Proceedings of the 3rd European Conference on Intellectual Capital

Piotr Wisniewski
in <strong>the</strong>ir performances, producers <strong>of</strong> phonograms in <strong>the</strong>ir recordings, and those <strong>of</strong> broadcasters in <strong>the</strong>ir
radio and television programs.” (WIPO 2010b). Copyright differs from industrial property in <strong>the</strong> sense
that it protect <strong>the</strong> form <strong>of</strong> ideas, not <strong>the</strong> ideas <strong>the</strong>mselves, which is <strong>the</strong> case for industrial property.
Clearly, both categories are limited to those intellectual assets for which legal protection is possible
and economically viable. The following constraints apply to IP protection:
Economic rationality – to be economically viable, <strong>the</strong> registration <strong>of</strong> IP has to demonstrate a clear
pay<strong>of</strong>f scenario in excess <strong>of</strong> registration fees and opportunity costs <strong>of</strong> capital – in numerous
circumstances such a scenario is questionable;
Legal enforceability – once IP is registered and protected (at least in <strong>the</strong>ory) each possible
infraction has to be challenged via litigation, which becomes problematic if <strong>the</strong> legal regimes
involved are ineffective or fragmented; and economically doubtful if infractions are numerous,
dispersed (geographically and conceptually) and <strong>of</strong> a small size;
Sensitivity/secrecy – certain genres <strong>of</strong> innovation are so sensitive and vulnerable to copying that
<strong>the</strong> risk <strong>of</strong> <strong>the</strong>ir premature disclosure greatly outweighs benefits related to quick
commercialization, or <strong>the</strong>ir use is formally restricted (e.g. to <strong>the</strong> military);
Technical sophistication – high technologies are becoming increasingly complex while <strong>the</strong>ir
dTvelopment is time consuming, protracted and costly – IP protection at <strong>the</strong> final stages <strong>of</strong>
manufacture does not always properly address this value creating structure;
Supply/demand globalization – due to <strong>the</strong> rising diffusion <strong>of</strong> global innovative activity, it is
increasingly more difficult to ascribe <strong>the</strong> value creation chain to individual companies and
jurisdictions – this is exceptionally cumbersome at <strong>the</strong> interface <strong>of</strong> <strong>the</strong> developed and emerging
worlds.
Last – but not least – IP represents a only fraction <strong>of</strong> IC creation. The IC notion, although still evolving
in international <strong>the</strong>ory and practice, is usually associated with more universal coverage (Cf. Edvinsson
and Malone 1997), (Cf. Brooking 1997), (Cf. Wisniewski 2009). The reasons why IC is not always
afforded protection in <strong>the</strong> form <strong>of</strong> IP are diverse. The key arguments why IC seldom morphs into IP
include:
Novelty: IC is a path-breaking idea – its global use accelerated (in earnest) at <strong>the</strong> turn <strong>of</strong> <strong>the</strong> 20 th
and 21 st centuries, whereas various forms IP have been around for centuries;
Conservatism and materiality: <strong>the</strong> existing frameworks <strong>of</strong> economic reporting at <strong>the</strong>
macroeconomic, industrial and corporate levels clearly favor goods and services <strong>of</strong> a tangible
nature (identifying, branding and protecting <strong>the</strong>m as “assets”), IP is undoubtedly closer to that
paradigm than IC;
Conceptual chasm: IP and IC seem to appeal to largely separate groups <strong>of</strong> people (which partially
determines <strong>the</strong>ir application): IP is (in essence) a legal term, whereas <strong>the</strong> IC idea is usually
promulgated by philosophical, managerial and socioeconomic circles.
Besides <strong>the</strong> aforementioned practicalities limiting <strong>the</strong> usefulness <strong>of</strong> IP registration, <strong>the</strong> following
factors come into play:
Humanity: IP (unlike IC) is, for obvious reasons, incapable <strong>of</strong> fully capturing value embodied in
human assets – whereas <strong>the</strong>y are becoming increasingly vital to modern enterprises and
economies;
Backwardness: due to dynamic innovation, IP lags at least one step behind new products and
services (registration can never keep pace with innovation: <strong>the</strong> essence <strong>of</strong> IC);
Formalism: to be legally executable, IP has to be categorized into an existing kind <strong>of</strong> property,
numerous intellectual concepts transcend such boundaries (many new inventions are, in essence,
interdisciplinary).
The impact <strong>of</strong> IP protection on <strong>the</strong> propensity to innovate (i.e. produce IC) has – for long – been
marked by controversy in worldwide economic literature. Most researchers admit that a healthy
balance needs to be struck between innovators seeking maximum value extraction from <strong>the</strong>ir works,
and <strong>the</strong> risk <strong>of</strong> monopolization on account <strong>of</strong> overaggressive patenting – potentially applicable to
many high-pr<strong>of</strong>ile inventions (Cf. Federal Trade Commission 2003). It is fair to point out that without a
predictable value-extraction pattern (i.e. IC being productively commercialized into IP), innovators’
interests are at risk. Arguably, <strong>the</strong> more ineffective a legal system is, <strong>the</strong> bigger role IP has to play in
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