There currently seems to be a technology tug of war occurring in manufacturing that may be affecting the check and weigh industry. This struggle revolves around the trend of equipment manufacturers as they more and more create “closed” or “locked” technology-related products and “lock outs” on their proprietary programming. As a result, equipment end users are forced to utilize OEMs for service or
Opponents of such OEM “black box” integrations and servicing limitations may cry unfair engagement and claim competition-limiting, monopoly-like business practices which tie their hands and disallow the freedom of service and upgrade options because they can no longer “shop” for the lowest service providers. They are also then automatically locked into OEM services and fees for the life of any equipment purchased.
In a previous iWAM article, Steve Van Duzen, SVP of AP Dataweigh (APD), stated that under the guises of Intellectual Property Rights (IPRs), he believes that OEM practices of “locking out” their proprietary programming represents one of the biggest current problems with checkweighers, and as a result, equipment has now mostly been “locked up” industry wide. “End users have had to rely on going back to the OEM for service, calibration and parts.” He added that this makes for a “service based sale,” and other OEMs are now able to charge “more than an arm and a leg” for servicing, updating and even calibrating their machines.
Proponents of locked technology incorporation into their products state IPRs as their defense. Intellectual property (IP) refers to creations of the mind or intellect which include but are not limited to the following: discoveries and inventions; literary and artistic works (including music); designs and symbols; as well as words, phrases, names and images used in commerce. By law, a monopoly is actually assigned to designated owners of said intellectual property. Subsequently, IPRs are defined as the protections granted to the creators of IP and include rights related to trademarks, copyrights, patents, industrial design rights, plant variety rights, trade dress, and in some jurisdictions, trade secrets.
According to the World Intellectual Property Organization (WIPO), “IP is protected in law by, for example, patents, copyright and trademarks, which enable people to earn recognition or financial benefit from what they invent or create. By striking the right balance between the interests of innovators and the wider public interest, the IP system aims to foster an environment in which creativity and innovation can flourish.”
To objectively evaluate this industry “controversy,” it is necessary to understand the central issue and arguing points of IP and IPRs and the relevant subcategories associate with these terms:
Intellectual Property Rights—Definitions
• Copyright—is a legal term used to describe the rights that creators have over their literary and artistic works. A copyright gives the creator of an original work exclusive rights to it, usually for a limited time. Copyright may apply to a wide range of creative, intellectual, or artistic forms, or “works.” Works covered by copyright range from books, music, paintings, sculpture and films, to computer programs, databases, advertisements, maps and technical drawings.
• Industrial Design Rights—sometimes called “design rights” or “design patents,” these constitute the ornamental or aesthetic aspect of an article. Industrial design rights protect the visual design of objects that are not purely utilitarian. An industrial design consists of the creation of a shape, configuration or composition of pattern or color, or combination of pattern and color in three-dimensional form containing aesthetic value. An industrial design may have three-dimensional features, such as the shape or surface of an article, or of two-dimensional features, such as patterns, lines or color. These two- or three-dimensional patterns in industrial designs are then used to produce a product, industrial commodity or handicraft.
• Patents—are one IPR that directly affects the weighing equipment industry. Patents are exclusive rights granted by the government to an inventor for an invention, giving the owner the right to exclude others from making, using, selling, offering to sell, and importing the invention for a limited period of time, in exchange for the public disclosure of the invention. In general, a patent also provides the patent owner with the right to decide how (or whether) the invention can be used by others. An invention is a solution to a specific technological problem, which may be a product or a process and generally has to fulfill three main requirements: it has to be new, not obvious and there needs to be an industrial applicability. In exchange for this right, the patent owner makes technical information about the invention publicly available in the published patent document.
• Trademarks—include a recognizable sign, design or expression capable of distinguishing products, goods or services of one particular trader or enterprise from the similar products or services of other traders or enterprises.
• Trade Secrets—are a formula, practice, process, design, instrument, pattern, or compilation of information which is not generally known or reasonably ascertainable, by which a business can obtain an economic advantage over competitors and customers. There is no formal government protection granted; each business must take measures to guard its own trade secrets.
Promoting progress is the most commonly accepted and generally stated objective of most intellectual property law. This philosophy held by IPR proponents holds that society and the patentee/copyright owner mutually benefit by the exchange of limited exclusive rights for disclosure of inventions and creative works. As a result, an incentive is created for inventors and authors to create and disclose their work. Some IPR opponents believe that the objective of intellectual property legislators and those who support its implementation appears to be absolute protection. But proponents then argue that if some intellectual property is desirable because it encourages innovation, they reason, more is better. The thinking is that creators will not have sufficient incentive to invent unless they are legally entitled to capture the full social and economic value of their inventions.
This absolute protection or “full value view” treats intellectual property as another type of “real” property, which is directly tied to financial incentives connected to IPRs. It is not surprising that exclusive rights allow owners of intellectual property to benefit from the property they have created, providing a financial incentive for the creation of (or of an investment in) intellectual property.
According to a report in 2013 by the United States Patent & Trademark Office, the approximated value of intellectual property to the U.S. economy “is more than $5 trillion (USD) and creates employment for an estimated 18 million American people.” Economists estimate that two-thirds of the value of large businesses in the U.S. can be traced to such intangible assets. Also, the value of intellectual property is considered similarly high in other developed nations.
Proponents also note that economic growth is another positive consequence of IP and IPR regulations. The Anti-Counterfeiting Trade Agreement (ACTA) states that “effective enforcement of intellectual property rights is critical to sustaining economic growth across all industries and globally.” Additionally, the WIPO treaty and several related international agreements underline that the protection of intellectual property rights is essential to maintaining economic growth. The WIPO Intellectual Property Handbook offers the following two reasons for intellectual property laws:
1. “To give statutory expression to the moral and economic rights of creators in their creations and the rights of the public in access to those creations.”
2. “To promote, as a deliberate act of Government policy, creativity and the dissemination and application of its results and to encourage fair trading which would contribute to economic and social development.”
Yet some economic experts refute the accepted business and financial benefits of IPRs. David K. Levine, the John H. Biggs Distinguished Professor of Economics at Washington University in St. Louis, conducts ongoing research in general equilibrium theory, focusing specifically on growth theory, innovation, and intellectual property. Michele Boldrin, the Joseph Gibson Hoyt Distinguished Professor in Arts & Sciences at Washington University in St. Louis, is also an economist and expert in economic growth, business cycles, technological progress and intellectual property. Through their collaborations, both experts have examined the role of increasing returns in growth and innovation. They posit that “little evidence exists for increasing returns at the aggregate level,” and thus argue that “there is no reason to believe that increasing returns play an important role in growth.” Their theory concludes that existing claims for the necessity of intellectual property in the process of growth and innovation are “greatly exaggerated.”
But there is also a morality or “fair practice” aspect to IPRs that may be just as relevant to the economic argument. According to the Universal Declaration of Human Rights, “everyone has the right to the protection of the moral and material interests resulting from any scientific, literary or artistic production of which he is the author.” Although the relationship between IPRs and human rights is a complex one, there definitely are moral arguments for IP.
Opponents have equally powerful contentions and some manufacturers within the weighing equipment industry have even specifically focused their processes on being “open.” In response to the “closed technology” trend, APD created “Open Architecture” systems to take that equation out of purchasing a checkweigher. This “open” aspect of APD systems is especially innovative industry-wide in that they are not based on locked, black box technology that only the OEM can access. Van Duzen explained, “We designed it to be open so our end users can go to their local scale company with service providers whom they are already familiar with and have them perform calibrations, service, etc.”
Both sides of the debate seem to have valid arguments and data which support the pros and cons of IPRs. But with a legal and societal precedent that spans well over a century, it appears that those who oppose IPRs would have a long, uphill battle to change the current status quo. Perhaps our government as well as governing agencies like the National Conference on Weights and Measures (NCWM) will eventually need to address this and decide whether or not “locked out” technology is in the best economic and business interests of the weighing equipment industry at large.
You can read more of Christopher’s work at www.cussat.com.