CC BY
27УДК: 339.544, 339.166.5
INTERNATIONAL TRADE IN PATENTS AND KNOW-HOW
M.A. Bartova
Financial University under the Government of the Russian Federation, Moscow, Russian
E-mail: masyanya20052000@mail.ru Supervisor: Obukhova L.Y., Senior teacher, Foreign Languages Department Financial University under the Government of the Russian Federation, Moscow, Russian
E-mail: lora.yur@mail.ru
Abstract: The article discusses one of the most dynamic areas of development of international economic relations -international trade in licenses within the framework of the exchange of technologies between the countries. The nature, terms and types of patents and know-how are determined in the article with the help of the legal base. Statistics and reports from the World Trade Organization and the World Intellectual Property Organization helped to analyze the market and conclude that the trade in licenses accelerates the process of development of new markets in emerging economies. Furthermore, this trade is an incentive for the sale of their own products, which may be an impetus to the state economy. The studied materials revealed that the most popular form of licensing is franchising, which provides many advantages in setting up a business. Based on given data, it can be concluded that the legislative framework in this industry is poorly developed and entrepreneurs do not have total knowledge about the process and consequences of licensing.
Keywords: trade in licenses, know-how, franchise, patent applications, intellectual property.
МЕЖДУНАРОДНАЯ ТОРГОВЛЯ ПАТЕНТАМИ И НОУ-ХАУ
Бартова М.А.
Финансовый университет при Правительстве Российской Федерации, г. Москва, Россия
E-mail: masyanya20052000@mail.ru
Научный руководитель: Обухова Л.Ю., старший преподаватель Департамента языковой
подготовки
Финансовый университет при Правительстве Российской Федерации, г. Москва, Россия
E-mail: lora.yur@mail.ru
Аннотация: В статье рассматривается одно из наиболее динамичных направлений развития внешних экономических отношений - международная торговля лицензиями в рамках обмена технологиями между странами. С помощью законодательной базы определяется суть, сроки и виды патентов и ноу-хау. Статистика и отчеты Всемирной торговой организации и Всемирной организации интеллектуальной собственности помогли проанализировать изучаемый рынок и сделать вывод о том, что торговля лицензиями позволяет ускорить процесс освоения нового рынка в развивающихся странах. Кроме того, данная торговля является стимулом для продажи собственной продукции, что может стать толчком для развития экономики государства. Изученные материалы показали, что наиболее популярной формой лицензирования является франчайзинг, который дает множество преимуществ при создании бизнеса. На основании статьи можно сделать вывод, что законодательная база в этой отрасли нуждается в существенной доработке и предприниматели не имеют четких знаний о процессе и последствиях лицензирования.
Ключевые слова: торговля лицензиями, ноу-хау, франшиза, патентные заявки, интеллектуальная собственность.
1. INTRODUCTION
One of the consequences of globalization is the transfer of production from rich technological countries to countries with cheap labor. This process poses a threat to suppliers and producers of SMEs (small and medium enterprises) in rich technological countries whose customers pay their attention to countries with cheaper labor where production costs are low.
From a historical and international point of view, relevance of the five main factors that provide added value: technology, production, marketing, logistics and services [2] have increased. Technologies - in the form of know-how and trade secrets - have become a key factors in this process and trade in technology and more specifically licenses are becoming an increasingly profitable part of the digital economy and affecting its growth rate.
In technological countries, there are a lot of untouched know-how. In emerging and developing markets there is a huge demand for new technologies, which can push the market to the highest level in contradistinction to industries that do not use innovations in their production. This "technology trade" may well be one of the responses to the constant changes in the modern world. In order to avoid chaos and misdemeanor, it is necessary to improve the process of trade regulation in this sphere, that can be done with licensing. International trade in inventions representing intellectual property takes the form of an international exchange of licenses.
2. THEORETICAL ASPECTS OF LICENSING AND KNOW-HOW
Patent is a document granting the author of an invention the exclusive rights to prohibit other persons from producing, using, copying and selling it without permission. The invention must be industrially applicable and beneficial (Clause 4, Article 1350) [1]. A patent has an expiration date: 5 years for an industrial design, 10 years for a utility model, 20 years for an invention, with regular payment of the fee for maintaining the patent in force. A person who has acquired a patent, for example, at the Federal Service for Intellectual Property (FSIP), has the right of authorship and the right to remuneration (Article 1356, Article 1357) [1], as well as the exclusive right. The holder of a patent can either sell it under a patent alienation agreement or permit it to be used by entering into a license agreement.
The know-how is recognized information of any nature (production, technical, economic, organizational) on the results of intellectual activity in the scientific and technical field that have actual or potential commercial value due to unknowingness to third parties (Article 1465.) [1]. Information, the mandatory disclosure of which or the inadmissibility of restricting access to which is established by law or other legal act, cannot be recognized as a production secret.
A license is a document of a licensor (owner of a technology or industrial property rights) for the use by a licensee (an individual or legal entity acquiring technology or related rights) of inventions, scientific
and technical achievements, technical knowledge and experience of production, secrets of production, commercial or other information necessary for the organization of production, as well as trademark for a certain period of time, provided for by the license agreement. This is a quick way to generate income and grow your business, as it has neither production nor sales [4].
There are patent licenses ("pure patent"), and nonpatent (know-how) - granting the right to use scientific and technological achievements. Any person is recognized as the legal owner of know-how if he personally developed it using his own means or acquired it conscientiously from another person.
The predominant part of licensed trade is carried out using non-patented licenses, since the acquisition of a "clean patent" often requires additional R&D and implementation costs in the production process.
Categories of the subject involved in the transaction differ in trademarks, scientific and technical knowledge (inventions and know-how) and various types of services. A popular type of international trade in licenses is franchising, which has become widespread over the past 30 years. The word "franchising" comes from the French franchise (privilege) and means that one company allows another to use its well-known brand, methods of organizing production and marketing for money.
Internationally, a formal license agreement is only possible if the intellectual property right that you wish to license is also protected in another country or countries that are of interest to you. If your intellectual property is not protected in such another country or countries, then you will not only not be able to license it but also you will not have the legal right to create any restrictions on its use by anyone else.
Licensing, in addition to being a means of making a profit and protecting one's own production from competition, is also a non-tariff regulator of the foreign economic state policy of protectionism. In the United States, some products require a license from the government to export to certain countries. This allows the government to monitor what is exported to whom and gives them the prerogative to refuse to issue a license if this is considered a threat to national security. In the US, licenses are required for scarce
goods domestically; goods related to the proliferation of nuclear weapons, missile technology, chemical and biological weapons; and other products that may affect regional stability, crime, or terrorist activities. Thus the state with the help of licenses regulates international trade in particular export [6].
3. INTERNATIONAL TURNOVER OF TRADE IN LICENSES
Let's start with the most important example of a franchise - McDonald's. It is also called the founder of franchising. McDonald's success story: worldwide popularity of this fast food restaurant was brought not by the creators of the restaurant, the McDonald's brothers, but by the small businessman Ray Kroc,
who had previously been engaged in the sale of equipment for the production of milkshakes. Entering a roadside restaurant owned and operated by McDonald's, Ray Crock, amazed by the incredible popularity of the high-speed service system and the cheapness of hamburgers, became interested in this idea and three weeks later turned to the brothers with a proposal to sell their franchises throughout America. Now McDonald's has more than 30 thousand restaurants around the world, and Ray Crock has become a billionaire [5]. Nowadays McDonald's is the second famous and best franchising in the world (look table 1).
Table 1. The best franchises in the world in 2019
Place Name Number Cost from Royalty Franchise features
1 7-Eleven more than 62.000 $38.000 not from turnover, but from profit Flexible format - an individual franchise package is assembled as a designer, the franchisor leases land for a partner and builds a store
2 McDonald's more than 22.000 $1.000.000 12-13% It is sold only to experienced business partners, the term of the franchise agreement is 20 years
3 Dunkin' Donuts more than 12.000 $229.000 6% + 0.5% marketing fee The franchisor undertakes all the training for the staff, it sells two billion cups of coffee per year
4 The UPS Store, Mail Boxes Etc more than 4.955 $178.000 5% + 2.5% on marketing In the USA it called the best franchise for veterans, disabled people and their families
5 Jimmy John's Gourmet Sandwiches more than 2.800 $330.000 6% of turnover Service speeds - a 20-cm burger is made in 30 seconds
*Source: The best franchises in the world: popularity rating. URL: https://e-tiketka.ru/luchshie-franshizy-mira [8]
Based on the data in the table we can conclude that licenses for using trademarks and copyrights are often transferred with inventions of know-how, managerial experience, and staff training. As part of such transactions, the licensee may be entitled to make improvements or to produce secondary products, as well as to create their own IP objects, which can be transferred in accordance with the license agreement to other persons.
There are several types of license fees: one-time payment (made in the form of a predetermined amount regardless of the turnover and real profit from
using the license), periodic deductions in the form of a percentage (share) of profit - royalties (turnover, profit or commission per unit of goods), transfer licensor shares in the company. In practice, combined pay methods are often used.
The size of the license fee depends on many factors. Often, the basis for the calculation is the profit made by the buyer of the license from its use. At the same time, for the licensee, the cost of the license should not exceed its potential cost for independent research in this area [3].
According to the World Trade Organization (WTO) statistics, in 2011 the United States was the world leader in terms of incoming payments for the sale of IP rights (more than 103.8 billion dollars). The EU countries accounted for 93.8 billion dollars, Japan - 29.0 billion dollars. At the same time, participation in the international trade in IP rights of developing countries was growing. In 2011, Republic of Korea revenues amounted to $ 4.3 billion, Singapore - $ 2.2 billion, China - $ 830 million. In general, the well-known triad (USA-EU-Japan) accounted for 88% of license revenue.
Concerning import EU leads in terms of paid royalties - $ 116.9 billion, US - $ 34.8 billion and Singapore - $ 19.4 billion (their share in world imports is slightly lower - 80%). The main world importers from developing countries are: Japan - $ 19.2 billion (6.9%), China - $ 14.6 billion (5.6%), the Republic of Korea - $ 7.3 billion (3.9%), Russia - $ 6.1 billion (2.2%) [10].
So, despite considerable progress in the scientific and technical sphere in developing countries, most of the technological exchange are still concentrated in the group of developed countries.
According to data taken from the WIPO website, in 2018, about 253,000 international applications were filed through the PCT (international patent system), which is 3.9% more than in 2017. Candidates from the United States filed the largest number of applications (56142), slightly less - from China (53345) and Japan (49702). The leader in filing patent applications related to digital communications has become China and the Republic of Korea, while for Germany and Japan, the main area of technology has become electric machines, and for the United States - computer technology [9].
The growth in trade in "other commercial services", including financial services, business services and fees for the use of intellectual property in 2018 increased to more than $ 3.1 trillion. In almost every region of the world growth is observed in this category, continuing the trend since 2017.
The total cost of all the technologies created in the world is 60% of the total gross domestic product - a consequence of large sales [7]. A company that buys technology can achieve a world-class level of quality
and high competitiveness in a short period of time, gaining new sales markets and increasing the scale of exported products.
Today the international intellectual property market is a set of cross-border transactions on technology transfer, export and import of high-tech products, and the sale of franchises. But professional studies of cross-border transactions are carried out only through surveys of market participants and their results are disseminated in a limited classified mode.
4. CONCLUSION
In modern conditions the development of the economy and the technical base of any state depends on the types of its international activities and foreign economic policy in the license market, and, as the experience shows, in leading countries the relationship with the license market becomes stronger when economic grows.
Unfortunately, the licensing tool used by SMEs is not imperfect. For the most part, this is due to the fact that licensors are not sure about the protection of their intellectual property including trade secrets. On the other hand, licensees are reluctant to accept often-severe restrictions that are accompanied by license agreements. This situation, in turn, is the result of excessive caution of licensors in protecting their interests. The vicious circle is complete. Much work remains to be done to make licensing know-how and trade secrets more accessible to those who need it most.
REFERENCES
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[8] The best franchises in the world: popularity rating. URL: https://e-tiketka.ru/luchshie-franshizy-mira (Accessed: 10.02.2020).
[9] WIPO. World Intellectual Property Indicators 2019. URL: https://www.wipo.int/edocs/pubdocs/en/wipo_pub_941_201 9.pdf (Accessed: 10.02.2020).
[10] WTO. International Trade Statistics 2012. P. 177. International Trade Statistics 2011. P. 174. International Trade Statistics 2008. P. 188. URL: https://www.wto.org/english/res_e/statis_e/statis_e.htm (Accessed: 10.02.2020).
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