The value of IP does not only lie in its commercial potential, but also in its use as a tool in defending infringement allegations
Intellectual Property1 issues are important for exporting businesses. It is one of the areas where contentious issues can arise and businesses should be prepared.
One of the key characteristics of Intellectual Property (IP)2 is that its protection and enforcement is territorial whereas its exploitation can be global. With the exception of copyright, you will need to register a patent3, a trade mark or a design where appropriate to protect your business' intangible assets. Similarly you should consider any local rights you may infringe in your export market.
Having a robust understanding of IP is more than about avoiding the usual major pitfalls such as not registering a trade mark or disclosing an invention4 before applying for a patent.
Exporters should be proactive and have clear strategies to protect their IP and avoid infringing that of others. These two strategies are complementary and can have unexpected results:
- By searching the trade mark register of a country to check that your trade mark is available, you may identify potential collaborators.
- By conducting a "freedom to operate" analysis to make sure that commercialisation of your product overseas will not infringe, you may find out that obtaining a licence from a patentee you did not know about may be the best way to solve that technological issue you have been struggling with.
Knowing about the IP of others, both in NZ and overseas, should be part of your IP policy. It has many advantages:
- It will save you time and money if you find out early that it is pointless to re-invent the wheel;
- Being aware of what IP your competitors own may enable you to anticipate their next move. If your competitor has applied for a trade mark that is confusingly similar to yours: you may need to get in fast to oppose its registration. If it has just been granted a patent for an invention similar to yours; it may be preparing an attack against you.
With a proactive IP strategy, you will be less likely to run into trouble, and better prepared to respond if you do.
The value of IP does not only lie in its commercial potential, but also in its use as a tool in defending infringement5 allegations. It is common these days to hear of a "defensive patent". Businesses often acquire patents (sometimes even knowing that their validity6 is doubtful) for the sole purpose of mitigating the risk of and providing protection from litigation.
In some countries, it is still possible to register a "defensive trade mark". Defensive trade marks can be registered for well-known trade marks in classes of goods or services in which the owner7 does not actually use the mark. They offer protection if a third party uses that well-known mark for different products or services.
When it comes to commercialising IP, good advice and well drafted agreements are key to avoiding disputes. Any commercial agreement should have specific provisions detailing the way in which your IP is to be used by your representatives, agents or distributors. It should also state clearly who will own any IP created or modified during the relationship.
A well written agreement is designed to anticipate potential problems and provide for a satisfactory dispute resolution mechanism. When negotiating clauses on governing law and dispute resolution, it is key to choose a law and a forum of quality. Whether a dispute is handled by mediation, arbitration or by the courts, the most important factor to consider is predictability.
New Zealand businesses should choose New Zealand law and New Zealand jurisdiction when negotiating with their overseas associates but may need to be ready to accept another governing law if the counterparty is "worth" it.
This is for three main reasons:
- New Zealand law originates from and still is very similar to English law, which should reassure sceptic overseas businesses;
- New Zealand is a well regarded, non-corrupt legal system; and
- New Zealand lawyers are generally better and less expensive than their overseas counterpart.
Unfortunately, risks will always exist. The best of IP strategies and written agreements are no substitute for good business acumen and common sense, and these come with experience. You should not hesitate to seek help from experienced advisers.
1Refers to the ownership of an intangible thing - the innovative idea behind a new technology, product, process, design or plant variety, and other intangibles such as trade secrets, goodwill and reputation, and trade marks. Although intangible, the law recognises intellectual property as a form of property which can be sold, licensed, damaged or trespassed upon. Intellectual property encompasses patents, designs, trade marks and copyright.
2Refers to the ownership of an intangible thing - the innovative idea behind a new technology, product, process, design or plant variety, and other intangibles such as trade secrets, goodwill and reputation, and trade marks. Although intangible, the law recognises intellectual property as a form of property which can be sold, licensed, damaged or trespassed upon. Intellectual property encompasses patents, designs, trade marks and copyright.
3A proprietary right in an invention which provides the owner with an exclusive right for up to 20 years to make, sell, use or import the invention. In exchange for this monopoly the patent is published so that others can see how the invention works and build on that knowledge. The patented invention may also be used by the public once the patent lapses.
4The product of the creative process of inventing. In intellectual property law "invention" is a legal term usually describing patentable subject matter. Under current New Zealand legislation that subject matter includes any manner of manufacture which is new and involves an inventive step. However, certain types of invention are excluded from patentability. They include inventions which are contrary to morality (for example weapons of mass destruction) and methods of medical treatment (on public policy grounds that such methods should be available for health practitioners to use to the benefit of all society).5Refers to the commission of a prohibited act with respect to a patented invention without permission from the patentee. In New Zealand, the Deed of Letters Patent confers on the patentee a monopoly to make, use, vend or exercise the invention in New Zealand. Performing any of these acts without the permission of the patentee will amount to an infringement if the patent is current and in force. Permission will typically be granted in the form of a license. Remedies for infringement can include an injunction to restrain further infringement, payment of damages suffered by the patentee as a consequence of the infringement or payment by the infringer of any profit he/she/it made by virtue of the infringement, and legal costs.
6A patent is valid if it is legally enforceable. This means that it must fulfil the criteria of patentability and not be able to be invalidated by a patent revocation proceeding. It is possible that a granted patent may not be valid, or at least its validity could be questionable. Ultimately, only the Courts can judge the validity of a granted patent.
7A legal term to describe a person entitled to make an application for a patent. In New Zealand this includes any person claiming to be the true and first inventor, the assignee of the inventor, or the legal representative of a deceased inventor or his/her assignee.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
James & Wells Intellectual Property, three time winner of the New Zealand Intellectual Property Laws Award and first IP firm in the world to achieve CEMARS® certification.