Intellectual Property Protection and Laws Around The World
Intellectual property protection is more important than ever in a global market. Companies need to protect their investments in products, services and ideas, no matter where they operate.
However, intellectual property protection can present great challenges for international business if a company does not choose expansion territories wisely. Consider the following points to minimize intellectual property risk.
Definition of Intellectual Property
We hear the term bantered about, but what is intellectual property?
The World Intellectual Property Organization (WIPO), a UN agency mandated for international advancement and protection of IP rights defines it as “…creations of the mind: inventions, literary and artistic works, and symbols, names, images, and designs used in commerce”.
In other words, intellectual property includes your company’s innovative, cutting-edge ideas, discoveries and inventions, as well as the symbols, words, phrases and designs associated with them. They are considered company assets (intangible), even though they do not have physical form.
One reason intellectual property is valuable is because it can be registered. Once licensed, the owner is granted certain exclusive rights or can sell or license the rights to others. Obviously, this makes these assets worth protecting.
Four basic types of intellectual property exist: trade secret, patent, trademark, and copyright & related rights. Each offers unique ways to earn profits.
Generally, a trade secret is confidential company information that gives your business a competitive edge. For instance, WD-40 built their brand on the unique lubricating attributes of their product. They own the trade secret and profit from their unique formulation.
Trade secrets are also used to protect manufacturing processes, plans, blueprints and mechanical inventions if the business chooses not to patent a new mechanical invention.
This is the most common method of protecting an invention. There are three different types of patents: design patents, utility patents and plant patents. Registering a patent is relatively inexpensive and the patent holder owns exclusive rights for a specific number of years. Patents can be granted within a single country or internationally.
Some companies obtain patents to sell or license them rather than making the product or service. Others obtain patents to prevent others from selling an identical product.
However, patents are published to spur further innovation. Consequently, some companies such as Microsoft do not patent some of their products, because they do not want to release the underlying processes for fear of competitor copies.
A trademark is the unique identifier of goods and services from a specific individual or enterprise. Most often businesses trademark their brand name for marketing and consumer trust. This can include protecting their logo, tagline, phrases, products, services, processes or methodologies.
Businesses can profit from a trademark when they license it to others. For instance, companies may use a trademark to expand into a new territory without physically expanding abroad. A business can also sell off trademarks to companies who do similar work to increase their cash flow.
Copyright and Related Rights
Copyright generally applies to literary and artistic creations. Related rights offer the same or limited rights and they may be of a shorter duration. Copyright owners usually profit through royalties earned when they sell or license their works to others.
Our economy no longer relies solely on labor and resource-intensive investments. Innovation and intellectual property are the new drivers of economic growth.
Currently, knowledge represents about half of current global trade flows. Knowledge-intensive trade is also growing about 1.3 times faster than labor-intensive flows. Additionally, developing countries are increasing their share of the pie.
For instance, 2018 WIPO data revealed China filed for almost three times the number of patents in 2018 than the U.S. Asia accounted for approximately two-thirds of all 3.3 million patent applications worldwide.
Importance of Intellectual Property Protection
Intellectual property is a valuable corporate asset. Companies often invest heavily in R&D and innovation, so it is critical for them to mitigate potential risks.
Strong, enforceable, consistent property rights are essential to company viability. If you’re considering partnering with a foreign firm and the country has weak IP laws, you risk valuable assets such as your brand, trademark and technology. Should your foreign partner expropriate or harm your intangible assets you’ll have little or no recourse.
Fortunately, research shows that good IP can also lead to more abundant and better quality foreign partnerships.
IP Protection Varies by Country
Unfortunately, not all countries protect intellectual property well and IP theft and counterfeiting are not uncommon is some regions.
The United States Trade Representative (USTR) monitors intellectual property rights around the world and issues a Special 301 Report annually. It includes a priority watch list for the worst offenders, as well as others to watch.
The International Prevention Research Institute (iPRI) is an independent research company that also monitors intellectual property rights. A five year report found 15 countries consistently rank highly. In 2019, Finland ranked first while Yemen ranked lowest.
Luckily, almost all countries have increased their property rights over the past five years and some have made substantial improvements.
What Constitutes Good International Property Protection?
So what makes Finland’s international property protection better those in Yemen?
International Prevention Research Institute rankings are based on a variety of factors including the countries legal and political system and its stability. There’s no point having laws if they can’t be enforced or the rule of law isn’t followed for everyone.
The judicial system must act independently to counteract corruption and the country must make it simple to register intellectual property. Countries must also demonstrate they value IP protection and protect patents, as well as fight copyright piracy.
Protecting Your Company’s Intellectual Property
Companies face significant IP risk when expanding abroad and need to develop strategies to mitigate it. Partnering with an experienced international expansion partner is an ideal way to move forward.
Blueback Global’s network of global professionals has the regional knowledge your business needs to make an informed decision. We’re well-positioned, highly-experienced and can help you overcome your multinational business challenges. Contact us for a free consultation to mitigate IP risk while expanding globally.