03 July 2019

The management of intellectual property – why is it necessary?

Any enterprise has at its disposal at least one subject matter of intellectual property from the moment of the registration – a company name of the organization. Depending on the nature of the company activity, the profit volume and other indicators, the number of the used subject matters of the intellectual activity, which are the intangible assets of the firm, changes. Many people may think that such subject matters have not a particular value due to their intangible nature, however, it is not so. All results of the intellectual activity can be expressed in a tangible form: the invention is used at the factory for the manufacture, the trade mark is placed on the product packaging, the company name is indicated on the company's letterheads, etc. At the same time, the very profitability and benefit from the use of these subject matters depend directly on the competent management of the intangible assets within a particular enterprise. And it is also important to take into account the fact that intellectual property is a special resource that is quite simple to obtain illegally and to use illegally subsequently, therefore the defence and management should be treated with an increased attention.

The concept definition

Approaching the issue of disclosing the term “management of intellectual property,” it is worth noting that the legislation lacks this concept legal definition. This is probably due to an alternative nature of the phenomenon: firstly, not all legal entities have the subject matters, the use of which requires the management, and secondly, the nature of such actions is not mandatory, i.e. they may or may not be performed.

The following definition of the concept under consideration seems to be the most correct: the management of intellectual property is a complex of the measures for the protection, defence and the rational use of the subject matters of intellectual property within a particular enterprise.

The stages of the management of intellectual property

  1. Despite the fact that the term “management” implies the availability of the already existing subject matter of intellectual property, the first stage is still directly obtaining a result of the intellectual activity. A third-party organization and/or the employees of the enterprise can act as a creator. It is necessary to describe clearly the requirements for the future subject matter, the purposes of the creation and the functions, the implementation of which is planned, while using it. Then it is necessary to determine how the obtained result of the intellectual activity or the means of individualization will be registered. For example, the designation individualizing the product can be registered as a trademark, a name of the place of the origin of the product, a regional brand or an industrial design. It is worth comparing the legal regimes provided to each subject matter and choosing the most favorable method for the use.
  2. Having determined in what form the subject matter of intellectual property will be claimed, a number of actions should be performed, due to which the right holder will be able to defend subsequently the intangible asset from the illegal infringements. If the result of the intellectual activity is a subject matter of the patent right, it must be registered with the Federal Executive Authority. In the case if the subject matter belongs to the field of the copyright or the related rights, the registration is not required. Meanwhile, it is advisable to confirm the authorship of the creator, for example, to send a copy of the work to one’s own address by registered mail with an enclosure list or to perform depositing of the material medium. Such actions are not mandatory due to the fact that the copyright and the related rights arise automatically, but in the case of a dispute these copies will become substantive evidence, while determining the author of the result of the intellectual activity. In the case, when the subject matters of intellectual property used by the enterprise are not planned to be disclosed, it is possible to protect such creative labour results as know-how. To do so, it is necessary to have the strictly established rules for the behaviour of the employees of the enterprise and to perform other actions that contribute to keeping the manufacturing secret in the status of being inaccessible for the public use.
  3. The third stage can be considered to be a turnover of the subject matters of intellectual property. When the legal protection regime regarding the result of the intellectual activity is registered appropriately, the right holder may apply without hesitation the intangible assets belonging to him. It is possible to use the subject matters of intellectual property directly by the holders of the exclusive rights and/or to transfer such right to one or several persons. Although the results of the intellectual activity and the means of individualization are the intangible assets, their assessment and use as a subject of the pledge is permissible.
  4. The next stage, which is of no small matter, is keeping the effect of the protection documents. The subject matters of the patent rights have a limited period of effect, which can be extended for a particular period. If the right holder fails to perform the actions, which are necessary to keep the effect of the patent or certificate within the prescribed period, then the protection document will cease its effect and the subject matter of intellectual property shall be deprived of the legal protection.
  5. Undoubtedly, the actions to defend the subject matters used should be referred to one of the stages of the management of intellectual property. There is a pre-court procedure and a judicial one for resolving disputes. In the first case, the holder of the subject matter shall appeal directly to the violator with a request to cease the illegal acts or to the state body authorized to resolve such disputes (for example, to the Federal Arbitration Court). In the second case, all action shall take place with the participation of the judicial instance. As is well known, it is easier to prevent negative consequences than to eliminate them, so the right holder should watch carefully over the actions of the competitors and, if possible, try to suppress the illegal acts as soon as possible. Although, large firms sometimes act in a different way: they wait for the moment, when the quantum of damage from the illegal acts becomes impressive and then apply to the court, what allows them to claim recovering damages in a larger quantum.
  6. The registration stage in other countries. It is important to note that while developing the enterprise and introducing the products to the international market, it may become necessary to obtain legal protection in accordance with the legislation of other states.
  7. As a separate stage, the process of alienating intellectual property can be distinguished. In general, the transfer of the rights to the result of the intellectual activity or the means of individualization is referred to the stage of the turnover of the intangible assets. At the same time, if we consider the phenomenon from the point of view according to which the right holder loses the rights owned by him and in the future he will not be able to manage the use of this subject matter, the alienation of the rights should be individualized.

It seems logical that in the process of functioning of the enterprise all the above stages may take place in any order and even simultaneously, as a key to the successful development of the organization is partly the creation and the reasonable use of intellectual property.

It is important to realize that the competent disposal of the intangible assets can bring substantive income to the company, and, possibly, become the main source of profit. In April 2018, RBC compiled a list of the most popular franchises. In Russia, there is no the franchise legal institution and such legal relations in the field of trademarks are essentially a franchise agreement or a subfranchise one. The twenty-sixth place in this rating was occupied by KFC, which concluded 178 agreements to grant the right to use the trademark with the same name.[1] At the same time, the company's income amounted to 3.232 billion USD in 2016.[2] It is worth assuming that the volume of profit from the use of intellectual property is a very impressive percentage of the above sum.

The management of intellectual property: is it necessity or excessiveness?

Ultimately, it is up to the right holder to make a choice in favour or against the active and practical management of intellectual property. However, it should be borne in mind that using the regime of the management of intellectual property, the holder gets a possibility of:

  • enshrining the exclusive rights to the intangible assets;
  • using the subject matters of intellectual property without a fear that they will be “stolen”;
  • granting third parties the right to use the results of the intellectual activity or the means of individualization and gaining profit from it;
  • selling the right to the intangible asset by alienating it;
  • suppressing illegal acts and claiming to recover damages.

Head of Trademark Department / Trademark Attorney Reg. № 1258 / Patent Attorney of the Russian Federation / Eurasian Patent Attorney Reg. № 63