Nov 22

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The ABCs of IP

Your company wants to venture into new markets but you hear unsettling things about theft of your brand or illegal copying of your product.  While the possibility of your product being copied or your brand being stolen is unfortunately out there, it should not hinder your plans to move into uncharted waters.  Beyond the legalese of IP, below are some factors to consider.

What exactly is IP and why do I need to protect it?

IP is essentially ‘creations of the human mind’.  For a business, IP is a core asset of the company–its ‘intellectual assets’.  

Consider this — U.S. intellectual property (IP) is worth $5-5.5 trillion—more than the nominal GDP of any other country.  America is a net exporter of intellectual property, contributing $37 billion to our trade balance in 2006.

Intellectual property ‘rights’ are the legal instruments that your company can use to protect your intellectual assets.  The most important IPRs are patents, trademarks, registered designs, and copyrights.  It is when these rights are infringed that you have been subject to counterfeiting and/or piracy.

Which countries do I need to worry about the most?

China is, by far, the source of most counterfeit goods on the market today.  According to U.S. Customs and Border Patrol, 81% of counterfeited and pirated products entering the U.S come from China, 6% from India and the remainder is divided up among other countries.  However, you cannot forget about your own home market.  Both American and European companies report IP theft in their own markets on an increasing scale.

Counterfeiters, wherever they are located, have become increasingly sophisticated about their targets.  They often attend industry trade shows to see which products and brands are the most popular.  Success attracts imitators, so, if your product is successful, you should assume they will want to copy it.

How do most companies find out they are being copied?

Industry trade shows are also where a vast majority of companies find out they are being illegally copied.  Many companies also stumble across “their” product in a retail store or on the internet.  Customers are also a good source of information.  Many companies agree that developing good customer relationships and being open with them about your vigilance against counterfeits is an important component of their anticounterfeiting strategy.

What are some basic steps I should take?

Violations of IPRs impact more than just nameless inventors or luxury goods companies – they impact everyone.  Companies every day, both large and small, find that their novel idea or innovation has been ripped off by an international competitor or even their neighbor next door.  Make your IP strategy part of your overall business strategy and be mindful of a few basic steps:

#1:     Most importantly, use the IPR tools that are out there.  Apply for a patent, register your trademark, or copyright your new song or book in three main regions – your home market, your export markets, and countries where counterfeited and pirated products are likely to be produced.  You can do it on your own, and there are often discounts if you are a small or medium- sized business.  If you can afford it, hire a lawyer to help you with the process.

#2:     Registration with a government entity is not enough – enforcement falls to you.  You must be continuously vigilant in protecting your intellectual assets.  Establish a ‘zero tolerance’ counterfeit policy in your company and make sure your suppliers, customers and competitors know about it.  This lets your customers know that you stand behind your brand and the quality and safety it represents and it puts counterfeiters on guard that you are not an easy target.

#3:     Choose your business partner or distributor carefully, especially in emerging markets.  Use all the due diligence resources available to you and make sure your contract allows for a ‘divorce’ if you later decide that it is not working out.  But just as important as your contract are the relationships you establish surrounding your business in a new market.  Building this strong network in third countries helps establish informal support for your activities and could become a good source of intelligence if you suspect your product is being illegally copied.

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