Keeping your big ideas safe

He’s an entrepreneur, chief executive of Cross Ventures and chair of the New Zealand Trade and Enterprise (NZTE) New Zealand Beachheads Advisory Board.

But what’s the best way to protect your intellectual property (IP) in a developing, or developed, market?

According to Cross, exporters must work out how to establish a trademark on their brand.

They should use patents to protect their technology, industrial designs, work processes and know-how.

They must look at copyrighting their artistic or intellectual output.

Even a developed market like the United States can present some keen IP challenges.

Emerging giants China and India present the most demanding IP environments of all.

The two emerging markets are tackling the issue in very different ways.

India’s IP laws have not been fully modernised, says Jonathan Ross, a partner at law firm Bell Gully.

Although Indian legislation complies with the World Trade Organisation’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), the country is still ratifying other international agreements.

Yet, on the frontlines, Indian authorities are effective.

India passed new customs seizure laws in 2007. More recently it completed an administrative overhaul.

Authorities that used to be slow to enforce regulations are now improving their performance.

In contrast, China has state-of-the-art IP laws, says Ross.

It’s also a signatory to all the major international conventions on patents, copyrights, industrial design and trademarks.

It has signed everything from the Madrid Protocol to the Berne Convention. It has been praised for its active cooperation with the United Nation’s World Intellectual Property Organisation (WIPO).

And China’s main administrative body, the State Intellectual Property Office (SIPO), is built on a solid legal framework.

But lax enforcement is China’s Achilles’ heel.

Colleen Cavanagh, a senior associate at Bell Gully, says enforcement is relatively strong in the major cities. She notes that up to 90 percent of IP infringements are prosecuted in Beijing.

Once outside the big cities, the situation deteriorates rapidly.

Cavanagh says the 2006 figures – the latest ones available – show that just 16 percent of patents in China are owned by foreigners.

She says it’s a sign that many companies are wary of the country’s ‘Wild West’ levels of enforcement and its counterfeiting culture.

Around 70 percent of counterfeit goods seized in the United States come from China.

Court action

Courts in the two countries recognise a trademark or patent holder in very different ways.

In India – as in most developed countries – a company with established use of a trademark or business process has the jurisdictional advantage.

In China, it’s first come, first served.

If a pirate or competitor registers your IP before you do, it can be very difficult to take action against them.

“It sounds preposterous, but unless you move to protect your IP first, pirates can hinder your ability to operate,” says Bell Gully’s Cavanagh.

She cites the example of French company Schneider Electric which in October 2007 was ordered to pay US$45 million in infringement damages to Chinese rival the Chint Group.

China’s current leadership has publicly committed to meeting much tougher enforcement standards, says Cavanagh: albeit with a relatively distant target date of 2020.