass produce the invention and make it available in the market shelves. This is where an enterprising individual comes in. He may either buy the patent, or negotiate for a licensing agreement so that he can manufacture or sell the invention while paying only a certain royalty to the inventor. Unfortunately, there are very few capitalists willing to invest in the development and commercialization of Filipino inventions. Most big businessmen would rather place their money where it would earn sure and easy returns. This is counter-productive in the long run because desperate inventors might sell their creations to foreign entities who are far-sighted enough to see the potential of the product or process and are willing to invest in its commercialization.

This situation has prompted centers of learning, particularly the state universities and colleges, with the help of some in the private sector, to put up "incubators" that would help fledgling innovations towards commercial viability. An example is found in the University of the Philippines in Diliman. In the United States, universities are getting a big part of their annual income from licensing agreements and royalties.

The state also protects what is called layout-designs (or topographies) of integrated circuits. This is important to manufacturers of micro-chips that are used in variety of things like telephones, computers, toys, and many others. If you belong to this particular species of engineering nerds, this might be the right endeavor for you, but you probably won't make much money from your vocation unless you join a manufacturing company and become one of its vice-presidents.

Meanwhile, those who gravitate towards plants would be happy to know that the Philippine government approved this year the protection of new plant variety. If you believe that you invented one, have it registered with the Department of Agriculture so that you can obtain compensation from anyone who might be interested in using or exploiting that new plant variety. This is particularly important to plant breeders, although, a bit troubling to traditional farmers who have been depending on communal seeds.

Finally, if he can help it, an inventor would rather keep his invention a secret. This he may do--as long as he can keep it a secret. This is also considered a protected property right called "protection of undisclosed information or trade secret". The most famous example would be the formula of the Coke soft drink. It's been a hundred years since then, and people are still drinking the thing, so it must really be possible to keep a secret.

We Filipinos are one of the most artistic and creative in the world. It is indeed frustrating that we still depend heavily on exporting labor when we can start exporting value-added, knowledge-powered and magnificent creations of the mind. It is also a puzzle that our local businessmen would rather import those cheap contraptions from other countries to flood our local markets, while they don't give much thought to indigenous technological inventions that are gathering dust in some forgotten corner. Perhaps, one of your bright kids out there, find a way to make good business out of these local stuff.

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