Intellectual Property …

Intellectual Property                                                                                                          12




Overview
The EU is home to a vibrant and thriving community of authors and                  Did you know
inventors. The success of this community depends on "intellectual
                                                                                    The copyright industry contributed over
property rights" (IPRs) ­ including copyrights, trademarks, and patents.
                                                                                    1,200 billion to the EU economy in 2000.
                                                                                    (Turku Finland School of Economics, The
· Copyright is a form of intellectual property protection conferred on              Contribution of Copyright and Related
  authors of original works, including literary, dramatic, musical and
                                                                                    Rights to the European Economy (2003))
  artistic works, among others. Copyright gives the author certain
  exclusive rights in his or her work, such as the right to make copies
                                                                                  For every 1 of software sold, an additional
  of the work, to distribute the work and to create derivative works.
                                                                                  1-2 goes to local economies (services,
  In the EU, copyrights are protected through a series of EU Directives,
                                                                                  distribution and supply companies).
  including the 1991 EU Computer Programs Directive (which sets forth
                                                                                  (Business Software Alliance and
  the copyright rules that apply to software). The most recent of the
                                                                                  International Data Corporation, Global
  EU's copyright-related Directives is the 2001 "Copyright" (Information
                                                                                  Software Piracy Study (2004))
  Society) Directive. The Copyright Directive modernises EU copyright
  by providing important new protections for authors, including the
  right of "making available", which allows right holders to control the
  distribution of their works over networks such as the Internet. The Copyright Directive also establishes the
  legal framework for protecting digital rights management (DRM) technologies. Those DRM technologies
  will not only make it easier to market works on-line, but will also allow the safe exchange of valuable data
  (such as medical data between doctors and hospitals). Among other things, the Directive provides that
  national "private copy levies" ­ levies assessed on the media and devices on which copies of works for
  private use are made and/or stored ­ must "take account" of the application of DRM technologies on
  works. Significantly, the European Commission is currently exploring the need to consolidate the various
  existing copyright-related directives. To this end, the Commission adopted a Working Paper on the EC
  Copyright Framework in July 2004. The Commission is also considering how copyrights are managed
  in the EU, and adopted a Communication on rights management in April 2004.

· Trademarks protect words, names and symbols that are used to identify products or services. Just as with
  copyrights, trademarks confer upon brand owners certain exclusive rights, including the right to exclude
  others from potentially confusing uses of the mark. Trademarks serve several important purposes.
  By identifying the good or service with its source, trademarks communicate to consumers information
  about the quality of a particular product and thereby help consumers to make informed purchasing
  decisions. Trademarks also ensure that brand owners can reap the rewards of their investment in
  developing and marketing a product without having to fear that a competitor will use the same or a
  confusingly similar mark. Trademarks are protected under EU law by the EU Trademark Directive (which
  harmonises national trademark rules across the EU); and, the Community Trademark Regulation (which
  establishes a Community-wide mark).

· Patents protect inventions in much the same way that copyrights protect works of authorship. EU
  patent rules are currently governed by the European Patent Convention. However, the EU is considering
  legislation that would establish a Community patent, enabling applicants to obtain a single patent legally
  valid throughout the EU. The EU has also been working on a Directive on the Patentability of Computer-
  Implemented Inventions ("Software Patents Directive"). The Directive would harmonise and clarify the
  legal framework concerning patent protection for computer-implemented inventions by codifying the
  European Patent Office's existing case law and practice. The EU Parliament completed first reading of the
  Directive in late 2003; a common position on a political agreement was reached under the Irish Presidency
  of the EU in May 2004, but remains to be adopted by the Council.
Microsoft's Perspective
Intellectual property (IP) protection offers many benefits, in the form of innovation, economic growth and
job creation. By ensuring that authors and inventors can realise a financial return on their investments, IP
yields incentives and resources to invest in creating new products and new technologies. In turn, these new
innovations contribute to EU economies via increased employment and tax revenues from the creative sector.
Greater innovation also means more competition and consumer choice, as well as increased productivity
and efficiency. As concluded in a report sponsored by the European Commission, the copyright industry
employed 5.2 million people in the EU15 and added 450 billion in wealth to the economy in 2000.1

Where software is involved, the EU has long been a leader in this area, starting with the 1991 Software
Directive, which reflects an effective compromise among many competing interests. This legislation works
well in practice and should not be revisited.

As the European Information Communication Technologies Association recognises, it is important that the
EU Member States correctly implement the protection of DRM technologies incorporated in the Copyright
Directive. Unlike levies, DRM technologies make it possible to compensate right holders accurately and directly
for the particular use to which a work has been put. Therefore, they should be preferred over the lump-sum
remuneration system associated with levies. As the technological development of DRM systems is currently
in its infancy, mandating a DRM standard today would freeze investments into the development of new and
more advanced DRM systems and thus deprive content providers from the benefit of improving both levels
of technological protection and user friendliness of systems to be deployed in the future. Along this line, the
Copyright Directive avoids to require DRMs, but encourages industries to develop interoperable systems.

European industry relies heavily on IP protections to support its innovative and developmental efforts. For
example, according to the Technology Review Patent Scoreboard 2004, Philips and Ericsson filed over 1.400
and 650 patents respectively worldwide in 2003.2 In addition, Siemens, in its annual "Pictures of the Future"
descriptions of upcoming technologies, explains that "patents are an integral part, a prerequisite, for making
Siemens' `Pictures of the Future' a reality".3

To ensure IP industries are able to contribute to the EU's success in the Information Society, we encourage
the EU to monitor the application of the existing IP Directives and to assist Member States likewise in the
rapid transposition of the 2004 Enforcement Directive, which may provide an opportunity to address other
issues at national level. Fighting the high levels of piracy and counterfeiting effectively will require additional
action at EU level to harmonize the criminal rules applicable to counterfeiting.

European industry overwhelmingly supports the pending Software Patents Directive as another essential
element of the EU's software IPR regime. Without such protection, investment in software research and
development and in designing new software functionalities would be limited, and innovation would
be hindered.



Helpful Links
Microsoft:                                                             Business Software Alliance:
http://www.microsoft.com/piracy/how_intellectual.mspx                  http://www.bsa.org/eupolicy/Copyright-and-Intellectual-
                                                                       Property.cfm
European Commission, Intellectual Property Rights:
http://europa.eu.int/comm/internal_market/en/intprop/                  European Information Communication Technologies
index.htm                                                              Association:
http://europa.eu.int/comm/internal_market/indprop/                     http://www.eicta.org
index_en.htm



Sources
1
    Turku Finland School of Economics study sponsored by the European Commission, "The Contribution of Copyright and Related
    Rights to the European Economy", October 2003, p. 1.
    (http://europa.eu.int/comm/internal_market/publications/docs/report-copyright-contribution_en.pdf)

2
    Technology Review, "Patent Scoreboard 2004".
    (http://www.technologyreview.com/articles/downloads/patents0504.xls)

3
    Siemens, "Patents and Researchers", Pictures of the Future, Fall 2001. (http://w4.siemens.de/FuI/en/archiv/pof/heft2_01/artikel20/)




For additional information please contact: Marie-Thérèse Huppertz, Tel: +32 2 550 0610, Fax: +32 2 550 0611, Email: marieth@microsoft.com