What is Soft IP?

Soft intellectual property (Soft IP) can either refer to copyrights and trademarks or to a proposed system of licensing patents to innocent infringers. Intellectual property rights are often classified as soft rights or hard rights. Soft rights refer to the rights conferred by copyrights, trademarks, and other conceptual rights attached to artistic works. Hard rights are those conferred by patents on inventions.

Intellectual property is an intangible right that provides the creator of a work with the exclusive ability to profit from his creation for a specific length of time. Instead of owning tangible property, such as a house or an office building, the creator of a work owns a copyright, trademark, or patent that can protect an asset that is not tangibly fixed. Obtaining a copyright or trademark is a relatively simple process in most jurisdictions.

The European Patent Office (EPO) adopted the term “soft IP” to refer to a system of patent licensing, even though soft IP typically referred to all intellectual property except patents. As part of a report on recent developments in intellectual property, it evaluated a patent licensing exception called “Licenses of Right” that is in effect in the UK and Germany. The EPO basically re-labeled this system, defining soft IP as the grant of this type of license.

In practice, a company can accidentally infringe upon a person’s patent without realizing it. If the company’s product is already in production, it may be impractical or devastating to the business to remove the infringing piece or to compensate the patent holder for past sales. The company may have come up with this parallel technology without ever knowing about the existing patent, but because the patent is registered, the company would have to cease using the invention without a license. In this instance, the company is an innocent infringer, and soft IP enables it to obtain a valid license instead of going out of business because of the mistake.

Germany and the UK allow the innocent infringer to obtain a license of right, now known as soft IP, from the patent holder. If the patent holder agrees, the intellectual property offices in these countries designate the patent as available for equitable terms to be decided between the patent holder and the person who needs to use the invention. This process preserves the patent holder’s rights, since the license is not compulsory or “hard.” Other countries are considering adopting the soft IP system.