Intellectual Property Issues in International Business

Intellectual Property Issues in International Business
Siyoung Park Counsellor, Innovation Division, WIPO

General Intellectual Property Issues
List of Contents General Intellectual Property Issues 1 PCT 2 Madrid 3

General Intellectual Property Issues
3 3 General Intellectual Property Issues 3

Just as in the National Context….
4 Just as in the National Context…. Exclusivity provided by the IP system essentially allows the owner to prevent others from using the IP rights It is said that imitation is the most sincere form of flattery. IP can reduce your chance of being flattered IP enables businesses to use it to: Create differentiation and add value Command higher prices and sustained demand through brand loyalty, new and/or improved features, captivating designs…. Attract partners and investors Access new markets and generate new sources of revenue through licensing and other partnerships Persuade investors . . . IP is an important consideration in international trade firms will sooner or later manufacture a similar or identical product that will compete with the product in question. Without IP protection it may be difficult or impossible to stop imitators and the resultant loss of profit may be substantial. (3) Avoid infringing upon other’s IP rights Failure to consider IP issues may result in large or fatal losses if your products are considered to be infringing upon the IP rights of others in the export market concerned. Even if an invention, design or trademark is not protected in your own country, this does not mean that someone else has not protected them in an export market. A product may have functional or aesthetic features that are not protected in your home country but are protected as IP rights by others in an export market. This may also be true for trademarks. (4) Access new markets through licensing, franchising, joint ventures, etc. IP protection makes it easier for an enterprise to access new markets through licensing, franchising, the establishment of joint ventures or other contractual agreements with other companies. IP rights help firms to establish partnerships with other firms for the production, marketing, distribution or delivery of goods and services in foreign markets. It may (1) Exclusivity Intellectual property rights provide exclusivity over certain features of a product enabling the owner to prevent or stop others from commercially using them in the marketplace. This enables companies to control the use of their trademark and the innovative and creative features of their products and strengthen their competitive position in export markets. (2) Stop imitators If the product is successful in a given market, it is likely that competingalso provide a company with greater bargaining power when seeking to license in technology from other firms that may be interested in its own proprietary technologies, copyright works, designs, trademarks, etc. (5) Protection of adaptation The adaptation of the product, its design, its brand or its packaging to export market(s) will require creative and/or inventive work that may, if certain requirements are met, be protected through the IP system thus guaranteeing a degree of exclusivity over the adaptations.(6) Negotiation with distributors, importers or other partners The negotiation of agreements with distributors, importers or other partners will have to take into account issues relating to the ownership of IP rights, particularly if the product will be manufactured abroad or will be modified, packaged or distributed by foreign partners. (7) Marketing of the product The marketing of your product will rely strongly on your company’s brand image, embodied primarily in its trademark, which, if unprotected, would be significantly more difficult to enforce in case of copying or imitation by competitors. (8) Timing of participation in fairs and exhibitions The timing of your participation in fairs and exhibitions may depend on whether you have already applied for protection for your inventions or designs, as early disclosure of your innovative work may result in loss of novelty and preclude you from applying for protection at a later stage. Your participation in fairs and exhibitions also result in problems if your products on display infringe the IPR of others. (9) Pricing of the product The pricing of the product will partly depend on the extent to which the brand or trademark is recognized and valued by consumers in the export market and the extent to which the product will face competition from similar or identical products. (10) Fund‐raising In raising funds, holding patents over the innovative aspects of your product, or owning trademarks with a good reputation, is often useful for convincing investors, venture capitalists or banks of the commercial opportunities available to your product.

Contents: IP Issue Areas to be Considered in International Trade
5 Contents: IP Issue Areas to be Considered in International Trade IP Rights are Territorial Secure Freedom to Operate Respect Deadlines Early Disclosure Working with Partners Choosing an Appropriate Trademark Remember – all this applies to using your IP rights in your own country!

IP Rights are Territorial
6 IP Rights are Territorial It is important to keep in mind that IP rights are only valid in the country or region in which they have been granted. Therefore, applying for such rights in other countries is important if there is an intention to go international. However, note copyright is automatically available through the provisions of the Berne Convention, famous marks have automatic protection, trade secrets are by their nature confidential.

7 IP Rights are Territorial - Obtain IP Rights Internationally - National Route National route - Apply in each country, pay fees, translation into national languages 7

8 IP Rights are Territorial - Obtain IP Rights Internationally - Regional Route Benelux Office for IP (TM and Designs) African Regional Industrial Property Office (ARIPO) Eurasian Patent Office European Patent Office Office for the Harmonization of the Internal Market (TM and Designs) Organisation Africaine de la Propriété Intellectuelle (OAPI) Patent Office of the Cooperation Council for the Arab States of the Gulf A European patent is valid in as many of the contracting states as the applicant designates, affording the same rights as a national patent granted in any of these states 8

Obtain IP Rights Internationally - International Route
9 Obtain IP Rights Internationally - International Route WIPO Administers the Madrid, Hague and PCT Systems for the international registration of marks, designs and patents Madrid and Hague – international application valid in the designated countries unless rejected within a specified time PCT – international application subject to international phase (international search and patentability report – and a preliminary examination report, if required) followed by the national phase. Here the designated countries decide on patentability 9

Freedom to Operate (FTO)
10 Freedom to Operate (FTO) Analyzing FTO is to evaluate whether you are in any way infringing the patents, designs or trademarks of others. Such a evaluation is usually done by conducting a search in patent, trademark and design databases for patent applications, granted patents, registered trademarks or designs As patents, trademarks and designs are granted to particular territories an FTO search may reveal that the particular IP in question is not protected in the territory of interest Then there's "freedom to operate". In that case, you're asking not "can I get a patent on this", but "can I do anything with it without infringing someone else's patents". For FTO considerations, you have to look at what IP rights other people have (or are likely to have by the time you'll be ready to go). That can get rather involved, since patents are limited in several dimensions: time (they expire eventually), space (coverage varies country by country), and in "IP space" (what territory the claims stake out). Depending on what comes up, you might decide that you're in the clear. Or you might try to invent yourself out of a tight spot, if you can do that. Or you could pay someone for rights to their IP, or trade them some of yours, if you have something to trade

FTO – Conducting Searches
11 FTO – Conducting Searches Reason for conducting searches: Example 1: same or confusingly similar trademark may already exist in the export market Example 2: technology not patented in one country may be patented elsewhere Example 3: FTO opinion to leave a paper trail showing effort to avoid infringement Consulting patent databases is done to ensure that your product does not infringe on patents owned by others. To do so you may consult the national or regional patent database, that may be available online, or you may submit a search request to the national or regional patent office. Bear in mind that conducting a through patent search requires a great deal of technical expertise and it may be advisable to contact a professional to do this. Must Search National or Regional Offices

16 FTO - Patent Even if there is a potentially conflicting patent that has been granted in the territory in question It may have expired or expiring soon Its claims may not cover the elements of interest If the patent still remains valid and applicable It could still be invalidated by finding applicable prior art A license could be obtained or Invent an alternative….! Our databases are there only to market them a bit not so as to imply that one can do a conclusive FTO with them. One needs to search national databases for that.

FTO - Trademark Same issues nationally as for international:
17 FTO - Trademark Same issues nationally as for international: Search for similar trade name or domain name that may lead to a future dispute. Look at the trademarks being used by the main competitors in the export market to ensure that they are not using trademarks that may be considered to be confusingly similar to yours, even if they have not registered them.

18 In case of conflict If the search produces a prior existing patent, trademark or design in the market of interest then clearly it cannot be used as is. Options available are to change the trademark, design around the patent or design, offer to buy or license that right or challenge its validity

Respect Deadlines Priority Period
19 Respect Deadlines Priority Period Once an application for a patent or design right has been made domestically (priority date) an international application has to be made within the “priority period.” The international application will benefit from the priority date. A filing after the priority period has lapsed would mean you can’t benefit from the earlier priority date and novelty will be lost. Patents: 12 months Designs: 6 months Trademarks 6 months - a US entity files a US trademark application, this starts a six-month period during which it is possible to file corresponding trademark applications outside of the US in countries that belong to the Paris Convention, each of which will be treated in its own country as if it had been filed on the date that the US application was filed. This often leads to a scramble to try to decide whether or not to spend money on trademark filings outside of the US. A first thing to appreciate is that missing the six-month due date does not necessarily mean the applicant has lost any chance to obtain trademark protection outside of the US. It merely means that an application filed outside of the US will only enjoy its own filing date and will not enjoy the filing date of the US application. 19

Risks of Early Disclosure
20 Risks of Early Disclosure Patents and designs are required to be novel to merit protection If a product needs to be disclosed it should be done in a confidential context  Non-disclosure Agreement. If not, the novelty could be lost and an application for registration be rejected This is particularly important in disclosing products that embody inventions and/or designs to potential partners before protection has been obtained The invention must not have been made available to the public in any form, in any country, before the application was filed (e.g., printed or oral publications; trade shows; on-sale bar/offers for sale). h U.S.A. grants a "grace period" of one year during which prior disclosure by the inventor will not affect patentability. h Grace period should NOT be relied upon because disclosure during this period does affect patentability in Europe and other countries. 20

Working with Partners Ownership of IP
21 Working with Partners Ownership of IP Creation of new IP and who owns that Assignments/licenses for ownership Risk of unauthorized use or disclosure of trade secrets by partner Risk that partner will use trade secrets of others and expose you to litigation. Insist on indemnification Quality of product to be maintained so as to sustain brand image Trade marks if registered in the partners name in the country could create problems once the relationship ends Example: if developing a new product with another enterprise, establishing a joint venture, or modifying the design, package or trademark of a product, important to ensure that it is clear (preferably in a written contract) who will be the owner of any IP generated. Indemnification: to secure against hurt, loss, or damage 21

Suitability of Trademarks
22 Suitability of Trademarks Check whether the mark has undesired connotations or is likely to be rejected in that country Mitsubishi was dismayed to find that PAJERO means 'wanker' in Spanish. Ford NOVA means no go in Spanish. Whereas Coca-Cola was successful in finding a trademark in Chinese to say “happiness in the mouth” No doubt Mitsubishi was dismayed to find that PAJERO means 'wanker' in Spanish. Ford NOVA means no go in spanish. Wheras coca cola was succesful in finding a trademark in chinese to say happiness in the mouth. The first attempt to translate Coca-Cola for the Chinese market read as “kekoukela”, meaning “bite the wax tadpole” or “female horse stuffed with wax”, depending on the dialect. After researching 40,000 Chinese characters, Coke found a phonetic equivalent, “kokou kole”, translating as “happiness in the mouth”. Certain brand names travel well. Oxo, Cif and Daz were created with the international market in mind and rarely need adapting. These are simple, graphic names that have no specific meaning or association attached. Other brands need careful adaptation. For example, Utterly Butterly, Aquafresh and Sunsilk. These brand names use local expressions and words which have specific meanings or nuances 22

Conclusion IP is of relevance to many aspects of international trade
23 Conclusion IP is of relevance to many aspects of international trade Crucially it provides exclusive rights But these rights have to be pursued locally and internationally so as to prevent imitators Be mindful of the additional issues of relevance to international trade

24 24 PCT 24

General remarks on the PCT
25 General remarks on the PCT The PCT system is a patent “filing” system, not a patent “granting” system The PCT system consists of an international and national phase The decision on granting patents is taken exclusively by national or regional Offices in the national phase The PCT is administered by the International Bureau of WIPO

PCT: “The PCT helps put innovation into practice by
26 PCT: “The PCT helps put innovation into practice by providing a simple and cost-effective way to file international patent applications” Paul Jacobs, Chairman and CEO, Qualcomm Qualcomm: US$ billion revenue (2011) 17,500 employees More than 9,000 PCT applications filed

The PCT System 29 Enter national phase International publication
(months) 12 16 18 22 28 30 File local application File PCT application International search report & written opinion (optional) File demand for International preliminary examination (optional) International preliminary report on patentability Typically a national patent application in the home country of the applicant

The PCT System 30 Enter national phase International publication
(months) 12 16 18 22 28 30 File local application File PCT application International search report & written opinion (optional) File demand for International preliminary examination (optional) International preliminary report on patentability Typically filed in same national patent office--one set of fees, one language, one set of formality requirements--and legal effect in all PCT States

search report & written opinion
31 The PCT System Enter national phase International publication (months) 12 16 18 22 28 30 File local application File PCT application International search report & written opinion (optional) File demand for International preliminary examination (optional) International preliminary report on patentability Report on state of the art (prior art documents and their relevance) + initial patentability opinion

Disclosing to world content of application in standardized way
32 The PCT System Disclosing to world content of application in standardized way Enter national phase International publication (months) 12 16 18 22 28 30 File local application File PCT application International search report & written opinion (optional) File demand for International preliminary examination (optional) International preliminary report on patentability

File demand for International
33 The PCT System Enter national phase International publication (months) 12 16 18 22 28 30 File local application File PCT application International search report & written opinion (optional) File demand for International preliminary examination (optional) International preliminary report on patentability Request an additional patentability analysis on basis of amended application

preliminary report on patentability
34 The PCT System Enter national phase International publication (months) 12 16 18 22 28 30 File local application File PCT application International search report & written opinion (optional) File demand for International preliminary examination (optional) International preliminary report on patentability Additional patentability analysis, designed to assist in national phase decision-making

Express intention and take steps to pursue to grant in various states
35 The PCT System Express intention and take steps to pursue to grant in various states Enter national phase International publication (months) 12 16 18 22 28 30 File local application File PCT application International search report & written opinion (optional) File demand for International preliminary examination (optional) International preliminary report on patentability

PCT international phase
36 PCT international phase Unified filing procedure consisting of the filing and processing of a single application with legal effect in all PCT Contracting States Information on the potential patentability of an invention prior to the start of national patent procedures (“national phase”) Publication of the international application together with the International Search Report (ISR) Time delay of at least 30 months before the start of the national patent procedure

PCT national phase Gateway to national patent systems
37 PCT national phase Gateway to national patent systems Grant (or refusal) of a patent by national or regional Offices

The PCT System 38 Chapter I (months) File PCT application Enter
national phase 12 30 International Search Report and Written Opinion of the ISA 16 18 or, optional publication File local 20 Chapter II Preliminary Examination File demand SIS request (optional) 19

International search Performed by an International Searching Authority
39 International search Performed by an International Searching Authority PCT Minimum Documentation (PCT Rule 34) Everything which has been made available to the public, anywhere in the world, by means of written disclosure

International Search Report (ISR)
40 International Search Report (ISR) IPC (International Patent Classification) symbols Indications of the technical areas searched Indications relating to any finding of lack of unity A list of the relevant prior art documents Indications relating to any finding that a meaningful search could not be carried out in respect of certain (but not all) claims

International Search Report (ISR) (2)
41 International Search Report (ISR) (2) Time limit to establish ISR and Written Opinion of the ISA 3 months from the date of receipt of the search copy by the ISA (usually within approximately 16 months from the priority date if priority is claimed); or 9 months from the priority date, whichever time limit expires later

Documents relevant to whether or not your invention may be patentable
42 Example of an ISR Documents relevant to whether or not your invention may be patentable Symbols indicating which aspect of patentability the document cited is relevant to (for example, novelty, inventive step, etc.) The claim numbers in your application to which the document is relevant

Written Opinion of the ISA
43 Written Opinion of the ISA A preliminary non-binding opinion on novelty, inventive step (non-obviousness) and industrial applicability (utility) Established at the same time as the ISR Not published at 18 months but made available to the public on PATENTSCOPE after 30 months No formal response procedure although applicants may submit informal comments

Example of the Written Opinion
44 Example of the Written Opinion Patentability assessment of the claims Reasoning supporting the assessment

International Preliminary Examination
45 International Preliminary Examination Optional procedure Requested by filing a demand with an International Preliminary Authority (IPEA) (same list as ISA) Results in the issuance of a preliminary, non-binding opinion by the IPEA on novelty, inventive step and industrial applicability International Preliminary Report on Patentability (Chapter II) – IPRP Ch.II Opportunity to amend the description, claims and drawings to address objections raised by the ISA

Amendment procedures Chapter I Article 19 amendments
46 Amendment procedures Chapter I Article 19 amendments One-time amendment of the claims before the International Bureau after receipt of the International Search Report (ISR) Chapter II Article 34 amendments Amendment of the claims, description, drawings before the IPEA to address objections raised by the ISA

Entry into the national phase
47 Entry into the national phase The international phase ends after 30 months from the earliest filing date The applicant typically has to decide prior to this time in which countries to enter the national phase The PCT provides an option for 146 Contracting States Based on experience, applicants would enter the national phase in no more than 30 countries (between 5 and 30)

Decisions to be taken by the applicant
48 Decisions to be taken by the applicant Whether to proceed with or abandon the international application? When? At the end of 30 months Where? Choice of countries/regions based on business and local market conditions

Some national phase requirements may apply
49 Some national phase requirements may apply Payment of national fee Translation, if applicable Copy of international application in particular circumstances only Other special national phase requirements which may apply are to be complied with at the time of national phase entry or within a time limit fixed by the national Office

50 Cost deferral Seeking patents in foreign countries requires a significant capital investment The PCT provides for the deferral of main initial costs associated with internationalization Cost of translations Local patent agent fees Local patent Office fees

Patentability analysis
51 Patentability analysis Strong basis for patenting decisions Valuable information that is of assistance in making patenting decisions The International Search Report (ISR) and the Written Opinion of the International Searching Authority International Preliminary Report on Patentability (IPRP (Ch.II)) of the International Preliminary Examining Authority (optional)

52 52 Madrid 52

Protection of Trademarks
53 Protection of Trademarks Obtained through registration or use, but strong protection may be obtained only through registration The right arising from registration has a territorial character-registration is subject to the national legislation of the country Filed with the competent authorities (IPO) If you want to have your mark protected abroad, you have to register the mark in all the countries where protection is desired

Routes for Protecting a Trademark abroad
54 Routes for Protecting a Trademark abroad The national route or direct filing: Filing applications with the trademark office of each country in which protection of the mark is sought The regional route: Applying for protection in countries which are members of a regional trademarks registration system with effect in the territories of all Member states (ARIPO, Benelux Trademark Office, OHIM and OAPI) The international route: The Madrid System

National Route vs. Madrid Route
55 National Route vs. Madrid Route Applicant Applicant Office of Origin Country A Country B Country C Country A Country B Country C

Legal Framework I Madrid Agreement (1891) latest revised in 1979
56 Legal Framework I Madrid Agreement (1891) latest revised in 1979 Madrid Protocol (1989) latest revised in 2007 Common Regulations as in force from September 1, 2009 Administrative Instructions as in force from January 1, 2008 Law and Regulations of each Contracting Party See at This is the legal framework of the Madrid system – covering the Agreement, the Protocol, the Common Regulations and Administrative Instructions. Then you also have the law and regulations of each of the 85 Contracting Parties. When I talk about the Madrid system, I mean the Protocol unless otherwise specified. 56

Legal Framework II Under the Madrid system Treaties and Regulations
57 Legal Framework II Under the Madrid system Treaties and Regulations providing the basic principles and mechanism of the system; governing the formal conditions for an international registration Domestic Law and Regulations of a Contracting Party governing the substantive conditions for granting the protection in each relevant territory More specifically, under the Madrid system, the Treaties and Regulations are providing the basic principles and mechanism of the system; governing the formal conditions for an international registration While the Domestic Law and Regulations of a Contracting Party are governing the substantive conditions for granting the protection in each relevant territory The Madrid System is a closed system; you will hear more about the need of a connection with a Contracting Party to use the system; that the connection determines the Office of origin, and that protection can only be requested in the countries party to the Madrid system. This is different than with the EU and the CTM system. 57

National or International/Madrid Route?
58 National or International/Madrid Route? National Route Madrid Route Many Offices for filing Many application forms Many languages Many currencies Many registrations Many renewals Many modifications Foreign attorney needed from beginning One Office for filing One single application form One language (E/F/S) One currency (Swiss francs) One international registration One renewal One modification Foreign attorney needed only in case of refusal

General Procedure under the Madrid System
59 General Procedure under the Madrid System Applicant files before Office of origin which certifies the application and forwards it to WIPO WIPO performs formal examination, registers and notifies designated Contracting Parties Designated Offices make substantive examination and grant or refuse protection Holder has equal rights as if he had filed directly WIPO records and notifies holder

International Registrations – an Overview
60 International Registrations – an Overview 18 Months Date of International registration Substantive examination WIPO Office of origin 2 Months (average) 10 years Designated Office Renewal (every 10 year) Time limit for provisional refusal

The Madrid System A centralized filing mechanism
61 The Madrid System A centralized filing mechanism A one-stop shop for trademark holders to obtain and maintain trademark protection in export markets An option to the national route A purely procedural treaty The domestic legislations of the designated Contracting Parties set the conditions for protecting a trademark and determine the rights which result from protection

Basic Features (1) Entitlement
62 Basic Features (1) Entitlement An international application may be based on one or more applications or registrations The fees payable in connection with the application The basic fee (CHF 653 or 903) A complementary fee for each designated Contracting Party with supplementary fee OR individual fee Scope of protection – to be determined by designated Contracting Party The Contracting Party may elect for 12/18 months refusal period

Basic Features (2) Statement of grant of protection
63 Basic Features (2) Statement of grant of protection Subsequent designation The 5 years dependency period Central attack – Ceasing of effects Transformation of the International registration into national applications 10 years term of protection with renewal every 10 years

Benefits for Trademark Owners
64 Benefits for Trademark Owners Simple - A single set of simple formalities - A single filing Office Low-Cost - Low registration fees - No need to pay foreign agents for filings - No need to pay translation of the paperwork into several languages Effective - A single international application produces the same legal effect in various countries - A fixed deadline for the confirmation or refusal of the legal effects in each designated country

Benefits for the Offices and Government
65 Benefits for the Offices and Government The Contracting Parties can focus on substantive examination The Madrid system has a positive effect on economic growth It empowers SMEs It promotes international trade by contributing to the opening of new markets and assisiting in development of export It creates a more favorable climate for foreign investment in the internal market

International Registration Procedure
66 International Registration Procedure Precondition: basic application or basic registration Certifies entitlement/basic mark and forwards the application to the IB OFFICE OF ORIGIN International Application Formal examination Records in the International Register Publishes in the International Gazette Notifies designated Contracting Parties INTERNATIONAL BUREAU Substantive Examination OFFICE OF DESIGNATED CONTRACTING PARTY OFFICE OF DESIGNATED CONTRACTING PARTY Provisional refusal within time limits Grant of protection = effect of national registration ?

Thank You for Your Attention!
67 Thank You for Your Attention! Siyoung Park Counsellor, Innovation Division, WIPO

Intellectual Property Issues in International Business

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