Intellectual Property Represents Commercial Advantage
The term “intellectual property” is open to many interpretations. From a manufacturing standpoint, it can mean anything from a product being produced to the technical know-how and methods/technologies utilised in its production; from the name of a company to the branding it employs in marking its products.
Regardless of the form it takes, intellectual property represents a commercial advantage and is arguably a company’s most valuable asset.
For innovative manufacturers in New Zealand, intellectual property protection can be a double-edged sword. Research and development budgets are usually thin at best, and the prospect of protecting a new product or technology which has yet to prove itsef in the marketplace can be daunting. However without adequate protection, a company who has invested in R & D can soon find that investment slipping away if competitors are able to legally produce the same or a similar product or technology minus the investment in R & D. This scenario often pushes manufacturers to seek protection for their investment.
The current system of intellectual property registration was developed to encourage innovation and recognise its value by rewarding a company or individual with an exclusive right to exclude others from the manufacture, sale, and/or use of the innovative products, technologies and/or brands which they have developed.
The primary advantage of registering your intellectual property is that once granted, a monopoly right provides the basis for legal action against individuals or companies who use your property without consent.
There are disadvantages to registration. The application process can be lengthy, tedious and expensive. Once granted, most monopoly rights run for a fixed term. Once they expire, they are open for anyone to use. Finally, and with justification, it has been said registering intellectual property is only worthwhile if you have the finances available to undertake legal action when infringement occurs.
There are alternative means of protecting intellectual property. Trade secrets can be effective in maintaining commercial advantage. The formula for Coca Cola is an example of an effective trade secret. However, relying on keeping intellectual property a secret can be just as tedious and expensive as registration, and the ability of competitors to reverse engineer must always be taken into consideration. Finally- although the formula for the Coca Cola soft drink is unregistered, the Coca Cola brand is a registered trade mark and is arguably one of the most recognised, valuable trade marks in the world.
As mentioned, obtaining monopoly rights can be a complex process. For this reason, most companies employ patent attorneys to handle applications on their behalf. Patent attorneys typicaly have a background in both technical and legal areas. An experienced patent attorney should be able to grasp most technical innovations, understand the associated legal implications and advise accordingly.
In most cases patent attorneys are utilised at the end of the development process to prepare patent and/or registered design applications and see them through to acceptance. However, an experienced patent attorney can provide valuable insight throughout the entire development process.
Once the goal of a project has been determined, a patent attorney can provide assistance regarding previously published material which may affect the development process. Avoiding infringement can be just as valuable as obtaining protection, and a patent attorney can provide invaluable advice at the outset of a project so that the rights of others are not affected by the outcome.
Conversely, existing material can be useful starting points for innovation. By understanding the associated technical and legal aspects, a patent attorney can also add to the creative development of any project.
When engaging the services of a patent attorney, it is valuable to have a general understanding of the system of intellectual property registration and how it works. For this reason, a series of articles will follow in future issues dealing with specific areas of intellectual property protection including patents, PCT or Patent Cooperation Treaty, trademarks, registered designs and copyright.
Patent Cooperation Treaty
Export trade has played and will continue to play an important role in New Zealand's economy.
This may hold especially true for the manufacturing industry. Once domestic markets have been established, innovative manufacturers in New Zealand invariably look to overseas markets for continued growth. In doing so, a number of factors should be considered including:
1. Market Research - developing overseas markets is often more involved than simply finding distributors. Varying consumer demands, safety regulations and technical requirements are likely to be a factor in your company’s exporting strategy.
2. Infrastructure - developing relationships with distributors and establishing trade agreements are considerations - the quality of which will, in large part, contribute to the success or failure of your company’s efforts overseas.
3. Product Development - Findings from market research may suggest that further product development or refinement is required before orders are taken.
4. Intellectual Property Protection - In addition to filing patent, design and trademark applications in NZ, protection of your company’s intelletual property overseas also plays an important role in any successful exporting strategy.
To protect an innovative product, brand or technology, a NZ patent, design or trademark application is typically filed first, followed by corresponding overseas applications. This can be done by filing directly in countries where patent, design or trade mark registration is desired. Another option in the case of patents is to file an international patent application under the Patent Cooperation Treaty (PCT). Filing a PCT application is a simple, economical method of investigating the potential for obtaining a patent in a number of selected foreign countries prior to filing individual applications. The advantages of filing a PCT application include:
1. Delaying the cost of filing individual foreign patent applications.
2. Providing information regarding similar inventions in the countries selected which may affect your company’s decision to file for additional patent protection and/or to attempt to develop markets in those countries.
3. Providing additional time to make these decisions - time which can be used for further market research, relationship buiding and product development and refinement.
For more information regarding intellectual property protection in NZ and overseas, contact the Intellectual Property Office of NZ (IPONZ) or your local patent attorney.
Weighing the Cost of Protecting Your Intellectual Property
"Intellectual property is only worth what a company is willing to spend on taking an infringing party to court.”
Statements like these are commonplace among those in the manufacturing industry when discussing intellectual property. Unfortunately in some cases, the statement rings true. The associated costs of defending your company’s intellectual property rights in court can be substantial. However the cost of neglecting your company’s rights can be even greater when lost profits and/or damaged reputation are taken into full consideration.
For this reason it is advisable to develop a comprehensive business plan which incorporates a strategy for protecting, exploiting and enforcing your company’s intellectual property rights including:
1. Allocating funds necessary for developing and protecting your company’s intellectual property at the outset of any development programme:
This may seem obvious. However for many companies, protecting their intellectual property is often an afterthought once the innovative process is at or near completion. For this reason, funds for adequate protection may be scarce or unavailable. Think of protecting your company’s intellectual property as an insurance policy and factor in adequate funding as part of any research and development budget.
2. Knowing what your competitors are up to:
Searching local and international patent, trade mark, and design data bases at the outset of any delopement program can save your company time and money. In doing so, not only can “reinventing the wheel" scenarios be avoided but so can the costs associated with infringing the rights of others. Thorough analysis of any search can also act as a catalyst for innovation and provide the basis for future market advantage.
3. Understanding your company’s advantage:
Throughout any development programme, it is advisable to continually assess the innovative steps being taken. Core innovations should be indentified as well as any product derivatives, spin-off technologies and market applications. Potential market impact as well as possible competitive reaction (such as the ease at which a new product or technology may be reverse engineered) should also be taken into consideration. Having done so, the overall cost of protecting the resulting intellectual property can be minimised by focusing on essential features, developing additional features which may support those essential features and disregarding those which are non-essential and/or industry standard.
4. Understanding your company’s market:
When considering export markets, it is important to know the various market requirements and government regulations in the countries where you intend to sell and/or license your new product. In doing so, protection can be focused on the requirements of those countries and an overall stratgey can be developed to suit financial and time requirements.
5. Exploiting your company’s advantage:
Whether your company intends to manufacture and sell its intellectual property outright or license it to others, the patents, trade marks and/or registered designs associated with that property can be used as a vauable tool in deterring others from infringing on your rights. When establishing licensing agreements, these proprietary rights usually form the basis of the agreement and play an important role in determining associated remuneration arrangements. In most cases, there is a direct relationship between the quality of your company's intellectual property portfolio and the associated remuneration arrangement.
6. Developing a strategy for enforcing your company’s rights:
There are many facts which need to be considered when enforcing your company’s intellectual property rights. These include consistant analysis of competitive products and how they may affect the rights of your company as well as the markets, local and international, in which they may be affected. Dependng on the market (country), varying legal issues and procedures may apply when considering your rights. In the event that your rights are being infringed it will be worth enforcing them, given they are in fact protected. The efforts afforded in establishing protection for your company’s intellectual property may prove invaluable when taking legal action against an infringing party and obtaining compenstion for lost profits.
7. Consulting your attorney:
It is advisable to establish a relationship with a patent attorney to insure your company gets the most out of its intellectual property. The more your attorney knows about your business, the more s/he can help in establishing, protecting, exploiting and enforcing your company’s intelletual property rights.
A complete list of patent and trade mark attorneys is available from the Intellectual Property Office of New Zealand which is a division of the New Zealand Division of Commerce.
samples from a series of articles written for New Zealand Manufacturer promoting intellectual property and underlining its relevance to the NZ manufacturing industry: