The better your product, and the more markets you sell into, the more you need to do to protect your intellectual property rights (IPR). But if your firm is like most smaller companies in Asia, there's a good chance you've neglected IPR. It's a relatively new concern in much of the region. For so long, much of the IPR registered in the region has been foreign-owned. And entrepreneurs tend to focus on business tasks that seem more pressing: financing, product development and production, marketing.
But the agenda is changing. As Asian companies increasingly compete on the basis of innovation and branding, IPR is becoming crucial, especially for exporters. By the time your product becomes successful in the marketplace, it may be too late to combat the inevitable copycats. Better to take preventative action by understanding what your IPR are, and what IPR your firm owns. You need to register your trademarks and patents, monitor the market for counterfeits, and take fast action against infringers. Unless you nip the problem in the bud, lawyers say, counterfeiting tends to grow out of control.
You should register a trademark even if your product is not successful at first - you can change the product and still use the brand, lawyers say. Trademark registrations last 10 years in many countries, and they are renewable. If you distribute your products overseas, IPR protection becomes more complicated and costly. You will probably need to register and monitor in all the markets where you sell. Your local law firm can probably handle the job through overseas affiliates.
Counterfeiting remains a serious problem in much of Asia. Fortunately for Asian IPR owners, however, many countries in the region have been strengthening their IPR protection capabilities in recent years, enhancing laws and courts, stepping up enforcement. Legal expertise is deepening. All this makes it more likely that Asian firms will find it worthwhile to guard their IPR, according to Say Sujintaya, a partner in the Bangkok office of Baker & McKenzie, the international law firm. With 15 years of practice in intellectual property law, Say is a member of numerous regional and global IP associations who speaks frequently at IP conferences. She recently told Asian Business about some of the IPR concepts and tactics that successful entrepreneurs need to bear in mind.
AB: Let's say I am selling a product in 20 different countries. That's a lot of trademark registrations.
SAY: Yes, but there are ways to get maximum coverage. For example, if you are interested in getting trademark protection in the European Community, you can file for what's called a community trademark. You file one application, then designate the countries in which you want to have protection. Similar arrangements are available for some African states. In the US, it's just one Federal application that covers the whole country. But nothing like this exists as of now for Asia.
You can't get around registering in the countries where you are exporting products for sale. Let's say the counterfeits are showing up in Italy, where you are selling your genuine product. They are being counterfeited in Burma [Myanmar]. In that case you can take action against the Italian wholesalers or whoever is distributing the product if you have obtained protection in Italy. And then if you had registered your [trade]marks in Burma, you could take action against the manufacturer there.
AB: What about registration costs?
SAY: Trademarks are relatively easy and straightforward. But there's a big difference between registering a trademark in Thailand, the US, Japan, or Germany, and the price can vary tremendously. And you have to assume that not every trademark registration for which you apply will be granted.
Registering a trademark in Thailand covering about five items of goods in the class can be something like 15,000 baht (US$333). The applications are charged according to the number of goods, not classes. Then you take the trademark to the US. It depends on the law firm you use, but you can probably get it done for US$1,000-$1,500, assuming you do not face any objections. And registration costs might be similar for a single country in the EU.
Patents are very expensive, because they have to go through strenuous searches. In some countries, however, they offer so-called design patents if you are just registering a design, which is not so expensive. Other countries also offer so-called utility patents, or petty patents, which are inexpensive. It's a smaller version of an invention patent. It only requires that it be new, and that it be industrially applicable, but it doesn't require an inventive step, which a full invention patent requires. This is especially common in developing countries, where there is often a lack of the knowledge and technology needed for a true inventive step. It has a shorter timeframe of protection and there's no examination. Once you file an application, you'll be granted the registration and it will be published. If anybody wants to challenge it, they can, and then it will be examined, rather than being examined before registration.
AB: If I register the brand, Acme, for a shampoo, and later start making soap, can I still use the Acme trademark?
SAY: You have to be careful. The trademark application only covers that mark for those specific goods you have listed. Say Acme is a great hit as a shampoo, now you want to make eye shadow, and T-shirts. Those are different classes, and now you have to file additional applications. Each incurs costs. Maybe you have a company with an active marketing department, and they want a wide variety of products. They might have 10 brands, but is it financially sound to go register 10 brands when all of them might fail?
So you need to consider what will be your house mark, your overall brand name, and then what will be your smaller marks for each product under the brand. The important thing is to register the main mark in the individual categories. If you think that this brand name is extremely catchy, you might want to register it in every class where you think you might introduce a product. That's to prevent other people from registering the same mark in those classes and to prevent them from using it.
A good example would be Viagra, which is probably the first trademark that was well-known even before the product came out in the various countries. A name like Viagra, which is being used for a drug that cures impotence, quickly leads to associations like Viagra drinks, Viagra this, Viagra that, playing off the name.
AB: What about patent registration?
SAY: Patents are a little bit different. All patents accepted for registration must be new. The novelty requirement is absolute - it has to be new worldwide. That means you cannot have disclosed your idea in any printed matter before filing.
In Thailand, for example, you must file for patent protection within 12 months of filing an application elsewhere. If you filed in another country first, you can essentially claim that filing date for your Thai application using what is called priority. But to use that priority dating, you must apply in Thailand within 12 months of the first filing.
A patent protects the idea. So you should file a patent application the minute you come up with a new idea, before you approach anyone else, like an investor or manufacturer, to interest them in your idea. Many people don't know that once you introduce your product, it's considered disclosed already and it's too late to file a patent application. This is very different from trademarks. There's no novelty requirement for a trademark. You could go and use the mark in the marketplace and decide to register it later. Not so with patents.
AB: So if I file for patent protection first in, say, Singapore, then it covers the world?
SAY: No, all IPR are specific national rights. You have to file for patents in other countries usually within 12 months of your first application anywhere. If you don't file within 12 months, your patent won't be eligible for filing elsewhere because of the disclosure issue.
AB: So once I have registered my trademarks and patents, my IP is protected and I'm ready to go out and make money?
SAY: You still have to monitor to make sure that no one infringes your rights. Information will usually come from your distributors. You can hire investigators as well, either directly or through your law firm. You also need to monitor the trademark publication journals.
Under Thai law, for example, a trademark has to be published before it is given registration. Anyone has the right to oppose the mark within 90 days, if they can argue it should not be registered. So monitoring the journals will give you the opportunity to oppose anybody else's mark that you deem too similar to yours.
AB: Any other ways for small companies to save on IP protection costs in international markets?
SAY: Sometimes you can get your overseas distributor to finance registration of your IPR as part of the distribution agreement. They pay for the registration, but it's in your name. And you can make it a burden for the licensee or distributor to pay some of the cost of bringing IPR enforcement action as well. You say the distributor has the right to sell your product in this country, but if there's counterfeiting activity, the distributor pays 50% of the bill to fight it, and you pay the other 50%.
AB: What about companies fighting counterfeits in China? Does, say, a Malaysian company have reasonable prospects working through the Chinese legal system?
SAY: In terms of registering your rights, the Chinese system is very good and once IPR is registered it will be protected. But like in all other countries, the burden is always on the IPR owner. You'll have to go and investigate, find out where it is being manufactured, where it is being sold, and go to the authorities and ask for assistance in maybe carrying out a raid. They do protect IPR, but you have to have a lot of resources, because China is such a big place. Once you raid and close one factory, then other people start up. You can run around China doing nothing but closing down these counterfeit factories. It's never-ending.