Protecting Your Intellectual Property in a Global Marketplace
By Jackie Maguire, CEO, Coller IP Management
The world may still be in the midst of a downturn, but that has not stopped the steady march of globalisation, and with it, the need to protect an organisation’s intellectual property across borders. Manufacturing is moving to emerging economies, where IP is key to value generation and economic growth and developing countries are recognising the importance of IP. The UK’s manufacturing base is also transferring to Asia, underlining the need for industry to ensure full protection of its ideas and inventions if it is not to lose out.
The need to protect IP applies both to newly-established companies as well as to more established ones, including those who are undergoing major changes. This is being understood more widely than it has been. Patent offices are getting busier, as the number of patents an organisation has is increasingly seen as a sign among investors of the value of a company.
80% of a company’s value is now in intangible assets and new financial rules are forcing companies to recognise this value on the balance sheet. There has been a surge in patent applications over the past decade. According to to the 2008 edition of the World Patent Report of the World Intellectual Property Organization (WIPO), increased patent filings in North East Asian countries (mainly China and the Republic of Korea and the United States of America (USA) drove growth in worldwide filing of patent applications, which topped 1.76 million in 2006, representing a 4.9% increase over 2005.
The report, based on 2006 figures (the last year for which complete worldwide statistics are available) also shows that patents granted worldwide increased by 18% with some 727,000 patents granted in 2006 alone.
The statistics also point to a growing tendency for applicants to file their applications in multiple countries. The number of international patent filings in 2007 submitted via the Patent Co-operation Treaty (PCT) - a multilateral agreement administered by WIPO which provides a simplified method for international patent filing - is estimated to be 158,400, representing a 5.9% increase over the previous year. The USA is by far the largest user of the PCT system.
The level of internationalization varies across countries and economies. Overall, the proportion of worldwide patent filings by non-residents increased from 35.7% in 1995 to 43.6% in 2006. In addition, between 2005 and 2006, total non-resident patent filings increased by 7.4%, in contrast to total resident filings which increased by 3.1%
The issue of protecting intellectual assets across the globe can be complex, particularly in the digital age, where access to information is so easily available.
Wherever possible a company should register its IP rights. Not only does this demonstrate that the company values its intellectual assets, but it may also improve the negotiating position if other third party IP rights become apparent in a country. IP rights that are not registered are very difficult to protect, although in some countries certain rights are not officially registrable, for example copyright in the UK.
Patents protect new inventions and are applied for through national patent offices in each country, although there are some regional systems for filing such as through the World Intellectual Property Organization (WIPO) or the European Patent Office (EPO). Once filed, a patent office usually confirms in principle that the invention is new and a more detailed examination is then made to finalize and define the rights. If the application passes all the hurdles then a patent is granted.
Procedures for designs and trade marks to protect brands follow a similar path, but the process is simpler. Investigations must be made to see if a brand is actually registrable in a country, and whether there are any conflicting earlier rights that may stop the brand being used. The remainder of the process however is quicker than for gaining a patent.
In most countries, it is possible to enforce registered rights through the courts. Customs and border controls can also prohibit movement of counterfeit goods. Where there are conflicting rights, co-existence may be possible through license agreements between companies.
Not only do IP protection requirements differ from country to country, but each organisation looking to protect their IP also has different elements to consider. It is important for each organisation to be clear about exactly what it needs to protect – inventions, goods, services, designs, brands and reputation. The best route to obtain the protection it needs can then be chosen, taking into account for example the best country in which to litigate (or in the US, which state) to enforce rights taking into account different laws – including Competition Law in Europe and anti-trust laws in the US.
The penalties for breaking anti-trust laws in the US and Competition Law in the EU can be severe. Under EU Competition Law organisations can be fined 10% of global profits if they get it wrong.
Intellectual property is a powerful business asset and like other assets it needs to be looked after, protected and applied effectively. Whilst global business opportunities can often come about quickly, it is critically important that IP is both protected and applied effectively if businesses are going to benefit from their ideas. Whilst there are challenging issues around protecting IP globally, an understanding of the issues around protecting IP and a strategy for applying IP across the full spectrum of available IP types are important issues for businesses to confront. Ignoring these issues is like leaving the office unlocked when you leave: an unnecessary risk to the business.
Because patent protection overseas can be complex, we recommend taking advice at an early stage to ensure pitfalls are avoided, opportunities maximized and costs are kept to a minimum. It can be time-consuming and costly to sort out errors later. In addition, contracts need to be reviewed on a regular basis to ensure that as organisations and legislation change, full protection remains in place. By taking care to ensure that property and rights are as protected as possible, companies can trade more easily across borders and ensure they remain competitive in an increasingly tougher global world.
