Strathclyde Business School

Department of Management MSc Business & Management

Management Consultants Haaris MAHMOOD Jun NAMIKOSHI Nabeel A. QADEER Alexander SLESARENKO Dan YU

Management Report
Pharmaceutical Research Company Hamilton, New Zealand
Contact Person: Krista YEN

Introduction Nowadays, the absence of legal protection of a trademark, an industrial design, an artistic work, and other types of intellectual property (hereinafter referred to as IP) may be the reason for serious legal, financial and administrative problems within an organization, and may even lead to its departure from the industry. In the case analyzed below, we have a New Zealand-based pharmaceutical company, which faced the accusation on account of IP Infringement from a Venezuelan competitor firm. Kristas firm, based in New Zealand, has conducted their own research for years; hence this legal case may result in serious repercussions for the company's future. In our report we will examine the legal grounds, keeping in view the laws within the concerned countries with regards to IP rights infringement. We shall determine, whether a published work constitutes a piece of IP or not, and on the basis thereof we shall offer our managerial advice to Krista on the way forward.

Insight into national laws of Venezuela, New Zealand, and Argentina To establish that the published conference paper is a piece of IP, a brief insight into the national laws of the countries mentioned above is recommended. As the case had place in Buenos Aires, we are taking into account the IP laws that apply in Argentina as well. New Zealand: According to the Copyright act (Part-2, Section-29(2)(a)) of New Zealand, Krista`s company has infringed the intellectual property of Venezuelan company by copying substantially a part of their original work presented during the international conference in Buenos Aires. The said Copyright act (Part-3, Section-43) determines that copying of work is only allowed if it is fair; and the purpose, the nature and the amount, etc. of the work copied should be taken into consideration. Whereas, Krista`s research paper does not fall in this category. Thus, the New Zealand Copyright act (Part-8, Section-147) gives to the Venezuelan company the copyrights on their published work. Venezuela: According to Venezuelan IP regulations, patents give their holders the exclusive right to introduce the improvements and amendments to their inventionsArticle 5part-1Section-1 Act LPI. The copyright allows the author to enjoy the exclusive right to make a decision on information disclosure concerning their work. To be noticed, only literary, audiovisual works, radio works, visual art works, performing or dramatic works, pieces of music, computer program and database, phonographic works, acts and contracts are eligible for copyright protectionArticle 25, part-1
Section-1).

Moreover, the author needs to apply to official authorities to have his invention registered,

and thereby to have their IP protected. Argentina: According to the Argentina intellectual property law, until the patent application is granted, the patent applicant cannot protect their rights in case of IP infringement (Article 13 and 14). However, if the author has published a subject-related work, or has participated in presentations in a 2

foreign country, he would hold the right of ownership over the translation and the authorization
(Article 23, 27 and 57).

Having understood the IP laws within the countries involved, it is essential to

conduct a sound review of international conventions, by which New Zealand, Venezuela, and Argentina abide. Agreements on IPR between Venezuela and New Zealand The published paper was presented by the research team of the Venezuelan company at the conference in Buenos Aires, Argentina, last year. Hence, the most appropriate international agreement is the Berne Convention for the Protection of Literary and Artistic Works, adopted by Argentina, New Zealand, and Venezuela as members along with other countries, globally. It is clearly specified in the convention (Article 2.1), that 'the expression literary and artistic works shall include every production in the literary, scientific and artistic domain, whatever may be the mode or form of its expression, such as books, pamphlets and other writings; lectures, addresses, sermons and other works of the same nature; <...>'. Moreover, the Convention gives the definition of published work (Article 3.3): 'The expression published works means works published with the consent of their authors, whatever may be the means of manufacture of the copies, provided that the availability of such copies has been such as to satisfy the reasonable requirements of the public, having regard to the nature of the work. <...>'. So, the conference paper will be termed as IP, and normally should be automatically protected in all the countries-members of the Convention (Article 2.6): 'The works mentioned in this Article shall enjoy protection in all countries of the Union. This protection shall operate for the benefit of the author and his successors in title'. Nevertheless, there exist two sets of arguments, which prove inconsistency of the Venezuelan firms denunciation. Firstly, referring to the Article 2.3 of the Berne Convention, 'Translations, adaptations, arrangements of music and other alterations of a literary or artistic work shall be protected as original works without prejudice to the copyright in the original work'. Thus, even if it is assumed that Krista's company used two genuine paragraphs of Venezuelan firm conference paper, the charge still stands invalid, as the remaining part of the research of the New Zealand-based company is unique and independent of the work of the rival firm. Secondly, it is mentioned that the pictures reflected a) the action of the drug in the stomach, and b) the possible side-effects; both action and side effects cannot be deemed as unique to one medicines research only, as two or more drugs may have a similar impact on the stomach or have similar side effects. Hence, Krista's company may also use the above mentioned arguments to build up their legal response to the accusations. Handling employees identified as probable sources of breach of confidentiality Keeping all facts in perspective, it becomes quite evident that there is no tangible proof that can be held up at this stage against the two employees of Kristas company. Incidents of this magnitude do 3

call for an internal audit in order to further strengthen companys internal processes. Initially, it is advised that Krista suspends the resignation of the Head of Research until the situation becomes clear, as the company needs people as significant as she is. The efforts put into research by firms employees cannot be ignored because of a baseless blame held up by a rival firm. Hence, to allow her some time to reconsider her decision, the Head of Research should be sent on a paid vacation, as a gesture of good will. Nevertheless, Krista must share the companys plans of an audit and the process of questioning that shall be conducted vis-a-vis other members of the research and development department beforehand. By all means, it must be made clear to the head of department and her team, that this shall be a regular procedure of audit in order to further streamline and fill in the loop holes that may exist in the companys current chain of command. Discussing the plans of an audit directly with the Head of Research shall help eliminate any chances of misunderstanding in future. Similarly, Krista must speak to the Nicaraguan Spanish speaking research assistant about the upcoming audit during the course of which the entire research team will be questioned and shall be expected to cooperate. Krista should set up a committee to review the findings of this case, comprising of a senior representative of the Legal Advisory body, of the Head of IT, of the Head of the HR department and of Krista herself respectively. The Head of IT shall be assigned the first task: with the help of the internal or external IT auditors a comprehensive review of the communication channels, history and a thorough analysis of the logs is to be conducted. All telephonic conversations, recorded messages, file transfers through emails and FTP, online chats and other communication media over the technology infrastructure of the company will be screened by a team of specialists and the results are to be submitted to the committee for further action within seven working days. Evaluating the nature of the inferences derived through IT audit, a final decision on the future line of actions shall be established by the committee members.

Conclusion At this point in time, there is no reason to doubt the intent or actions of any of the employees of the company. Nevertheless, for proactive companies with a healthy organizational culture, such incidents act as a genuine instigator of the need to conduct awareness workshops for issues in perspective. In this scenario, despite the nature of the results of the IT audit, it would be in the best interest of Kristas company culture, that the HR department to arrange a workshop on Intellectual Property Rights, Importance of Copyright, and the circumstances that may occur in case of Infringement of any of the above. This exercise shall surely instill the importance of IPR within employees of the company, and shall pass on a strong and positive message to all critics of Kristas company about the culture that prevails within her organization. 4