How to: protect your intellectual property when exporting
Selling outside of Ireland automatically brings your company into contact with different legal environments, so the rules that apply in here may differ from the countries in which your customers are based. If your product or service is based on intellectual property (IP) which has taken time and money to develop, it’s important to protect this appropriately when selling outside your home market.
What is your IP?
Your IP could be the product your company has developed, your brand, or the way in which you provide your services. As the World Intellectual Property Organisation points out, your IP could potentially be a unique selling point in a new market. However, many companies don’t use their IP as effectively as they could.
What are the common types of IP?
Intellectual property can be in the form of:
- Registered designs
- Trade Secrets
- and plant varieties
Intellectual property includes non-disclosure agreements with third parties, contractors, employees and distributors. The most common forms are patents, trademarks, designs and copyright. The most obvious type of IP would be patents which cover technical inventions that enable the execution of an innovative idea. Registered, or industrial, designs cover the aesthetic look and feel of products, and there are trademarks which are a form of intellectual property to protect the brand of the company. Copyright, which is an automatic legal right, protects the expression of an idea. Regardless of the industry sector, if you are innovating and creating new products, by definition you are creating some form of intellectual asset. The IP system is there to help you reap the value of your creativity.
Why is it important to protect your IP and how can you do so?
It is vital for a company to protect its IP correctly as they have to understand that they have something to protect and they have a willingness to protect their creative thought. It is also important that a company understand that their IP is their original thought and they are not infringing on someone else’s intellectual property. This is why businesses need to register their IP. The means by which a company can go about protecting their intellectual property can vary in each jurisdiction.
Protecting IP is territorial; that is, rights are only available in countries where you have applied for them and after they have been granted. As part of your research into export markets, it’s essential that you get informed of what you will need to protect your IP in that market because the regimes are so varied around the world. It may be that your IP is not automatically protected in the country where you plan to do business. The best way to ensure intellectual property or all goods are protected is to contact a reputable organisation that can help. Invest Northern Ireland and Enterprise Ireland can advise you of your next steps.
Intellectual property protection overseas (Invest NI)
Many small and medium-sized companies aren’t aware of theimportance of intellectual property, or the potentially important role it can play when exporting. Here is a more detailed look at the issues to consider.
What is the importance of IP when exporting?
Primarily, the IP system is an international system of legal processes that gives people the right to stop competitors from stealing the value that they have created through innovation. For example, where a company might have an invention, a company can patent that invention and get a recognised international legal right to protect the ownership of that invention.
When a company goes into a foreign market, they can use these IP processes to monopolise the right to use, make and sell a product in that market. Very often, the intellectual property represents the competitive advantage of the company in a foreign market by giving legal effect to the ownership of the intangible value of innovative products,
services and brands.
What is the risk of not protecting a company’s IP in an overseas market?
If a company launches a new product, what tends to happen is, competitors will look at the unique design or technical features of that product, and will try to copy it to give them some advantage. If the company hasn’t protected those features as IP, such as a technical invention as a patent, then the competitor can reverse engineer the product and that the company that originally developed it may not be able to stop them. As a result, your competitors can benefit from your investment in innovation.
What are the benefits to protecting IP in foreign markets?
By definition, if a company is truly innovative and they are creating new intangible value, there is no other system other than the IP system to capture that value as an asset of the business. So IP allows companies to get out into the market and profit from innovation by exploiting their intellectual assets. A more suitable term might be Intellectual assets because it is a broader catch-all term that includes ‘softer’ IP as well as hard IP like patents. For example, many companies compete based on their trade secrets, even if they don’t know it. So it is very important that businesses manage the confidentiality of their key knowledge and information so that it is captured as assets for the benefit of the company. If a company captures its intellectual assets and protects them correctly, then it increases the possibility of extracting more value from those assets. If they don’t, they run the risk of losing that value. They also run the risk of inadvertently infringing on other people’s intellectual property, and that can be extremely costly.
There’s also a third reason: companies always have a primary market objective when developing a new product but there can be other market opportunities for the unique features of the product. For example, if you come up with a new patented invention for a better door latch for the construction sector, it might also solve a problem for the automobile industry and you can license its use for that application. Therefore, by capturing a new development as intellectual property it enables you to licence it for a fee and get a royalty: the idea has been converted into an asset for the business. It enables it to be used many times over, all simultaneously.
There is untapped value in companies that are innovative but do not effectively capture the output of their innovation. If they don’t know the true value of what they develop, then it follows they’re not fully exploiting its true value. So every innovative business needs a system to manage their intellectual assets and yes it does take investment. However the starting point is not to rush to the patents office and file a portfolio of patents. Start a few steps back: put in-house processes in place and take a strategic approach, and out of that will come the hard IP like patents.
What can a SME do to start dealing with its intellectual assets in a more strategic way?
Companies have to adopt an IP strategy, which sets out their plan to extract the maximum value of their innovation which is manifest in their intellectual property. It gets embodied in the product, or in whatever they have developed. It says “these are the most valuable assets that we have created and they are the parts that we don’t other people to copy”.
The first step is to recognise that these assets exist. An intellectual property audit which can be done by the company itself or else bring in a consultant to do an audit with them. The audit asks things like: what IP do they have that they know about? What key information, knowledge, data, expertise, do they have that gives them competitive edge? How are they managing those and ensuring that that value isn’t seeping out of the organisation? What processes, resources and capabilities and so on does the organisation not have and how can they get them? This exercise also highlights what you do not have and what you need to do to get it – for example, your audit might show that your employment contracts don’t say what happens when an employee comes up with IP, and what happens if they leave the organisation. Contracts should make clear what belongs to the company. An intellectual asset audit is also, therefore, about identifying those gaps are in the system and putting processes in place to plug them.
There’s no obligation on any company to have a load of patents in order to enter a new market. It’s about going in with their eyes open, and doing what needs to be done to protect your competitive advantage. That will depend on the nature of the product, nature of market, and the resources available to the company. That’s why it’s a strategy. However it can be a difficult, complicated and risky process so it is always advisable to take professional IP and legal advice.