It’s not always easy to protect intellectual property

Failure to consider intellectual property (IP) issues can result in large or fatal losses when pursuing international markets. The consequences of being unprepared should not be underestimated—setting up joint ventures, distribution networks and other strategic alliances represents a significant undertaking when protecting one’s IP.

Yet protection from potential partners and in-country representatives provides no safeguard from the entire realm of pirates, counterfeiters and other dubious characters that have made it their business to profit at someone else’s expense.

It is a phenomenon that goes far beyond losses for right-owners or individual companies but extends to the well-being and survival of entire sectors and national economies.

Much is said about pirated music, TV shows and movies, but the problem of counterfeiting and piracy extends to, for instance, aircraft parts, fashion, food, pesticides and medicines, just to mention a few.

The information technology sector is particularly vulnerable to this problem. Indeed, according to the Business Software Alliance, more than half of the world’s personal computer users—57 percent—admit they pirate software (which includes 31 percent who say they do it “all of the time” or “most of the time”). These findings are from a survey of approximately 15,000 computer users in 33 countries which make up 82 percent of the global PC market.

Global traders need to invest time and resources into protecting intellectual property. One option is to seek protection in individual countries separately by applying directly to national industrial/intellectual property offices. Each application may have to be translated into a prescribed language, which is usually the national language.

National applications fees need to be paid, and it may be necessary to engage an IP agent or lawyer to ensure the application meets national requirements. Some countries have established regional agreements for obtaining IP protection for an entire region with a single application.

Examples of regional IP offices include the European Patent Office, the Office for Harmonization in the International Market and the Eurasian Patent Office.

For more information on protection of intellectual property, refer to the World Intellectual Property Organization (WIPO).

When protecting intellectual property extends too far

Although the theft of intellectual property represents a real problem in some sectors (e.g. music, motion pictures, software, etc.), the extension of protecting intellectual property rights into other important sectors, such as food and medicine, has become a highly controversial issue.

The WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) negotiated in the 1986–94 Uruguay Round, introduced intellectual property rules into the multilateral trading system for the first time that require member nations to respect intellectual property rules. While it may sound straightforward, this rule set is quickly creating ethical challenges that are threatening too many less developed nations.

For example, it is argued that some countries, such as the United States, issue patents too quickly without much research on whether or not the invention is truly novel (i.e. if it is really the first instance of this idea).

In effect, if a patent that has been issued is challenged, it is left to the courts to decide whether or not the patent should have been issued in the first place.

This led to a bizarre situation a few years ago where the United States Patent and Trademark Office (USPTO) granted a Texas-based company a series of patents on Basmati rice (i.e. strains of rice that have been grown in India and Pakistan for centuries). Eventually, after a lengthy series of challenges, most often these patents were revoked, but the implications of a system that focuses on protecting intellectual property rights on food are considered too ominous for many.

Indeed, as higher yielding cereal crops are being created through genetic modifications, intellectual property claims are being made on the very foundations of sustenance in many countries. Lower-yielding strains of plant are effectively rendered uncompetitive, and small farmers are being pushed out of business or are forced to adopt crop strains that are regulated by the monopolistic structures inherent to patented products.

Farmers are then unable to save seed from one year to the next (an age-old practice), leading to extreme vulnerability from a food-security standpoint (i.e. in hard times, farmers may not be able to afford seed).

Medicine another area of concern in IP cases

Similarly, in the area of medicine, multinational companies have been aggressively identifying the active ingredients in indigenous species of plants worldwide (in particular, those known for their healing potential) and filing patent claims on the chemical structures (or analogues of their chemical structures) in these plants to secure monopolistic rights for the resulting medicines. It has been argued that this is a form of unwarranted bio-piracy that capitalizes on public knowledge and the lack of technical sophistication in many countries.

For example, a patent claim was granted a few years ago to the University of Mississippi Medical Center for the use of turmeric, an Indian spice, for wound healing (U.S. Patent Number 5,401,504). This was extraordinary because turmeric has been commonly used for this purpose in India for centuries.

However, under U.S. law, it is necessary to find adequate evidence (i.e. printed or published information) that can establish precedence before a patent can be revoked. Fortunately, in this case, an adequate number of references were found, and when challenged, the USPTO revoked the patent.

However, in many countries where literacy rates are low, such evidence could be difficult to locate. And again, the rights are first asserted, and then those who are potentially harmed by those rights must fight to nullify the claim. Given the costs and complexity of litigation and the time involved in undertaking such a challenge, the uniform application of these rights across national boundaries creates a situation that leaves the most impoverished nations at an extreme disadvantage.

Accordingly, those engaged in international trade need to understand the nuances of these situations to ensure that corporate claims on intellectual property are not impinging on well-established rights.

The post Protecting intellectual property: the good, the bad and the ugly appeared first on Trade Ready.

For many, this unfortunate situation occurs when they see the hijacked mark or design on products imported back into their home market.

On a trip to China in 2008, I met with an American automotive rubber belt manufacturer. They had made this unfortunate discovery.

Would-be clients came to the company wanting support on their purchased products. Instead, both sides discovered that the products weren’t authentic, but copies. As a result, the company wasn’t able to support the copycat products.

These inferior products from abroad had tarnished the company’s brand both in China and in countries where the knock-off products were being sold.

Situations like this one require time and money to try to wrestle stolen intellectual property (IP) away from international IP pirates.

It happens even to companies that choose to skip selling in international markets. But there are ways to help protect your company’s name, logos and designs.

The smartest and least costly of which is registering trademarks in international markets. Here’s where to start:

Internationally filing your trademark

The World Intellectual Property Organization (WIPO) established the Madrid Protocol in 1989. The Madrid Protocol and Treaty allows an individual or company to register for trademark protections in one process. This streamlined approach helps with the registration process, but does not actually harmonize trademark protection standards between member countries.

With more countries signing on regularly, there are now 92 countries claiming to adhere to these international registration protocols of mark protection. I say ‘claiming’ because China is on that list, and China is by far the greatest source of IP infringement in the world.

You can check the Madrid Protocol List of Member Countries to see if your current and future target markets are listed.

The list includes popular export markets such as the United States, Canada, Japan and Germany.

By registering your marks with WIPO, you can pay one fee, read the information in one language and register one time. Fees vary from a few hundred dollars for one mark in one market, to tens of thousands of dollars for registering in all Madrid Protocol countries. Terms vary, but most WIPO trademarks registrations last for ten years.

What kinds of marks can you register?

To quote WIPO:

“A word or a combination of words, letters, and numerals can perfectly constitute a trademark.”

“But trademarks may also consist of drawings, symbols, three-dimensional features such as the shape and packaging of goods, non-visible signs such as sounds or fragrances, or color shades used as distinguishing features—the possibilities are almost limitless.”

While most companies stick to the basics of registering their company name, product names and logos; especially larger multinationals, have registered colors (ex. Coca-Cola red) and symbols (ex. McDonald’s arches and the Nike swoosh).

First to file vs. first to use

Some companies discover that, by law, they cannot use their own trademark in an overseas market because someone else already registered the mark.

The famous recent case of this was Tesla, the car manufacturer being sued in China for trademark infringement. The Tesla name and logo had been registered by a Chinese businessman well before Tesla’s entry into the market. By rights, the Chinese trademark holder can register the marks without any proof of actual use.

In some countries, including the U.S., intellectual property rights are normally awarded to the first to use a mark or invention (with proof of use, of course). This is not universally the case.

In many countries, the right to use IP is given to whoever files the registration and pays the fees first.

This is why it is crucial to register your trademarks as early as possible and before you actually enter markets.

Always register in China

Since China is both a first-to-register IP legal framework and the IP Piracy Capital of the World, it makes sense to register in China as soon as possible. It gives your company legal standing should you need to pursue any legal action now or in the future.

Some would say that the Chinese legal system is too broken to bother registering IP.

But Chinese laws and enforcement in this area are steadily gaining ground.

For example, a social entrepreneurial company called Nokero—operating out of Denver, CO—has sought IP protection for trademark infringement and damages in China. The CEO of this small but growing company happens to be a former patent attorney. The company has won several of its infringement cases in Chinese courts!

For non-Madrid Protocol markets

If you are operating in a market NOT covered by the Madrid Protocol, or plan to do so, then talk with your international business attorney for a referral. If your company does not yet have a law firm with international reach, this would be the time to find one that does.

Registering trademarks is relatively easy and inexpensive compared with damage control after infringement when you have no legal claim to stand upon.

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