This month's Editorial takes a look at commoditization: is it really such a dreadful think?
‘Bundle them high, protect them cheap’: IP and commoditization
When it comes to dealing with intellectual property rights, they often lose their individuality. Thus copyright collecting societies license entire bundles of protected musical works, lyrics, recordings and performing rights to bulk licensees; this makes sense because so many copyright works are short and the transaction costs of licensing each one separately for use by a broadcasting company, for example, would be oppressively high. In contrast, patents may be bundled together for large-scale collective licensing because their specifications are so long and their claims so complex that the transaction costs of evaluating each one separately to see if it even requires a licence can make bespoke licensing an intolerable burden. Likewise, the fair, reasonable and non-discriminatory (FRAND) licensing of technologies that are deemed to be essential if compliance with global industrial standards is sought can also be a form of commoditization: one buys the whole package not just because it saves time and effort and reduces the risk of an unexpected infringement action but because the licensed IP appears to be generally regarded by the businesses comprising the standard-setting group as being the relevant IP, thus saving prospective licensees the hassle of having to re-invent the wheel, as it were, by trying out all available alternatives before deciding which they do in fact need.
In some areas of IP, transactions have yet to show a high degree of commoditization. The trade mark is perhaps the best example, though if brand owners ever learn to harness the power of the internet as effectively as its service providers do, we may see the dawn of a new era in which trade marks are collectively licensed and commoditized, too. Is it too remote a scenario to imagine a day when businesses such as Google, eBay and Amazon will take bulk licences to use registered trade marks as keywords for regular online search or for enabling consumers to navigate their way around the labyrinths in which their customers' web pages lurk?
Anyway, having entered the world as a solitary entity, then having been bundled together and commoditized, it is the lot of the IP right to revert to its individualized, non-commoditized status at its point of expiry. Each patent, copyright and design slips quietly away either at the end of its predestined time or on the occurrence of a premature termination through cancellation, revocation, surrender or lapse, as the case may be. The trade mark has the option of eternal life, but that is a subject for another editorial.
Where does litigation fit into the commoditisation of intellectual property? While IP rights may be held in a portfolio, commercialized and securitized in bulk, they are most often litigated individually since the nature and scope of protection available to each separate protected work defines the scope of its own protection. But opportunities for some commoditization remain. Thus, in seeking a blocking order as a means of preventing access to a website used for the purposes of infringing copyright or selling counterfeit products, it would be an unproductive and unhelpful exercise for the separate orders to be made in respect of each infringed work, by each IP owner: ‘bundle them high and protect them cheap’ should be an attainable objective.