About Exporting
HOW IPR CAN ENHANCE YOUR EXPORT OPPORTUNITIES |  |
Before starting to export, it is prudent to develop a cogently written export plan for determining a product’s readiness for export. A well-developed plan assists in:
Assessing the potential of a product in international markets and facilitates application for financing.
Finding local partners and channels of distribution. Adapting the product, its design, its brand or its packaging to the new market. Negotiating and signing contractual agreements with export sales representatives, distributors, local partners, local manufacturers, etc.
Determining prices for different export markets, making transport arrangements for exports, advertising/marketing the product in the export markets, participating in trade shows or other events abroad.
Deciding upon the most effective mode of entry into a specific new market either through direct exporting, by establishing a joint venture, by licensing IP rights to third parties, through e-commerce, etc.
Searching for, and taking into consideration, any IP rights of third parties which might interfere with freedom to implement the export strategy If discussing Intellectual Property Rights (IPR), the typical export manager will probably wonder what benefit they are to his own business. In this guide we take a close look at the practical implications of IPR from the perspective of the exporter and analyse the possibilities offered by the IP system offers for protection, development and competitiveness in relation to export market opportunities
What is Intellectual Property, and how do you protect it?
‘Intellectual Property’ (IP) is a term attributed to any product of the human intellect which will have some value in the market place, e.g.
An Idea
An Invention
Unique Name
Business Method
Industrial Process
Chemical Formula
Computer Program
IP is distinct from Intellectual Property Rights (IPR). IPR, as the name suggests are the legal rights one must own in order to protect IP. To many, IPR may seem a rather obscure legal concept however in simple terms they are legal systems which offer a facility whereby the original creator can create legal ownership of IP innovation and therefore allow the individual or enterprise to reap the benefits of investment resulting in IP creation.
While some very limited rights may exist if IP is unregistered, generally to secure full rights in IP, the IP must be registered under as registration system in the jurisdictions of interest to generate the appropriate IPR.
Protection for innovation can be divided into four main classes:
Patents: A registration system available in all major industrial countries designed to protect inventions such as new or improved products and processes which are capable of industrial application by conferring exclusive rights in the invention.
Without registration generally no exclusive rights exist.
Trademarks: Trademarks can be words, symbols, images, a logo, packaging, a smell, colour or sound which are capable of distinguishing one’s goods and/or services from those of others. A registration system is also available for registration of trademarks and should be employed to create the strongest IPR possible. Some
jurisdictions afford a much lower level of IPR for unregistered trademarks.
Design: ‘Design’ generally relates to the aesthetic features of an article. These may or may not necessarily impact on the use of the article, but are distinguishable as part of the ‘look’ of the item. Again, while some level of IPR may be available in certain jurisdictions for unregistered rights, registration systems exist and should be
utilised to maximise IPR.
Copyright: Attached to all literary or artistic materials, music, film, sound recordings and broadcasts, including software and multimedia. It should be noted that copyright is an unregistered right, which exists, and comes into play as soon as a copyright work is created. In some jurisdictions (e.g. the US) registration of copyright works gives stronger IPR.
Benefits of Registration and Intellectual Property Rights (IPR)
Registration of IP imparts upon the creator IPR in the form of an exclusive legal right to prevent the use of their innovation by another party, without the permission of the creator. This gives the IP owner a powerful strategic tool, which facilitates the development of a strong competitive advantage within the marketplace.Ultimately dependant on how you choose to manage your IP the advantages to IP protection are almost limitless. However, the primary benefits are identified below:
• Obtain an exclusive property right
• Transpose knowledge/idea into a tangible asset capable of:
- Transfer
- Licensing
- Security
• Mark off a niche area of technology.
• Protect and be rewarded for your investment of resources in research and development by preventing imitation by competitors without your permission.
• Generate revenue and provide a return on investment in R&D
• Generate royalty income from licensing
• Qualify for tax relief on royalty income and investment in patent rights
• Provides opportunity to cross-license with other innovators.
• Trademark can operate as a "badge of origin" for your goods/services thereby providing a guarantee of source and quality to customers/prospective customers
• Provide a tool for identification and differentiation within the market.
Managing your IP and generation of IPR in a strategic way may enable your enterprise to access new export markets through licensing, franchising, the establishment of joint ventures or other contractual agreements with other companies. IP rights permit you to negotiate agreements with other organisations for the production, marketing, distribution or delivery of goods and services in foreign markets. It may also provide your company
with greater bargaining power when seeking to license technology from other firms that may be interested in your proprietary technologies and their associated IPR, (patents designs, trademarks, copyright works, etc.)
Intellectual Property and Export Strategy
The inclusion of an IP Strategy in the development of an overall business plan is essential in order to ensure that the maximum benefit is derived from your organisation’s IP. A successful IP strategy will incorporate plans or opportunities for research and development, growth and expansion, and will detail how the organisation will manage its IP portfolio.Developing your organisation’s IP strategy will involve thorough analysis of the organisation’s current IP portfolio, together with the future objectives of the company. The core objective of your IP Strategy should be to ensure that your IP Portfolio is providing you with sufficient rights and exclusivity to enable continued growth and maximisation of market opportunities and benefits which IP can provide.
What factors should one bear in mind when developing an IP Strate gy for export Some export products will face competition from similar or identical products (which maybe limited through IP protection) In raising funds, holding patents over the innovative aspects of your product is often useful for convincing investors, venture capitalists or banks of the commercial opportunities available to your product.
The adaptation of the product, its design, its brand or its packaging for the export market(s) may require creative and/or inventive work that may be protected through the IP system thus guaranteeing a degree of exclusivity over the adaptations.
In the negotiation of agreements with partners you will have to take into account issues relating to the ownership of IP rights, particularly if the product will be manufactured abroad or will be modified, packaged or distributed by foreign partners.
The marketing of your product will rely strongly on your company’s brand image, embodied primarily in its trademark, which, if unprotected, would be significantly more difficult to enforce in the event of copying or imitation by competitors.
The timing of your participation in fairs and exhibitions may depend on whether you have already applied for protection for your inventions or designs, as early disclosure of your innovative work may result in loss of novelty and preclude you from applying for protection at a later stage (unless a "grace period" is available
in certain specified circumstances in the country concerned).
In addition, there may be confidential business information relating to most, if not all, of the items listed above. Such information will benefit from trade secret protection or protection against unfair competition provided it is disclosed on a "need to know" basis only, and only after a confidentiality or non-disclosure agreement (see sample agreement at appendix 4) has been signed. The export plan and strategy itself is a "trade secret" and
companies will generally have an interest in making sure it remains confidential and is not disclosed to competitors.
Another important reason for including IP issues in your business strategy is because it may help to strengthen your position in export markets. If your product is successful abroad, it is likely that competing organisations will, sooner or later, manufacture a similar or identical product that will compete with the product in question. Knowing in advance what to do in this situation can help you efficiently stop other companies from imitating or copying a work protected by a patent, trademark, design or copyright.
In addition without adequate IPR, it may be difficult or impossible to stop imitators which may result in substantial loss of commercial value, competitive positioning and ultimately return on investment
Common IP mistakes made by Exporters
Believing that IP protection is universal . Many exporters believe that by applying for trademark, patent or industrial design protection in their own country they are automatically protected worldwide. However, IPR are territorial, and IP offices (generally government appointed) only grant protection for the relevant national(or regional) jurisdiction
Assuming that laws and procedures for the protection of IP rights are the same worldwide. While there has been significant harmonization of laws and procedures for the protection of IP rights worldwide, there remain many areas in which there are significant differences between countries.
One example is the US, where patents are granted on a first-to-invent basis (i.e. an applicant may not be granted a patent if somebody else can prove that he/she had made the same invention at an earlier date) while most other countries grant patents on a firstto- file basis (i.e. the patent is granted to the first person to file an application for patent protection for a given invention).
Not checking whether IPR of others precludes use of some aspect of an exported product, for example a trademark is already registered or is being used by competitors in the export market. Using a trademark in a foreign country that is identical or similar to one that is registered or is already being used by a different company could be considered to be an infringement on the other company’s trademark rights. Your company may be asked to cease using such a trademark or asked to pay damages for infringement, which may be a huge
blow to the entire marketing and export strategy of your firm. A search for IPR of others should be considered carefully.
Using a Trademark that is Inappropriate for the Market in Question – Although your brand may be suitable to use in the majority of countries, cultural or language differences may mean that a trademark may have negative or undesired connotations in a new market. There is also the possibility that a national IP office may refuse to register your trademark because the mark is devoid of distinctive character or may be seen as descriptive of the
product/service, as a result of national language or cultural understandings of the word/logo/image etc.
It is advised that you fully research your market place prior to your launch in order to prevent problems of this nature occurring. When beginning to trade in a new country, it is particularly important to verify that your trademark/brand is appropriate for use in that country.
Avoiding IP Pitfalls
Failure to consider IPR issues may result in large or fatal losses if your products are considered to be infringing upon the IPR of others in the export market concerned.Even if an invention, design or trademark is not protected in your own country, this does not mean that someone else has not protected them in an export market. So, your product may have functional or aesthetic features or an associated trademark that are not protected in your home country but are protected as IPR of others in an export market.
In addition, it is important to bear in mind that companies which have signed a licensing agreement with another company, thereby obtaining a license to sell a given product in their domestic market, may not have the right to sell the product in export markets. The territorial exclusivity and scope of the license is specified in licensing contracts and it is important to bear this issue in mind while negotiating a licensing agreement.
Exporters often realise the importance of protecting their IP once it is too late, i.e. once they are faced with imitators or counterfeiters or recognising the IPR of others after they have been accused of infringing the rights of others. While preparing the export plan and strategy, it is, therefore, important to understand the IP environment in the potential export market as much as it is understanding all other facets of the business environment in that market.
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